a

GAO

United States General Accounting Office

Report to Congressional Requesters

June 2004 HUMAN CAPITAL

DHS Faces Challenges 

In Implementing Its 

New Personnel 

System

GAO-04-790
www.gao.gov/cgi-bin/getrpt?GAO-04-790.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact J. Christopher 

Mihm at (202) 512-6806 or mihmj@gao.gov. 

Highlights of GAO-04-790, a report to 

congressional requesters 

June 2004

HUMAN CAPITAL

DHS Faces Challenges in Implementing 

Its New Personnel System 

To date, DHS’s actions in designing its human capital management system 

and its stated plans for future work on the system are helping to position the 

department for successful implementation. Nonetheless, the department is 

in the early stages of developing the infrastructure needed for implementing 

its new human capital management system. 

• DHS has begun strategic human capital planning efforts at the 

headquarters level since the release of the department’s overall strategic 

plan and the publication of proposed regulations for its new human 

capital management system. Strategic human capital planning efforts 

can enable DHS to remain aware of and be prepared for current and 

future needs as an organization. However, this will be more difficult 

because DHS has not yet been systematic or consistent in gathering 

relevant data on the successes or shortcomings of legacy component 

human capital approaches or current and future workforce challenges. 

Efforts are now under way to collect detailed human capital information 

and design a centralized information system so that such data can be 

gathered and reported at the departmentwide level. 

• DHS and Office of Personnel Management leaders have consistently 

underscored their personal commitment to the design process. 

Continued leadership is necessary to marshal the capabilities required 

for the successful implementation of the department’s new human 

capital management system. Sustained and committed leadership is 

required on multiple levels: securing appropriate resources for the 

design, implementation, and evaluation of the human capital 

management system; communicating with employees and their 

representatives about the new system and providing opportunities for 

feedback; training employees on the details of the new system; and 

continuing opportunities for employees and their representatives to 

participate in the design and implementation of the system. 

• In its proposed regulations, DHS outlines its intention to implement key 

safeguards. For example, the DHS performance management system 

must comply with the merit system principles and avoid prohibited 

personnel practices; provide a means for employee involvement in the 

design and implementation of the system; and overall, be fair, credible, 

and transparent. The department also plans to align individual 

performance management with organizational goals and provide for 

reasonableness reviews of performance management decisions through 

its Performance Review Boards. 

DHS was provided with significant 

flexibility to design a modern 

human capital management system.

Its proposed system has both 

precedent-setting implications for 

the executive branch and farreaching implications on how the 

department is managed. GAO 

reported in September 2003 that 

the effort to design the system was 

collaborative and consistent with 

positive elements of 

transformation. In February, 

March, and April 2004 we provided 

preliminary observations on the 

proposed human capital 

regulations. 

Congressional requesters asked 

GAO to describe the infrastructure 

necessary for strategic human 

capital management and to assess 

the degree to which DHS has that 

infrastructure in place, which 

includes an analysis of the progress 

DHS has made in implementing the 

recommendations from our 

September 2003 report. 

DHS generally agreed with the 

findings of our report and provided 

more current information that we 

incorporated. However, DHS was 

concerned about our use of results 

from a governmentwide survey 

gathered prior to the formation of 

the department. We use this data 

because it is the most current 

information available on the 

perceptions of employees currently 

in DHS and helps to illustrate the 

challenges facing DHS. 
Page i GAO-04-790 DHS Challenges

Contents

Letter 1

Results In Brief 3

Background 5

DHS Is Beginning Strategic Human Capital Planning Efforts 9

Continued Leadership Is Necessary to Marshal the Capabilities 

Required for Successful Implementation 12

DHS Proposes Implementing Key Safeguards 18

Conclusions 19

Agency Comments and Our Evaluation 20

Appendixes

Appendix I: Scope and Methodology 22

Scope 22

Methodology 22

Appendix II: Criteria Used for Evaluation 24

Strategic Human Capital Planning 24

Key Capabilities for Implementing Human Capital Approaches 25

Institutionalizing Performance Management Safeguards 27

Appendix III: Comments from the Department of Homeland Security 30

Appendix IV: GAO Contact and Staff Acknowledgments 32

GAO Contact 32

Acknowledgments 32

Figure Figure 1: The Development of the DHS Human Capital System 8

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Page 1 GAO-04-790 DHS Challenges

United States General Accounting Office

Washington, D.C. 20548

A

June 18, 2004 Letr

The Honorable George V. Voinovich

Chairman, Subcommittee on Oversight of Government 

Management, the Federal Workforce, and the 

District of Columbia

Committee on Governmental Affairs

United States Senate

The Honorable Jo Ann Davis

Chairwoman, Subcommittee on Civil Service and 

Agency Organization

Committee on Government Reform

United States House of Representatives

The creation of the Department of Homeland Security (DHS) is an historic 

opportunity for the federal government to fundamentally transform how 

the nation will protect itself from terrorism and other threats. DHS is in the 

early stages of transforming and integrating a disparate group of agencies 

with multiple missions, values, and cultures into a strong and effective 

cabinet department. Together with this unique opportunity, however, 

comes significant risk to the nation if this transformation is not 

implemented successfully. In fact, we designated this implementation and 

transformation as high risk in January 2003.1

On February 20, 2004, the Secretary of DHS and the Director of the Office 

of Personnel Management (OPM) released proposed regulations for DHS’s 

new human capital system. Among other things, the proposal establishes a 

pay for performance system, a new adverse actions and appeals process, 

and new labor relations rules. The regulations provided the broad outline 

of the DHS proposed system. As the system evolves, critical issues, such as 

how DHS will link individual performance expectations to DHS’s mission 

and goals, how it will define performance expectations to promote 

individual accountability, and how it will continue to incorporate adequate 

safeguards to ensure fairness, will need to be addressed. Such detailed 

implementation policies and procedures will need to be developed in a 

transparent and inclusive manner as the system evolves. 

1

U.S. General Accounting Office, Major Management Challenges and Program Risks: 

Department of Homeland Security, GAO-03-102 (Washington, D.C.: January 2003). 
Page 2 GAO-04-790 DHS Challenges

In light of the challenge to establish a modern strategic human capital 

management system in the department, you asked that we undertake a 

series of engagements to assess and assist DHS in its implementation 

efforts. As agreed with your office, this is the third of several studies in 

which we examine how DHS begins to implement its new human capital 

system. Our first report, issued in September 2003, described the process 

DHS put in place to design its human capital system and involve employees 

and analyzed the extent to which the process reflected what we found to be 

important elements of successful transformations.2

 We found that, to date, 

the design effort was collaborative and facilitated participation of 

employees from all levels of the department. The effort also generally 

reflected what we have found to be important elements of effective 

transformations. Second, we provided our preliminary observations on 

selected major provisions of the proposed human capital regulations in a 

testimony and two related items of correspondence providing answers to 

post-hearing questions.3

 We found that many of the basic principles 

underlying the proposed regulations were consistent with proven 

approaches to strategic human capital management, and identified parts of 

the system that deserved further consideration. 

