Testimony 

Before the Subcommittee on Oversight of Government 

Management, the Federal Workforce, and the District of 

Columbia, Committee on Homeland Security and 

Governmental Affairs, U.S. Senate 

United States Government Accountability Office

GAO 

OFFICE OF PERSONNEL 

MANAGEMENT 

OPM Is Taking Steps to 

Strengthen Its Internal 

Capacity for Leading 

Human Capital Reform 

Statement of David M. Walker 

Comptroller General of the United States 

For Release on Delivery

Expected at 10:00 a.m. EDT 

Tuesday, June 27, 2006

 

GAO-06-861T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

June 27, 2006

OFFICE OF PERSONNEL MANAGEMENT

OPM Is Taking Steps to Strengthen Its 

Internal Capacity for Leading Human 

Capital Reform 

Highlights of GAO-06-861T, a testimony 

before the Subcommittee on Oversight of 

Government Management, the Federal 

Workforce, and the District of Columbia, 

Committee on Homeland Security and 

Governmental Affairs, U.S. Senate 

General recognition exists of a 

need to continue to develop a 

governmentwide framework for 

human capital reform to enhance 

performance, ensure accountability

and position the nation for the 

future. Potential governmentwide 

human capital reform and likely 

requirements that the Office of

Personnel Management (OPM) 

assist, guide, and ultimately certify

agencies’ readiness to implement

reforms, raise important questions 

about OPM’s capacity to 

successfully fulfill its central role. 

This testimony addresses 

management challenges that could 

affect OPM’s ability to lead

governmentwide human capital

reform efforts. To assess these 

challenges, GAO analyzed OPM’s 

2002 and 2004 Federal Human 

Capital Survey (FHCS) results, data 

from its 2005 follow-up focus group 

discussions, OPM’s May 2006 

action plans to address employee 

concerns, and OPM’s associate 

directors’ fiscal year 2006 executive

performance contracts. GAO also 

conducted interviews with OPM 

senior officials and Chief Human 

Capital Officers (CHCO) and 

human resource directors from 

CHCO Council agencies. 

 

In commenting on a draft of this 

statement, the OPM Director said 

that OPM has addressed many of

the challenges highlighted from 

the 2004 FHCS and achieved many

meaningful and important results. 

GAO agrees and believes OPM 

should continue to build upon its

progress to date.

OPM has made commendable efforts towards transforming itself to being a 

more effective leader of governmentwide human capital reform. It can build 

upon that progress by addressing challenges that remain in the following 

areas: 

Leadership. OPM Federal Human Capital Survey responses and the fall 

2005 follow-up focus group discussions suggests that information from OPM 

leadership does not cascade effectively throughout the organization and that 

many employees do not feel senior leaders generate a high level of 

motivation and commitment in the workforce. Agreement with leaders 

ability was lowest in one of OPM’s key divisions—a unit vital to successful 

human capital reform. OPM is working to address employee concerns and 

improve perceptions of senior leaders. 

Talent and resources. To align talent and resources to support its reform 

role, OPM has made progress in assessing current workforce needs and 

developing leadership succession plans. However, OPM’s workforce 

planning has not sufficiently identified future skills and competencies that 

may be necessary to fulfill its role in human capital reform. 

Customer focus, communication, and collaboration. OPM can improve 

its customer service to agencies and create more opportunities for dialogue. 

According to key officials in executive agencies, OPM guidance to agencies 

is not always clear and timely, OPM’s human capital officer structure is often 

a barrier to efficient customer response, and greater opportunities exist to 

collaborate with agency leaders. OPM recognizes these shortcomings and 

has identified improvement actions to address. However, more can be done 

such as strategically using partnerships it has available to it, like the CHCO 

Council. 

Performance culture and accountability. OPM has made progress in 

creating a “line of sight” or alignment and accountability across Senior 

Executive Service (SES) expectations and organizational goals. It needs to 

build on this progress and effectively implement new performance standards 

for all employees to support the recently issued agency strategic and 

operational plan and ensure all employees receive the necessary training. 

To meet OPM’s current and future challenge to lead governmentwide human 

capital reform, Director Springer has shown leadership commitment to 

OPM’s transformation by initiating a number of action plans to address 

employee concerns. While the steps taken by OPM demonstrate progress in 

achieving its transformation, it must continue on this path by closely 

monitoring and communicating with its employees and customers, 

expanding its workforce and succession planning efforts, and continuing to 

create a “line of sight” throughout the organization. 

www.gao.gov/cgi-bin/getrpt?GAO-06-861T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Brenda S. 

Farrell at (202) 512-6806 or farrellb@gao.gov. 
Chairman Voinovich, Senator Akaka, and Members of the Subcommittee: 

I appreciate the opportunity to be here today to discuss the capacity of the 

U.S. Office of Personnel Management (OPM) to lead and implement 

governmentwide human capital reform. Potential governmentwide human 

capital reform, and likely requirements that OPM assist, guide, and 

ultimately certify agencies’ readiness to implement reforms, raise 

important questions about its capacity to successfully fulfill its central 

role. Director Springer and her leadership team clearly recognize that 

strategic human capital management is a pervasive challenge facing 

agencies across the federal government, and overcoming this challenge 

will require vigorous and sustained leadership from multiple parties—

OPM as well as other key human capital players, such as the President; the 

Office of Management and Budget (OMB); Congress; and department and 

agency leaders. Since designating strategic human capital management as

a high-risk area in January 2001,1

 our work and the work of others 

continue to show that agencies need and want greater leadership from 

OPM in helping them to address their human capital challenges. 

As we have noted in our 21st Century Challenges report, people are critical 

to any agency’s successful transformation.2

 Transformations have 

enormous implications for the federal government’s “people” policies and

procedures, as well as cultures of government organizations. Strategic 

human capital management is at the centerpiece of this transformation 

and last fall I testified that OPM should play a key leadership and oversight 

role in helping individual agencies work towards overcoming a broad 

range of human capital challenges.3

 

I have testified previously that a governmentwide framework for 

advancing human capital reform is needed to avoid further fragmentation

within the civil service, ensure management flexibility as appropriate, 

allow a reasonable degree of consistency, provide adequate safeguards 

within the overall civilian workforce, and help maintain a level playing 

field among federal agencies competing for talent. Within the human 

capital community, there is general recognition of a need to continue to 

 1

GAO, High-Risk Series: An Update, GAO-01-263 (Washington, D.C.: January 2001). 

2

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

GAO-05-325SP (Washington, D.C.: Mar. 4, 2005). 

3

GAO, Human Capital: Preliminary Observations on the Administration’s Draft 

Proposed “Working for America Act,” GAO-06-142T (Washington, D.C.: Oct. 5, 2005). 

Page 1 GAO-06-861T 
develop a governmentwide framework for human capital reform that 

Congress and the administration can implement to enhance performance, 

ensure accountability, and position the nation for the future.4 

Nevertheless, how it is done, when it is done, and on what basis it is done 

can make all the difference. 

I know from my conversations with Director Springer that she agrees that

OPM needs to continue and even augment the internal transformation 

effort underway, and she is putting in place a concerted effort to make that

happen. In 2003, we reported that OPM was undergoing its own 

transformation—from less of a rulemaker, enforcer, and independent 

agent to more of a consultant, toolmaker, and strategic partner in leading 

and supporting executive agencies’ human capital management systems.5

 

At that time, OPM had taken a number of important steps and had several 

initiatives underway or planned to improve its overall mission and 

management performance. For example, OPM has exerted greater human 

capital leadership through its Human Capital Scorecard of the President’s

Management Agenda to assist agencies in improving strategic management 

of their human capital. OPM also developed the governmentwide Federal 

Human Capital Survey (FHCS) to assist agencies and OPM in better 

understanding specific and governmentwide agency workforce 

management conditions and practices in the areas of leadership, 

performance culture, and talent. Most recently, Director Springer 

announced OPM’s television campaign to promote federal employment 

and has undertaken a greater focus on succession planning to respond to 

the forthcoming federal retirement wave and undertaken steps to further 

reduce the length of time for the federal hiring process. 

Under Director Springer’s leadership this past year, OPM has continued to 

transform itself by undertaking a number of internal management 

initiatives to build a results-oriented culture. The results of OPM’s 2004 

FHCS showed that OPM employees expressed a number of concerns 

regarding perceptions of agency leadership; talent and resources; 

customer focus, communication and collaboration; and performance 

culture and accountability. The FHCS was administered before Director 

Springer began her term. Also, according to OPM, about half of the senior

 4

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

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

5

GAO, Major Management Challenges and Program Risks, Office of Personnel

Management, GAO-03-115, (Washington, D.C.: January 2003). 

