FEDERAL WORKFORCE

Sustained Attention to 

Human Capital Leading 

Practices Can Help 

Improve Agency 

Performance

Statement of Robert Goldenkoff 

Director, Strategic Issues

Testimony 

Before the Committee on Oversight 

and Government Reform, House of 

Representatives

For Release on Delivery 

Expected at 9:00 a.m. ET

Thursday, May 18, 2017

GAO-17-627T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-627T, a testimony 

before the Committee on Oversight and 

Government Reform, House of 

Representatives

May 2017

FEDERAL WORKFORCE

Sustained Attention to Human Capital Leading 

Practices Can Help Improve Agency Performance

What GAO Found

GAO’s prior work has shown that implementing a market-based and more 

performance-oriented federal pay system is both doable and desirable, and 

should be part of a broader strategy of change management and performance 

improvement initiatives. In 2005, GAO identified the following key themes that 

highlight the leadership and management strategies high-performing 

organizations collectively considered in designing and managing a pay system 

that is performance oriented, affordable, and sustainable. Specifically, they:

1. Focus on a set of values and objectives to guide the pay system.

2. Examine the value of employees’ total compensation to remain competitive in 

the labor market.

3. Build in safeguards to enhance the transparency and ensure the fairness of 

pay decisions.

4. Devolve decision-making on pay to appropriate levels.

5. Provide clear and consistent communication so that employees at all levels 

can understand how compensation reforms are implemented. 

6. Build consensus to gain ownership and acceptance for pay reforms. 

7. Monitor and refine the implementation of the pay system. 

While the federal compensation system may need to be re-examined, Congress 

has already provided agencies with tools and flexibilities to build and maintain a 

high-performing workforce. They include, for example: 

Hiring process

GAO reported in 2016 that the Office of Personnel Management (OPM) and 

selected agencies had not evaluated the effectiveness of hiring authorities. By 

evaluating them, of which over 100 were used in 2014, OPM and agencies could 

identify ways to expand access to those found to be more effective, and 

eliminate those found to be less effective.

General Schedule (GS) classification system

The federal government has become more highly skilled and specialized than 

the GS classification system was designed to address at its inception in 1949. 

OPM and stakeholders should examine ways to make the classification system 

consistent with attributes GAO identified of a modern, effective classification 

system, such as internal and external equity. 

Performance management 

Credible and effective performance management systems are a strategic tool to 

achieve organizational results. These systems should emphasize “a line a sight”

between individual performance and organizational success, and use core 

competencies to reinforce organizational objectives, among other things. 

Human resources capacity

The human resources specialist occupation is a mission critical skills gap area. 

Chief Human Capital Officers have reported that human resources specialists do 

not have the skills to lead strategic human capital management activities. 

Strengthening this capacity could help agencies better meet their missions.

View GAO-17-627T. For more information, 

contact Robert Goldenkoff at (202) 512-2757 

or goldenkoffr@gao.gov.

Why GAO Did This Study

A careful consideration of federal pay 

is an essential part of fiscal 

stewardship and is necessary to 

support the recruitment and retention 

of a talented, agile, and highperforming federal workforce. Highperforming organizations have found 

that the life-cycle of human capital 

management activities—including 

workforce planning, recruitment, onboarding, compensation, 

engagement, succession planning, 

and retirement programs—need to 

be aligned for the cost-effective 

achievement of an organization’s 

mission. However, despite some 

improvements, strategic human 

capital management—and more 

specifically, skills gaps in mission 

critical occupations—continues to be 

a GAO high-risk area.

This testimony is based on a body of 

GAO work primarily issued between 

June 2012 and March 2017. It

focuses on (1) lessons learned in 

creating a more market driven, 

results-oriented approach to federal 

pay, and (2) opportunities, in addition 

to pay and benefits, that OPM and 

agencies could use to be more 

competitive in the labor market and 

address skills gaps.

What GAO Recommends

Over the years, GAO has made 

recommendations to agencies and 

OPM to improve their strategic 

human capital management efforts. 