As agreed with your offices, this third study describes the infrastructure 

necessary for strategic human capital management and assesses the degree 

to which DHS has that infrastructure in place, including progress DHS has 

made since our September 2003 report. More details on our scope and 

methodology can be found in appendix I and criteria used to evaluate the 

department’s efforts are summarized in appendix II. We interviewed 

officials from DHS headquarters who are involved in designing the new 

human capital system. Human resource leaders from the five largest legacy 

components within DHS were also interviewed: the Transportation 

Security Administration (TSA), Federal Emergency Management Agency 

(FEMA), the organizations formerly known as the Immigration and 

Naturalization Service (INS) and the U.S. Customs Service (Customs), and 

2

U.S. General Accounting Office, Human Capital: DHS Personnel System Design Effort 

Provides for Collaboration and Employee Participation, GAO-03-1099 (Washington, D.C.: 

Sept. 30, 2003). 

3

U.S. General Accounting Office, Human Capital: Preliminary Observations on Proposed 

DHS Human Capital Regulations, GAO-04-479T (Washington, D.C.: Feb. 25, 2004); 

Posthearing Questions Related to Proposed Department of Homeland Security (DHS) 

Human Capital Regulations, GAO-04-570R (Washington, D.C.: Mar. 22, 2004); and 

Additional Posthearing Questions Related to Proposed Department of Homeland Security 

(DHS) Human Capital Regulations, GAO-04-617R (Washington, D.C.: Apr. 30, 2004).
Page 3 GAO-04-790 DHS Challenges

the U.S. Coast Guard. This work was conducted from March 2003 through 

March 2004 in Washington, D.C., and in accordance with generally accepted 

government auditing standards.

The analysis of DHS’s effort to design a strategic human capital 

management system can be particularly instructive for future human 

capital management and integration initiatives within specific units of DHS. 

We have consistently supported the need for government transformation 

and the concept of modernizing federal human capital policies, as 

underscored in recent testimonies and our January 2003 report that 

described why strategic human capital management remains a 

governmentwide high-risk area.4

 The DHS effort can also prove instructive 

as other agencies implement changes to their human capital management 

systems. 

Results In Brief DHS is in the early stages of developing the infrastructure needed for 

implementing its new human capital management system. At a minimum, 

this infrastructure includes a strategic human capital planning process that 

integrates the agency’s human capital approaches with program goals, 

desired outcomes, and mission; the capabilities to effectively develop and 

implement a new human capital system; and a modern, effective, and 

credible performance management system that includes a set of 

institutional safeguards, including reasonable transparency and 

appropriate accountability mechanisms to ensure the fair, effective, and 

credible implementation of the new system. DHS’s infrastructure 

development efforts include the following:

• DHS has begun strategic human capital planning efforts at the 

headquarters level since the release of the department’s overall strategic 

plan and the publication of proposed regulations for its new human 

capital management system. In comparison, the five legacy agencies we 

studied each engage in strategic human capital planning activities, but 

their efforts vary in their level of detail, including the time frames 

covered by the plans and the degree to which future skill and 

4

U.S. General Accounting Office, Human Capital: Building on DOD’s Reform Effort to 

Foster Governmentwide Improvements, GAO-03-851T (Washington, D.C.: June 4, 2003); 

High-Risk Series: Strategic Human Capital Management, GAO-03-120 (Washington, D.C.: 

January 2003); and Managing for Results: Using Strategic Human Capital Management to 

Drive Transformational Change, GAO-02-940T (Washington, D.C.: July 15, 2002). 
Page 4 GAO-04-790 DHS Challenges

competency needs are identified. DHS has not yet systematically 

gathered relevant human capital data at the headquarters level. 

However, efforts are now under way to collect detailed human capital 

information and design a centralized information system so that such 

data can be gathered and reported at the departmentwide level. These 

strategic human capital planning efforts can enable DHS to remain 

aware of and be prepared for current and future needs as an 

organization. 

• DHS and OPM leaders have consistently underscored their personal 

commitment to the design process. Sustained and committed 

leadership is required on multiple levels: securing appropriate resources 

for the design, implementation, and evaluation of the human capital 

management system; communicating with employees and their 

representatives about the new system and providing opportunities for 

feedback; training employees on the details of the new system; and 

continuing opportunities for employees and their representatives to 

participate in the design and implementation of the system. In light of 

this challenge, DHS formed three teams to implement the human capital 

regulations, each of which are co-led by professional staff from DHS 

headquarters and a component agency. 

• In its proposed regulations, DHS outlines its intention to implement key 

safeguards. For example, the DHS performance management system 

must comply with the merit system principles and avoid prohibited 

personnel practices; provide a means for employee involvement in the 

design and implementation of the system; and overall, be fair, credible, 

and transparent. The department also plans to align individual 

performance management with organizational goals and provide for 

reasonableness reviews of performance management decisions through 

its Performance Review Boards. 

The proposed DHS human capital management system has both significant 

precedent-setting implications for the executive branch and far-reaching 

implications for how the department is managed. However, how it is done, 

when it is done, and the basis on which it is done can make all the 

difference in whether such efforts are successful. To date, DHS’s actions in 

designing its human capital management system and its stated plans for 

future work on the system are helping to position the department for 

successful implementation. 
Page 5 GAO-04-790 DHS Challenges

In commenting on a draft of this report, DHS generally agreed with its 

findings. DHS comments provided more current information on 

implementation timelines and described further research conducted by the 

design teams between April and September 2003, which we have 

incorporated. In addition, DHS raised concerns about our use of data from 

the OPM governmentwide Federal Human Capital Survey (FHCS) since the 

survey was administered before the formation of DHS. Since the 

administration of the survey, DHS notes a significant amount of change has 

been made in the department. We agree that the department is making 

progress in designing its human capital system and outline in this report 

where the department is making strides. This report notes that the FHCS 

was conducted during the same time frame that the administration 

proposed legislation to form DHS. FHCS data are the most current 

information available on the perceptions of employees currently employed 

by DHS and are valuable because of their illustration of the challenges the 

department faces. DHS provided additional technical comments, which 

were incorporated where appropriate. Comments from DHS are provided 

in full in appendix III.

Background

Mission and Organization of 

DHS

The DHS strategic plan, released on February 23, 2004, includes the 

following mission statement: “We will lead the unified national effort to 

secure America. We will prevent and deter terrorist attacks and protect 

against and respond to threats and hazards to the nation. We will ensure 

safe and secure borders, welcome lawful immigrants and visitors, and 

promote the free-flow of commerce.” The strategic plan further identifies 

seven strategic goals: awareness, prevention, protection, response, 

recovery, service, and organizational excellence.