Page 2 GAO-06-861T 
leadership started after the survey was administered. However, we used 

these results, among other things, to assess some of the issues that could 

impede OPM’s capacity to lead federal human capital reform. I call 

attention to some of these relevant questions throughout my testimony. 

We found that OPM is taking actions to address these concerns in a 

number of areas. For example, in fall 2005, OPM conducted a series of 

employee focus groups in response to its FHCS results to further 

understand specific issues underlying the decline and identify actions it 

could take to help improve the overall agency work environment. In May 

2006, OPM issued a series of federal human capital action plans to address 

employee concerns raised during those focus group discussions. In 

addition, in March of this year, OPM issued its Strategic and Operational 

Plan, 2006–2010, and identified a number of activities that OPM plans to 

implement to improve employee satisfaction. 

As you know, the Senate Committee on Homeland Security and 

Governmental Affairs and your Oversight of Government Management, the 

Federal Workforce, and the District of Columbia Subcommittee requested

that we conduct a review of OPM to identify management challenges that 

could affect its ability to lead human capital reform efforts. In March 2006, 

we briefed your staff on our preliminary observations. My remarks today 

are based on that briefing. Our forthcoming report will provide additional 

information and recommendations to OPM on opportunities to improve its 

internal management capacity. We analyzed OPM’s 2006-2010 Strategic 

and Operational Plan to identify activities related to internal

transformation. We analyzed OPM’s associate directors’ fiscal year 2006

Senior Executive Service (SES) performance contracts to identify 

alignment of strategic goals and individual executive performance. We 

also reviewed OPM’s most currently available workforce and succession 

plans to examine issues related to talent and resources. We analyzed 

OPM’s 2002 and 2004 FHCS agency results, the most recently available 

data that OPM is using to identify employee concerns. In addition, we 

reviewed OPM’s analysis of its 2004 FHCS results. (For more information 

regarding the methodology related to OPM’s administration of the FHCS 

and our analysis of OPM’s survey results, see app. I). We also reviewed 

the results from a series of employee focus groups conducted by OPM in 

fall 2005 to follow up on its agency 2004 FHCS results, as well as analyzed

OPM’s May 2006 action plans to address issues raised by the 2004 FHCS 

and employee focus groups. 

We interviewed OPM’s five associate directors and other senior-level staff

to obtain their views of agency management. We interviewed 21 of the 23

members of the Chief Human Capital Officers Council and their 

Page 3 GAO-06-861T 
corresponding agency human resource (HR) directors to gain a customer 

perspective of OPM’s products and services and their views of OPM 

management challenges. Finally, we reviewed our ongoing work and 

previous recommendations to OPM on a range of issues related to human 

capital and other management challenges. We conducted our work from

June 2005 to June 2006 in accordance with generally accepted government 

auditing standards. 

We provided a draft of this statement to Director Springer for her 

comment. The Director expressed concern that the basis for GAO’s 

observations relied heavily on outdated information, specifically from the 

results of the FHCS administered in 2004. She noted that in many 

instances, OPM has addressed the challenges highlighted from the 2004

FHCS and achieved many meaningful and important results. We wish to 

point out that OPM has also relied heavily on the results of the 2004 FHCS 

and conducted focus groups in fall 2005 to understand the factors 

contributing to employees’ responses on selected items on the 2004 FHCS 

and to obtain employees’ ideas for addressing top priority improvement 

areas. Further, OPM used the results from 2004 FHCS and 2005 focus 

group discussions—the most recent data available—and this information 

was used to form the basis for its recently released (May 2006) action 

plans to address these issues. 

Today, I would like to highlight that OPM has made commendable efforts

towards transforming itself to being a more effective leader of 

governmentwide human capital reform. OPM’s recently issued “Strategic 

and Operational Plan” is a significant accomplishment. While the plan’s 

strength is in its definition of clear, tangible goals and deliverables, it is not 

clear if the plan adheres to the goals for a strategic plan as contained in 

the Government Performance and Results Act of 1993.6

 We will analyze 

compliance of the plan with GPRA and present the results of our analysis

in our forthcoming report. We will examine the extent to which the plan's 

operational steps are consistently linked to a larger strategic vision and set 

of clearly articulated outcomes. Importantly, in the future, OPM should 

revisit its organizational structure to ensure it is aligned with the goals and

objectives in its plan and make any necessary changes. Doing so will help 

 6

 The Government Performance and Results Act of 1993 (GPRA) requires federal agencies 

to focus on achieving results and to provide objective, performance-based information

intended to improve congressional and agency decision-making by providing 

comprehensive and reliable information on the extent to which federal programs are 

fulfilling their statutory intent. 

Page 4 GAO-06-861T 
OPM to improve economy, efficiency, effectiveness, and responsiveness 

while enhancing flexibility and improving accountability. My statement 

today addresses how OPM can build upon the progress it has made with 

its strategic and operational plan by addressing challenges that remain in 

four key areas: 

Leadership. OPM 2004 employee survey responses and the more recent 

OPM employee focus group discussions suggest that information from 

OPM top leadership does not cascade effectively throughout the 

organization. Survey and focus group data also suggest that many 

employees do not feel their senior leaders generate a high level of 

motivation and commitment in the workforce. Agreement with leaders’ 

ability to generate motivation and commitment were lowest in the Human 

Capital Leadership and Merit System Accountability (HCLMSA) division, 

one of OPM’s key divisions—a unit responsible for partnering with 

agencies and vital to successful human capital reform efforts. 

Talent and resources. In an effort to align talent and resources to 

support its reform role, OPM has made progress in its assessment of 

current workforce needs and developing leadership succession plans. 

However, if OPM is to lead governmentwide human capital reform it 

should identify the skills and competencies of the new OPM, determine 

any skill and competency gaps, and develop specific steps to fill such gaps. 

Customer focus, communication, and collaboration. Agency views, 

survey results, and our previous work show that OPM can improve its 

customer service and communication with agencies. Our recent work 

shows that guidance to agencies is not always clear and timely, the human

capital officer structure is often a barrier to efficient customer response, 

and there are greater opportunities to dialogue and collaborate with Chief 

Human Capital Officers (CHCO) and human resource directors. 

Communication and collaboration are key aspects of OPM’s ability to 

support agency efforts at human capital reform and establish a consistent 

reform message. OPM has recognized these shortcomings and has 

identified improvement actions to address some of them. However, more 

can be done such as strategically using the partnerships it has available to 

it, like the CHCO Council and others, as well as developing a culture of 

collaboration, information sharing, and working with customers to 

understand what they will need from the agency.

Performance culture and accountability. OPM has made progress in 

creating a “line of sight” or alignment and accountability across leader 

expectations and organizational goals. Performance expectations of 

Page 5 GAO-06-861T 
senior leaders are clearly aligned with the goals of OPM's strategic and 

operational plan. Success in achieving reform objectives will rest, in part, 

on OPM’s ability to align performance and consistently support mission 

accomplishment for all employees of the organization. 

The OPM 2004 FHCS results and OPM’s 2005 follow-up focus group 

discussions suggest that information is not cascading effectively from top 

leadership throughout the organization. Further, according to the 

summary reports of OPM’s follow-up focus group discussions, overall 

communication was selected by employees as one of the most important 

areas to address. Some focus group participants said that managers and 

employees were unaware of what is going on in the organization due to a

lack of internal and cross-divisional communication. Focus group 

participants also described not knowing where the agency is heading and 

not having a clear understanding of how their activities aligned with the 

overall vision and mission of the agency. 

Leadership 

As figure 1 shows, fewer employees below the SES level at OPM as well as 

the rest of government reported being satisfied with the information they 

receive. Further there were significantly fewer employees at OPM, 

especially in the GS-1 to GS-12 range, reporting “satisfaction with the 

information they receive from management on what’s going on in the 

organization” when compared with the rest of the government. On the 

other hand, significantly more SES employees at OPM indicated 

satisfaction with the “information they were receiving from management” 

than SES employees at all the other government agencies participating in

the 2004 FHCS. 

Page 6 GAO-06-861T 
Figure 1: Employee Responses to Selected 2004 Federal Human Capital Survey Questions Related to Leadership 

Percentage of employees with 

favorable/positive responses 

Question Overall GS-1-12 GS-13-15 SES

OPM 40 37 45 87

How satisfied are you with the information you receive from management on 

what’s going on in your organization? 

Rest of 

government 46 45 49 57

OPM 47 44 51 93

Managers promote communication among different work units (for example, 

about projects, goals, needed resources). 

