a

GAO

United States Government Accountability Office

Report to the Subcommittee on 

Government Management, Finance, and 

Accountability, Committee on 

Government Reform, House of 

Representatives

January 2006 SECURITIES AND 

EXCHANGE 

COMMISSION

Some Progress Made 

on Strategic Human 

Capital Management

GAO-06-86
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

January 2006

SECURITIES AND EXCHANGE 

COMMISSION 

Some Progress Made on Strategic Human 

Capital Management 

Highlights of GAO-06-86, a report to the 

Subcommittee on Government 

Management, Finance, and Accountability,

Committee on Government Reform, 

House of Representatives

Corporate failures and accounting 

scandals led to changes in 

legislation governing U.S. securities

markets, which resulted in

increased workload demands on

the Securities and Exchange

Commission (SEC). As a result, 

Congress provided SEC with 

substantial budgetary increases to 

obtain more resources to help 

fulfill the agency’s mission. GAO

was asked to review SEC’s 

strategic workforce planning 

efforts to efficiently and effectively 

utilize its resources. This report 

discusses (1) the progress SEC has

made toward developing a strategic

human capital plan and (2) whether 

SEC uses effective strategic 

workforce planning principles for 

acquiring, developing, and retaining

staff. 

What GAO Recommends

GAO is not making

recommendations because many of 

SEC’s human capital initiatives, 

including the strategic human 

capital plan, are currently under 

development. However, GAO 

makes observations based on our 

audit work that highlight areas

warranting management attention,

such as conducting outreach with

congressional stakeholders and the

securities industry, obtaining 

employee feedback on human

capital strategies before they are

implemented, and taking steps to

document existing skills among

staff. SEC agreed with these 

findings and observations.

SEC has taken steps to implement a number of strategic human capital 

management initiatives, including developing its strategic human capital 

plan. In 2004, SEC split its Office of Administrative and Personnel 

Management into the Office of Administrative Services and the Office of 

Human Resources (OHR), allowing the agency to separate its administrative 

and personnel functions and hire an associate executive director to focus on

assessing, developing, and implementing human capital programs. In April 

2005, SEC created a more structured human capital council by expanding 

the role of the Executive Resources Board (ERB), now called the Human 

Capital Review Board (HCRB). The HCRB includes senior management from 

all major divisions and offices, the Chairman’s office, the Executive Director, 

and OHR and follows a more formalized and regular process for reviewing

and approving human capital decisions. According to SEC, as of November 

2005, the agency was in the process of creating its first strategic human 

capital plan, which will be based on the Office of Personnel Management’s 

Human Capital Assessment and Accountability Framework, but it has not set 

a completion date. 

GAO also found that many of SEC’s efforts related to workforce planning to 

date have been consistent with five key principles for effective strategic 

workforce planning; however, some of these efforts were still being 

developed or could be improved. Specifically, 

• SEC has involved top management and a variety of stakeholders during 

the development of its strategic human capital plan, but only some 

employees will have the opportunity to provide feedback before the plan 

is finalized; 

• SEC has been taking steps to identify needed critical skills and 

competencies, but it lacks a formal process for identifying existing skills 

among staff and linking them to SEC’s strategic goals; 

• SEC has been using human capital strategies to address workforce needs 

and skill gaps, but some of these strategies have not been in place long 

enough to assess results; 

• SEC is developing or changing many of the administrative, educational, 

and other requirements to support workforce strategies, particularly 

pertaining to the use of human capital flexibilities; and 

• SEC is developing additional human capital indicators and a more formal 

process by which to measure the achievement of its human capital goals. 

However, SEC currently does not formally evaluate the effectiveness of 

its human capital strategies in fulfilling SEC’s strategic goals.

www.gao.gov/cgi-bin/getrpt?GAO-06-86.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Orice M. 

Williams at (202) 512-8678 or 

williamso@gao.gov.
Page i GAO-06-86 Securities and Exchange Commission

Contents

Letter 1

Background 2

Results in Brief 9

SEC Has Made Progress on Strategic Human Capital Initiatives and 

Is Developing a Strategic Human Capital Plan 11

Components of SEC Workforce Planning Efforts Are Consistent 

with Established Principles, but Some Efforts Could Be 

Improved 15

Observations 34

Agency Comments and Our Evaluation 35

Appendixes

Appendix I: Scope and Methodology 36

Appendix II: Comments from the Securities and Exchange Commission 37

Appendix III: GAO Contact and Staff Acknowledgments 38

Figures Figure 1: Structure of SEC (Divisions and Offices) 4

Figure 2: GAO’s Five Key Principles for Effective Strategic 

Workforce Planning 8

Figure 3: Summary of SEC Actions As They Relate to the Five Key 

Principles of Effective Strategic Workforce Planning 16
Contents

Page ii GAO-06-86 Securities and Exchange Commission

Abbreviations

CSE consolidated supervised entity 

ELR Employee-Labor Relations

ERB Executive Resources Board 

HCAAF Human Capital Assessment and Accountability Framework 

HCRB Human Capital Review Board 

MBA master of business administration 

OCIE Office of Compliance, Inspections, and Examinations 

OHR Office of Human Resources 

OMB Office of Management and Budget 

OPM Office of Personnel Management 

OPUR Office of Public Utility Regulation 

ORA Office of Risk Assessment

PUHCA Public Utility Holding Company Act of 1935 

SEC Securities and Exchange Commission 

SLR student loan repayment

SRO self-regulatory organization 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.
Page 1 GAO-06-86 Securities and Exchange Commission

United States Government Accountability Office

Washington, D.C. 20548

A

January 10, 2006 Letr

The Honorable Todd Russell Platts

Chairman

The Honorable Edolphus Towns

Ranking Minority Member

Subcommittee on Government Management,

 Finance, and Accountability

Committee on Government Reform

House of Representatives

Over the past several years, in the wake of corporate failures and 

accounting scandals, changes in legislation governing U.S. securities 

markets have resulted in increased demands on the Securities and 

Exchange Commission’s (SEC) regulatory capacity. Through the 

Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley), Congress augmented SEC’s 

responsibilities but also authorized a substantial budget increase for the 

agency to better address workload challenges. In fiscal year 2003, SEC 

received $716 million, or a 39 percent increase over its previous year’s 

budget authority, and has used much of it to fund more than 842 new staff 

positions. In addition, SEC used a portion of the fiscal year 2003 

appropriations to fund its new pay parity authority, which allowed the 

agency to pay staff commensurate with other federal financial regulators. 

In fiscal year 2004, SEC received a 13 percent increase over its previous 

year’s budget authority. These increases offered SEC a unique opportunity 

to obtain the resources and expertise necessary to meet its mission, but the 

transformation will require a rigorous effort to recruit, hire, and retain the 

right staff with the right expertise to fulfill agency mission and strategic 

goals. 

In formalizing its strategic direction, on July 9, 2004, SEC approved its 

2004-2009 strategic plan, which identifies the vision, mission, values, and 

goals shaping the agency’s activities during the next 5 years. The fourth 

goal of the strategic plan outlines SEC’s commitment to maximize the use 

of SEC resources. It further states that in an effort to attract, hire, and 

retain the right staff with the expertise necessary to carry out its mission, 

the agency plans to use a variety of human capital strategies that will 

complement the agency’s other ongoing activities. To respond to your 

request to review SEC’s strategic workforce planning, our report discusses 

the following: (1) the progress SEC has made toward developing a strategic 

human capital plan and (2) whether SEC uses effective strategic workforce 

planning practices for acquiring, developing, and retaining staff. 
Page 2 GAO-06-86 Securities and Exchange Commission

To address the first objective, we collected information and data from 

representatives of SEC’s Offices of the Chairman and Executive Director, 

SEC’s Office of Human Resources (OHR), and key divisions and offices on 

the agency’s recent workforce planning activities. To gain insights on SEC’s 

progress in this area, we also reviewed SEC’s strategic plan, budget 

requests, and other relevant documents, and GAO reports. To address the 

second objective, we compared SEC’s workforce planning activities with 

five key principles for effective strategic workforce planning, which we 

developed based on our review of studies by leading workforce planning 

organizations and interviews with officials from the Office of Personnel 

Management (OPM) and the National Academy of Public Administration.1

We identified related tasks for each principle (described in our prior work) 

to provide more specific examples of how each principle may be 

implemented and we determined whether SEC was undertaking these or 

similar tasks. In addition, we interviewed representatives from the Office of 

Management and Budget (OMB) and OPM to discuss SEC’s activities and 

best practices in strategic workforce planning in the federal government. 

This report primarily focuses on strategic workforce planning efforts under 

the former Chairman, whose resignation was effective June 30, 2005. We 

conducted our work in Washington, D.C., from April 2005 through 

November 2005 in accordance with generally accepted government 

auditing standards. Appendix I provides additional information on our 

scope and methodology.

Background SEC was created by Congress in 1934 primarily to protect investors; 

maintain fair, honest, and efficient securities markets; and facilitate capital 

formation. SEC’s oversight responsibilities include rule making, surveilling 

the markets, interpreting laws and regulations, reviewing corporate filings, 

conducting inspections and examinations, and determining compliance 

with federal securities laws. In addition, SEC monitors and regulates a 

variety of key market participants, which as of July 2004 included more 

than 7,200 broker-dealers, 900 transfer agents, almost 500 municipal and

1

GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

GAO-04-39 (Washington, D.C.: Dec. 11, 2003).
Page 3 GAO-06-86 Securities and Exchange Commission

government securities dealers, and self-regulatory organizations (SRO).2

However, as we have reported previously, SEC has faced resource and 

management challenges that affected its ability to achieve its mission. The 

following sections include a discussion of SEC’s organizational structure 

and its human capital challenges, as well as a discussion of principles for 

human capital management and planning.