DHS is generally organized into four mission-related directorates: Border 

and Transportation Security, Emergency Preparedness and Response, 

Science and Technology, and Information Analysis and Infrastructure 

Protection. These directorates include the following legacy agencies:

• The Border and Transportation Security directorate consolidates the 

major border security and transportation operations under one roof, 

including legacy Customs, parts of the legacy INS, TSA, the Federal Law 

Enforcement Training Center, the Federal Protective Service, the Office 
Page 6 GAO-04-790 DHS Challenges

for Domestic Preparedness from the Department of Justice (DOJ), and 

part of the U.S. Department of Agriculture’s Animal and Plant Health 

Inspection Service (APHIS). This directorate includes the newly formed 

Bureau of Immigration and Customs Enforcement (ICE) and the Bureau 

of Customs and Border Protection (CBP).

• The Emergency Preparedness and Response (EPR) directorate 

integrates domestic disaster preparedness training and government 

disaster response and includes FEMA, the Strategic National Stockpile, 

the National Disaster Medical System, the Nuclear Incident Response 

Team, the Domestic Emergency Support Teams from DOJ, and the 

National Domestic Preparedness Office from the Federal Bureau of 

Investigation (FBI). 

• The Science and Technology directorate coordinates scientific and 

technological advantages for securing the homeland and includes the 

Chemical, Biological, Radiological, and Nuclear Countermeasures 

Programs, the Environmental Measurements Laboratory, the National 

Bio-Weapons Defense Analysis Center, and the Plum Island Animal 

Disease Center. 

• The Information Analysis and Infrastructure Protection directorate 

accesses and analyzes intelligence, law enforcement data, and other 

information involving threats to homeland security and evaluates 

vulnerabilities from state and local agencies, the private sector, and 

federal agencies such as the Central Intelligence Agency, FBI, and the 

National Security Agency. It includes the Critical Infrastructure 

Assurance Office, the Federal Computer Incident Response Center, the 

National Communications System, the National Infrastructure 

Protection Center, and the energy security and assurance program 

activities of the Department of Energy.

• In addition to the mission directorates, the Management Directorate, led 

by the Undersecretary for Management, is responsible for integrating 

the activities of the Chief Financial Officer, the Chief Procurement 

Officer, the Chief Human Capital Officer, the Chief Information Officer, 

and the Chief of Administrative Services.

In addition to the four mission-related directorates, the U.S. Secret Service 

and the U.S. Coast Guard remain intact as distinct entities in DHS. The 

Bureau of Citizenship and Immigration Services, composed of legacy INS 

adjudications and benefits programs, reports to the Deputy Secretary. 
Page 7 GAO-04-790 DHS Challenges

DHS’s People DHS has just under 158,000 civilian employees.5

 Of the civilian employees, 

a vast majority transferred from seven organizations: TSA, INS, Customs, 

FEMA, the U.S. Coast Guard, the Secret Service, and APHIS. Of the civilian 

employees who transferred from these seven organizations, approximately 

90 percent are stationed outside the Washington, D.C. metropolitan area. 

These employees hold positions ranging from inspectors, investigators, 

police and intelligence to attorneys and administrative services.

According to OPM, just over 49,000, or just under one-third, of DHS civilian 

employees are represented by unions. This includes 16 different unions 

divided into 75 separate bargaining units. The 3 unions representing the 

largest number of employees are the American Federation of Government 

Employees, the National Treasury Employees Union, and the National 

Association of Agricultural Employees. 

Process Used to Design the 

Human Capital System

The design process of the DHS human capital management system 

included DHS and OPM employees and union representatives. Figure 1 

describes the development of the DHS human capital system.

5

According to OPM’s Central Personnel Data File (CPDF), as of December 2003. This 

represents the number of DHS federal employees. For more information on the CPDF, see 

appendix I.
Page 8 GAO-04-790 DHS Challenges

Figure 1: The Development of the DHS Human Capital System

Senior Review

Advisory

Committee

DHS Secretary

and

OPM Director

April 2003 to September 2003

Core Design Team

● Research and gather data on leading human capital practices 

 in the public and private sectors.

● Organize outreach activities (newsletters, e-mail boxes, Town Hall 

 meetings, Field Team, and focus groups) to promote and facilitate 

 two-way communication between DHS management and employees. 

● Draft initial options for the proposed personnel system.

October 2003

Senior Review Advisory Committee

● Hold public meetings on the personnel system options.

● Develop final list of proposed options for the personnel system.

 ● May eliminate, create, and/or prioritize the options received 

 from the Core Design Team.

● May make recommendations related to implementation strategies.

November 2003 to Fall 2004

DHS Secretary and OPM Director

● May edit, remove, and/or develop alternatives to the proposed 

 options received from the Senior Review Advisory Committee.

● Drafted proposed regulations after considering the comments of 

 and meeting with employee representatives.

 ● Issued proposed regulations on February 20, 2004.

 ● Issue interim final regulations after completion of the statutory 

 collaboration period.

Source: GAO.

Implementation

Fall 2004 to January 2009

Implementation

● Implement the new labor relations, adverse actions, and appeals 

 provisions 30 days after issuance of interim final regulations on a 

 departmentwide basis.

● Implement the job evaluation, pay, and performance management 

 provisions in a phased approach, with the first phase implemented 

 beginning January or February 2005 and the second phase 

 implemented beginning fall of 2005.

● Evaluate and modify the human capital system as needed.

 

Labor and

Employee 

Relations 

Subgroup

Pay and 

Performance 

Subgroup

Core Design Team
Page 9 GAO-04-790 DHS Challenges

DHS Is Beginning 

Strategic Human 

Capital Planning 

Efforts

Using the department’s strategic plan as a starting point, DHS recently 

began drafting a strategic human capital plan and a more detailed 

workforce plan for the department. One of the goals of the strategic plan, 

organizational excellence, makes it a priority for the agency to value its 

people and create a culture that promotes a common identity, innovation, 

mutual respect, trust, accountability, and teamwork. To support the 

accomplishment of this goal, the department has an objective focused on 

ensuring effective recruitment, development, compensation, succession 

management, and leadership of a diverse workforce to provide optimal 

service at a responsible cost. While the plan broadly states a few strategies 

that could be used to achieve this objective, it does not identify the skills 

needed, resources required, or timetables associated with the strategies. 

Additional programmatic objectives within the strategic plan will require 

human capital approaches to ensure they are realized. 

The Director for Human Resources Policy and the Senior Advisor for 

Human Resources Policy said that the strategic human capital plan will be 

completed later this spring and will include goals for transforming the 

human capital management of the department over the next 5 years. These 

same officials report that this will be a “living document” and expect that 

revisions will be made as they learn more about the human capital needs 

across the department. 

Below the headquarters level, strategic human capital planning of different 

levels of detail is being done in the five legacy components we studied. 

These plans vary in terms of the time frame covered by the plan and the 

degree to which future skill and competency needs are identified.

• In July 2003, FEMA/EPR released a 5-year strategic human capital plan 

that identified the challenges it faces, improvement initiatives, and 

outcome measures for the initiatives. A timeline and the unit 

responsible for implementation are also identified. Part of FEMA’s 

“Model for Success” articulates the need to identify strategic 

competencies. The plan states that FEMA intends to integrate its 

competency management system with future workforce planning 

efforts. According to agency officials, FEMA was invited to present its 

Competency Assessment System to the DHS Human Capital 

Management Forum and OPM.