Rest of 

government 52 51 57 70

OPM 68 66 71 89

Overall, how good a job do you feel is being done by your immediate 

supervisor/team leader? 

Rest of 

government 65 65 69 80

OPM 43 45 37 84

I have a high level of respect for my organization’s senior leaders. 

Rest of 

government 49 50 49 66

OPM 33 34 31 76

How satisfied are you with the policies and practices of your senior leaders? 

Rest of 

government 40 40 41 57

OPM 33 34 29 81

ln my organization, leaders generate high levels of motivation and commitment 

in the workforce.

Rest of 

government 37 38 37 58

Source: GAO analysis.

A similar gap between OPM SES and GS-level employees, as well as for 

their relative counterparts from the rest of government, is evident when 

employees were asked if they agreed that “managers promote 

communication among different work units.” 

OPM employees also expressed concerns regarding their views of senior 

leaders. As shown in figure 1, roughly two-thirds of OPM employees, as 

well as employees in the rest of government, indicated that their 

immediate supervisors or team leaders are doing a good or very good job. 

Employee perceptions of senior level leadership were not as positive, 

Page 7 GAO-06-861T 
however. When survey respondents were asked if they agreed with the 

statement “I have a high level of respect for my organization’s senior 

leaders,” nearly twice as many OPM SES employees agreed with this 

statement as compared with OPM GS-level employees. Survey 

respondents were also asked if they were “satisfied with the policies and 

practices of your senior leaders” and OPM SES employees also agreed 

with this statement more than twice the level of OPM GS-level employees. 

For both items, the percent of OPM GS-level respondents agreeing with 

these statements tends to be lower than for their counterparts in the rest 

of government. A similar pattern of OPM SES and OPM GS-level response 

can be seen in Figure 1 for the percent of employees agreeing with the 

statement “leaders generate high levels of motivation and commitment in 

the workforce.” OPM’s analysis of responses to this question by its 

divisions and offices show that the Human Capital Leadership and Merit 

System Accountability (HCLMSA) division had the lowest positive and 

largest negative response of any division at about 28 percent and 51 

percent respectively. This issue of leaders generating motivation and 

commitment was selected by all six of the HCLMSA focus groups as one of 

the most important issues that OPM needs to address. Because the 

HCLMSA division is OPM’s frontline organization that partners with 

agencies to achieve human capital success by providing oversight and 

leadership to agencies, it will play a key role in OPM initiatives to 

implement human capital reform—so it will need effective leadership to 

guide its transformation. 

OPM is clearly aware of the most critical issues for its agency leaders to 

address, such as the lack of overall and cross-divisional communication, 

issues related to employee views of senior management, and obtaining 

employee input to individual work plans linked to the agency strategic 

plan. Based on OPM’s May 2006 action plans, the agency is planning to 

improve communication through such means as “visits to OPM field 

locations, brown bag lunches with the Director, an email box where 

employees can make suggestions on more efficient and effective ways of 

doing business, Web Casts, and employee meetings.” According to the 

May 11, 2006 memo from OPM’s CHCO to Director Springer, OPM has 

released several messages to employees regarding steps that it will be 

taking to improve communications agencywide and to address each of the

specific critical issues within individual organizations of the agency. OPM 

officials told us that many of these actions have already occurred, such as 

senior executives visiting field locations. To improve its cross-divisional 

communication, OPM has developed and posted a functional organization 

directory on its internal website, which it has accomplished almost a 

month ahead of schedule. To address employee concerns regarding views 

Page 8 GAO-06-861T 
of senior leaders, OPM is establishing a process in all divisions to solicit 

employee input on various initiatives and setting aside “open door” time 

for employees to speak with their managers. Furthermore, OPM has 

created an action plan to help employees better understand how their 

work fits into the overall mission of the agency by providing a mechanism 

to increase employee input to work plans related to its strategic plan. 

As I have testified on many occasions, in recent years GAO has learned a 

great deal about the challenges and opportunities that characterize 

organizational transformation. Several such lessons are of particular 

relevance to today's discussion. For example, GAO has recognized that 

soliciting and acting on internal feedback such as that obtained through 

employee surveys, provides a key source of information on how well an 

organization is developing, supporting, using and leading staff, as well as 

how internal operations are functioning and meeting employee needs as 

they carry out their mission. OPM's practices in this area are based in part

on GAO’s experience and include efforts to gain insight into employee 

perceptions of leadership and explicit follow-up activities to address 

identified concerns. OPM’s planned actions are important steps in the 

right direction. Moving forward, as OPM implements its action plans to 

address issues of communication and motivation, it is important that it 

frequently communicate with employees on the progress of each of its 

planned actions and how these changes will affect them. OPM should also 

communicate any challenges or delays faced in its planned actions as soon 

as possible and the reasons why any changes to plans might be made. The

2006 FHCS deployed just last month, will provide an initial indication of 

the extent to which the new initiatives are responding to employee 

concerns. 

A high-performance organization needs a dynamic, results-oriented 

workforce with the requisite talents, multidisciplinary knowledge, and upto-date skills to ensure that it is equipped to accomplish its mission and 

achieve its goals. We have reported that acquiring and retaining a 

workforce with the appropriate knowledge and skills demands that 

agencies improve their recruiting, hiring, development, and retention 

approaches so that they can compete for and retain talented people.7

 

Similar to other agencies, OPM faces challenges in recruiting and retaining 

Talent and Resources 

 7

GAO, High-Risk Series: Strategic Human Capital Management, GA0-03-120 (Washington 

D.C.: January 2003). 

Page 9 GAO-06-861T 
a high-quality, diverse workforce and these challenges could limit OPM’s 

capacity to accomplish its current mission, which includes in part leading

other agencies in addressing their own recruitment and retention 

challenges. Further, if OPM is to lead governmentwide human capital 

reform and transition from less of a rulemaker, enforcer, and independent 

agent to more of a consultant, toolmaker, and strategic partner, it should 

identify the skills and competencies of the new OPM, determine any skill 

and competency gap, and develop specific steps to fill that gap. 

The FHCS shows that OPM employees identified several issues related to

its current workforce: 

• Workforce skills. Some OPM employees were concerned about a 

lack of skills among OPM’s current workforce. Our analysis of the 

2004 FHCS shows that 67 percent of OPM employees agreed that “the 

workforce has the job relevant knowledge and skills necessary to 

accomplish organizational goals” compared with 74 percent of 

employees from the rest of government. Among OPM’s divisions, 

HCLMSA had the lowest rate of agreement and highest rate of

disagreement with the above statement at, respectively, 25 percent and 

59 percent. This division provides leadership to agencies in their 

human capital transformation efforts. If HCLMSA lacks the knowledge 

and skills necessary to accomplish OPM’s current organizational goals, 

the division may have difficulty managing the additional 

responsibilities of leading and implementing future governmentwide 

human capital reform. 

Agencies are also concerned with OPM’s current workforce capacity. 

We spoke with agency CHCOs, HR directors, and their staffs about 

OPM’s current capacity, and they expressed concern about whether 

OPM has the technical expertise needed to provide timely and

accurate human capital guidance and advice. For example, agency

officials said that the perceived lack of federal human resource 

expertise among some OPM Human Capital Officers (HCO) makes it 

difficult for them to assist agencies when communicating policy 

questions to appropriate OPM employees. For example, an HR

director told us that their agency contacted the responsible HCO about 

the Outstanding Scholars Program and did not get a response from 

OPM for two to three weeks. When OPM finally responded, they said 

Page 10 GAO-06-861T 
each agency was deciding how to administer the program.8

 In the end, 

the agency’s General Counsel Office had to contact another agency to 

learn how they administered the program. 

Many CHCOs and human resource directors told us they believed that 

OPM’s expertise has declined over the last decade, while noting that 

OPM is facing many of the same personnel issues as all federal 

agencies regarding the loss of federal human capital talent and

institutional knowledge. 

OPM’s ability to lead and oversee human capital management policy 

changes that result from potential human capital reform legislation 

could be affected by its internal capacity and ability to maintain an 

effective leadership team, as well as, an effective workforce. CHCOs 

and human resource directors expressed concern about the loss of 

OPM employees with technical expertise that will be needed to 

effectively assist agencies with future human capital efforts. One 

CHCO believed OPM’s capacity is dependent upon a few key 

employees, in particular in the area of innovative pay and

compensation approaches, adding that the potential loss of these 

employees could create a tipping point that severely damages OPM’s 

capacity. Moreover, agencies believed that the Departments of 

Defense (DOD) and Homeland Security human capital reform efforts 

severely taxed OPM technical resources, specifically pay and 

compensation employees. 