SEC Staff and Organization As of August 2005, SEC had approximately 3,800 staff working in four 

divisions and 21 offices in Washington, D.C., and 11 regional and district 

offices. Approximately 41 percent of staff were attorneys, 25 percent were 

accountants or financial analysts, and 6 percent were investigators or 

examiners. The remaining 28 percent were other professional, technical, 

administrative, and clerical staff. Figure 1 depicts SEC’s organizational 

structure, including the Chairman’s office and the agency’s key divisions 

and offices. 

2

SROs are organizations responsible for regulation of member broker-dealers. Among other 

things, transfer agents cancel stock certificates presented for transfer, issue new stock 

certificates, and maintain records reflecting the ownership of securities as agent for the 

issuers. 
Page 4 GAO-06-86 Securities and Exchange Commission

Figure 1: Structure of SEC (Divisions and Offices)

The Managing Executive for Operations and Management, who works in 

the Office of the Chairman, is responsible for overseeing all efforts to 

enhance agency productivity, retain qualified staff, and manage agency 

resources. In coordination with the Office of the Executive Director, the 

Managing Executive for Operations and Management has primary 

responsibility for OHR, which develops, implements, and evaluates SEC’s 

programs for human resource and personnel management. 

Corporation

Finance Enforcement InvestmentManagement

Executive

Staff

Market

Regulation

Compliance

Inspections

and

Examinations

General

Counsel

Risk

Assessment

Executive

Director

Commissioner Commissioner

Chairman

Office of the

Chairman

Commissioner Commissioner

Secretary

External

Affairs

Economic

Analysis

Equal

Employment

Opportunity

Information

Technology

Inspector

General

International

Affairs

Public

Affairs

Legislative

Affairs

Investor

Education

and

Assistance

Administrative

Law Judges

Chief

Accountant

Financial

Management

Human

Resources

Administrative

Services

Southeast

Regional

Office

(Miami)

Pacific

Regional

Office

(Los Angeles)

Central

Regional

Office

(Denver)

Midwest

Regional

Office

(Chicago)

Northeast

Regional

Office

(New York)

Atlanta

District

Office

San Francisco

District

Office

Fort Worth

District

Office

Salt Lake

District

Office

Philadelphia

District

Office

Boston

District

Office

Filings and

Information

Services

Source: SEC.
Page 5 GAO-06-86 Securities and Exchange Commission

SEC Human Capital 

Management and 

Challenges

Over the past years, we have produced several reports relevant to human 

capital and workforce planning issues at SEC. In 2001, we recommended 

that the Chairman of SEC include a strategy for succession planning and 

develop a comprehensive, coordinated workforce planning effort as part of 

the agency’s annual performance plan.3

 In March 2002, we found that SEC 

had not reviewed its staffing and resource needs independent of the budget 

process and that SEC generally developed its annual budget request based 

on the previous year’s appropriation, not on what the agency actually 

needed to fulfill its mission.4

 We also commented that SEC was making its 

staffing allocation decisions without the benefit of a strategic plan. We 

recommended that SEC broaden its strategic planning process to 

determine its regulatory priorities and the resources needed to fulfill its 

mission, including identifying the staff skills needed to do so.

In July 2004, we found that although SEC received more flexible pay and 

hiring authority, it continued to face challenges filling critical vacancies, 

such as for accountants.5

 Furthermore, we reported that although SEC’s 

allocation of its newly authorized positions was generally consistent with 

Sarbanes-Oxley directions, these decisions were made without the benefit 

of an updated strategic plan that outlined the agency’s priorities—a tool 

that could be used to help ensure that SEC was deploying its resources to 

maximize organizational effectiveness. Later, in November 2004, we 

reported the results of a GAO survey of human capital issues at SEC to 

benchmark employee views following the implementation of pay parity and 

several work-life programs.6

 We found that the significant improvement in 

employee satisfaction with compensation and work-life programs could be 

attributed to SEC’s recent implementation of pay parity and an increased 

focus on the use of flexible work schedules and telework programs since 

2001.

3

GAO, Securities and Exchange Commission: Human Capital Challenges Require 

Management Attention, GAO-01-947 (Washington, D.C.: Sept. 17, 2001).

4

GAO, SEC Operations: Increased Workload Creates Challenges, GAO-02-302 (Washington, 

D.C.: Mar. 5, 2002).

5

GAO, Securities and Exchange Commission: Review of Fiscal Year 2003 and 2004 

Budget Allocations, GAO-04-818 (Washington, D.C.: July 23, 2004).

6

GAO, Securities and Exchange Commission Human Capital Survey, GAO-05-118R

(Washington, D.C.: Nov. 10, 2004). Work-life programs help employees balance their work 

and family lives and include compressed work schedules, alternative work schedules, 

telecommuting, and part-time work arrangements.
Page 6 GAO-06-86 Securities and Exchange Commission

In May 2005, we audited SEC’s financial statements for fiscal year 2004 and 

found that SEC’s preparation of its financial statements was manually 

intensive and consumed significant staff resources.7

 To address the 

weaknesses found in the audit, SEC stated that it would increase the 

number of financial reporting staff. Finally, in August 2005, as a result of 

our review of SEC’s facilities project management and related budget 

planning, we recommended that SEC complete the hiring of new positions 

in the Office of Administrative Services and the Office of Financial 

Management.

Strategic Human Capital 

Management and Workforce 

Planning

Studies by several organizations, including GAO, have shown that 

successful organizations in both the public and private sectors use strategic 

management approaches to prepare their workforces to meet present and 

future mission requirements. For example, preparing a strategic human 

capital plan encourages agency managers and stakeholders to 

systematically consider what is to be done, how it will be done, and how to 

gauge progress and results. Federal agencies have used varying 

frameworks for developing and presenting their strategic human capital 

plans.8

 More recently, various agencies have begun using OPM’s Human 

Capital Assessment and Accountability Framework (HCAAF) as the basis 

for preparing such plans. HCAAF, which OPM developed in conjunction 

with OMB and us, outlines six standards for success, key questions to 

consider, and suggested performance indicators for measuring progress 

and results. These six standards for success and related definitions are as 

follows:

• Strategic alignment. The organization’s human capital strategy is 

aligned with mission, goals, and organizational objectives and integrated 

into its strategic plans, performance plans, and budgets.

7

GAO, Financial Audit: Securities and Exchange Commission’s Financial Statements for 

Fiscal Year 2004, GAO-05-244 (Washington, D.C.: May 26, 2005). 

8

For example, in a March 2002 exposure draft, we introduced a strategic human capital 

model designed to help agency leaders effectively use their people and determine how well 

they integrate human capital considerations into daily decision making and planning for the 

program results they seek to achieve. This model is built around four cornerstones: (1) 

leadership; (2) strategic human capital planning; (3) acquiring, developing, and retaining 

talent; and (4) results-oriented organizational cultures.
Page 7 GAO-06-86 Securities and Exchange Commission

• Workforce planning and deployment. The organization is 

strategically utilizing staff in order to achieve mission goals in the most 

efficient ways. 

• Leadership and knowledge management. The organization’s leaders 

and managers effectively manage people, ensure continuity of 

leadership, and sustain a learning environment that drives continuous 

improvement in performance.

• Results-oriented performance culture. The organization has a 

diverse, results-oriented, high-performance workforce, and a 

performance management system that effectively differentiates 

between high and low performance and links individual, team, or unit 

performance to organizational goals and desired results.

• Talent management. The organization makes progress toward closing 

gaps or making up deficiencies in most mission-critical skills, 

knowledge, and competencies.

• Accountability. The organization’s human capital decisions are guided 

by a data-driven, results-oriented planning and accountability system.

Strategic workforce planning, an integral part of human capital 

management and the strategic workforce plan, involves systematic 

assessments of current and future human capital needs and the 

development of long-term strategies to fill the gaps between an agency’s 

current and future workforce requirements. Agency approaches to such 

planning can vary with each agency’s particular needs and mission; 

however, our previous work suggests that irrespective of the context in 

which workforce planning is done, such a process should incorporate five 

key principles: (1) involve management and employees, (2) analyze 

workforce gaps, (3) employ workforce strategies to fill the gaps, (4) build 

the capabilities needed to support workforce strategies, and (5) evaluate 

and revise strategies. Figure 2 provides a fuller description of each of the 

five principles.
Page 8 GAO-06-86 Securities and Exchange Commission

Figure 2: GAO’s Five Key Principles for Effective Strategic Workforce Planning

Note: In broad terms, human capital flexibilities represent the policies and practices that an agency has 

the authority to implement in managing its workforce to accomplish its mission and achieve its goals in 

areas such as recruitment, retention, compensation, incentive awards, training and development, 

performance management, work arrangements, and work-life policies. 

Agencies use periodic measurement and evaluation to obtain data for identifying shortfalls and 

revising future workforce planning efforts. Gathering this information helps ensure that human 

capital strategies work as intended. 

Agencies use strategies, including programs, policies, and practices, to address how the 

workforce is acquired, developed and trained, deployed, compensated, motivated, and retained. 

Such strategies help an agency move from the current to future workforce.

(2) Determine the critical 

skills and competencies that 

will be needed to achieve 

future programmatic results.

(3) Develop strategies that are 

tailored to address gaps and 

human capital conditions in 

critical skills and 

competencies that need 

attention.

(4) Build the capability needed 

to address administrative, 

educational, and other 

requirements important to 

support workforce strategies.

(1) Involve top management, 

employees, and other 

stakeholders in developing, 

communicating, and 

implementing the strategic 

workforce plan.

(5) Monitor and evaluate the 

agency's progress toward its

human capital goals and the 

contribution that human 

capital results have made 

toward achieving

programmatic goals.

Agencies’ top program and human capital leaders set the overall direction, pace, tone, and 

goals, and involve employees and stakeholders in establishing a communication strategy that 

creates shared expectations for the outcomes of the process.

Agencies determine how many personnel have the skills and competencies needed to meet 

program goals and how many are likely to remain with the agency over time, given 

retirement and other attrition. Such analysis allows agencies to identify the resources to 

achieve current and future goals. 