• Customs/CBP workforce planning efforts are currently short-term and 

tactical in nature. The component does not have a consolidated plan 
Page 10 GAO-04-790 DHS Challenges

that identifies human capital needs or strategies and the planning 

horizon is less than 1 year in duration. Instead, CBP informally sets 

annual targets for various human capital activities that are articulated in 

various agency meetings and memoranda. Progress towards the targets 

is tracked in a biweekly report that includes information such as 

changes in staffing levels, retirement eligibilities, and the gender 

breakdown of the workforce. 

• INS/ICE officials reported that they used workforce plans to respond to 

Congressional mandates in managing large-scale recruiting and 

retention efforts, beginning in 1996. It released a 3-year plan in June 

1996 to manage this growth, placing a priority on deployment, 

recruiting, hiring, and training strategies. Since the original release of 

the plan, it has been updated annually through individual memoranda 

and charts reflecting current human capital data. According to an 

agency official, the component is working with a contractor to identify a 

baseline understanding of workforce demographics and skills and 

determine future workforce requirements.

• TSA hired a consultant in September 2003 to conduct a study of 

screener staffing levels at the nation’s commercial airports in an effort 

to right-size and stabilize its screener workforce. Among the tasks the 

contractor is to complete are the implementation of a staffing analysis 

model to be used as a management tool to determine daily and weekly 

staffing levels and the deployment of the model to commercial airports 

nationwide. 

• The Coast Guard has a 5-year strategic human capital plan covering the 

period 2001 to 2005 that integrates approaches for managing military, 

civilian, and reserve employees. Identified within the plan are current 

challenges and desired characteristics for the workforce of the future. 

Strategies are adjusted annually and the objectives and approaches are 

continuously evaluated for their impact so that midcourse corrections 

can be made if necessary, according to an agency official. The Coast 

Guard plans to do a major update of its plan once the department’s 

human capital system is completed.

DHS headquarters has not yet been systematic or consistent in gathering 

relevant data on the successes or shortcomings of legacy component 

human capital approaches or current and future workforce challenges, 

despite the potential usefulness of this information to strategic human 

capital planning activities. Efforts are now under way to gather such data. 
Page 11 GAO-04-790 DHS Challenges

During the design process, from April through September 2003, the 

subgroups that identified options for the human capital system gathered an 

extensive amount of research on innovative practices outside of DHS and 

basic demographic data on employees in the department. DHS also 

reported that it gathered policy documents from legacy components and 

specifically noted meeting with TSA, Coast Guard, legacy Customs, and 

FEMA to understand their policies and practices. However, at a briefing for 

DHS stakeholders in August 2003, DHS and OPM officials said that they did 

not evaluate the successes or shortcomings of legacy agency human capital 

approaches or current and future workforce challenges, nor had they 

analyzed the results from the OPM FHCS. 

The department is now beginning to collect more detailed, internal human 

capital data, according to one DHS official. With the support of a 

contractor, focus groups are planned for this summer so that human capital 

challenges can be identified and validated. According to the same official, 

the Chief Human Capital Officer is holding monthly meetings to spotlight 

the successful practices of components within the department and 

disseminate best practices. Moving forward, the department plans to 

design a centralized information system so that human capital data can be 

gathered and reported at the corporate level.

With this information, the department will be better positioned to conduct 

data-driven evaluations of the successes and shortcomings of its new 

human capital management system. DHS documents indicate that the 

department is committed to an ongoing comprehensive evaluation of the 

effectiveness of the human capital system. The department described 

efforts to identify human capital metrics and an intent to use employee 

surveys to gauge employee satisfaction and needs. We testified that DHS 

should consider doing evaluations that are broadly modeled on the 

evaluation requirements of the OPM demonstration projects.6

 Under the 

demonstration project authority, OPM requires agencies to evaluate and 

periodically report on results, implementation of the demonstration 

project, cost and benefits, impacts on veterans and other equal 

employment opportunity groups, adherence to merit system principles, and 

the extent to which the lessons from the project can be applied 

governmentwide. A set of balanced measures addressing a range of results 

and customer, employee, and external partner issues may also prove 

beneficial. An evaluation such as this would facilitate congressional 

6

GAO-04-479T. 
Page 12 GAO-04-790 DHS Challenges

oversight; allow for any midcourse corrections; assist DHS in 

benchmarking its progress with other efforts; and provide for documenting 

best practices and sharing lessons learned with employees; stakeholders; 

other federal agencies; and the public. We have reported on key principles 

for effective strategic human capital planning and the importance of datadriven human capital decision making (see app. II).7

Continued Leadership 

Is Necessary to 

Marshal the 

Capabilities Required 

for Successful 

Implementation

DHS and OPM leaders have consistently underscored their personal 

commitment to the design process and speak openly in support of it. As we 

have reported, this is a very positive start. DHS will need to sustain this 

effort to overcome the views reflected in the OPM FHCS,8

 administered 

prior to the formation of DHS, in which employees now in the department 

responded with the following perceptions:

• 28 percent believe that leaders generate high levels of motivation and 

commitment in the workforce, compared to a governmentwide 

response of 36 percent;9

• 35 percent hold their leaders in high regard, compared to a 

governmentwide response of 43 percent; and

• 43 percent believe their organization’s leaders maintain high 

standards of honesty and integrity, compared to a governmentwide 

response of 47 percent.

7

U.S. General Accounting Office, Human Capital: Key Principles for Effective Strategic 

Workforce Planning, GAO-04-39 (Washington, D.C.: Dec. 11, 2003), and A Model of Strategic 

Human Capital Management, GAO-02-373SP (Washington, D.C.: Mar. 15, 2002). 

8

The DHS responses reported by the 2002 OPM FHCS approximate the views of some, but 

not all, employees now at DHS. For example, TSA screeners were not hired at the time of 

the survey. Also, though APHIS employees were divided between DHS and the U.S. 

Department of Agriculture (USDA), the APHIS respondents included those remaining at 

USDA. Additionally, the survey was conducted during the same time frame that the 

administration proposed legislation to form DHS; thus, the opinions expressed by the 

respondents to the survey were before the formation of DHS. The objective, scope, and 

methodology for the 2002 OPM FHCS is described in more detail in GAO-04-479T. 

9

In all instances, comparing DHS’s results to the OPM FHCS governmentwide average, DHS 

results are fewer by a statistically significant amount, according to analysis presented on 

OPM’s Web site. Statistics are rounded to the nearest whole number. The governmentwide 

response includes all respondents except for those transferred to DHS.
Page 13 GAO-04-790 DHS Challenges

Resources. DHS is recognizing that there are up-front costs to design and 

implementation and that its components are starting from different places 

regarding the maturity of their human capital management systems. 