Building the skills and knowledge of its workforce provides OPM with 

an opportunity to streamline decision making to appropriate 

organization levels. The FHCS includes one question on employee 

empowerment. The 40 percent of OPM employees who had a “feeling 

of personal empowerment with respect to work processes” was close 

to the response of 43 percent from the rest of government. Although 

these results do not differ markedly from those in the rest of 

government, this item was selected by a majority of participants in the 

focus groups as one of the most important issues that OPM needs to 

address. Some participants said decision making is too centralized at 

the top without delegating authority to managers, supervisors, and 

 8

 The Outstanding Scholars Program is a special hiring authority for GS-5 and GS-7 

positions that allows agencies to appoint college graduates with high grade point averages

or class standing. The use of the authority is currently being litigated before the Merit 

Systems Protection Board. 

Page 11 GAO-06-861T 
employees. Taken together, these survey and focus group results 

suggest that the majority of OPM employees do not feel empowered to 

accomplish their tasks. Having delegated authorities gives employees 

the opportunity to look at customer needs in an integrated way and 

effectively respond to those needs and can also benefit agency 

operations by streamlining processes. Furthermore, such delegation 

to frontline employees gives managers greater opportunities to 

concentrate on systematic, cross-cutting, problems or policy-level 

issues. In April 2006, OPM began taking steps to delegate more 

authority to lower-level employees, and Associate Directors are now 

currently reviewing redelegations within their organizations. 

• Recruiting. Similar to most federal agencies, OPM may have 

difficulty recruiting new talent. For example, 47 percent of OPM 

employees who perform supervisory functions agreed with the 

statement that their “work unit is able to recruit people with the right 

skills,” which is similar to the 45 percent of supervisors from the rest 

of government. The OPM CHCO told us that HR specialist positions 

are difficult to fill now. The work of HR specialists ranges across 

policy development, consultation and agency outreach, and 

operational recruitment and staffing activities. This is noteworthy 

because we identified HR specialist as a mission-critical occupation 

among the 24 Chief Financial Officer Act agencies in our 2001 report. 9

 

HR specialist was also listed as a mission-critical occupation in OPM’s 

2003 human capital plan.

Mr. Chairman, as you know, longstanding concerns exist regarding 

DOD’s personnel security clearance program. In fact, we declared 

DOD’s program a high-risk area in January 2005. We testified last 

month before this subcommittee on concerns that slow the process of 

personnel clearances.10 OPM continues to experience problems with 

its investigative workforce, a problem we first identified in February 

2004 when we found that OPM and DOD together needed

approximately 3,800 additional full-time-equivalent investigators to 

reach their goal of 8,000. Although OPM reports that it has reached its 

goal, it still faces performance problems due to the inexperience of its 

 9

GAO, Federal Employee Retirements: Expected Increases Over the Next 5 Years 

Illustrates Need for Workforce Planning, GAO-01-509 (Washington, D.C.: Apr. 27, 2001). 

10GAO, DOD Personnel Clearances: New Concerns Slow Processing of Clearances for

Industry Personnel, GAO-06-748T (Washington, D.C.: May 17, 2006). 

Page 12 GAO-06-861T 
domestic investigative workforce. While OPM reports that it is making 

progress in hiring and training new investigators, the agency notes it 

will take a couple of years for the investigative workforce to reach 

desired performance levels. 

• Training. OPM employees cited strengths as well as concerns with 

employee development and training, as well as not feeling empowered 

to accomplish their tasks. As we have reported, agencies must develop 

talent through education, training, and opportunities for growth, such 

as delegating authorities to the lowest appropriate level.11 In the 2004 

FHCS, 62 percent of OPM employees agreed that “supervisors/team 

leaders in [their] work unit support employee development” which is 

close to the agreement level of employees from the rest of government 

at 65 percent. OPM employees were not as close to the employees in 

the rest of government in agreeing that “I receive the training I need to 

perform my job.” Fifty-three percent of OPM employees agreed with 

this statement as compared with 60 percent of employees from the rest 

of government. In the follow-up employee focus groups, some 

participants selected this item as one of the most important issues for 

OPM to address. Some focus group participants said OPM’s culture 

does not support training and employees do not have time to attend 

training classes. Further, an OPM executive told us that it can be a 

struggle to convince managers that people should attend training. 

Some focus group participants also said that managers are not given 

sufficient and timely training budgets. OPM officials believe that 

limited funding for training is an issue at OPM, and added that OPM is 

also working to provide managers with more timely training budgets. 

In 2003, we reported that OPM was using rotational assignments, 

special projects, and details to broaden the skills of employees.12 OPM 

officials also told us the agency is taking steps to address training 

concerns by offering more online training courses. In 2004, 57 percent 

of employees agreed with the statement that they have electronic 

access to learning and training programs readily available at their desk. 

Although still below the 71 percent agreement level for the rest of 

government, this was an 8 percentage point increase from the 49 

percent of employees who agreed with this statement on the 2002

 11GAO, Human Capital: A Self-Assessment Checklist for Agency Leaders, 

GAO/OCG-00-14G (Washington, D.C.: September 2000); GAO, Human Capital: Practices 

That Empowered and Involved Employees, GAO-01-1070 (Washington, D.C.: Sep. 14,

2001). 

12GAO-03-115. 

Page 13 GAO-06-861T 
FHCS. OPM can build upon its current training initiatives, such as 

online courses and rotational assignments, to leverage the available 

training resources. 

• Critical resources. OPM employees have indicated concerns 

regarding the availability of critical resources. Although responses 

from OPM employees overall are similar to employees from the rest of 

government, we noted one group of OPM employees whose responses 

are not as close to their counterparts in the rest of government. 

Among all OPM employees, 51 percent agreed with the statement that 

they have “sufficient resources (for example, people, materials, 

budget) to get my job done” as did 49 percent of employees from the 

rest of government. For employees performing supervisory functions, 

however, the agreement rate was 35 percent at OPM and 42 percent for 

the rest of government. Participants in the follow-up focus groups 

selected this item as one of the most important issues OPM needs to 

address to make the agency a better place to work. Focus group 

participants said the lack of administrative staff and essential 

equipment causes specialized employees to waste time performing 

administrative functions. This suggests that OPM needs to take 

additional steps to ensure that it has aligned its available resources 

with its mission needs. 

OPM Has Engaged in

Workforce and Succession 

Planning, but Different 

Workforce Skills May Be 

Needed to Meet Future 

Needs 

OPM’s workforce and succession planning efforts may be sufficient for 

maintaining the organization’s current capacity, but OPM may need more 

collaborative workforce skills to lead and implement human capital 

reform. We have reported that strategic workforce planning addresses 

two critical needs: (1) aligning an organization’s human capital program 

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. 13 

Almost half (about 46 percent) of OPM’s workforce will be eligible to 

retire as of September 30, 2010, as compared with 33 percent 

governmentwide, according to information in the Central Personnel Data 

File (CPDF). Further, about two-thirds (66 percent) of the OPM SES 

employees will be eligible to retire at the same time—about the same as 

the governmentwide eligibility of 68 percent. We have reported that 

 13GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

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

Page 14 GAO-06-861T 
without careful planning, SES separations pose the threat of an eventual 

loss in institutional knowledge, expertise, and leadership continuity.14 In 

light of the impending retirements among its SES workforce, OPM has 

engaged in succession planning to ensure that it has the leadership talent 

in place to effectively manage OPM’s transformation, as well as ensure 

that the workforce skill mix is appropriate to meet its future challenges 

and transition to more of a strategic consultant role. This effort is 

important because leading organizations engage in broad, integrated 

succession planning efforts that focus on strengthening both current and

future organizational capacity. OPM officials told us that the agency has 

identified 142 key leadership positions within the SES and GS-15 grade 

levels that are classified for succession planning in the near future. 

Currently, OPM’s succession planning efforts are only focused on SES and 

GS-15 positions. I understand that OPM is now planning to expand the 

scope of its succession management program to include all supervisory, 

managerial, and executive positions throughout the agency—

approximately 240 additional positions. I would encourage them to 

undertake this broader succession planning effort, given the importance of 

maintaining, and in many cases augmenting, critical skills throughout the 

organization, as well as the consideration of the future skills it may need to 

achieve its own transformation to lead the executive branch’s overall 

human capital reform effort. 

As I noted earlier, in 2003, we reported that OPM’s overarching challenge

today is to lead agencies in shaping their human capital management 

systems while also undergoing its own transformation. Given its 

governmentwide leadership responsibilities, it is particularly important 

that OPM seeks to “lead by example” with its own human capital practices. 