OPM and agencies generally 

concurred. This testimony discusses 

actions taken to implement key 

recommendations to improve federal 

hiring and classification. 
Letter

Page 1 GAO-17-627T Federal Workforce

Chairman Chaffetz, Ranking Member Cummings, and Members of the 

Committee,

I am pleased to be here today to discuss the federal compensation 

system and how to modernize it, as well as additional steps beyond pay 

and benefits that agencies can take to better compete in the labor market. 

Our work has shown that a careful consideration of federal pay is 

essential to fiscal stewardship and is necessary to support the recruitment 

and retention of a talented, agile, and high-performing federal workforce. 

It is Congress’s policy that pay for federal workers in the General 

Schedule (GS), the pay system covering the majority of federal workers,

1

be in line with pay for comparable nonfederal workers.2

High-performing organizations have found that the full life-cycle of human 

capital management activities—including workforce planning, recruitment, 

on-boarding, compensation, engagement, succession planning, and 

retirement programs—need to be fully aligned and focused on the costeffective achievement of an organization’s mission. However, despite 

some improvements in the federal government’s management of its 

personnel in recent years, strategic human capital management—and 

more specifically, the need for the Office of Personnel Management 

(OPM) and agencies to address skills gaps in mission critical 

occupations—continues to be a GAO high risk area.3

Importantly, the impact of skills gaps goes beyond the occupations 

themselves and can adversely affect the performance of an entire 

organization. For example, of the 34 areas on our 2017 High-Risk list 

(excluding strategic human capital management), skills gaps played a 

 1

Excluding the U.S. Postal Service. 

2

5 USC 5301.

3

GAO, High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts 

Needed on Others, GAO-17-317 (Washington, D.C.: Feb. 15, 2017).

Letter
Page 2 GAO-17-627T Federal Workforce

role in making 15 areas high-risk, and included information technology 

management, and acquisitions, and veterans’ health care, among others.4

In my remarks today, I will discuss (1) lessons learned in creating a more 

market-driven, results-oriented approach to federal pay, and (2) 

opportunities in addition to pay and benefits that OPM and agencies could 

use to be more competitive in the labor market and address skills gaps.

The bottom line is that, while the federal compensation system may need 

to be re-examined, it will also be important for agencies to make better 

use of the management tools already available to them. Indeed, more 

effective use of hiring flexibilities, adopting leading human capital 

management practices, and strengthening the capacity of agencies’

human resource offices could significantly improve executive branch 

personnel management, and thus help agencies to better carry out their 

missions in an era of highly constrained resources.

My testimony is based on our large body of work on federal human capital 

management issued primarily between June 2012 and March 2017. In 

addition, we conducted follow-up on recommendations made in prior 

reports through interviews with agency officials. More detailed information 

on our objectives, scope, and methodology for that work can be found in 

the issued report. We conducted the work on which this statement is 

based in accordance with generally accepted government auditing 

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

obtain sufficient, appropriate evidence to provide a reasonable basis for 

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

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

 4

The complete list of areas in our high-risk report that feature skills gap findings includes: 

Management of Federal Oil and Gas Resources; Managing Federal Real Property; 

Improving the Management of IT Acquisitions and Operations; Department of Defense 

(DOD) Business Systems Modernization; DOD Financial Management; Strengthening 

Department of Homeland Security (DHS) Management Functions; Ensuring the Security 

of Federal Information Systems and Cyber-Critical Information and Protecting the Privacy 

of Personally Identifiable Information; Protecting Public Health through Enhanced 

Oversight of Medical Products; Transforming the Environmental Protection Agency’s 

(EPA) Processes for Assessing and Controlling Toxic Chemicals; DOD Contract 

Management; Department of Energy (DOE)’s Contract Management for the National 

Nuclear Security Administration and Office of Environmental Management; National 

Aeronautics and Space Administration (NASA) Acquisition Management; Enforcement of 

Tax Laws; Managing Risks and Improving Department of Veterans Affairs (VA) Health 

Care; and Improving Federal Management of Indian Programs. 
Page 3 GAO-17-627T Federal Workforce

As we reported earlier this year, mission-critical skills gaps within the 

federal workforce pose a high risk to the nation.5 Regardless of whether 

the shortfalls are in such government-wide occupations as cybersecurity 

and acquisitions, or in agency-specific occupations such as nurses at the

Veterans Health Administration, skills gaps impede the federal 

government from cost-effectively serving the public and achieving results.