Members of the Senior Review Advisory Committee agreed during their 

deliberations that creating the new human capital management system will 

require a substantial investment, and identified this as a core principle for 

the design of the system. Additionally, during the DHS focus groups, 

employees expressed an interest in increasing the resources available for 

training and professional development, and noted the importance of having 

an adequate budget for the performance management system in 

particular.10

The administration recognizes the importance of funding this major reform 

effort and has requested, for fiscal year 2005, $102.5 million to fund 

training, the development of the performance management and 

compensation system, and contractor support, and over $10 million for a 

performance pay fund in the first phase of implementation (affecting about 

8,000 employees) to recognize those who meet or exceed expectations.11 

Approximately $20 million was also requested to fund the development of a 

departmental human resources information technology system. While the 

investments are important to the ultimate success of DHS’s efforts, it is 

equally important to recognize that certain costs are one-time in nature 

and, therefore, should not be built into the base of DHS’s budget for future 

years.

Communication. In our September 2003 report, we commended the 

structured approach the department developed to communicate with 

stakeholders on the human capital system and recommended that the 

Secretary of DHS ensure that the message communicated across the 

department was consistent. Officials we interviewed in five legacy 

components of the department agreed that communication from DHS 

headquarters on the human capital system has been consistent. In 

particular, three noted that the information contained in the weekly 

departmental newsletter is helpful. As an example of the consistency of 

the communication on the new human capital management system, 

10The objective, scope, and methodology for the DHS focus groups are described in more 

detail in GAO-04-479T. 

11According to agency officials, the training costs do not include the time employees are 

expected to spend in training or the costs associated with using training resources already 

in the department. 
Page 14 GAO-04-790 DHS Challenges

between December 5, 2003 and February 27, 2004, employees were assured 

in five different newsletters that the new human capital system would not 

lead to a loss in pay or benefits and four different newsletters reported that 

no layoffs would result due to the implementation of the new system. To 

ensure the consistency of the message, a Communications Coordination 

Team, which includes members from across the department, has been 

established to disseminate information and promote a clear understanding 

of the new human capital system. This team meets biweekly or weekly 

and is co-chaired by the Director of Internal Communications and the 

Director of Human Resource Management. 

In our September report we also recommended that the department 

maximize opportunities for two-way communication and employee 

involvement through the completion of the design process and 

implementation, and noted that special emphasis should be placed on 

seeking the feedback and buy-in of front-line employees in the field. 

Opportunities for two-way communication were limited between the 

conclusion of the town hall meetings in July 2003 and the publishing of the 

proposed regulations in February 2004. The primary means for employees 

to provide feedback was through the Human Resources Design Team

e-mail box. Employees and the general public were also allowed to 

participate in the public comment period of the Senior Review Advisory 

Committee meetings in October 2003. While the department continued to 

consult intermittently with leaders of the three major unions during this 

period, one agency official noted that the department does not have a 

similar mechanism in place to obtain feedback from nonunionized 

employees. One action taken to overcome this challenge was the effort to 

notify employees how to comment on the proposed regulations, which was 

communicated in six different newsletters between February 13 and March 

22, 2004. DHS received over 3,400 comments on its proposed regulations, 

in part due to its efforts to encourage employees to submit comments on 

the system. 

Since the release of the proposed regulations, DHS has provided 

information to employees through a variety of formats. For example, a link 

to the proposed human capital regulations was placed in a prominent 

position on the intranet home page of the department for easy access. On 

February 13, 2004, a satellite broadcast outlined the major features of the 

human capital management system, reaching approximately 500 DHS 

locations around the country. During the broadcast, employees submitted 

questions, and those unable to view the broadcast could access it through 

the DHS Internet Web site. Additionally, a senior leadership conference 
Page 15 GAO-04-790 DHS Challenges

was held, in part, to brief executives on the proposed system. The 

department has developed tool kits to provide information to both 

executives and line managers about the changes and to provide them with 

talking points for discussion with their employees and developed a quadfold to distribute to line employees containing questions and answers about 

the new system. Town hall meetings that were held around the country to 

mark the one-year anniversary of the department included discussions 

about the proposed human capital system. Finally, between February 13 

and March 22, 2004, the time in which employees could submit comments 

on the proposed regulations, the weekly DHS newsletter included answers 

to commonly asked questions and details on what would be changed and 

remain the same under the proposal.

The success of DHS communication efforts is especially important, given 

employee responses to the OPM FHCS:

• 40 percent report that managers promote communication among 

different work units, which is less than the governmentwide response of 

51 percent;

• 65 percent feel they have enough information to do their job well, which 

is less than the governmentwide response of 71 percent; and

• 37 percent are satisfied with the information they receive from 

management on what is going on in the organization, which is less than 

the governmentwide response of 45 percent.

Training. Members of the Senior Review Advisory Committee identified 

training and development as a critical component for implementing the 

human capital system. Furthermore, participants in the DHS focus groups 

expressed a need for training and professional development opportunities 

in a number of areas, including general supervisory capabilities, assessing 

employee performance, labor-management relations, and alternative 

dispute resolution. The DHS proposal correctly recognizes that a 

substantial investment in training is a key aspect of implementing a 

performance management system. The need for in-depth and varied 

training will continue as the system is implemented, as indicated by results 

from the OPM FHCS in which 53 percent of respondents believe 

supervisors/team leaders in their work unit encourage their development at 

work, which is less than the governmentwide response of 59 percent. 

Furthermore, 47 percent feel they are given a real opportunity to improve 

their skills, which is less than the governmentwide response of 57 percent. 
Page 16 GAO-04-790 DHS Challenges

Our recently released guides for agencies to help ensure investments in 

training and development are targeted strategically and could prove helpful 

to DHS as it develops its training and development programs.12

Employee Participation. The Undersecretary for Management has 

already noted her commitment to move forward on implementing the 

human capital system in a collaborative way, and reiterated that support in 

a December 19, 2003 memorandum to DHS employees regarding the human 

capital system. Regardless of whether it is a part of collective bargaining, 

involving employees in such important decisions as how they are deployed 

and how work is assigned is critical to the successful operations of the 

department. This is likely to be a significant challenge for the department 

in light of employee responses to the OPM FHCS in which 28 percent of 

DHS employees indicated a feeling of personal empowerment, which is 

fewer than the governmentwide response of 40 percent. Additionally, 44 

percent of DHS employees reported satisfaction with their involvement in 

decisions that affect their work, compared to 53 percent governmentwide.

Implementation Teams. DHS formed three implementation teams at the 

end of February 2004 to support the design and implementation of the 

human capital management system because of the multiple areas that 

require management attention. This includes a Training and 

Communications team; a Pay, Performance, and Classification team; and a 

Labor Relations, Adverse Actions, and Appeals team. According to agency 

officials, the teams will initially focus their efforts on data collection and 

project planning activities until the department issues interim final 

regulations for the human capital management system, at which time the 

teams will begin to draft departmental policies to support implementation. 

Agency officials reported that, as they move forward, they will pay 

particular attention to how their decisions may affect other human capital 

approaches across the department. 