Leading organizations go beyond simply backfilling vacancies, and instead 

focus on strengthening both current and future organizational capacity. 

Thus, it is critical that OPM assesses its mission-critical workforce skills 

relative to the human capital reform competencies and needs of the future. 

OPM officials said they will be issuing the agency’s updated strategic 

human capital plan later this summer to include such items as its human 

capital focus, workforce plan, leadership and knowledge management, 

workforce analysis, and performance goals, among other things. Director

Springer has noted that she envisioned the OPM of the future as having a 

greater emphasis on collaboration and consulting capabilities. Given the 

 14GAO, Human Capital: Insights for U.S. Agencies from Other Countries' Succession 

Planning and Management Initiatives, GAO-03-914 (Washington, D.C.: Sep. 15, 2003). 

Page 15 GAO-06-861T 
greater emphasis on collaboration and consulting skills, I believe that 

OPM’s forthcoming strategic human capital plan should include thoughtful 

strategies for how the agency plans to recruit, train, develop, incentivize, 

and reward employees with this important skill set. 

During a transformation, we have reported that a communication strategy

is especially crucial in the public sector where policy making and program 

management demand transparency and a full range of stakeholders and 

interested parties are concerned not only with what results are to be 

achieved, but also which processes are to be used to achieve those 

results.15 Our work on high-performing organizations and successful 

transformations has shown that communication with customers and 

stakeholders should be a top priority and is central to forming the 

partnerships needed to develop and implement an organization’s 

transformation strategies. Specifically, an appropriate customer 

communication strategy would include consistency of message and 

encourage two-way communication. 

Customer Focus, 

Communication, and 

Collaboration 

A majority of CHCOs and human resource (HR) directors told us that OPM 

could improve the clarity, consistency, and timeliness of its guidance to 

agencies. Several agency officials commented that OPM conveyed a “we’ll 

know it, when we see it” method of communicating expectations. This 

method of communicating expectations and lack of clear and timely 

communications and guidance was clearly illustrated as agencies 

conveyed their experiences with the SES performance management 

system certification process. In November 2003, Congress authorized a 

new performance-based pay system for members of the SES. Under this 

authority, SES members are to no longer receive automatic annual acrossthe-board or locality pay adjustments with the new pay system. Agencies

are to base pay adjustments for SES members on individual performance 

and contributions to the agency’s performance by considering such things

as the unique skills, qualifications, or competencies of the individual and 

their significance to the agency’s mission and performance, as well as the 

individual’s current responsibilities. Congress also authorized agencies to 

raise the maximum rate of pay for senior executives if their SES 

 15GAO, Highlights of a GAO Forum: Mergers and Transformation: Lessons Learned for a

Department of Homeland Security and Other Federal Agencies, GAO-03-293SP 

(Washington, D.C.: Nov. 14, 2002). 

Page 16 GAO-06-861T 
performance appraisal system is certified by OPM and OMB as making 

meaningful distinctions in relative performance. 

We asked agency CHCOs and HR directors to provide us with their 

experiences with OPM’s administration of the SES pay-for-performance 

process to identify parallel successes and challenges that OPM could face

in a certification role for the implementation of human capital reforms. 

We heard a number of concerns from agencies regarding OPM’s ability to 

communicate expectations, guidance, and deadlines to agencies in a clear

and consistent manner. For example, one official said, while OPM tries to

point agencies in the right direction, it will not give agencies discrete 

requirements. This leads to uncertainty about what agencies must and 

should demonstrate to OPM. Some CHCOs and HR directors also told us 

that, in some cases, OPM changed expectations and requirements 

midstream with little notice or explanation. 

The late issuance of certification submission guidance to agencies was 

especially problematic for agencies and they appeared to have responded

to this circumstance in two different ways. Because OPM did not issue 

guidance for calendar year 2006 submissions until January 5, 2006, some 

agencies were unable to deliver their submissions to OPM before the 

beginning of the calendar year. Further, OPM clarified this guidance in a 

January 30, 2006, memorandum to agencies, telling agencies that SES 

performance appraisal systems would not be certified for calendar year 

2006 if the performance plans did not hold executives accountable for 

achieving measurable business outcomes. As a result, agencies had to 

revise their submissions, where necessary, to meet OPM’s additional 

requirements. Some agencies indicated that OPM’s late issuance of 

guidance also creates an uneven playing field among agencies, as those 

that choose to wait until OPM issues guidance before applying for 

certification are unable to give their SES members higher pay, while their 

counterparts who did not wait for OPM’s guidance, could get certified 

sooner. Some human resource directors we spoke with expressed 

concern that OPM is not certain about their expectations of agencies’ 

submissions and said they would like more clarity from OPM on the 

certification process. For example, one agency director of executive

resources said agencies ended up relying on each other rather than OPM 

during the 2004 SES certification process. They said OPM provided 

agencies with mixed messages on what would be required for SES 

certification. One human resource director requested that, at the very

least, agencies should be given the certification process guidelines before 

the end of the calendar year, so they can plan adequately. OPM officials 

we spoke with about this agreed that they need to be able to provide clear 

Page 17 GAO-06-861T 
and consistent guidance to agencies and said they are working to improve

this. Further, they said their evaluation of agencies’ submissions is 

evolving as their understanding of the SES certification criteria is 

increasing. 

 

In the past, we have reported concerns with OPM’s communications 

pertaining to their leadership in implementing governmentwide human 

capital initiatives and have recommended ways in which OPM could 

improve its guidance to federal agencies. For example, in 2003 we 

reported that an initial lack of clarity in telework guidance for federal 

agencies from OPM led to misleading data being reported on agencies’

telework programs.16 As one of the lead agencies, along with the General 

Service Administration (GSA), for the federal government’s telework 

initiative, OPM issued telework guidance to agencies in 2001 that did not 

define a statement that was included in their guidance that told agencies

that eligible employees who wanted to participate in telework must be 

allowed that opportunity. As a result, we found that agencies interpreted 

this statement differently and subsequently reported incomparable data to

OPM. After discussing this issue with OPM officials, OPM reacted 

promptly by issuing new telework guidelines within weeks that addressed 

our initial concerns. We concluded that the steps taken by OPM in 

response to our findings showed a ready willingness to address issues that

were hindering implementation of this important human capital initiative. 

We also recommended to OPM and GSA that they should use their lead 

roles in the federal telework initiative to identify where more information 

and additional guidance, guidelines, and technical support could assist 

agencies in their implementation of telework. 

In May 2006, we reported that communications problems between OPM 

and DOD may be limiting governmentwide efforts to improve the 

personnel security clearance—an area of high-risk concern that I noted 

earlier.17 For example, DOD officials asserted—and OPM disagreed—that 

OPM had not officially shared its investigator’s handbook with DOD until 

recently. DOD adjudicators had raised concerns that without knowing 

what was required for an investigation by the investigator’s handbook, 

they could not fully understand how investigations were conducted and

effectively use the investigative reports that form the basis for their 

 16GAO, Human Capital: Further Guidance, Assistance, and Coordination Can Improve

Federal Telework Efforts, GAO-03-679 (Washington, D.C.: Jul. 18, 2003).

17GAO-06-748T. 

Page 18 GAO-06-861T 
adjudicative decisions. OPM indicated that it is revising the investigator’s

handbook and is obtaining comments from DOD and other customers. 

More recently, our review of oversight of Equal Employment Opportunity 

(EEO) related requirements and guidance, found little evidence of OPM 

coordination with Equal Employment Opportunity Commission (EEOC) 

because an insufficient understanding of their mutual roles, authority, and 

responsibilities resulting in lost opportunity to realize consistency, 

efficiency, and public value in federal EEO and workplace diversity human 

capital management practice.18 Further, a majority of human capital and 

EEO officials responding to a survey we did for that review, reported that

OPM’s feedback on their agencies’ programs and the guidance they 

received from OPM was not useful. 

Helping to achieve EEO and workplace diversity is another area where 

opportunities exist for OPM to increase its coordination and collaboration

with EEOC. Over 80 percent of the respondents to our survey of federal

human capital and EEO officials said that more coordination between 

OPM and EEOC would benefit their agency, adding that the lack of such 

coordination resulted in added requirements on them and detracted from 

the efficiency of their won work. Moreover, in 2005, OMB recommended 

to OPM that it develop a regular/formal working relationship with EEOC 

with respect to those programs where it shares oversight responsibility 

with EEOC in order to improve overall government efficiency. 