Agencies can have skills gaps for different reasons: they may have an 

insufficient number of people or their people may not have the 

appropriate skills or abilities to accomplish mission-critical work. 

Moreover, current budget and long-term fiscal pressures, the changing 

nature of federal work, and a potential wave of employee retirements that 

could produce gaps in leadership and institutional knowledge, threaten to 

aggravate the problems created by existing skills gaps.

According to our analysis of OPM data, government-wide more than 34 

percent of federal employees on-board by the end of fiscal year 2015 will 

be eligible to retire by 2020 (see figure 1). Some agencies, such as the 

Department of Housing and Urban Development, will have particularly 

high eligibility levels by 2020. Various factors can affect when individuals 

actually retire, and some amount of retirement and other forms of attrition 

can be beneficial because it creates opportunities to bring fresh skills on 

board and it allows organizations to restructure themselves to better meet 

program goals and fiscal realities. But if turnover is not strategically 

monitored and managed, gaps can develop in an organization’s 

institutional knowledge and leadership.

 5

GAO-17-317.

Background
Page 4 GAO-17-627T Federal Workforce

Figure 1: Percentage of Federal Employees on Board by the End of Fiscal Year 2015 Will Be Eligible to Retire by Fiscal Year 

2020

Notes: Our calculations include permanent employees in the competitive service, the excepted 

service, and the senior executive service with all work schedules (e.g. full time, part time, seasonal, 

and intermittent). Retirement eligibility is not affected by work schedule. Temporary and term 

employees are excluded.

“Eligible to retire” is defined as the year in which a person is first eligible for retirement with unreduced 

annuity.

Data are from the OPM Enterprise Human Resources Integration (EHRI) database.

EHRI covers federal civilian employees at most Executive Branch agencies and some Legislative 

Branch agencies. Among those agencies excluded from EHRI are the Central Intelligence Agency 

and other intelligence organizations; the U.S. Postal Service; Tennessee Valley Authority; and the 

White House.

The total number of employees included in our calculations on January 17, 2017 is 1,712,547.
Page 5 GAO-17-627T Federal Workforce

While numerous tools are available to help agencies address their talent 

needs, our past work has identified problems across a range of personnel 

systems and functions. For example:

• Classification system: The GS system has not kept pace with the 

government’s evolving requirements.6

• Recruiting and hiring: Federal agencies need a hiring process that is

applicant friendly, flexible, and meets policy requirements.7

• Pay system: Employees are compensated through an outmoded 

system that (1) rewards length of service rather than individual 

performance and contributions, and (2) automatically provides acrossthe-board annual pay increases, even to poor performers.8

• Performance management: Developing modern, credible, and 

effective employee performance management systems and dealing 

with poor performers have been long-standing challenges for federal 

agencies.9

• Employee engagement: Additional analysis and sharing of promising 

practices could improve employee engagement and performance.10

 6

GAO, Human Capital: OPM Needs to Improve the Design, Management, and Oversight 

of the Federal Classification System, GAO-14-677 (Washington, D.C.: July 31, 2014).

7

GAO, Federal Hiring: OPM Needs to Improve Management and Oversight of Hiring 

Authorities, GAO-16-521 (Washington, D.C.: Aug. 2, 2016). 

8

GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, 

GAO-05-325SP (Washington, D.C.: February 2005).

9

GAO, Federal Workforce: Improved Supervision and Better Use of Probationary Periods 

Are Needed to Address Substandard Employee Performance, GAO-15-191 (Washington, 

D.C.: Feb. 6, 2015).