Agencies educate managers and employees about available human capital flexibilities, so that 

the flexibilities are implemented openly, fairly, and effectively.

Principle Description

Source: GAO.
Page 9 GAO-06-86 Securities and Exchange Commission

Results in Brief SEC has made progress on a number of human capital initiatives and is in 

the process of developing a strategic human capital plan. In 2003, SEC 

completed a comprehensive workforce and work-flow review of the 

agency, subsequent to which it split its Office of Administrative and 

Personnel Management into the Office of Administrative Services and 

OHR. This change allowed SEC to separate and thereby increase its 

attention to its administrative and personnel functions, as well as hire an 

associate executive director of OHR to focus on assessing, developing, and 

implementing human resources programs. In addition, in April 2005, SEC 

created a more structured human capital council by expanding the role of 

the Executive Resources Board (ERB), now called the Human Capital 

Review Board (HCRB). In contrast to the ERB, the HCRB follows a more 

formalized and regular process for reviewing and approving all human 

capital decisions. Senior management from SEC’s major divisions and 

offices, the Chairman’s office, the Executive Director, and OHR compose 

the HCRB and regularly meet to discuss staffing allocations and alignment 

of their human capital resources and strategies to achieve strategic 

planning goals. Finally, as of November 2005, SEC was in the process of 

creating its first strategic human capital plan, which according to OHR 

officials, will be based on OPM’s HCAAF. However, SEC has not set a 

completion date. 

Overall, many of SEC’s efforts related to workforce planning have been 

consistent with our five key principles for effective strategic workforce 

planning; however, some of these efforts were still being developed or 

could be improved. We found the following: 

• SEC has been making a concerted effort to include various stakeholders 

in the strategic workforce planning process, as noted in our first 

principle. For instance, OHR has been working with some internal and 

external stakeholders as it develops its strategic human capital plan. 

However, SEC may also benefit from conducting outreach with 

congressional stakeholders and the securities industry. In addition, not 

all SEC employees will be given the opportunity to provide feedback 

during the development of the plan, but may be more involved in related 

initiatives. Additional employee input, which SEC plans to obtain in the 

future, could provide SEC with more information to determine whether 

workforce planning efforts are understood and supported by staff. 

• Although SEC has been taking steps to identify needed critical skills and 

competencies, as outlined in our second principle, SEC could benefit 
Page 10 GAO-06-86 Securities and Exchange Commission

from a formal process for identifying existing skills among staff and 

linking them to SEC’s strategic goals. Specifically, although managers 

can determine knowledge and abilities possessed or needed within their 

divisions, SEC has not systematically collected and maintained 

information on employees’ current skills and competencies across the 

agency. As a result, SEC may incorrectly estimate workforce needs and 

skill gaps, information that helps agencies determine appropriate human 

capital strategies. 

• As related in our third principle, SEC has been developing and using 

human capital strategies to address workforce needs and skill gaps, but 

some of these strategies have not been in place long enough to assess 

results. For example, SEC recognized that the agency would benefit 

from the knowledge and skills possessed by individuals with business 

degrees. Therefore, in addition to a Summer Honors Business Program 

that was implemented in 2001 to attract future master of business 

administration (MBA) graduates, OHR in September 2005 implemented 

a 2-year program where MBA graduates rotate through various SEC 

divisions as associates before being permanently placed in a division. 

However, it is too soon to assess the overall effectiveness of the 2-year 

MBA program. 

• SEC is developing or changing many of the administrative, educational, 

and other requirements to support workforce strategies that are 

discussed in our fourth principle. In particular, SEC has provided some 

training on human capital flexibilities, considered potential 

improvements to the administration of these programs, and has 

procedures in place to promote transparency and accountability in its 

administration of these programs.

• SEC is developing additional human capital measures and a more formal 

process by which to link the achievement of its human capital and 

strategic goals, the importance of which are underscored in our fifth 

principle. Currently, SEC informally links its human capital and strategic 

goals during HCRB meetings. A formal linkage could help SEC to better 

evaluate how effectively human capital strategies are fulfilling strategic 

goals.

This report includes no recommendations because many of SEC’s human 

capital initiatives, including the strategic human capital plan, are currently 

under development. However, we made observations based on our audit 

work that highlight areas warranting management attention or possible 
Page 11 GAO-06-86 Securities and Exchange Commission

enhancements in SEC’s current strategic workforce planning efforts. In 

commenting on a draft of this report, SEC agreed with our findings and 

stated that the areas of concern cited in our report would be addressed 

once SEC’s strategic human capital planning process is fully implemented. 

SEC’s written comments are reprinted in appendix II and discussed near 

the end of this report.

SEC Has Made 

Progress on Strategic 

Human Capital 

Initiatives and Is 

Developing a Strategic 

Human Capital Plan 

SEC has shown progress on a number of strategic human capital 

management initiatives that could help strengthen SEC’s efforts in 

workforce planning and is developing its strategic human capital plan. 

These initiatives include splitting its Office of Administrative and Personnel 

Management into the Office of Administrative Services and OHR in order to 

improve efficiency and effectiveness in both and creating a more 

structured and institutionalized human capital council by expanding the 

role of the ERB, now called the HCRB. Furthermore, SEC is in the process 

of creating its first strategic human capital plan. According to SEC, this 

plan is to be based on OPM’s HCAAF. 

SEC Has Developed More 

Formalized Process for 

Strategic Human Capital 

Management

In 2003, after the passage of Sarbanes-Oxley, SEC undertook an extensive 

workforce and work-flow review, and the ERB became the vehicle through 

which SEC leadership met to align its programmatic goals and new 

responsibilities with its human capital approaches and existing and new 

resources. The ERB—composed of senior division managers, the Managing 

Executive for Operations, and the head of OHR (after the creation of that 

office)—met monthly and on an ad hoc basis to deal with special issues, 

and produced recommendations for the Chairman’s approval. The 2003 

workforce and work-flow review process required division and office 

directors to present justifications for resource requests to the ERB for the 

board’s approval. One outcome of the 2003 review was the decision to split 

SEC’s Office of Administrative and Personnel Management into two 

offices—the Office of Administrative Services and OHR. According to OHR, 

the separation of the office’s administrative and personnel functions was 

made to improve efficiency and effectiveness in these functions, which was 

necessitated by the agency’s growth of approximately 1,000 individuals 

after the implementation of Sarbanes-Oxley. In addition, the split created 

an opportunity for SEC to hire an Associate Executive Director for OHR, 

who is tasked with assessing, developing, and implementing human 

resources programs. 
Page 12 GAO-06-86 Securities and Exchange Commission

Following the creation of OHR, SEC broadened the role of the 

ERB—renamed the HCRB in April 2005—to include a senior executive 

review of all human capital issues. SEC staff said that the HCRB has a 

standing 2- to 3-hour biweekly meeting and is composed of (1) directors 

from the major divisions and offices—Divisions of Corporation Finance; 

Investment Management; Market Regulation; Enforcement; and the Office 

of Compliance, Inspections, and Examinations (OCIE); (2) a designee 

representing the interests of the field offices; (3) the Executive Director 

(who serves as Chair); (4) a representative from the Chairman’s office; and 

(5) the Associate Executive Director of OHR. According to SEC, although 

smaller offices do not regularly participate in the HCRB, the Executive 

Director is responsible for representing the interests of these offices. In 

addition, these offices make presentations to the HCRB on an as-needed 

basis. 

The HCRB approves all human capital decisions, including staffing 

allocations. Specifically, staffing allocations and current structures for each 

division and office can now only be amended with the approval of the 

HCRB. According to SEC officials, HCRB’s staffing decisions are made on a 

consensus rather than formal voting basis. SEC staff also said that although 

the commission does not directly participate in the agency’s human capital 

planning process, a representative from the Chairman’s office attends 

HCRB meetings. Furthermore, while the HCRB has the ability to approve 

staffing requests, larger allocations of staff slots and staff reorganizations 

are subject to final review and approval by the Chairman. 

Representatives from SEC’s key divisions and offices said they felt that the 

migration from the ERB to the HCRB was much more than a name change. 

Specifically, the HCRB has a greater focus on SEC’s strategic needs. 

Management staff from several SEC divisions attributed this change to the 

hiring of the new Associate Executive Director of OHR, who was formerly 

employed at OPM and who, they felt, is aware of what OPM and OMB 

expect from agencies in their strategic planning and human capital 

management processes. One division staff representative added that 

whereas they felt that the ERB met more “sporadically” and many did not 

feel compelled to gain board approval of staffing allocations, the HCRB 

now meets regularly and has more “rigor and structure.” 
Page 13 GAO-06-86 Securities and Exchange Commission

SEC Is Developing a 

Strategic Human Capital 

Plan

SEC has been developing its human capital plan to address its strategic 

planning goal of maximizing the use of agency resources. Specifically, OHR 

officials told us that the plan will address how SEC will implement and 

align its human capital strategies to achieve agency mission, goals, and 

outcomes. OHR officials also told us that they are in the process of 

developing a human capital plan based on OPM’s HCAAF (previously 

discussed in the report), which identifies six standards for success: (1) 

strategic alignment, (2) workforce planning and deployment, (3) leadership 

and knowledge management, (4) results-oriented performance culture, (5) 

talent management, and (6) accountability. A major component of the 

human capital plan, according to OHR officials, will be a strategy map and 

balanced scorecard to delineate and determine whether its strategies and 

action plans are meeting each of HCAAF’s six standards. A strategy map 

defines the strategic objectives and associated initiatives that support the 

organization’s vision and mission. A balanced scorecard is a management 

system that provides metrics and feedback about agency actions.9

 The 

actual scorecard uses indicators to measure the relative success of each 

initiative. Following this approach, SEC plans to use some indicators 

suggested by HCAAF to measure the success of each of the initiatives. OHR 

officials told us that the balanced scorecard will also focus on OHR’s 

internal operations and the agency human capital outcomes for which it 

will be accountable. In early November 2005, OHR officials provided us 

with a draft strategy map and possible draft objectives and indicators for 

how OHR is planning to achieve SEC’s strategic planning goal of 

maximizing the efficient and effective delivery of human resource services. 