As changes in governmentwide human capital initiatives begin to address 

the changing needs of the 21st century federal workforce, it will be 

especially critical that OPM develops clear and timely guidance for 

agencies that can be consistently and easily implemented. 

OPM’s HCO Structure Is 

Viewed as a Barrier to 

Meeting Customer Needs 

CHCOs and human resource directors informed us that, while OPM’s HCO 

structure is good in theory, it is often a barrier to obtaining timely 

technical guidance. Within the HCMLSA division, OPM assigns one HCO 

as the main point of contact to each agency of the President’s Management 

Council and one to each cluster of small agencies. HCOs act as liaisons 

and consultants communicating with an agency’s human capital 

leadership. CHCOs and human resource directors commented that their 

 18GAO, Equal Employment Opportunity: Improved Coordination Needed between EEOC 

and OPM in Leading Federal Workplace EEO, GAO-06-214 (Washington, D.C.: Jun. 16,

2006). 

Page 19 GAO-06-861T 
HCO has become an advocate for their agencies and has been helpful for 

troubleshooting and resolving issues that did not require detailed technical 

assistance. However, problems arose for many agencies when technical 

questions and issues had to be communicated via their HCO to the policy 

experts at OPM. For example, one human resource officer told us they 

asked their HCO if they could talk directly to OPM experts on Voluntary 

Separation Incentive Pack and Voluntary Early Retirement Authority, but 

the HCO insisted on relaying the information to the agency. The agency 

official said their HCO was relatively new, so there were numerous policy

nuances that were lost during this process. 

One CHCO stated that, while the HCOs at OPM have provided one-stop 

shopping for agencies, having the HCO as the only point of contact can be 

restrictive. Several human resource directors conveyed instances where 

technical nuances of a particular issue, such as the Voluntary Early 

Retirement Authority, were lost in the translation between the HCOs and 

policy experts at OPM, as the HCO often did not have federal HR 

experience or expertise. As one official described it, while the HCO is 

helpful, time and context are lost in having to go through the HCO to 

obtain technical assistance. Human resource directors expressed a desire 

to communicate directly with OPM’s policy experts for technical guidance

and some use their personal contacts at OPM for technical guidance and 

assistance instead of going through their HCO. 

Human resources directors also said that they sometimes received mixed 

messages on the SES certification process from OPM, and it appeared that 

answers would change depending on with whom an official was working. 

From their perspective, agencies thought that OPM did not effectively 

communicate among its internal divisions and that OPM could greatly 

improve its customer service by clarifying its internal structure and 

making it more customer-oriented. Human resource directors commented 

about the lack of a formal mechanism, such as a survey instrument, to 

provide feedback to OPM on their guidance and assistance to agencies. 

We asked an executive within the HCLMSA division about this and were 

told that while OPM does not have a formal feedback mechanism, they 

talk to agencies all the time, so OPM does not feel that a formal 

mechanism is needed. 

Employee responses to FHCS questions relating to OPM’s customer focus 

show employees are also concerned about the service OPM provides to 

agencies. OPM’s results for the two FHCS questions relating to customer 

focus show a decline from 2002 to 2004 in its employee’s satisfaction with 

OPM’s focus on customer needs. In 2002, 66 percent of OPM employees 

Page 20 GAO-06-861T 
agreed that “products and services in their work unit are improved based 

on customer/public input.” However in 2004, 53 percent of OPM 

employees agreed with the same statement, a 13 percentage point decline. 

A similar decline occurred in response to a FHCS question concerning 

performance rewards. In 2002, 51 percent of OPM employees agreed that

“employees are rewarded for providing high quality products and services

to customers,” whereas in 2004, 35 percent of OPM employees agreed with 

the same statement, a decline of 16 percentage points. 

While the employee focus group discussions did not directly address 

customer focus, some participants raised concerns during their 

discussions that could affect OPM’s client focus. Focus group participants

from HCLMSA said OPM provides poor service to external customers due 

to unnecessary delays and a lack of communication. They said the HCO 

structure makes it difficult to connect customers with OPM employees 

who can provide them with accurate information and advice. The HCO 

structure was introduced in 2003, therefore it could have contributed to 

the decline in positive responses to the customer focus questions in the 

2004 FHCS. 

In an OPM briefing to GAO, officials described OPM’s structure in support 

of strategic human capital management, and part of that structure includes 

“targeting capability to implement strategic management of human capital 

on an agency-by-agency basis” through its HCLSMA division. According to 

OPM documents, each agency center in HCLMSA has staff to provide 

human resources technical assistance to agencies. OPM has a number of 

goals and activities in its Strategic and Operational Plan intended to 

improve its customer service and focus on customer needs. For example, 

OPM plans to develop performance standards for OPM common services 

by July 2006, and implement them by October 2006. 

As OPM works to address its customer issues, it should consider other 

ways to more quickly respond to inquires from agencies for specific 

technical expertise. In addition, OPM should develop a customer 

feedback survey to identify issues related to timeliness, customer needs, 

satisfaction, and take action accordingly. 

Page 21 GAO-06-861T 
OPM Needs to Take Full 

Advantage of 

Opportunities to 

Collaborate and Facilitate 

Information Sharing with 

the CHCO Council and 

Agency Human Resource 

Directors

Our prior work has found that high-performing organizations strengthen 

accountability for achieving crosscutting goals by placing greater 

emphasis on collaboration, interaction, and teamwork, both within and 

across organizational boundaries, to achieve results that often transcend 

specific organizational boundaries. In addition, we have found that highperforming organizations strategically use partnerships and that federal 

agencies must effectively manage and influence relationships with 

organizations outside of their direct control. An effective strategy for 

partnerships includes establishing knowledge-sharing networks to share 

information and best practices. 

To collaborate and share information, CHCOs said that OPM could make 

better use of the CHCO Council. Human resource directors said that OPM 

could facilitate more communities of practice at the implementation level

among them. We have reported often on the need to collaborate and share 

information as a way to improve agency human capital approaches, 

processes, and systems. Specifically, we have made several 

recommendations to OPM to work more closely with the CHCO Council to 

(1) share information on the effective use of retirement flexibilities, (2) act 

as a clearinghouse of information for the innovative use of alternative 

service delivery for human capital services, and (3) more fully serve as a

clearinghouse in sharing and distributing information about when, where, 

and how the broad range of human capital flexibilities are being used to 

help agencies meet their human capital management needs.19 Further, we 

have recommended that OPM, in conjunction with the CHCO Council, help

facilitate the coordination and sharing of leading practices related to 

efficient administration of the student loan repayment program by 

conducting additional forums, sponsoring training sessions, or using other 

methods.20 For example, our work on the federal hiring process identified 

areas where OPM could target its efforts.21 OPM has since taken a number 

 19GAO, Human Capital: Agencies Are Using Buyouts and Early Outs with Increasing

Frequency to Help Reshape Their Workforces, GAO-06-324 (Washington, D.C.: Mar. 31,

2006); GAO, Human Capital: Selected Agencies’ Use of Alternative Service Delivery

Options for Human Capital Activities, GAO-04-679 (Washington, D.C.: Jun. 25, 2004);

GAO, Human Capital: OPM Can Better Assist Agencies in Using Personnel Flexibilities,

GAO-03-428 (Washington, D.C.: May 9, 2003). 

20GAO, Federal Student Loan Repayment Program: OPM Could Build on Its Efforts to

Help Agencies Administer the Program and Measure Results, GAO-05-762 (Washington 

D.C.: Jul. 22, 2005). 

21GAO, Human Capital: Opportunities to Improve Executive Agencies’ Hiring Processes, 

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

Page 22 GAO-06-861T 
of actions to help agencies improve their hiring processes. With respect to

improving agency hiring processes and use of human capital flexibilities, 

we reported that the CHCO Council should be a key vehicle for this 

needed collaboration. For example, OPM, working through the CHCO 

Council, can serve as a facilitator in the collection and exchange of 

information about agencies’ effective practices and successful approaches 

to improved hiring.22 To address the federal government’s crosscutting 

strategic human capital challenges, we have testified that an effective and 

strategic CHCO Council is vital. We have also reported that using 

interagency councils, such as the Chief Financial Officers’ and Chief 

Information Officers’ Councils, has emerged as important leadership 

strategy in both developing policies that are sensitive to information 

concerns and gaining consensus and consistent follow-through within the 

executive branch.23 

Agency officials overwhelmingly reinforced a need for OPM to do more to 

collaborate and facilitate information sharing with the CHCO Council and 

HR directors. A former department-level CHCO described the CHCO 

Council as “a lost opportunity with little opportunity for dialogue.” 