The mission of the Training and Communications team is to develop 

comprehensive communication and training plans, coordinate and manage 

the development of training, coordinate the delivery of training, and to 

disseminate information related to the design and implementation of the 

12U.S. General Accounting Office, Human Capital: A Guide for Assessing Strategic 

Training and Development Efforts in the Federal Government, GAO-04-546G (Washington, 

D.C.: March 2004); and Human Capital: Selected Agencies' Experiences and Lessons 

Learned in Designing Training and Development Programs, GAO-04-291 (Washington, 

D.C.: Jan. 30, 2004). 
Page 17 GAO-04-790 DHS Challenges

department’s human capital system. The co-leads of the team said their 

work largely depends on the efforts of the other two implementation teams 

and acknowledged the concerns raised by employees on the need for 

training, especially for departmental managers. They also said they plan to 

rely on the training capacity already in the department. A second goal is for 

the team to ensure that communication with employees about the new 

human capital management system is coordinated and consistent across 

components and to ensure that avenues are available for DHS employees to 

communicate ideas to the implementation teams. 

The mission of the Pay, Performance, and Classification team is to design 

departmental policies, procedures, guidance, implementation instructions, 

and evaluation criteria so that components can implement new systems in 

the areas of pay, performance management, and classification. The team is 

beginning its work by gathering information in these areas from 

departmental components and defining the system objectives. Officials 

noted this would be a significant challenge because of differences in the 

types of data collected, the varied manner in which the data are stored, and 

uneven levels of data reliability. As the team develops its proposals, it 

plans to use advisory groups to evaluate the efficacy of draft policies. 

Particular attention will be paid to ensuring there are adequate safeguards 

in the classification, pay, and performance management systems, according 

to officials.

The mission of the Labor Relations, Adverse Actions, and Appeals team is 

to prepare rules, regulations, policies, procedures, guidance, implementing 

instructions, and evaluation criteria for the department to deploy new 

systems in these areas. The co-leads noted that they intend to work 

collaboratively to design systems that encourage cooperation. These 

officials reported that their initial tasks are to explore how to staff different 

boards and panels identified in the proposed regulations and determine 

how to transition pending cases to the new system. They further plan to 

identify elements that require departmental-level guidance, identify 

elements where policy variation is appropriate among departmental 

components, and collect data on historical levels of grievances and appeals 

to forecast the potential workload once the department is transitioned to 

the new system.

The composition of the implementation teams sends an important signal. 

Each of the three implementation teams is co-led by professional staff from 

DHS headquarters and a component agency. As of mid-March 2004, 

officials noted the membership of the teams was still evolving, but was 
Page 18 GAO-04-790 DHS Challenges

composed mainly of human capital professionals. Agency officials noted 

that decisions had not yet been made about the level of involvement of 

union officials. These same officials reported that OPM staff would serve 

as advisers when needed as opposed to participating on a full-time basis, 

and noted an intention to pull together groups of employees to serve as 

“sounding boards and challenge groups” throughout the process. 

Contractors will be integrated with the teams to provide project 

management and other support. 

As DHS moves forward, it may find helpful a set of key capabilities that our 

work has found to be central to the use of human capital authorities.13 

These practices center on effective planning and targeted investments, 

employee training and participation, and accountability and cultural 

change (see app. II). 

DHS Proposes 

Implementing Key 

Safeguards

In its proposed regulations, DHS outlines its intention to implement key 

safeguards that we have found essential to implementing performance 

management systems in a fair, effective, and credible manner. For 

example, the DHS performance management system must comply with the 

merit system principles and avoid prohibited personnel practices; provide a 

means for employee involvement in the design and implementation of the 

system; and overall, be fair, credible, and transparent. The department also 

plans to align individual performance management with organizational 

goals and provide for reasonableness reviews of performance management 

decisions through its Performance Review Boards. Moreover, employees 

and their union representatives played a role in shaping the design of the 

proposed systems. These safeguards are generally consistent with our 

work identifying key practices that leading public sector organizations here 

and abroad have used in their performance management systems to link 

organizational goals to individual performance and create a “line of sight” 

between an individual’s activities and organizational results (see app. II).14

13U.S. General Accounting Office, Human Capital: Effective Use of Flexibilities Can Assist 

Agencies in Managing Their Workforces, GAO-03-2 (Washington, D.C.: Dec. 6, 2002). 

14U.S. General Accounting Office, Results-Oriented Cultures: Creating a Clear Linkage 

between Individual Performance and Organizational Success, GAO-03-488 (Washington, 

D.C.: Mar. 14, 2003). 
Page 19 GAO-04-790 DHS Challenges

Our February 2004 testimony identified additional steps DHS could take to 

build safeguards into its revised performance management system.15 For 

example, we suggested that DHS commit to publishing the results of the 

performance management process to assure reasonable transparency and 

provide appropriate accountability mechanisms in connection with the 

results of the performance management process. This can include 

publishing overall results of performance management and individual pay 

decisions while protecting individual confidentiality and reporting 

periodically on internal assessments and employee survey results relating 

to the performance management system. Publishing the results in a manner 

that protects individual confidentiality can provide employees with the 

information they need to better understand the performance management 

system. 

Conclusions The proposed DHS human capital management system has both significant 

precedent-setting implications for the executive branch and far-reaching 

implications on how the department is managed. However, how it is done, 

when it is done, and the basis on which it is done can make all the 

difference in whether such efforts are successful. To date, DHS’s actions in 

designing its human capital management system and its stated plans for 

future work on the system are positioning the department for successful 

implementation. Looking forward, DHS will need to make continued 

progress in a number of key areas including the following.

• Strategic workforce planning and the gathering of relevant human 

capital data -- Strategic human capital planning activities can enable the 

department to capitalize on the strengths of its workforce and address 

challenges in a manner that is clearly linked to achieving DHS’s mission 

and goals. The potential for human capital planning activities to 

positively impact the department, however, depends on its gathering of 

valid, reliable data on workforce demographics and the successes and 

shortcomings of new approaches at the headquarters level.

• Communication and training -- As we previously noted, communicating 

with employees and their representatives about the new system and 

providing opportunities for feedback, placing a special emphasis on 

reaching out to line employees in the field, can facilitate gaining 

15GAO-04-479T. 
Page 20 GAO-04-790 DHS Challenges

employee buy-in to the new human capital management system. 

Additionally, the delivery of training on the new system can enable 

employees to understand their rights and how the agency will use its 

authority. 

• Safeguards -- Publishing the results of the performance management 

process can provide employees with the information they need to better 

understand the performance management system and make the system 

more transparent.

Agency Comments and 

Our Evaluation 

In commenting on a draft of this report, DHS generally agreed with its 

findings. DHS comments provided more current information on 

implementation timelines and described further research conducted by the 

design teams between April and September 2003, which we have 

incorporated. In addition, DHS raised concerns about our use of data from 

the OPM governmentwide FHCS since the survey was administered before 

the formation of DHS. Since the administration of the survey, DHS notes a 

significant amount of change has been made in the department. We agree 

that the department is making progress in designing its human capital 

system and outline in this report where the department is making strides. 