10GAO, Federal Workforce: Additional Analysis and Sharing of Promising Practices Could 

Improve Employee Engagement and Performance, GAO-15-585 (Washington, D.C.: July 

14, 2015). 
Page 6 GAO-17-627T Federal Workforce

As we reported in 2012, Congress’s policy calls for federal workers’ pay 

under the GS system to be aligned with comparable nonfederal workers’

pay.11 Across-the-board pay adjustments are to be based on private 

sector salary growth.12 Locality adjustments are designed to reduce the 

gap between federal and nonfederal pay in each locality to no more than 

5 percent. The President’s Pay Agent is the entity charged with 

determining the disparities between federal and nonfederal pay in each 

locality; it measures federal pay based on OPM records that identify GS 

employees by occupation and grade level, and nonfederal pay based on 

U.S. Bureau of Labor Statistics data (BLS).13 In 2012, the Pay Agent has 

recommended that the underlying model and methodology for estimating 

pay gaps be reexamined to ensure that private sector and federal sector 

pay comparisons are as accurate as possible. As of December 2016, no 

such reexamination has taken place. 

The across-the-board and locality pay increases may be made every 

year, and are not linked to performance.14 Pay increases and monetary 

awards that are linked to performance ratings as determined by the 

agencies’ performance appraisal systems include within-grade increases, 

ratings-based cash awards, and quality step increases, and are available 

 11GAO, Federal Workers: Results of Studies on Federal Pay Varied Due to Differing 

Methodologies, GAO-12-564 (Washington, D.C.: June 22, 2012).

12Specifically, pay rates are to be increased by the 12-month percentage increase in the 

wage and salary component of the Employment Cost Index for private sector workers, 

minus one-half of one percentage point. However, the President may decide to provide an 

alternative pay adjustment based on national emergency or serious economic conditions 

affecting the general welfare. Additionally, Congress may legislate an increase that is 

different from the formula increase or the President’s alternative adjustment.

13Similar to the across-the-board adjustments, instead of following the recommendation of 

the Pay Agent, the President may provide an alternative pay adjustment based on national 

emergency or serious economic conditions and Congress may legislate a different

increase.

14In 2011, 2012, and 2013, there was neither an across-the-board nor locality pay 

increase due to a government-wide pay freeze. 

Lessons Learned in 

Creating a ResultsOriented Approach to 

Federal Pay

Key Elements of General 

Schedule Pay System 
Page 7 GAO-17-627T Federal Workforce

to GS employees. Within-grade increases are the least strongly linked to 

performance, ratings-based cash awards are more strongly linked to 

performance depending on the rating system the agency uses, and 

quality step increases are also more strongly linked to performance.

The composition of the federal workforce has changed over the past 30 

years, with the need for clerical and blue collar roles diminishing and 

professional, administrative, and technical roles increasing. As a result, 

today’s federal jobs require more advanced skills at higher grade levels 

than in years past. Additionally, we have found that federal jobs, on 

average, require more advanced skills and degrees than private sector 

jobs. This is because a higher proportion of federal jobs than nonfederal 

are in skilled occupations such as science, engineering, and program 

management, while a lower proportion of federal jobs than nonfederal are 

in occupations such as manufacturing, construction, and service work. 

The result is that the federal workforce is on average more highly 

educated than the private sector workforce.

As we reported in 2014, a key federal human capital management 

challenge is how best to balance the size and composition of the federal 

workforce so that it is able to deliver the high quality services that 

taxpayers demand, within the budgetary realities of what the nation can 

afford.15 Recognizing that the federal government’s pay system does not 

align well with modern compensation principles (where pay decisions are 

based on the skills, knowledge, and performance of employees as well as 

the local labor market), Congress has provided various agencies with 

exemptions from the current system to give them more flexibility in setting 

pay. Thus, a long-standing federal human capital management question 

is how to update the entire federal compensation system to be more 

market based and performance oriented. This type of system is a critical 

component of a larger effort to improve organizational performance.