OHR has hired a contractor to help implement the balanced scorecard 

approach and plans to involve a number of internal stakeholders in 

developing the human capital plan, including the Executive Director, the 

HCRB, and a cross section of division and office managers. According to 

OHR officials, the contractor will interview branch chiefs and assistant 

directors within OHR to discuss how to apply the balanced scorecard to 

SEC, and will also interview managers from the divisions, but does not plan 

to obtain input from employees below the supervisory level. As of 

9

A balanced scorecard provides feedback for both internal organizational processes and 

external outcomes in order to continuously improve strategic performance and results.

Generally, the balanced scorecard approach suggests that the agency view its organization 

from four perspectives and develop metrics, collect data, and analyze itself relative to each 

perspective: (1) learning and growth, (2) business process, (3) customer perspective, and 

(4) financial perspective. 
Page 14 GAO-06-86 Securities and Exchange Commission

November 2005, OHR officials, working with the contractor, have identified 

a list of human capital initiatives and indicators to measure the success of 

these initiatives. OHR officials said that the next step is to communicate 

with division staff to determine the appropriate targets for these indicators. 

Once the development work is complete, the Executive Director will 

approve a presentation of the human capital plan to the HCRB. After 

receiving HCRB’s approval, OHR will disseminate the human capital plan 

throughout the agency. We discuss stakeholder involvement in developing 

the human capital plan and SEC’s communication strategy in greater detail 

later in the report.

Once the strategic human capital plan is implemented, SEC officials intend 

to update the plan quarterly and annually. The process will begin with an 

evaluation of the results of the balanced scorecard measures. OHR 

management said that the quarterly assessments of the plan will focus on 

SEC’s ability to implement initiatives and demonstrate results in both 

leading and lagging indicators. OHR officials said that the office plans to 

conduct the quarterly review and present results to the Executive Director 

and then to the HCRB. OHR also stated that it plans to conduct an annual 

review to ensure that the human capital plan remains linked to the agency’s 

strategic plan and to correct any gaps between the plan’s human capital 

initiatives and the ability to meet the agency’s strategic goals. In addition to 

data used in the quarterly reviews, annual reviews are to include input from 

the HCRB and use performance management data and employee focus 

groups to determine gaps.

Although the anticipated human capital plan should allow SEC to more 

consistently plan for its staffing needs and adjust staffing or program 

priorities, it does not appear to formally link resource needs to the 

budgeting process. As we have previously reported, the absence of this 

linkage results in reactive rather than proactive activities and planning that 

tends to be tactical rather than strategic. According to OHR, divisions and 

offices are not currently required to provide OHR with annual resource 

allocation information such as number of planned promotions because 

SEC’s divisions and offices do not have staff with the expertise to do 

strategic human capital planning. Although OHR can provide some minimal 

assistance to the divisions on long-term workforce planning and linking 

these efforts to the budget, OHR recognizes the benefit to increasing such 

assistance and plans to improve its capacity to provide this guidance. 
Page 15 GAO-06-86 Securities and Exchange Commission

Components of SEC 

Workforce Planning 

Efforts Are Consistent 

with Established 

Principles, but Some 

Efforts Could Be 

Improved 

We found that many of SEC’s efforts related to workforce planning were 

consistent with our five key principles for effective strategic workforce 

planning; however, some of these efforts are still being developed or could 

be improved. Figure 3 summarizes how SEC had incorporated GAO’s key 

principles into its strategic workforce planning. 
Page 16 GAO-06-86 Securities and Exchange Commission

Figure 3: Summary of SEC Actions As They Relate to the Five Key Principles of Effective Strategic Workforce Planning

• SEC has a formalized process for its top leadership and executives to establish and implement human capital 

strategies

• SEC has been seeking guidance from certain external stakeholders and resources

• SEC has communicated its strategic workforce initiatives agencywide, but has not fully sought feedback from 

 employees during the development of new human capital initiatives

Principle 1: Involve top management, employees, and other stakeholders in developing, communicating, and implementing

 the strategic workforce plan

Finding

Source: GAO.

SEC has engaged top management 

and expanded the role of certain 

external stakeholders

• SEC requires some training for supervisors and new employees on flexibilities

• SEC has improved administrative processes that support the use of some flexibilities

• SEC has processes to promote transparency and accountability in the use of flexibilities

Principle 4: Build the capability needed to address administrative, educational, and other requirements important to supporting

 workforce strategies

Finding

SEC is addressing administrative, 

educational, and other requirements

important to supporting workforce 

strategies

• SEC is developing additional indicators for measuring its progress toward human capital goals

• SEC is developing a formal process by which to link its achievement of its human capital and strategic goals

Principle 5: Monitor and evaluate the agency's progress toward its human capital goals and the contribution that human capital results

 have made toward achieving programmatic goals

Finding

SEC is developing additional human 

capital measures and a formal process

by which to link the achievement of its

human capital and strategic goals

• SEC is building more comprehensive human capital strategies to recruit and retain employees and address skill 

 gaps

• SEC has various methods in place to measure the success of its human capital approach, but many of these 

assessments are not yet complete

Principle 3: Develop strategies tailored to address gaps and human capital conditions in critical skills and competencies

 that need attention

Finding

SEC has developed some human 

capital strategies to address gaps, but 

it is too early to assess results

• SEC has made efforts to identify staff deficiencies, but does not maintain information on skills possessed by its 

 employees

• SEC is taking steps to determine what critical skills and competencies it needs, but has not linked them to strategic 

 goals

• SEC is making efforts to reshape its workforce to increase its efficiency and effectiveness through re-engineering 

 work processes

Principle 2: Determine the critical skills and competencies that will be needed to achieve current and future programmatic results

Finding

SEC has been taking steps to track and 

identify critical skills and competencies; however, it currently lacks a 

formal process for identifying and 

linking these skills to strategic goals
Page 17 GAO-06-86 Securities and Exchange Commission

Principle 1: SEC Has 

Engaged Top Management 

and Expanded the Role of 

Certain External 

Stakeholders

In surveying SEC activities related to our first workforce planning 

principle, we found that the creation of the HCRB expanded the role of top 

management in strategic workforce decision making at SEC. As previously 

discussed, HCRB meetings create a forum for regular dialogue between 

OHR, key executives, and division leaders, and the HCRB now reviews and 

approves all human capital decisions. Moreover, during the ongoing 

development of its strategic human capital plan and other strategies, OHR 

officials said that it has also sought the assistance and guidance of various 

external stakeholders. In particular, SEC staff have been meeting regularly 

with OPM and using several of OPM’s key tools to assist the development of 

its strategic human capital plan. According to OHR officials, they have 

researched best practices in government, academia, and the private sector. 

However, SEC may have missed opportunities to conduct outreach with 

congressional stakeholders and the securities industry. In addition, SEC 

has not fully sought employee feedback during the development of human 

capital initiatives and, specifically, during the development of the strategic 

human capital plan.

SEC Has a Formalized Process 

for Its Top Leadership and 

Executives to Establish and 

Implement Human Capital 

Strategies

In our prior work, we have found that top management clearly and 

personally involved in workforce planning can provide the organizational 

vision that is important in times of change and generate cooperation within 

the agency to ensure that planning strategies are thoroughly implemented 

and sustained. Specifically, we have found that a key action in integrating 

human capital approaches with strategies for achieving programmatic 

results is the establishment of an entity, such as a human capital council, 

that is held accountable for linking human capital management and 

obtaining strategic goals.10 As demonstrated by their new responsibilities 

and participation in the HCRB, SEC’s key executives and top management 

have been actively engaged in SEC’s workforce planning efforts. As 

discussed previously, biweekly HCRB meetings are chaired by the 

Executive Director. This gathering of top leadership and executives helps 

determine and respond to current and changing workforce needs at SEC. 

For example, division managers we interviewed said that during HCRB 

meetings, senior managers representing SEC’s major divisions and offices 

make consensus-based determinations of staffing decisions at the agency.

10GAO, Human Capital: Selected Agency Actions to Integrate Human Capital Approaches 

to Attain Mission Results, GAO-03-446 (Washington, D.C.: Apr. 11, 2003).
Page 18 GAO-06-86 Securities and Exchange Commission

In addition, the HCRB is to have a role in the development of the strategic 

human capital plan. For example, OHR officials said it has presented status 

reports to the HCRB on the development of the human capital plan. 

According to OHR officials, once the plan’s proposed indicators and related 

targets are developed, some HCRB representatives will review and approve 

them for inclusion in the plan. Although a completion date for the plan has 

not been established, OHR officials said that HCRB will continue to work 

with OHR to make revisions and approve the strategic human capital plan. 

SEC Has Been Seeking Guidance 

from Certain External 

Stakeholders and Resources

In prior work, we found that agencies should engage various stakeholders 

to identify ways to streamline processes, improve human capital strategies, 

and help the agency recognize and deal with the potential impact that the 

organization’s culture can have on the implementation of such 

improvements. Further, involvement of key congressional and other 

stakeholders during the strategic planning process also helps ensure that 

workforce planning efforts are clearly linked to the agency’s mission and 

long-term goals.

In developing its strategic human capital plan, SEC has been using various 

methods to obtain the assistance and viewpoints of external resources. 

According to OHR officials, staff researched and identified a number of 

best practice studies from government, academia, and the private sector. 

For instance, OHR said that it is working with a private human capital 

consulting company to obtain information on best practices for integrating 

human capital functions at SEC. The human capital functions SEC plans to 

integrate are (1) selection (hiring), (2) performance management, (3) 

training, and (4) succession planning. These functions will be linked by a 

common competency platform—meaning all four functions will be linked 

to agencywide skills and competencies, which SEC is currently in the 

process of identifying. As part of the integrated human capital functions 

initiative, officials said SEC is planning to (1) implement the performance 

management system within OHR by the end of 2005 and then throughout 

the agency, (2) begin integrating performance management with its hiring 

or “selection” system in May 2006, (3) offer training that develops employee 

competencies used for selection and performance management, and (4) 

use performance management, selection, and training to help institute 

succession planning. OHR plans to completely implement these integrated 

functions by May 2007.