This report notes that the FHCS was conducted during the same time frame 

that the administration proposed legislation to form DHS. FHCS data are 

the most current information available on the perceptions of employees 

currently employed by DHS and are valuable because of their illustration of 

the challenges the department faces. DHS provided additional technical 

comments, which were incorporated where appropriate. Comments from 

DHS are provided in full in appendix III.

As agreed with your offices, unless you publicly release its contents earlier, 

we plan no further distribution of this report until 30 days from its date. At 

that time, we will send copies of this report to the Chairman and Ranking 

Minority Member, Senate Committee on Governmental Affairs; the 

Chairman and Ranking Minority Member, House Committee on 

Government Reform; the Chairman and Ranking Minority Member, House 

Select Committee on Homeland Security; and other interested 

congressional parties. We will also send copies to the Secretary of the 

Department of Homeland Security and the Director of the Office of 

Personnel Management. Copies will be made available at no charge on the 

GAO Web site at http://www.gao.gov.
Page 21 GAO-04-790 DHS Challenges

If you have any questions about this report, please contact me on 

(202) 512-6806. Key contributors to this report are listed in appendix IV. 

J. Christopher Mihm

Managing Director, Strategic Issues
Page 22 GAO-04-790 DHS Challenges

Appendix I

Scope and Methodology ApApenednxidexiIs

Scope This work was conducted from March 2003 through March 2004 in 

accordance with generally accepted government auditing standards. We 

performed our work in the Washington, D.C., metropolitan area in the 

headquarters offices of Department of Homeland Security (DHS) and the 

five largest legacy components that transferred to the department: The 

Transportation Security Administration (TSA), the Federal Emergency 

Management Agency (FEMA), the organizations formerly known as the 

Immigration and Naturalization Service (INS) and the U.S. Customs 

Service, and the U.S. Coast Guard.

Methodology To address our objective, we examined the workforce planning efforts of 

the five largest legacy components that transferred to the department. 

Data on workforce planning and capabilities needed for successful human 

capital management were supplemented by information gathered in 

interviews with officials from DHS headquarters and the five legacy 

components. A standard set of questions was used for interviewing the 

legacy components. Interviews with the components were conducted 

between January and February 2004. Presentations made by DHS and the 

Office of Personnel Management (OPM) in August 2003 were evaluated to 

understand the level of data analysis conducted during system design. We 

were observers at the August 2003 briefing. We also examined the 

transcripts and report summarizing the proceedings of the Senior Review 

Advisory Committee meetings in October 2003 and relevant issues of the 

weekly DHS newsletter. Our findings were analyzed against criteria 

articulated in relevant GAO human capital reports.

To be responsive to your particular interest in seeking out and 

incorporating employee perspectives on the human capital system, we 

gathered information on employee perceptions from a variety of sources 

and presented these findings throughout the report. Insights into employee 

opinions were gathered from the OPM Federal Human Capital Survey, 

administered between May and August 2002, and a DHS report 

summarizing findings from the department’s focus groups held during the 

summer of 2003. A description of the objective, scope, methodology, and 

limitations of these two studies was detailed in appendix I of Human 

Capital: Preliminary Observations on Proposed DHS Human Capital 

Regulations (GAO-04-479T).

In the background section of this report, we cite information from OPM’s 

Central Personnel Data File (CPDF). The CPDF contains personnel data 
Appendix I

Scope and Methodology

Page 23 GAO-04-790 DHS Challenges

for most employees of the executive branch. The largest executive branch 

employee groups not included are in the intelligence agencies (CIA, etc.) 

and the Postal Service. Agencies submit data to the CPDF at the end of 

each fiscal quarter. We have found the CPDF to be sufficiently reliable for 

the purposes of this report.1

1

U. S. General Accounting Office, OPM’s Central Personnel Data File: Data Appear 

Sufficiently Reliable to Meet Most Customer Needs, GAO/GGD-98-199 (Washington, D.C.: 

Sept. 30, 1998). 
Page 24 GAO-04-790 DHS Challenges

Appendix II

Criteria Used for Evaluation ApendxiI

The success of DHS’s efforts to design and implement its new human 

capital system depends, in part, on building and maintaining an 

institutional infrastructure to make effective use of its flexibilities. At a 

minimum, this infrastructure includes a strategic human capital planning 

process that integrates the agency’s human capital approaches with 

program goals, desired outcomes, and mission; the capabilities to 

effectively develop and implement a new human capital system; and a 

modern, effective, and credible performance management system that 

includes a set of institutional safeguards, including reasonable 

transparency and appropriate accountability mechanisms to ensure the 

fair, effective, and credible implementation of the new system. 

Strategic Human 

Capital Planning

Strategic workforce planning is the first essential element of the 

institutional infrastructure that an agency needs to ensure that its human 

capital program capitalizes on its workforce’s strengths and addresses 

related challenges in a manner that is clearly linked to achieving the 

agency’s mission and goals. Strategic workforce planning addresses two 

critical needs: (1) aligning an organization’s human capital programs with 

its current and emerging mission and programmatic goals and (2) 

developing long-term strategies for acquiring, developing, and retaining 

staff to achieve programmatic goals.1

 

At its core, strategic workforce planning, also called human capital 

planning, focuses on developing long-term strategies for acquiring, 

developing, and retaining an organization’s total workforce (including fulland part-time federal staff and contractors) to meet the needs of the future. 

We recently described five principles for strategic workforce planning.2

• Involve top management, employees, and other stakeholders in 

developing, communicating, and implementing the strategic workforce 

plan.

• Determine the critical skills and competencies that will be needed to 

achieve current and future programmatic results.

1

U.S. General Accounting Office. Human Capital: Key Principles for Effective Strategic 

Workforce Planning, GAO-04-39 (Washington, D.C.: Dec. 11, 2003). 

2

GAO-04-39. 
Appendix II

Criteria Used for Evaluation

Page 25 GAO-04-790 DHS Challenges

• Develop strategies that are tailored to address gaps in the number and 

deployment of employees and the alignment of human capital 

approaches for enabling and sustaining the contributions of all critical 

skills and competencies.

• Build the capability needed to address administrative, educational, and 

other requirements important to support workforce strategies.

• Monitor and evaluate the agency’s progress towards its human capital 

goals and the contribution that human capital results have made toward 

achieving programmatic goals.

Consistent with these principles, we have identified that one of the critical 

success factors for strategic human capital planning is data-driven human 

capital decision making.3

 A fact-based, performance-oriented approach to 

human capital management is crucial for maximizing the value of human 

capital as well as managing risk. High-performing organizations use data to 

determine key performance objectives and goals that enable them to 

evaluate the success of their human capital approaches. Valid and reliable 

data are critical to assessing an agency’s workforce requirements and 

heighten an agency’s ability to manage risk by allowing managers to 

spotlight areas for attention before crises develop and identify 

opportunities for enhancing agency results. Reporting on the results of 

these evaluations can facilitate congressional oversight of the system, 

allow for midcourse corrections, and serve as a tool for documenting best 

practices and sharing lessons learned with employees, stakeholders, other 

federal agencies, and the public. 