 15GAO, Federal Workforce: Human Capital Management Challenges and the Path to 

Reform, GAO-14-723T (Washington, D.C.: July 15, 2014).
Page 8 GAO-17-627T Federal Workforce

Our 2005 work showed that implementing a more market-based and 

more performance-oriented pay system is both doable and desirable.16

However, we also found that it is not easy. For one thing, agencies should

have effective performance management systems that link individual 

expectations to organizational results. Moreover, representatives of 

public, private, and nonprofit organizations, in discussing the successes 

and challenges they have experienced in designing and implementing 

their own results-oriented pay systems, told us at the time they had to 

shift from a culture where compensation is based on position and 

longevity to one that is performance-oriented, affordable and sustainable.

As we have reported in the past, these organizations’ experiences with 

their own market-based and performance-oriented pay systems provide 

useful lessons learned that will be important to consider to the extent the 

federal government moves toward a more results-oriented pay system. 

Lessons learned identified in our 2005 report include the following:17

1. Focus on a set of values and objectives to guide the pay system. 

Values represent an organization’s beliefs and boundaries, and 

objectives articulate the strategy to implement the system.

2. Examine the value of employees’ total compensation to remain 

competitive in the labor market. Organizations consider a mix of base 

pay plus other monetary incentives, benefits and deferred 

compensation, such as retirement pay, as part of a competitive 

compensation system.

3. Build in safeguards to enhance the transparency and ensure the 

fairness of pay decisions. Safeguards are the precondition to linking 

pay systems with employee knowledge, skills, and contributions to 

results.

4. Devolve decision-making on pay to appropriate levels. When 

devolving such decision making, overall core processes help ensure 

reasonable consistency in how the system is implemented.

5. Provide training on leadership, management, and interpersonal skills 

to facilitate effective communication. Such skills as setting 

expectations, linking individual performance to organizational results, 

 16GAO, Human Capital: Symposium on Designing and Managing Market-Based and More 

Performance-Oriented Pay Systems, GAO-05-832SP (Washington, D.C.: July 27, 2005). 

17GAO-05-832SP.

Lessons Learned in 

Creating a Market-Driven, 

Results-Oriented Pay 

System
Page 9 GAO-17-627T Federal Workforce

and giving and receiving feedback need renewed emphasis to make 

such systems succeed.

6. Build consensus to gain ownership and acceptance for pay reforms. 

Employee and stakeholder involvement needs to be meaningful and 

not pro forma.

7. Monitor and refine the implementation of the pay system. While 

changes are usually inevitable, listening to employee views and using 

metrics helps identify and correct problems over time.

Our prior work has found that across a range of human capital functions, 

while in some cases statutory changes may be needed to advance 

reforms, in many instances improvements are within the control of federal 

agencies. These improvements include such actions as improving the 

coordination of hiring specialists and hiring managers on developing 

recruitment strategies and up-to-date position descriptions in vacancy 

announcements. Indeed, Congress has already provided agencies with a 

number of tools and flexibilities to help them build and maintain a highperforming workforce. Going forward, it will be important for agencies to 

make effective use of those tools and for Congress to hold agencies 

accountable for doing so. 

Among other things, our work has shown that the tone starts at the top. 

Agency leaders and managers should set an example that human capital 

is important and is directly linked to performance—it is not a transactional 

function. As we noted in our 2017 high-risk update, agencies can drive 

improvements to their high risk areas—including strategic human capital 

management—through such steps as: 

• Sustained leadership commitment, including developing long-term 

priorities and goals, and providing continuing oversight and 

accountability;

Additional Steps 

Agencies Can Take to 

Be Competitive in the 

Labor Market and 

Address Skills Gaps

Agency Actions Can Help 

Transform Personnel 

Management
Page 10 GAO-17-627T Federal Workforce

• Ensuring agencies have adequate capacity to address their personnel 

issues, including collaborating with other agencies and stakeholders 

as appropriate; 

• Identifying root causes of problems and developing action plans to 

address them, including establishing goals and performance 

measures;

• Monitoring actions by, for example, tracking performance measures 

and progress against goals; and 

• Demonstrating progress by showing issues are being effectively 

managed and root causes are being addressed.18

Our list of leading human capital management practices may be helpful 

as well. Covering such activities as strategic workforce planning, 

recruitment and hiring, workforce development, and employee 

engagement, among others, agencies can use this information to 

strengthen how they recruit, retain, and develop their employees and 

Congress can hold agencies accountable for using them.19

OPM has taken some important steps as well. For example, in December 

2016, OPM finalized revisions to its strategic human capital management 

regulation that include the new Human Capital Framework.20 This 

framework is to be used in 2017 by agencies to plan, implement, 

evaluate, and improve human capital policies and programs.