Another CHCO stated that the Council has rarely been used to debate new 

human capital policies and has been excluded from major policy debates. 

Although, some CHCOs and HR directors pointed to OPM’s successful 

collaborative efforts through the CHCO Council, such as its assistance to 

agencies in the aftermath of Hurricane Katrina, they told us that OPM 

misses opportunities to more effectively partner with agencies. While 

some human resource directors believed the CHCO Council did provide a 

means of sharing information, which is especially useful for the CHCOs 

who lack human resources backgrounds, several officials described ways 

in which OPM could more effectively use the Council. 

A majority of human resource directors we met with told us they would 

like to see OPM facilitate the sharing of information and best practices 

among HR professionals, as well as CHCOs. Some officials said that OPM 

frequently communicates with agencies via fax and e-mail, but does not 

bring agencies together as often to share information. Some CHCOs said 

they would like to see the CHCO Council interact more with other 

 22GAO, Human Capital: Additional Collaboration Between OPM and Agencies Is Key to 

Improved Federal Hiring, GAO-04-797 (Washington, D.C.: Jun. 7, 2004).

23GAO, Human Capital: Building on the Current Momentum to Transform the Federal 

Government, GAO-04-976T (Washington, D.C.: Jul. 20, 2004). 

Page 23 GAO-06-861T 
governmentwide interagency councils. Also, most HR directors, as well 

as, several CHCOs, responded positively to more involvement of agency 

HR directors on the CHCO Council. Director Springer said that 

membership on the CHCO Council has been expanded to include a deputy 

CHCO position. The inclusion of deputies is an important step toward 

building a collegial environment for sharing best practices. 

Several agency officials used the SES performance management system 

certification process to illustrate what they considered a missed 

opportunity for OPM to facilitate agency sharing of information and best 

practices, particularly during the certification application submission 

process. However, an OPM official told us that it does not provide 

agencies with examples of “best practice” certification submissions 

because OPM does not want to convey to agencies that there is only one

“right” way to become certified. While OPM is certainly correct about no 

one right way, several agencies nevertheless indicated having difficulty 

understanding OPM’s expectations for agency certification submissions. 

In response, one CHCO took the initiative to use one of the CHCO 

Academy24 meetings to engender information sharing among agencies with 

the application process. 

Collaboration and information sharing will be critical as human capital 

reforms begin to take hold across government. If OPM is to successfully 

lead reform, it will need to strategically use the partnerships it has 

available to it, such as the CHCO Council and others, as well as develop a

culture of collaboration, information sharing, and working with customers 

to understand what they will need from the agency. 

OPM’s Strategic and 

Operational Plan Includes 

a Number of Efforts 

Intended to Improve Its 

Customer Focus 

It is clear from the OPM Strategic and Operational Plan, 2006–2010 that 

issues of customer satisfaction and timeliness in the provision of OPM 

common services is an important and compelling customer need. OPM 

management has indicated that operational goals and activities are 

organized as steps in its internal activities or processes to better support 

external products and services for its customers and stakeholders. For 

instance, OPM intends to develop and implement a new common services 

 24The CHCO Academy was established as a forum for Council members only, to discuss

human resources issues, learn from one another in an informal setting, and share best 

practices in the strategic management of human capital. Academy sessions are scheduled 

throughout the year on the third Thursday of the month at the Office of Personnel 

Management. 

Page 24 GAO-06-861T 
methodology, to employ performance standards for measuring the delivery 

of common services to customers, and to operate under a fully 

implemented set of internal delegated authorities and protocols by the end

of fiscal year 2006. OPM management has pointed out that these activities 

are also presented in a timeline tracking sheet that is used to make “real 

time” changes through continual update of accomplishments. It is OPM’s 

intent to then inform customers of the agency’s success in meeting the 

stated customer goals found in the plan within two weeks of each success, 

thereby establishing a means of transparency and accountability. OPM 

officials told us that to date, the agency is meeting this intent.

Successful organizations establish a communication strategy that allows 

for the creation of common expectations and reports on related progress. 

Activities intended to provide for better means of communication and 

collaboration are also clearly found in the OPM plan. As noted earlier, 

OPM is taking steps to improve its internal communication by recently 

developing and posting a functional organization directory on its internal 

website. OPM also plans to redesign its public website to improve 

communication and customer focus by the close of fiscal year 2006. The 

OPM plan further states, as a strategic objective, that OPM “will have 

constructive and productive relationships with external stakeholders,” 

such as Congress, veterans, unions, media and employee advocacy groups. 

To better meet external client needs, OPM has an ongoing key related 

effort to modernize its retirement systems program. Through this 

program, OPM expects to reengineer the various processes that provide 

services to retirement program participants that include about 5 million 

federal employees and annuitants. One of OPM’s objectives is to 

standardize applications for coverage and eligibility determinations and 

benefits calculations, making them specific to customer needs and 

accessible to federal agencies and program participants. OPM’s Strategic 

and Operational Plan contains operational goals related to this 

modernization effort. We believe that such a modernization effort is 

clearly needed. At the same time, as we have noted in our prior work, 

OPM has lacked needed processes for developing and managing 

requirements and related risks, while providing sound information to 

investment decision makers in order to effectively complete 

modernization of this program.25 We made recommendations to OPM 

regarding establishment of management processes needed for effective 

 25GAO, Office of Personnel Management: Retirement Systems Modernization Program

Faces Numerous Challenges, GAO-05-237 (Washington, D.C.: Feb. 28, 2005). 

Page 25 GAO-06-861T 
oversight of the program. OPM agreed that the processes we identified 

were essential and noted it is taking steps to address our 

recommendations to strengthen these processes. 

Leading organizations have recognized that a critical success factor in 

fostering a results-oriented culture is an effective performance 

management system that creates a “line of sight” showing how unit and 

individual performance can contribute to overall organizational goals and 

helping them understand the connection between their daily activities and 

the organization’s success.26 Effective performance management systems 

Performance Culture 

and Accountability 

can drive organizational transformation by encouraging individuals to 

focus on their roles and responsibilities to help achieve organizational 

outcomes. Our analysis shows that OPM’s executive performance 

management system aligns the performance expectations of OPM’s top 

leaders with the organization’s goals. OPM sets forth the organization’s 

goals in its 2006–2010, Strategic and Operational Plan and directly 

connects these goals to the performance expectations of top leaders using 

performance contracts. Clearly defined organizational goals are the first 

step toward developing an effective performance management system. 

OPM uses performance contracts to link organizational goals to 

performance expectations for senior leaders and holds them accountable 

for achieving results. As we have reported, high performing organizations 

understand that they need senior leaders who are held accountable for 

results, drive continuous improvement, and stimulate and support efforts 

to integrate human capital approaches with organizational goals and 

related transformation issues.27 These organizations can show how the 

products and services they deliver contribute to results by aligning 

performance expectations of top leadership with organizational goals and 

then cascading those expectations down to lower levels. We assessed how 

well OPM is creating linkages between executive performance and 

organizational success by reviewing the performance contracts (Fiscal 

Year 2006 Executive Performance Agreements) of the five associate 

directors of OPM’s major divisions. We evaluated these performance 

contracts by applying selected key practices we have previously identified

 26GAO, Results-Oriented Cultures: Using Balanced Expectations to Manage Senior 

Executive Performance, GAO-02-966 (Washington, D.C.: Sep. 27, 2002). 

27GAO, Human Capital: Senior Executive Performance Management Can Be 

Significantly Strengthened to Achieve Results, GAO-04-614 (Washington, D.C.: May 2004). 

Page 26 GAO-06-861T 
for effective performance management. 28 We chose these practices 

because they are especially relevant to OPM’s current strategic 

management efforts. These practices, collectively with others we have 

identified in prior work, create a “line of sight” showing how unit and 

individual performance can contribute to overall organizational goals. 

We found that OPM has implemented several key practices to develop an 

effective performance management system for its senior executives: 

• Align individual performance expectations with organizational 

goals. An explicit alignment of daily activities with broader results is 

one of the defining features of effective performance management 

systems in high-performing organizations. OPM executive

performance contracts explicitly link individual performance 

commitments with organizational goals. Executives are evaluated on 

their success toward achieving goals that are drawn directly from the 

OPM Strategic and Operational Plan. Measures of these achievements 

account for 75 percent of executives’ annual performance ratings. For 

example, one associate director’s performance contract includes a 

commitment to achieve OPM’s operational goal of having “80 percent 

of initial clearance investigations completed within 90 days.” 