SEC also plans to use written guidance developed by other government 

agencies, including OMB, OPM, and us. Specifically, OHR plans to 

incorporate measures outlined in HCAAF—and developed by OPM in 
Page 19 GAO-06-86 Securities and Exchange Commission

conjunction with OMB and us—into the balanced scorecard being 

developed for SEC. OHR officials said that the office has consulted with 

OPM staff and hired a specialist from OPM to help implement its new 

human capital strategies, including the development of SEC 

University—one of the agency’s new initiatives that focuses on staff 

training. Furthermore, according to OHR officials, SEC formally and 

informally communicates with other financial regulators through 

networking events like the Small Agency Council, and also regularly 

receives operational information and survey data from other regulators, 

including compensation and benefit comparisons, labor relations 

discussions, and recruiting strategies.11

Although SEC has collected useful information and perspectives from 

various external parties, SEC has not met with congressional and industry 

stakeholders during the development of its strategic human capital plan. 

OHR officials said that SEC had not met with congressional staff to obtain 

their input on human capital planning at SEC and did not indicate any plans 

to do so since SEC has communicated human capital issues to Congress 

through congressional hearings and during the budget process. In addition, 

OHR officials told us they have collected best practice data from the 

private sector through a consulting firm, but they did not state that SEC has 

had discussion with industry stakeholders on how the evolving securities 

market may affect SEC’s resource needs.

SEC Has Communicated Its 

Strategic Workforce Initiatives 

Agencywide but Has Not Fully 

Sought Feedback from 

Employees during the 

Development of New Human 

Capital Initiatives

We have found that an effective communication strategy will create shared 

expectations, promote transparency, and report progress. In general, 

communication about the goals, approach, and results of strategic 

workforce planning is most effective when done early and clearly. Effective 

strategies also allow for a variety of two-way communication and are not 

limited to top-down dissemination. Efforts that address key organizational 

issues, like strategic workforce planning, are most likely to succeed if, at 

their outset, agencies’ top program and human capital leaders set the 

overall direction, pace, tone, and goals of the effort, and involve employees 

and other stakeholders in establishing a communication strategy that 

creates shared expectations for the outcome of the process.

11The Small Agency Council is the voluntary management association of independent 

sub-Cabinet federal agencies. Established in 1986, the council represents about 80 small 

agencies. Members have diverse program responsibilities that include public- and 

private-sector employment, commerce and trade, energy and science, transportation, 

national defense, and finance and cultural issues. Almost half of the council's members are 

regulatory or enforcement agencies.
Page 20 GAO-06-86 Securities and Exchange Commission

SEC communicates relevant information on human capital issues to its 

employees not only through SEC’s intranet and e-mail sent to 

administrative contacts within divisions and offices, but also through other 

forums such as staff meetings. In some cases, issues are communicated 

top-down from executives to managers and supervisors, and sometimes 

from managers and supervisors to nonmanagerial employees. For example, 

OHR officials said that the presentation of SEC’s new human capital plan is 

to be authorized by the Executive Director and then approved by the 

HCRB. Following HCRB approval, other top-level executives (those who 

are not on the HCRB), managers, and supervisors are to participate in 

group meetings to discuss the plan. Finally, OHR officials said that all SEC 

employees are to receive electronic presentations of the plan from OHR but 

will not have the opportunity to provide feedback prior to the approval of 

the plan. In general, informal methods of communicating human capital 

issues include performance discussions that occur during the employee 

evaluation process and impromptu communications between staff and 

liaisons from OHR assigned to each division. 

Overall, division officials said that OHR has been sensitive about the need 

to communicate about human capital issues, programs, and policies. 

However, one division manager noted that written agency communications 

sometimes assume that the reader has adequate knowledge of policies and 

procedures. For example, while SEC provides comprehensive new 

employee orientation training, such training could be enhanced by 

providing more basic information on federal government employment. This 

additional training may help ensure that when there are changes or new 

training opportunities, employees have a better understanding of the 

context in which changes occur. Another division manager said that OHR 

should e-mail employees directly regarding training opportunities instead 

of delegating this responsibility to the division’s OHR liaison.

Although OHR has communicated with SEC staff on some human capital 

matters, it has not sought feedback from all employees in the development 

of SEC’s strategic human capital plan. Without such feedback, it is difficult 

to determine employees’ awareness of issues and fully determine the 

effectiveness of such human capital approaches. As previously discussed, 

participation in the development of this plan will not take place below the 

supervisory level. Nevertheless, OHR has indicated that it plans to use 

some employees to help with the development of some of its integrated 

human capital functions, such as performance management. Furthermore, 

OHR officials said it plans to seek feedback from employees and to use 

focus groups to evaluate the success of its strategic human capital plan.
Page 21 GAO-06-86 Securities and Exchange Commission

Principle 2: SEC Has Been 

Taking Steps to Track and 

Identify Critical Skills and 

Competencies; However, It 

Currently Lacks a Formal 

Process for Identifying and 

Linking These Skills to 

Strategic Goals

SEC has been developing tools to measure needed skills and training for its 

employees, but currently relies on management’s informal knowledge of 

the skills and competencies possessed and needed within agency divisions. 

OHR has started interviewing division management to identify agencywide 

and position-specific competencies. As previously discussed, SEC also has 

begun to integrate its human capital functions with agencywide skills and 

competencies. Despite these efforts to identify and minimize gaps in 

workforce skills, SEC currently lacks a formal process to link critical skills 

and competencies to the goals and objectives outlined in its strategic plan. 

As a result, SEC may incorrectly estimate workforce gaps, information that 

helps agencies determine appropriate human capital strategies.

SEC Has Made Efforts to Identify 

Staff Deficiencies but Does Not 

Maintain Information on Skills 

Possessed by Its Employees

Our prior work suggests that maintaining information on the critical skills 

and competencies that an organization’s staff possess is especially 

important as the environment in which federal agencies operate changes. 

Shifts in priorities, advances in technology, budget constraints, and other 

factors all affect what sort of staff agencies will need to fulfill their 

missions. For SEC, such information is particularly useful for determining 

and addressing gaps in critical workforce skills or staff and making 

efficient resource allocations, because SEC must respond to changing 

regulatory conditions requiring its attention. For example, after the Energy 

Policy Act of 2005 (P.L. 109-58) repealed the Public Utility Holding 

Company Act of 1935 (PUHCA), the statute under which SEC is responsible 

for regulating public utility holding companies, SEC had to assess the skills 

of the 24 employees assigned to work in the Office of Public Utility 

Regulation (OPUR) to determine where they might be reassigned.12

Although SEC managers indicated that they were aware of the current 

knowledge, skills, and abilities of staff in their divisions, OHR officials 

stated that the agency does not currently maintain any formal inventory of 

the staff’s skills and competencies. Documentation of staff experience and 

skills may help management and OHR more effectively identify hiring 

strategies and training and developmental opportunities for current staff 

that would help eliminate skills gaps. In the OPUR case, OHR officials said 

it has been somewhat difficult to identify the skills of employees in this 

office. Nevertheless, during our interviews with divisions, senior staff 

indicated that, in general, they have informal knowledge, mainly through 

12As a result of PUHCA being repealed, SEC will transfer responsibility for regulating these 

entities to the Federal Energy Regulatory Commission in February 2006.
Page 22 GAO-06-86 Securities and Exchange Commission

experience, of the skills and competencies of supervised staff. Also, 

division management said that it draws upon staff knowledge when hiring; 

in particular, this occurs when divisions work with OHR to write position 

descriptions. 

Despite lacking documentation of current skills, SEC has made efforts to 

identify deficiencies in staff skills. For example, OHR officials indicated 

that its office has interviewed directors and deputy directors at the agency 

to identify where knowledge and skills could be improved at the agency. 

The interviewees identified areas needing improvement, and branch chiefs 

ranked them in order of importance: (1) research and analysis; (2) 

knowledge of SEC process, rules, and regulations; (3) decision making; (4) 

writing; (5) oral communication; (6) information technology knowledge 

and skills; (7) management/supervisory skills; and (8) institutional 

knowledge. In another instance, in July 2004, OCIE completed a survey of 

examiners with higher degrees (e.g., MBA) to determine what skills were 

possessed and needed in the office. Further, division staff said they contact 

OHR when they need to identify persons with special skills and abilities. 

Division staff explained that OHR helps locate staff to complete work 

requiring special resources. Division staff interviewed generally agreed that 

these liaisons have proved to be an adequate resource for locating 

specialized skills and abilities on an as-needed basis.

Although SEC currently does not document and centrally compile skills 

possessed by employees, OHR plans to use the skills and competencies 

needed for SEC positions as the basis for integrating the four human capital 

functions of selection (hiring), performance management, training, and 

succession planning. Furthermore, SEC plans to identify competencies that 

will be needed agencywide as well as for specific occupations. With the aid 

of a private contractor, OHR plans to conduct a competency-based job 

analysis for each occupation at SEC. OHR expects that, in consultation 

with its contractor, it will determine two or three competencies that may be 

applied agencywide, while other technical competencies will pertain to 

specific positions at the agency. According to OHR officials, the core 

competencies will be linked to broader agencywide strategic goals, and 

job-specific competencies may be linked to programmatic goals listed in 

the strategic plan. Eventually, all SEC employees will be evaluated through 

a competency-based performance management system. As part of its wider 

strategic human capital planning efforts, OHR is in the process of linking all 

of its human capital functions. These functions will be linked to the critical 

skills and competencies identified by the agency and provide information 

that can be used in all personnel-related functions. For instance, skills gaps 
Page 23 GAO-06-86 Securities and Exchange Commission

identified by the performance management system may be remedied by 

hiring or training initiatives. 