Our recent work on federal hiring, classification, addressing poor 

performance, and the capacity of federal human resource functions are 

illustrative of some of the areas in need of attention.

 18GAO-17-317. 

19http://www.gao.gov/key_issues/leading_practices_in_human_capital_management/issu

e_summary. 

20Personnel Management in Agencies, 81 Fed. Reg. 89,357 (Dec. 12, 2016) (to be 

codified at 5 C.F.R. pt. 250, subpt. B).
Page 11 GAO-17-627T Federal Workforce

To help ensure agencies have the talent they need to meet their 

missions, we have found that federal agencies should have a hiring 

process that is simultaneously applicant friendly, sufficiently flexible to 

enable agencies to meet their needs, and consistent with statutory 

requirements, such as hiring on the basis of merit.21 Key to achieving this 

is the hiring authority used to bring applicants onboard.22

Congress and the President have created a number of hiring authorities 

to expedite the hiring process or to achieve certain public policy goals, 

such as facilitating the entrance of certain groups into the civil service. As 

we reported in 2016, we found that of the 105 hiring authorities used in 

fiscal year 2014, agencies relied on 20 of those authorities for 91 percent 

of the 196,226 new appointments made that year.23 OPM officials said at 

the time they did not know if agencies relied on a small number of 

authorities because agencies are unfamiliar with other authorities, or if 

they have found other authorities to be less effective.

Although OPM tracks such data as agency time-to-hire, we found this 

information was not used by OPM or agencies to analyze the 

effectiveness of hiring authorities. As a result, OPM and agencies did not 

know if authorities were meeting their intended purposes. By analyzing 

hiring authorities, OPM and agencies could identify opportunities to refine 

authorities, expand access to specific authorities found to be highly 

efficient and effective, and eliminate those found to be less effective.

We recommended that OPM, working with agencies, strengthen hiring 

efforts by (1) analyzing the extent to which federal hiring authorities are 

meeting agencies’ needs, and (2) using this information to explore 

opportunities to refine, eliminate, or expand authorities as needed, among 

other recommendations.24 OPM concurred with our recommendations, 

and reported it had reviewed hiring authorities related to the entry-level 

Pathways Program and for hiring seasonal employees.

 21GAO-16-521. 

22A hiring authority is the law, executive order, or regulation that allows an agency to hire 

a person into the federal civil service.

23GAO-16-521.

24GAO-16-521.

Hiring Process Could Be 

Improved by Refining, 

Consolidating, or 

Eliminating Less Effective 

Authorities
Page 12 GAO-17-627T Federal Workforce

The GS classification system is a mechanism for organizing federal whitecollar work—notably for the purpose of determining pay—based on a 

position’s duties, responsibilities, and difficulty, among other things. A 

guiding principle of the GS classification system is that employees should 

earn equal pay for substantially equal work.

We and others have found that the work of the federal government has 

become more highly skilled and specialized than the GS classification 

system was designed to address when it was created in 1949 when most 

of the federal workforce was engaged in clerical work. While there is no 

one right way to design a classification system, in 2014, we identified 

eight key attributes that are important for a modern, effective classification 

system.25 Collectively, these attributes provide a useful framework for 

considering refinements or reforms to the current system. These key 

attributes are described in table 1.

Table 1: Attributes of a Modern, Effective Classification System

Internal equity: All employees with comparable qualifications and responsibilities for their respective occupations are assigned the 

same grade level.

External equity: All employees with comparable qualifications and responsibilities are assigned grade levels and corresponding pay 

ranges comparable to the nonfederal sector.