Key Capabilities for 

Implementing Human 

Capital Approaches

As DHS moves forward, it may find helpful a key set of capabilities that our 

work has found to be central to the use of human capital authorities.4

 

These practices center on effective planning and targeted investments, 

employee participation and training, and accountability and cultural 

change. 

3

U.S. General Accounting Office, A Model of Strategic Human Capital Management, GAO02-373SP (Washington, D.C.: Mar. 15, 2002). 

4

U.S. General Accounting Office, Human Capital: Effective Use of Flexibilities Can Assist 

Agencies in Managing Their Workforces, GAO-03-2 (Washington, D.C.: Dec. 6, 2002). 
Appendix II

Criteria Used for Evaluation

Page 26 GAO-04-790 DHS Challenges

• Plan strategically and make targeted investments 

• Obtain agency leadership commitment 

• Determine agency workforce needs using fact-based analysis

• Develop strategies that employ appropriate flexibilities to meet 

workforce needs

• Make appropriate funding available

• Ensure stakeholder input in developing policies and procedures 

• Engage the human capital office 

• Engage agency managers and supervisors

• Involve employees and unions

• Use input to establish clear, documented, and transparent policies 

and procedures

• Educate managers and employees on the availability and use of 

flexibilities 

• Train human capital staff 

• Educate agency managers and supervisors on existence and use of 

flexibilities

• Inform employees of procedures and rights

• Streamline and improve administrative processes 

• Ascertain the source of existing requirements 

• Reevaluate administrative approval processes for greater efficiency

• Replicate proven successes of others

• Build transparency and accountability into the system

• Delegate authority to use flexibilities to appropriate levels within the 

agency

• Hold managers and supervisors directly accountable 

• Apply policies and procedures consistently

• Change the organizational culture

• Ensure involvement of senior human capital managers in key 

decision-making processes 

• Encourage greater acceptance of prudent risk taking and 

organizational change

• Recognize differences in individual job performance and 

competencies
Appendix II

Criteria Used for Evaluation

Page 27 GAO-04-790 DHS Challenges

Institutionalizing 

Performance 

Management 

Safeguards

We testified last spring that Congress should consider establishing 

statutory standards that an agency must have in place before it can 

implement a more performance-based pay program and developed an 

initial list of possible safeguards to help ensure that pay for performance 

systems in the government are fair, effective, and credible.5

• Assure that the agency’s performance management systems (1) link to 

the agency’s strategic plan, related goals, and desired outcomes and 

(2) result in meaningful distinctions in individual employee 

performance. This should include consideration of critical 

competencies and achievement of concrete results. 

• Involve employees, their representatives, and other stakeholders in the 

design of the system, including having employees directly involved in 

validating any related competencies, as appropriate. 

• Assure that certain predecisional internal safeguards exist to help 

achieve the consistency, equity, nondiscrimination, and 

nonpoliticization of the performance management process (e.g., 

independent reasonableness reviews by Human Capital Offices and/or 

Offices of Opportunity and Inclusiveness or their equivalent in 

connection with the establishment and implementation of a 

performance appraisal system, as well as reviews of performance rating 

decisions, pay determinations, and promotion actions before they are 

finalized to ensure that they are merit-based; internal grievance 

processes to address employee complaints; and pay panels whose 

membership is predominately made up of career officials who would 

consider the results of the performance appraisal process and other 

information in connection with final pay decisions). 

• Assure reasonable transparency and appropriate accountability 

mechanisms in connection with the results of the performance 

management process. This can include reporting periodically on 

internal assessments and employee survey results relating to the 

performance management system and publishing overall results of 

performance management and individual pay decisions while protecting 

5

U.S. General Accounting Office, Defense Transformation: Preliminary Observations on 

DOD’s Proposed Civilian Personnel Reforms, GAO-03-717T (Washington, D.C.: Apr. 29, 

2003).
Appendix II

Criteria Used for Evaluation

Page 28 GAO-04-790 DHS Challenges

individual confidentiality. Publishing the results in a manner that 

protects individual confidentiality can provide employees with the 

information they need to better understand the performance 

management system. 

While incorporating these safeguards into performance management 

systems, our work indicates that there is a set of key practices for agencies 

to create a clear linkage, or “line of sight,” between individual performance 

and organizational success.6

 These key practices include the following. 

1. Align individual performance expectations with organizational 

goals. An explicit alignment helps individuals see the connection between 

their daily activities and organizational goals.

2. Connect performance expectations to crosscutting goals. Placing 

an emphasis on collaboration, interaction, and teamwork across 

organizational boundaries helps strengthen accountability for results.

3. Provide and routinely use performance information to track 

organizational priorities. Individuals use performance information to 

manage during the year, identify performance gaps, and pinpoint 

improvement opportunities.

4. Require follow-up actions to address organizational priorities. By 

requiring and tracking follow-up actions on performance gaps, 

organizations underscore the importance of holding individuals 

accountable for making progress on their priorities.

5. Use competencies to provide a fuller assessment of performance. 

Competencies define the skills and supporting behaviors that individuals 

need to effectively contribute to organizational results.

6. Link pay to individual and organizational performance. Pay, 

incentive, and reward systems that link employee knowledge, skills, and 

contributions to organizational results are based on valid, reliable, and 

transparent performance management systems with adequate safeguards.

6

U.S. General Accounting Office, Results-Oriented Cultures: Creating a Clear Linkage 

between Individual Performance and Organizational Success, GAO-03-488 (Washington, 

D.C.: Mar. 14, 2003).
Appendix II

Criteria Used for Evaluation

Page 29 GAO-04-790 DHS Challenges

7. Make meaningful distinctions in performance. Effective 

performance management systems strive to provide candid and 

constructive feedback and the necessary objective information and 

documentation to reward top performers and deal with poor performers.

8. Involve employees and stakeholders to gain ownership of 

performance management systems. Early and direct involvement helps 

increase employees’ and stakeholders’ understanding and ownership of the 

system and belief in its fairness. 

9. Maintain continuity during transitions. Because cultural 

transformations take time, performance management systems reinforce 

accountability for change management and other organizational goals.
Page 30 GAO-04-790 DHS Challenges

Appendix III

Comments from the Department of Homeland 

Security ApendxiI
Appendix III

Comments from the Department of Homeland 

Security

Page 31 GAO-04-790 DHS Challenges
Page 32 GAO-04-790 DHS Challenges

Appendix IV

GAO Contact and Staff Acknowledgments ApendxiIV

GAO Contact J. Christopher Mihm, (202) 512-6806

Acknowledgments In addition to the person named above, Ed Stephenson, Ellen V. Rubin, Tina 

Smith, Lou V.B. Smith, Masha Pasthhov-Pastein, Karin Fangman, and Ron 

La Due Lake made key contributions to this report.

(450258)
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