• Connect performance expectations to crosscutting goals. Highperforming organizations use their performance management systems 

to strengthen accountability for results, specifically by placing greater 

emphasis on collaboration to achieve results. OPM’s executive

performance contracts achieve this objective by making executives 

accountable for OPM-wide goals. In addition to specific divisional 

goals, each executive performance contract includes a common set of 

“corporate commitments” that transcend specific organizational 

boundaries and that executives must work together to achieve. These 

commitments are directly linked to the OPM Strategic and Operational 

Plan. For example, each executive contract includes a commitment to 

“Implement an employee recognition program at OPM by July 1, 2006.” 

• Provide and routinely use performance information to track 

organizational priorities. High-performing organizations provide 

objective performance information to executives to show progress in 

 28GAO, Results-Oriented Cultures: Creating a Clear Linkage between Individual

Performance and Organizational Success, GAO-03-488, (Washington, D.C.: Mar. 14, 2003). 

Page 27 GAO-06-861T 
achieving organizational results and other priorities.29 OPM is taking a 

tactical approach to implementing its Strategic and Operational Plan. 

Activities supporting the strategic objectives are listed on an 

“Operational Timeline” or tracking sheet that OPM uses, and “real 

time” changes are made through continual updates of 

accomplishments. According to Director Springer, each OPM division 

has a tracking sheet for the specific goals for which they are 

accountable. She told us that OPM leadership meets monthly to 

review the timeline and to determine if goals have been met or what 

progress OPM is making toward achieving their objectives. 

• Require follow-up actions to address organizational priorities. 

High-performing organizations require individuals to take follow-up 

actions based on the performance information available to them. 

OPM’s performance contracts include commitments for executives to 

respond to results from the FHCS. Each associate director is 

committed to “Implement [an] action plan to ensure OPM is rated in 

the top 50% of agencies surveyed in the 2006 FHCS and the top five 

agencies in the 2008 FHCS.” To achieve this goal, each associate 

director developed a FHCS action plan for their division to address 

employee concerns identified in the 2004 FHCS and the follow-up 

focus group discussions. 

• Use competencies to provide a fuller assessment of 

performance. High-performing organizations use competencies, 

which define the skills and supporting behaviors that individuals need 

to effectively contribute to organizational results. Each OPM 

executive performance contract includes core competency 

requirements for effective executive leadership, which account for 25 

percent of annual performance ratings. For example, executives are 

responsible for building “trust and cooperative working relationships 

both within and outside the organization.” 

OPM’s executive performance contracts incorporate these key practices of 

performance management, and the agency must build on this progress and 

ensure that its SES performance management system is used to drive 

organizational performance. 

 29GAO-04-614. 

Page 28 GAO-06-861T 
OPM can build on its strong system of executive accountability to address 

employee concerns with its overall performance culture, as well as 

support its internal transformation. OPM has plans to implement new 

performance elements and standards for all OPM employees to support 

the new agency Strategic and Operational Plan. As we have reported, 

high-performing organizations use their performance management systems 

to strengthen accountability for results.30 In the 2004 FHCS, the percent of 

OPM employees who agreed that “I am held accountable for achieving 

results” was 81 percent; essentially the same as the 80 percent of 

employees in the rest of the government agreeing with this statement. 

OPM employees’ positive view of “being held accountable for achieving

results” can be used to help address employee concerns regarding its 

performance culture. For example, a significant decrease occurred 

between OPM’s 2002 and 2004 FHCS results on a question that measures 

employee perceptions of management’s focus on organizational goals. The 

percentage of OPM employees who agreed that “managers review and 

evaluate the organization's progress toward meeting its goals and 

objectives,” declined by 17 percentage points from 2002 (69 percent) to 

2004 (52 percent). This question was only discussed in a few of the focus 

groups, so it is unclear why fewer employees agreed with this statement in 

2004. Although limited, these discussions suggest that some employees do

not feel their performance appraisal is a fair reflection of their 

performance due to inadequate goals and performance standards, and a 

lack of alignment between employee goals and OPM’s mission. 

OPM Can Build upon 

Strong Accountability to 

Address Employee 

Concerns with its 

Performance Culture 

OPM plans to address these employee performance concerns to ensure 

there is a clear linkage between the OPM Strategic Operational Plan, 

Division/Office Plans, and individual employee-level work plans. By July 

2006, OPM plans to implement new performance elements and standards 

for all employees that support the OPM Strategic and Operational Plan. 

Already underway, is an OPM beta site (the HCLMSA division) to test its 

performance management system to link pay to performance. OPM 

officials informed us that as of June 1, 2006, all HCLMSA employees are 

now working under new performance plans, consistent with the OPM beta 

site requirements. 

To maximize the effectiveness of a performance management system, high 

performing organizations recognize that they must conduct frequent 

 30GAO-03-488. 

Page 29 GAO-06-861T 
training for staff members at all levels of the organization.31 OPM plans to 

develop and implement a core curriculum for supervisory training to 

ensure all managers and supervisors are trained in performance 

management. Also, OPM is developing a proposal to enhance the 

relationships between the human resources function and managers to 

assist them in dealing with their human resource issues. If effectively 

implemented, these actions should address many of the concerns raised by 

focus group participants.

 

OPM faces many challenges as it seeks to achieve its organizational 

transformation and become a high-performing organization. To meet its 

current and future challenge to lead human capital across government, 

Director Springer has shown leadership commitment to its transformation 

by initiating a number of action plans to address employee concerns. 

While the steps taken by OPM demonstrate progress in achieving its 

transformation, it must continue on this path by closely monitoring and 

communicating with its employees and customers, expanding its 

workforce and succession planning efforts, and continuing to improve its 

performance culture and accountability for results. As I have testified on

many occasions, in recent years GAO has learned a great deal about the 

challenges and opportunities that characterize organizational 

transformation. From both our own experiences and from reviewing 

others’ efforts, I look forward to working closely with Director Springer 

and assisting Congress as it moves toward the implementation of 

governmentwide human capital reform. 

Concluding Remarks 

Chairman Voinovich, Senator Akaka, and Members of the subcommittee, 

this completes my prepared statement. I would be pleased to respond to 

any questions that you may have. 

 31GAO-03-488. 

Page 30 GAO-06-861T 
For further information regarding this statement, please contact Brenda S. 

Farrell, Acting Director, Strategic Issues, at (202) 512-6806 or 

farrellb@gao.gov. Individuals making key contributions to this statement 

include Julie Atkins, Thomas Beall, Carole Cimitile, William Colvin, S. 

Mike Davis, Charlene Johnson, Trina Lewis, and Katherine H. Walker. 

Contact and 

Acknowledgments 

 

Page 31 GAO-06-861T 
Appendix I 

Federal Human 

Capital Survey, Focus 

Groups, and Action 

Plans 

We used the Federal Human Capital Survey (FHCS) and summaries of the 

Office of Personnel Management (OPM) focus groups to assess employee 

views of OPM’s organizational capacity. OPM conducted the FHCS during 

fall 2004. The survey sample included 276,000 employees and was 

designed to be representative of the federal workforce. OPM had 1,539 

respondents to the survey. The survey included 88 items that measured 

federal employee perceptions about how effectively agencies are 

managing their workforces. For more information about the 2004 FHCS 

survey see http://www.fhcs2004.opm.gov/. We reviewed OPM’s analysis of

its 2004 FHCS results and conducted our own analyses of survey results 

using 2002 and 2004 FHCS datasets provided to us by OPM. On the basis 

of our examination of the data and discussions with OPM officials 

concerning survey design, administration and processing, we determined 

that the data were sufficiently reliable for the purpose of our review. 

In fall 2005, OPM contracted with Human Technology, Inc. to conduct 

focus groups to understand factors contributing to employees’ responses 

on selected items from the 2004 FHCS and to obtain employees’ ideas for 

addressing top priority improvement areas. Employees were randomly 

selected to participate in 33 focus groups with participants from all major 

divisions, headquarters and the field, employees and supervisors, and 

major OPM installations. The participants in each focus group decided 

which topics to discuss by voting for the FHCS questions that “are most 

important for OPM to address in order to make the agency a better place 

to work.” Questions were divided into three categories: leadership, 

performance culture, and other dimensions. Participants voted for three 

questions in each category and the questions that received the most votes 

were discussed by the group. We analyzed summaries of these focus 

groups and used the participant comments to illustrate employee 

perspectives. We also analyzed recently issued action plans developed by 

OPM to address issues identified in the focus groups. These action plans 

were approved by OPM’s Director in May 2006 and they list specific 

actions OPM and each internal division will take along with suggested due 

dates for completion. 

Page 1 GAO-06-861T (450503) 
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