SEC Is Taking Steps to 

Determine What Critical Skills 

and Competencies It Needs but 

Has Not Linked Them to 

Strategic Goals

In our prior agencywide work, we have found that the scope of agencies’ 

efforts to identify the skills and competencies needed for their future 

workforces varies considerably, depending on the environment and 

responsibilities of a particular agency. The most important consideration is 

that the skills and competencies identified are clearly linked to the agency’s 

mission and long-term goals, as developed with stakeholders during the 

strategic planning process.

SEC has already taken some steps to identify the type of knowledge and 

skills that would be beneficial. As discussed previously, OHR interviewed 

division directors and deputy directors to identify areas where staff 

knowledge and skills could be improved. According to OHR officials, these 

interviews also led to the conclusion that management should (1) create a 

career development plan, (2) develop an individualized training curriculum, 

(3) mitigate or prevent loss of institutional knowledge, and (4) promote 

knowledge transfer among its employees to strategically address its future 

workforce needs. In addition, SEC has been conducting the triennial needs 

assessment required by OPM. SEC has completed the first two phases of 

the assessment, which gathered information from executives and 

supervisors at the agency. According to officials, the assessment results 

will form the basis for questions to ask subject matter experts. Following 

interviews with subject matter experts, SEC anticipates that it will 

distribute a survey to all employees asking them to identify the skills 

needed to perform their jobs. The results of this assessment are to be used 

by OHR to determine if SEC’s existing training programs should be 

refocused and to identify additional courses or programs that should be 

developed.

Although SEC has completed its 2004-2009 strategic plan, OHR officials 

stated that goals and objectives outlined in the plan have not been linked to 

specific skills or competencies. While the strategic plan lists potential 

performance indicators, they are not directly linked to particular critical 

skills or competencies. As it develops its integrated human capital 

functions and determines workforce gaps, SEC plans to link the critical 

skills and competencies it identifies to the strategic plan. According to 

OHR officials, this linkage will occur eventually as competencies are 

determined. 
Page 24 GAO-06-86 Securities and Exchange Commission

SEC Is Making Efforts to 

Reshape Its Workforce to 

Increase Its Efficiency and 

Effectiveness through 

Re-engineering Work Processes

When estimating the number of employees needed with specific skills and 

competencies, we found, based on prior work, it is also important to 

consider opportunities for reshaping the workforce by re-engineering 

current work processes or sharing work among offices and divisions within 

an agency. This is particularly important to SEC as it responds to changes 

in legislation affecting its responsibilities and substantial growth in the size 

of its workforce. Re-engineering processes have been particularly helpful 

as SEC considers more strategically how to use employees to perform a 

wider variety of functions at the agency, or seeks persons with differing 

skills to perform certain functions. According to OHR officials, the office is 

trying to improve employee versatility at the agency and is currently 

developing a “versatility index” to measure how well employees may 

perform a variety of tasks at the agency.

Changes in the structure and responsibilities of SEC have contributed to 

some changes in workforce processes. SEC executives said that in an effort 

to more proactively regulate the securities industry, they are taking 

initiatives to identify emerging risks in securities markets and are working 

on creating more coordination among divisions. For example, the recently 

created Office of Risk Assessment (ORA) works with various divisions and 

offices to develop methodologies to address identified risk. ORA consults 

with risk-assessment committees that consist of staff from various 

divisions. Committees currently exist for the following areas: (1) full 

disclosure, (2) investment management and regulation, and (3) SEC 

infrastructure. ORA also uses software in coordination with divisions to 

identify how emerging risks have affected SEC’s workload and 

responsibilities. However, according to SEC management, ORA is not 

directly involved in workforce planning efforts at the agency.

Various divisions have also modified work processes to respond to 

changing responsibilities and workload and identified skill gaps. For 

example, SEC’s Enforcement staff attorneys were responsible for 

collecting disgorgement, as well as investigating potential violations of 

securities law.13 Partly in response to the new Fair Fund provision under 

Sarbanes-Oxley, the Division of Enforcement hired attorneys dedicated to 

collections, as well as case management specialists, to assist with 

13Section 308(a) of Sarbanes-Oxley, the Federal Account for Investor Restitution provision, 

commonly known as the Fair Fund provision, allows SEC to combine civil monetary 

penalties and disgorgement amounts collected in enforcement cases to establish a fund for 

the benefit of victims of securities law violations. Disgorgement is a remedy designed to 

deprive defendants of their ill-gotten gains derived from their illegal activities. 
Page 25 GAO-06-86 Securities and Exchange Commission

maximizing collections and addressing competing priorities and the 

growing workload of the Enforcement attorneys. Enforcement also stated 

that it is working with technology staff to improve systems, so that 

collection information is tracked in one system rather than captured in 

multiple systems. Furthermore, the Division of Investment Management is 

now conducting integrated disclosure reviews and participates in 

cross-divisional task forces, such as the Investor Education and Soft Dollar 

task forces, to leverage skills across divisions.14 In addition, as a result of 

using a risk-based approach to more proactively identify and address 

compliance risks, OCIE recently gained the approval of the HCRB to create 

20 additional staff positions, to be filled by individuals with data analysis 

skills to collect surveillance data. SEC is also now responsible for 

overseeing investment firms that want to become a consolidated 

supervised entity (CSE).15 Because such oversight requires a combination 

of specialized technical and auditing skills currently not found within the 

agency, OCIE recently created a new unit to oversee CSEs. 

Principle 3: SEC Has 

Developed Some Human 

Capital Strategies to 

Address Gaps, but It Is Too 

Early to Assess Results

SEC is using a variety of methods to address skill gaps and improve 

employee benefits and work life. For example, SEC uses its student loan 

repayment (SLR) program and teleworking opportunities to attract and 

retain employees. In addition, SEC is linking its human capital functions 

and focusing on developing skills and competencies to use for hiring, 

performance management, training, and succession planning. SEC also has 

been developing SEC University to expand employee training opportunities 

and minimize critical skills gaps. Recently, OHR has used hiring and 

retention data, focus groups, and surveys to assess the use of many of 

SEC’s work-life programs. However, because many of the human capital 

strategies have only recently been implemented, it is too soon to assess the 

effectiveness of these strategies.

14Broker-dealers typically provide a bundle of services, including research and execution of 

transactions, that are paid for by broker-dealers’ commissions. “Soft dollars” are 

commission dollars that broker-dealers allocate to pay for the research component. 

15GAO, Financial Regulation: Industry Changes Prompt Need to Reconsider U.S. 

Regulatory Structure, GAO-05-61 (Washington, D.C.: Oct. 6, 2004). Many of the largest 

financial legal entities are part of holding company structures—companies that hold stock 

in one or more subsidiaries. Holding companies that own large broker-dealers can elect to 

be supervised by SEC as consolidated supervised entities. SEC would provide groupwide 

oversight of these entities unless they are determined to already be subject to 

“comprehensive, consolidated supervision” by another principal regulator.
Page 26 GAO-06-86 Securities and Exchange Commission

SEC Is Building More 

Comprehensive Human Capital 

Strategies to Recruit and Retain 

Employees and Address Skill 

Gaps

In our prior work, we have found that much of the authority that allows 

agencies to tailor human capital strategies to their needs is already 

available under current laws and regulations. Therefore, in setting goals for 

their human capital programs and developing tailored workforce planning 

strategies to achieve these goals, agencies should identify and use all 

appropriate administrative authorities to build and maintain an effective 

workforce for the future. 

As mentioned earlier, SEC has been developing integrated human capital 

functions to better recruit and retain the right staff with the right expertise 

to help achieve its strategic goals and objectives. SEC indicated that 

selection, or hiring, is a critical tool to meet its changing needs, particularly 

following the increase in SEC’s responsibilities under Sarbanes-Oxley. SEC 

made several changes to its hiring process to fill accountant positions 

within Corporation Finance, which had been a challenging task for the 

agency partly due to the slowness of the hiring process and the reluctance 

of some candidates to relocate to Washington, D.C. First, SEC retained an 

executive recruiting firm to carry out some of the recruitment. Second, to 

expedite the hiring process, OHR introduced an automated hiring system to 

accelerate the review of applications by automatically disseminating 

information on job candidates to Corporation Finance. Third, to 

accommodate qualified applicants who might not want to relocate to SEC 

headquarters, Corporation Finance instituted a “virtual workforce” pilot 

where several of its employees can work from an alternate site and 

physically report to an SEC location on a limited basis. OHR staff indicated 

that the pilot phase of the program would be useful in helping managers 

learn how to manage off-site employees. However, it is unclear to what 

extent the program will be expanded, or whether it will be continued. 

Finally, OHR said that category rating will be introduced to the agency 

during 2006.16

In addition to exploring ways to improve the hiring processes, SEC also has 

tried to more strategically allocate skills and experience when creating or 

filling existing vacancies. For example, recognizing the need for more 

administrative support for its collection program, the Division of 

Enforcement recently filled a number of positions with paralegals and 

16Category rating allows agencies to place job candidates in broad quality groupings rather 

than assigning candidates actual numerical ratings. This approach may give the selecting 

officials more candidates from whom to select rather than limiting agency officials to just 

the top three, as is the case with the traditional federal hiring system. 
Page 27 GAO-06-86 Securities and Exchange Commission

administrative personnel instead of attorneys. SEC also recognized that as 

an agency, it would benefit from the knowledge and skills possessed by 

individuals with business degrees. Therefore, as mentioned earlier, SEC 

developed a Summer Honors Business Program in 2001 to attract future 

MBA graduates to SEC. In September 2005, OHR implemented a 2-year 

program where MBA graduates rotate through various SEC divisions as 

associates before being permanently placed in a division.