Transparency: A comprehensible and predictable system that employees, management, and taxpayers can understand.

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

rates of pay for certain occupations to attract a qualified workforce, within the framework of a uniform government-wide system.

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

system to evolve as the workforce and workplace change.

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

ladders with meaningful differences in skills and performance, as well as a system that can be cost-effectively maintained and 

managed.

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

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

Source: GAO analysis. | GAO-17-627T

We concluded in 2014 that the inherent tension between some of these 

attributes, and the values policymakers and stakeholders emphasize 

could have large implications for pay, the ability to recruit and retain 

mission critical employees, and other aspects of personnel management. 

This is one reason why—despite past proposals—changes to the current 

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

acceptable to all stakeholders is difficult.

 25GAO-14-677. 

The GS System Could 

Better Balance Attributes 

of a Modern, Effective 

Classification System
Page 13 GAO-17-627T Federal Workforce

In 2014, we recommended that OPM (1) work with stakeholders to 

examine ways to modernize the classification system, (2) develop a 

strategy to track and prioritize occupations for review and updates, and 

(3) develop cost-effective methods to ensure agencies are classifying 

correctly.26 OPM partially concurred with the first and third 

recommendation but did not concur with the second recommendation. 

Instead, OPM officials said they already tracked and prioritized 

occupations for updates. However, they were unable to provide 

documentation of their actions. In April 2017, OPM officials said they 

meet regularly with the interagency classification policy forum to inform 

classification implementation and had reviewed and canceled 21 

occupational series that were minimally used by agencies.

In our 2015 report, we noted how federal agencies’ ability to address poor 

performance has been a long-standing issue.27 Employees and agency 

leaders share a perception that more needs to be done to address poor 

performance, as even a small number of poor performers can affect 

agencies’ capacity to meet their missions. More generally, without 

effective performance management, agencies risk losing (or failing to 

utilize) the skills of top talent. They also may miss the opportunity to 

observe and correct poor performance.

Among other things, we found effective performance management helps 

agencies establish a clear “line of sight” between individual performance 

and organizational success and using core competencies helps to 

reinforce organizational objectives. Agencies should also make 

meaningful distinctions in employee performance levels. However, we 

found that 99 percent of permanent, non-senior executive service

employees in 2013 received a rating at or above fully successful, with 

around 61 percent rated as “outstanding” or “exceeds fully successful.”28

Importantly, in 2015 we found that good supervisors are key to the 

success of any performance management system. Supervisors provide 

the day-to-day performance management activities that can help sustain 

and improve the performance of more talented staff and can help 

 26GAO-14-677.

27GAO-15-191.

28GAO, Federal Workforce: Distribution of Performance Ratings Across the Federal 

Government, 2013, GAO-16-520R (Washington, D.C.: May 9, 2016). 

Opportunities Exist to 

Strengthen Performance 

Management and Deal 

with Poor Performers
Page 14 GAO-17-627T Federal Workforce

marginal performers to become better. As a result, agencies should 

promote people into supervisory positions because of their supervisory 

skills (in addition to their technical skills) and ensure that new supervisors 

receive sufficient training in performance management. Likewise, a 

cultural shift might be needed among agencies and employees to 

acknowledge that a rating of “fully successful” is already a high bar and 

should be valued and rewarded and that “outstanding” is a difficult level to 

achieve.

Further, in 2015 we found that probationary periods for new employees 

provide supervisors with an opportunity to evaluate an individual’s 

performance to determine if an appointment to the civil service should 

become final. However, some Chief Human Capital Officers (CHCO) said 

supervisors often do not use this time to make performance-related 

decisions about an employee’s performance because they may not know 

that the probationary period is ending or they have not had time to 

observe performance in all critical areas. In our prior work, we 

recommended that OPM educate agencies on ways to notify supervisors 

that an individual’s probationary period is ending and that the supervisor 

needs to make a decision about the individual’s performance and also to 

determine whether there are occupations in which the probationary period 

should extend beyond 1-year to provide supervisors with sufficient time to 

assess an individual’s performance. OPM concurred with the first 

recommendation and partially concurred with the second. In January 

2017, OPM issued guidance to agency about supervisors notification of a 

probationary period ending, but officials said OPM had not taken action 

on extending the probationary period.

In 2014, we found that many agency CHCO said their offices did not have 

the capacity to lead strategic human capital management activities such 

as talent management, workforce planning, and promoting high 

performance and a results-oriented culture.29 Instead, these offices 

remained focused on transactional human resource activities like benefits 

and processing personnel actions. As a result, officials said agency 

decision makers often did not seek out and draw upon the expertise of 

human capital experts to inform their deliberations. Perhaps further 

reflecting the varying capabilities of agency human capital offices across 

 29GAO, Human Capital: Strategies to Help Agencies Meet Their Missions in an Era of 

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

Opportunities Exist to 

Address Human 

Resources Capacity 

Challenges
Page 15 GAO-17-627T Federal Workforce

government, some CHCOs at the time said that agency leaders did not 

fully understand the potential for strategic human capital management 

and had not elevated the role of the human capital office to better support 

an agency’s operations and mission.

The human resources specialist occupation continues to be one of six 

government-wide, mission-critical skills gap areas identified by OPM. Our 

recent work on the Veterans Health Administration (VHA) demonstrates 

how capacity shortfalls in an agency’s personnel office can adversely 

impact an organization’s mission.30 Among other things, we found that the 

recruitment and retention challenges VHA is experiencing with its clinical 

workforce are due, in part to attrition among its human resource 

employees and unmet staffing targets within medical center personnel 

offices. We concluded that until VHA strengthens its human resource 

capacity, it will not be positioned to effectively support its mission to serve 

veterans’ healthcare needs. We made 12 recommendations to Veterans 

Affairs (VA) to improve the human resource capacity and oversight of 

human resource functions at its medical centers; develop a modern, 

credible employee performance management system; and establish clear 

accountability for efforts to improve employee engagement. VA concurred 

with nine recommendations and partially concurred with three 

recommendations to improve VHA’s performance management system.

Under OPM’s leadership, several steps have been taken as part of a 

cross agency group focused on improving the capacity of human 

resource specialists. For example, OPM reported that it increased 

registration in its Human Resources University and validated career path 

guides for classification, recruitment and hiring policy, and employee 

relations. As part of our ongoing oversight of OPM’s and agencies’ efforts 

to close government-wide mission critical skill gaps, we will continue to 

assess the progress being made in improving the human capital 

infrastructure within agencies needed to better support agencies’ planning 

and programmatic functions.

In conclusion, given the long-term fiscal challenges facing the nation and 

ongoing operational and accountability issues across government, 

agencies must identify options to meet their missions with fewer 

resources. The federal compensation system should allow the 

 30GAO, Veterans Health Administration: Actions Needed to Better Recruit and Retain 

Clinical and Administrative Staff, GAO-17-475T (Washington, D.C.: Mar. 22, 2017).
Page 16 GAO-17-627T Federal Workforce

government to cost-effectively attract, motivate, and retain a highperforming, agile workforce necessary to meet those missions. At the 

same time, our work has shown that agencies already have a number of 

tools and flexibilities available to them that can significantly improve 

executive branch personnel management and do so sooner, rather than 

later. Going forward, it will be important to hold agencies accountable for 

fully leveraging those resources.

Chairman Chaffetz, Ranking Member Cummings, and Members of the 

Committee, this completes my prepared statement. I would be pleased to 

respond to any questions you may have at this time.

If you or your staff have any questions about this statement, please 

contact Robert Goldenkoff at (202) 512-2757 or e-mail at 

goldenkoffr@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this 

statement.

GAO staff who made key contributions to this testimony include Chelsa 

Gurkin, Assistant Director; Dewi Djunaidy, Analyst-in-Charge; Ann 

Czapiewski; Karin Fangman; Krista Loose; Susan Sato; Cynthia 

Saunders; and Stewart W. Small.

GAO Contacts and 

Staff 

Acknowledgments

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