To increase employee retention, SEC has increased the use of its SLR 

program and telework arrangements. SEC began using the SLR program in 

the last half of fiscal year 2003 and reported making 384 student loan 

repayments totaling approximately $3.3 million in fiscal year 2004. This is 

an increase from fiscal year 2003, in which 257 employees received 

payments.17 To receive loan repayment, enrollees agree to work for an 

additional 3 years at SEC. According to SEC officials, few employees leave 

before the 3-year employment agreement terminates. SEC is also 

expanding the use of telework arrangements for its employees, with 

approximately 20 percent of its workforce now participating in the 

program. As of August 2005, SEC reported having 813 approved 

teleworking employees, an increase from March 2005, when it had 648 

employees approved for telework. SEC also found that strategic use of 

recruitment and retention bonuses for employees with qualifications 

critical to SEC’s mission has been an effective way to achieve its hiring 

goals and an efficient use of funding. 

In addition, SEC has been expanding its training programs to eliminate 

gaps and maximize employee contributions. Training efforts at SEC 

previously focused on specific division and office needs, and division 

managers told us they have training units within their divisions. With the 

development of SEC University, OHR hopes to bring about a cultural 

change within the agency and encourage cross-divisional and agencywide 

training. Although OHR plans to consolidate various training programs at 

SEC through the university, some divisions indicated that they found 

in-house training on technical issues performed by division staff critical to 

meeting agency goals and felt such training should remain outside the main 

training center at SEC. To date, OHR has taken no action to discontinue 

training offered within divisions. In September 2005, SEC placed a new 

17GAO, Federal Student Loan Repayment Program: OPM Could Build on Its Efforts to Help 

Agencies Administer the Program and Measure Results, GAO-05-762 (Washington, D.C.: 

July 22, 2005). 
Page 28 GAO-06-86 Securities and Exchange Commission

position announcement to hire a person from within SEC who would be 

devoted exclusively to directing SEC University. OHR officials expect this 

position to be filled by the end of November 2005. As part of the current 

SEC University plan, OHR is assessing employee training interests and 

relevancy to programmatic functions, and is exploring establishing training 

partnerships with government, public and private entities, and five or six 

law and business schools. According to OHR, SEC University also plans to 

provide supervisory training and help the agency maintain quality 

leadership, which will be particularly important because 14 percent of SEC 

managers will be eligible to retire by the end of 2005. 

In addition to developing a curriculum for SEC University, OHR is also 

working to automate and centralize employees’ training and skills 

information. OHR has proposed that SEC develop a learning management 

system to centrally track employees’ work experiences and training, as 

well as provide a forum to share work experiences among employees.18

OHR has produced a project plan outlining the business needs for the 

learning management system, including key deliverable dates for 

implementation and cost estimates. 

SEC Has Various Methods in 

Place to Measure the Success of 

Its Human Capital Approach, but 

Many of These Assessments Are 

Not Yet Complete

Our previous agencywide work suggests that agencies could benefit by 

assessing key aspects of their human capital approach to identify possible 

obstacles and opportunities that may occur in meeting critical workforce 

needs. Specifically, an agency can use HCAAF to create indicators to 

measure the effectiveness of human capital approaches.

According to OHR officials, the office has used various methods to assess 

recruitment, retention, and work-life issues at SEC, including (1) focus 

group research, (2) employee satisfaction surveys on human capital 

flexibilities, and (3) entrance and exit interviews. OHR has conducted 

focus groups of employees on recruitment effectiveness, as well as 

retention and job satisfaction. According to OHR officials, it has used the 

findings from its research studies and OPM’s Federal Human Capital

18According to SEC, a learning management system automates the administration of 

learning processes to plan, register, deliver, and measure courseware. It provides the ability 

to create, store, access, and reuse learning content. Such a system can provide collaboration 

and communication tools for participants and instructors to interact and share information 

from different locations, as well as provide access to information, tools, and processes on 

the job, where it is most used.
Page 29 GAO-06-86 Securities and Exchange Commission

Survey in developing SEC’s strategic human capital plan.19 For example, 

focus group results showed that SEC employees were most concerned 

about being recognized for good performance and agency procedures for 

dealing with poor performance. Consequently, OHR determined that 

performance management and training needed to be enhanced. OHR also 

determined that SEC needed to integrate the four human capital functions 

of selection (hiring), performance management, training, and succession 

planning. Specifically, OHR plans to enhance its performance management 

by using individual development plans for employees that include more 

comprehensive and targeted training and development opportunities. 

As indicated above, SEC is using results from various surveys and informal 

assessments to improve human capital management. However, many of its 

human capital strategies are new or under development, and it is too soon 

to gauge their effectiveness. As part of developing and implementing its 

human capital plan, SEC plans to use a balanced scorecard to more 

comprehensively assess the effectiveness of its human capital strategies 

and workforce planning efforts. As of November 2005, OHR has worked 

with a contractor to develop a list of indicators that SEC could use to 

measure the progress the agency has made on its human capital strategies. 

Principle 4: SEC Is 

Addressing Administrative, 

Educational, and Other 

Requirements Important to 

Supporting Workforce 

Strategies

Overall, SEC has been addressing many of the administrative, educational, 

and other requirements to support human capital programs and workforce 

strategies, including (1) educating managers and employees on the use of 

flexibilities, (2) streamlining and improving administrative processes, and 

(3) building transparency and accountability into its human capital system. 

To this end, SEC requires some training for supervisors and new employees 

on the use of human capital flexibilities. OHR told us that it informally 

reviews its administrative processes and has been working to improve the 

administration of some human capital flexibilities. In addition, we found 

that SEC has promoted transparency and accountability in the use of these 

flexibilities. 

19The Federal Human Capital Survey is a biennial survey of federal employees that measures 

employees’ perceptions of whether, and to what extent, conditions characterizing 

successful organizations are present in their agencies.
Page 30 GAO-06-86 Securities and Exchange Commission

SEC Requires Some Training for 

Supervisors and New Employees 

on Flexibilities

As discussed in prior GAO work, managers and supervisors can be much 

more effective in using human capital strategies that involve flexibilities if 

they are properly trained to identify when they can be used and how they 

can be administered. In addition, to avoid confusion and 

misunderstandings, it is also important to educate employees about how 

the agency uses human capital flexibilities and what rights employees have 

under policies and procedures related to human capital. 

According to OHR officials, supervisors are usually required to attend 

training on policies and practices related to newly implemented human 

capital programs. For example, SEC has focused on strengthening its 

telework program. In the spring of 2005, the agency hired a consultant to 

develop and deliver a comprehensive training program designed to better 

equip supervisors to manage remote workers. SEC management said that 

while the training was not mandatory, supervisors were strongly 

encouraged to participate. In addition, management from several divisions 

confirmed that all of their supervisors and managers had been briefed on 

available human capital flexibilities at SEC, especially alternative work 

schedules and telework. 

SEC also has disseminated information on human capital programs to new 

and current employees. New employees receive such information at a 

required orientation session. OHR officials told us that current employees 

can receive information concerning human capital flexibilities through 

administrative notices, technical training, daily consultation with OHR 

staff, and postings of human capital information on the agency’s intranet. 

SEC has also been finalizing an SEC employee handbook that provides 

information on human capital flexibilities.

SEC Has Improved 

Administrative Processes That 

Support the Use of Some 

Flexibilities

As suggested in our prior work, it is important that agency officials look for 

instances in which administrative processes can be re-engineered to more 

effectively administer flexibilities. OHR officials told us that while they do 

not conduct a formal evaluation of the effectiveness of existing 

administrative processes, they do solicit feedback from divisions and 

agencies and adjust processes to meet their needs. For example, to 

expedite the hiring process for a division that had a substantial number of 

positions to fill, SEC delegated authority to grant recruitment bonuses to 

the division’s director, allowing the division to more quickly and readily 

recruit highly desirable candidates. In another example, OHR officials told 

us they plan to develop and implement recommendations based on SEC 

managers’ suggestions provided in our 2005 study of SLR programs
Page 31 GAO-06-86 Securities and Exchange Commission

implemented by various federal agencies.20 Specifically, we recommended 

that SEC build on current efforts to measure the impact of the repayment 

program by determining now what indicators SEC will use to track 

program success, what baseline SEC will use to measure resulting program 

changes, what data SEC needs to collect, and whether SEC could use 

periodic surveys to track employee attitudes about the program.

Additionally, OHR officials said that their office has surveyed managers and 

employees to gauge the ease of administering policies and procedures. 

Similarly, OHR has asked employees hired using flexibilities (such as 

recruitment bonuses) and employees who participate in the telework and 

student loan repayment programs for suggestions to improve 

administrative processes. According to OHR officials, OHR plans to 

continue to refine collection and analysis of this information as the office 

develops and implements the balanced scorecard.

SEC Has Processes to Promote 

Transparency and Accountability 

in the Use of Flexibilities

In our prior agencywide work, we found that clear guidelines for using 

specific flexibilities and holding managers and supervisors accountable for 

their fair and effective use are essential for successfully implementing 

workforce strategies. SEC has some processes in place to promote 

transparency and accountability in the use of flexibilities. According to 

SEC management, key stakeholders—OHR staff, Employee-Labor 

Relations (ELR) specialists, managers, and senior management 

officials—have assisted in developing guidelines for using flexibilities. In 

addition, OHR officials told us that the National Treasury Employees 

Union, the labor organization that represents SEC employees, is involved in 

all matters affecting employees in the union.21

In using human capital flexibilities, SEC generally requires employees to 

prepare and submit a written request that must then receive managerial 

approval and, in some cases, input from ELR as well as OHR. To help 

ensure accountability in the use of flexibilities, employees’ requests go 

through more than one level for approval or disapproval. For example, to 

telework, employees first submit a written request to their immediate 

supervisor, who then forwards it to a second-level supervisor for final 

approval or disapproval. If the request is denied, the second-level 

supervisor must document why. If there is a “close call” in approving or 

20GAO-05-762.

21SEC officials estimate that two-thirds of SEC’s 4,000 employees are members of the union.
Page 32 GAO-06-86 Securities and Exchange Commission

denying a telework request, ELR or OHR staff may be consulted. SEC 

officials told us that ELR usually gets involved when a request is denied. 

According to SEC officials, the agency requires written justification for 

denials of employee application for most types of flexibilities, not just 

telework. 

Outside agencies also play a role in ensuring accountability in SEC’s use of 

human capital policies, programs, and options. SEC’s use of flexibilities is 

subject to review by OPM, OMB, the Merit Systems Protection Board, 

Congress, and us. Specifically, OPM monitors SEC’s use of direct hire 

authority, as well as student loan repayment. Moreover, according to SEC, 

unionized employees can file a grievance under the provisions of the 

collective bargaining agreement, and there is an administrative grievance 

process in place for nonunionized employees. 

Principle 5: SEC Is 

Developing Additional 

Human Capital Measures 

and a Formal Process by 

Which to Link the 

Achievement of Its Human 

Capital and Strategic Goals

Our prior agencywide work found that agencies should develop 

appropriate performance measures to link human capital measures with 

strategic goals. Performance measures, appropriately designed, can be 

used to gauge success and evaluate the contribution of human capital 

activities toward achieving programmatic goals. SEC management said that 

SEC has informally monitored the agency’s progress toward achieving 

some human capital goals using a few performance measures. SEC mainly 

has monitored hiring, attrition, and retention rates. These indicators, along 

with other indicators compiled by the divisions and offices to measure 

performance related to programmatic goals, compose SEC’s management 

“dashboards.” The “dashboards” are indicators compiled monthly by the 

Executive Director’s office and are designed to present regular snapshots 

of the divisions’ and offices’ progress in meeting budget, staffing, and 

performance objectives. One division official said that the turnover rates 

and measures of supervisors’ tenure included in the dashboards were 

particularly useful. Division managers said they consulted with OHR when 

the human capital indicators identified potential issues. For example, a 

division manager we interviewed noted that one human capital measure 

indicated few women in the division were applying for branch chief jobs, 

and the division has been working with OHR to determine the reasons why.

Although SEC uses some human capital indicators, OHR officials 

acknowledged that they needed to develop additional measures because 

their current indicators capture output measures for overall human capital 

strategies, such as turnover, but do not directly link to specific human 

capital initiatives. OHR officials explained that the balanced scorecard, 
Page 33 GAO-06-86 Securities and Exchange Commission

discussed earlier, will link human capital initiatives to outcomes. 

Identifying performance measures and discussing how the agency will use 

them to evaluate the human capital strategies—before it starts to 

implement the strategies—can help agency officials think through the 

scope, timing, and possible barriers to evaluating the workforce plan. 

However, as we have found in prior work, developing meaningful 

outcome-oriented performance measures for both human capital and 

programmatic goals, and collecting performance data to measure 

achievement of these goals are major challenges for many federal agencies.

Further, one SEC division official said it was particularly difficult to 

develop performance measures in areas dealing with the enforcement of 

laws and regulations. For example, in 2002 we reported that SEC strategic 

and annual performance plans did not clearly indicate the priority that 

disgorgement collections should receive in relation to SEC’s other goals 

and did not include collection-related performance measures.22 In our 2005 

report, we found that SEC needed to make further progress in establishing 

performance measures to better track the effectiveness of its collection 

efforts, and track both receivers’ fees and the amounts distributed to 

harmed investors.23

Finally, SEC said that evaluations of the linkage between human capital 

and strategic goals currently take place informally during various meetings, 

including HCRB meetings, and the results of these evaluations are 

addressed through periodic adjustments made to deal with short-term 

problems. More specifically, SEC management said that HCRB members 

used the management “dashboards” to help make staffing decisions, but 

noted that the dashboards were not tightly linked to the HCRB process. 

However, OHR anticipates that the implementation of the balanced 

scorecard and its indicators will strengthen and formalize the linkage 

between human capital activities and strategic goals. 

22GAO, SEC Enforcement: More Actions Needed to Improve Oversight of Disgorgement 

Collections, GAO-02-771 (Washington, D.C.: July 12, 2002). 

23GAO, SEC and CFTC Penalties: Continued Progress Made in Collection Efforts, but 

Greater SEC Management Attention Is Needed, GAO-05-670 (Washington, D.C.: Aug. 31, 

2005). 
Page 34 GAO-06-86 Securities and Exchange Commission

Observations With the enhancements being made to its human capital management, SEC 

has begun to use a planning and management approach that ensures 

ongoing attention to human capital issues. SEC has been making changes 

to ensure management focuses not only on traditional personnel functions, 

but also on the broader issues of human capital management. Further, 

senior managers are beginning to focus on strategic issues in decision 

making. In particular, SEC has undertaken a number of initiatives that 

demonstrate its commitment to human capital planning. When enacted, 

these initiatives should begin to help address the agency’s human capital 

challenges, some of which are long-standing and cannot be quickly or 

easily overcome, such as succession planning. To ensure the success of 

SEC’s strategic goals, it is critical that SEC complete its human capital 

initiatives—in particular, its strategic human capital plan. A 

well-documented plan is an essential tool that can serve as a guide for SEC 

in workforce management and direct an effective, ongoing 

communications strategy that genuinely engages employees and other 

stakeholders in the creation and administration of human capital programs. 

Based on our discussions with OHR, SEC is in the process of creating a 

human capital plan. SEC’s finalized human capital plan is to include many 

of the best practices outlined in our five principles for workforce planning. 

While we are encouraged by SEC’s progress, three areas may warrant 

management attention as SEC continues to develop its human capital plan: 

conducting outreach with congressional stakeholders and the securities 

industry on strategic workforce planning, obtaining employee feedback on 

human capital strategies before they are implemented, and taking steps to 

better identify, understand, and document existing skills among staff. 

Obtaining feedback from congressional stakeholders and the securities 

industry could enhance SEC’s ability to gain feedback from these important 

groups. Further, employee input prior to implementation may increase 

SEC’s ability to determine whether its human capital strategies are 

understood and supported by the staff. In addition, by formally identifying 

and documenting existing skills among staff, SEC may more accurately 

estimate workforce needs and skill gaps, which is information that helps 

agencies determine appropriate human capital strategies. Finally, we want 

to stress the importance of ensuring that the plan formally links human 

capital activities with the goals in SEC’s strategic plan. This linkage will 

help SEC to use its workforce to increase the agency’s operational 

effectiveness and responsiveness.
Page 35 GAO-06-86 Securities and Exchange Commission

Agency Comments and 

Our Evaluation

SEC, in written comments on a draft of this report that are reprinted in 

appendix II, stated that it agreed with our findings. SEC commented that its 

strategic human capital plan will soon be completed and that it will provide 

the long-term infrastructure to ensure that the progress SEC has made in 

human capital initiatives are institutionalized. SEC stated that its strategic 

human capital plan will include a rigorous strategic planning system that, 

once implemented, will address our concerns regarding the alignment of 

SEC’s human capital and strategic goals. SEC also commented that the 

work being done on integrating its human capital systems will more 

formally capture SEC’s institutional knowledge, which was another 

concern cited in the report.

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 provide copies to the Chairman and 

Ranking Minority Member of the House Committee on Government 

Reform; the Chairman and Ranking Minority Member of the House 

Committee on Financial Services; the Chairman and Ranking Minority 

Member of the Senate Committee on Homeland Security and Governmental 

Affairs; and the Chairman and Ranking Minority Member of the Senate 

Committee on Banking, Housing and Urban Affairs. We will also send 

copies to the Chairman of the SEC and other interested parties, and we will 

make copies available to others upon request. In addition, the report will be 

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

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

at (202) 512-8678 or williamso@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 major contributions to this report are 

listed in appendix III.

Orice M. Williams

Director, Financial Markets

 and Community Investment
Page 36 GAO-06-86 Securities and Exchange Commission

Appendix I

Scope and Methodology AAppenednxidexiIs

In order to describe the progress the Securities and Exchange Commission 

(SEC) made in developing a strategic human capital plan, we gathered and 

analyzed data from a variety of sources. We reviewed GAO’s recent prior 

work on human capital issues at SEC. We also obtained information on 

SEC’s operations and strategic planning efforts, recent budget requests, 

human capital plans and strategies, workforce data, milestones and 

timelines, and performance measures. To collect data not identified 

through prior work, we contacted and conducted interviews with SEC, the 

Office of Management and Budget (OMB), and Office of Personnel 

Management (OPM) to obtain relevant information.

To evaluate how SEC was developing its long-term strategies for acquiring, 

developing, and retaining staff to achieve the agency’s mission, we used the 

key principles for effective strategic workforce planning developed in 

Human Capital: Key Principles for Effective Strategic Workforce 

Planning as our criteria for identifying workforce planning practices that 

SEC planned or had under way.1

 Using these five principles, we also 

identified related tasks associated with each principle to provide more 

specific examples of how each principle might be implemented. 

Additionally, we met with SEC, OPM, and OMB to discuss and collect 

information on the agency’s former and current practices and future plans 

to address human capital issues. After these initial meetings, we held 

follow-up meetings with SEC’s Office of Human Resources and other key 

offices and divisions to gather relevant information.

We conducted our work in Washington, D.C., from April 2005 through 

November 2005 in accordance with generally accepted government 

auditing standards.

1

GAO-04-39.
Page 37 GAO-06-86 Securities and Exchange Commission

Appendix II

Comments from the Securities and Exchange 

Commission ApendxiI
Page 38 GAO-06-86 Securities and Exchange Commission

Appendix III

GAO Contact and Staff Acknowledgments ApendxiI

GAO Contact Orice M. Williams, (202) 512-8678 or williamso@gao.gov

Staff 

Acknowledgments

In addition to the contact named above, Karen Tremba, Assistant Director; 

Allison Abrams; Marianne Anderson; William R. Chatlos; Kenneth Scott 

Derrick; Marc Molino; and Barbara Roesmann made key contributions to 

this report.

(250234)
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