U.S. GOVERNMENT PRINTING OFFICE

70–977 cc WASHINGTON : 2001

S. Hrg. 107–65

HIGH RISK: HUMAN CAPITAL IN THE FEDERAL

GOVERNMENT

HEARING

BEFORE THE

OVERSIGHT OF GOVERNMENT MANAGEMENT,

RESTRUCTURING AND THE DISTRICT OF COLUMBIA

SUBCOMMITTEE

OF THE

COMMITTEE ON

GOVERNMENTAL AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

FEBRUARY 1, 2001

Printed for the use of the Committee on Governmental Affairs

(

For sale by the Superintendent of Documents, Congressional Sales Office

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

(II)

COMMITTEE ON GOVERNMENTAL AFFAIRS

FRED THOMPSON, Tennessee, Chairman

JOSEPH I. LIEBERMAN, Connecticut, Ranking Democrat

TED STEVENS, Alaska

SUSAN M. COLLINS, Maine

GEORGE V. VOINOVICH, Ohio

PETE V. DOMENICI, New Mexico

THAD COCHRAN, Mississippi

JUDD GREGG, New Hampshire

ROBERT F. BENNETT, Utah

CARL LEVIN, Michigan

DANIEL K. AKAKA, Hawaii

RICHARD J. DURBIN, Illinois

ROBERT G. TORRICELLI, New Jersey

MAX CLELAND, Georgia

THOMAS R. CARPER, Delaware

JEAN CARNAHAN, Missouri

HANNAH S. SISTARE, Staff Director and Counsel

JOYCE A. RECHTSCHAFFEN, Democratic Staff Director and Counsel

DARLA D. CASSELL, Chief Clerk

SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT,

RESTRUCTURING, AND THE DISTRICT OF COLUMBIA

GEORGE V. VOINOVICH, Ohio, Chairman

RICHARD J. DURBIN, Illinois, Ranking Democrat

TED STEVENS, Alaska

SUSAN M. COLLINS, Maine

PETE V. DOMENICI, New Mexico

THAD COCHRAN, Mississippi

DANIEL K. AKAKA, Hawaii

ROBERT G. TORRICELLI, New Jersey

THOMAS R. CARPER, Delaware

JEAN CARNAHAN, Missouri

Kristine I. Simmons, Staff Director

Marianne Clifford Upton, Minority Staff Director and Chief Counsel

Julie L. Vincent, Chief Clerk

(III)

C O N T E N T S

Opening statements: Page

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

Senator Durbin ................................................................................................. 4

Senator Akaka .................................................................................................. 6

WITNESS

THURSDAY, FEBRUARY 1, 2001

Hon. David M. Walker, Comptroller General of the United States and Chief

Executive Officer, U.S. General Accounting Office, Washington, DC:

Testimony .......................................................................................................... 7

Prepared statement with attachments ........................................................... 27

(1)

HIGH RISK: HUMAN CAPITAL IN THE

FEDERAL GOVERNMENT

THURSDAY, FEBRUARY 1, 2001

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

The Subcommittee met, pursuant to notice, at 10:30 a.m., in

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

Voinovich, Chairman of the Subcommittee, presiding.

Present: Senators Voinovich, Durbin, and Akaka.

OPENING STATEMENT OF SENATOR VOINOVICH

Senator VOINOVICH. The hearing will come to order.

First, I would say that I am expecting some more of my colleagues. I was able to get out of the prayer breakfast a little bit

sooner than some of them, so I suspect they will be coming along

in the next couple of minutes.

I would like to thank you all for coming today. This is the first

hearing in the 107th Congress of the Subcommittee on Oversight

of Government Management. Today we will examine the decision

of the U.S. General Accounting Office to designate strategic human

capital management across the entire government as high risk. To

help in that examination, our sole witness today is the Hon. David

M. Walker, the Comptroller General of the United States and the

Chief Executive Officer of the U.S. General Accounting Office.

Comptroller General, we are very happy to have you with us

today, and again I want to express publicly the wonderful cooperation that I have received from you during the last couple of years.

It is heartening to me to know that your recently released ‘‘2001

GAO High-Risk Report’’ states that, ‘‘After a decade of government

downsizing and curtailed investments in human capital, it is becoming increasingly clear that today’s Federal human capital strategies are not appropriately constituted to adequately meet current

and emerging needs of government and its citizens in the most effective, efficient, and economical manner possible. Strategic human

capital management is a pervasive challenge in the Federal Government.’’ I agree.

As anyone who has been following the activities of this Subcommittee knows, we have been focusing on the unmet needs of the

Federal workforce for some time. During the 106th Congress, one

of the top priorities of the Subcommittee was to raise the profile

of human capital issues, and I am proud of our record in that reVerDate 11-MAY-2000 12:24 Aug 09, 2001 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 70977.TXT SAFFAIRS PsN: SAFFAIRS
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gard. From July 1999 through May 2000, the Subcommittee held

six hearings that examined various aspects of human capital management. We requested four reports from GAO addressing various

aspects of the human capital issue, and I sponsored and cosponsored important civil service legislation that has become law.

The culmination of the Subcommittee’s review was to release this

past December a report entitled, ‘‘Report to the President: The Crisis in Human Capital.’’ The findings of the Subcommittee leave little doubt that the Federal Government is in dire need of a unified

strategy to rebuild the civil service in light of the demographic and

performance challenges it confronts. The report includes recommendations for reforming human capital management before it

reaches critical mass, and I think that in some departments we

have already reached that. I have shared the report with the new

administration.

I must say it is fortuitous that 7 weeks after we issued this report stating that there is a crisis, GAO designated human capital

as high risk. I hope that the work of the Governmental Affairs

Committee, the General Accounting Office, and numerous well-respected think tanks such as The Brookings Institution, the National Academy of Public Administration, and the Council for Excellence in Government, has settled the question that we do have

a crisis in human capital. The question now is: How are we going

to resolve it?

Mr. Walker, I would like to commend you for sounding the alarm

over the human capital crisis. We have both been ringing the bell

over the human capital crisis for the last 2 years, and I would like

to ring the bell right now. [Rings bell.] Is anybody listening?

There is an old song entitled, ‘‘If I had a Hammer.’’ Some of the

young people here will not remember it. But the fact is that we

have to get people’s attention, and I wish more of my colleagues

were here this morning. We have to have a wakeup call.

Some of you may wonder why I am so interested in this subject.

For 18 years, as a mayor and a governor, I lobbied and interfaced

with the Federal Government. I am the only person in the history

of this country who has been president of the National League of

Cities and chairman of the National Governors Association. I

worked with administrations year in and year out, and my observations were that new administrations came in and appointed their

secretaries, many of whom were appointed because of geographic or

other reasons; and then, there were assistant secretaries and deputy secretaries and so on and so forth. Then, they all got on a plane

and went around the country giving speeches. And the ‘‘A’’ team,

the people who were supposed to get the job done, were basically

ignored.

One thing that I decided to do and one reason why I came to the

U.S. Senate was to see if we could not do something about changing the culture of the workforce of the Federal Government. We are

here today—and the chickens have come home to roost. We have

a lot of people who are ready to retire and will be retiring, and I

am hoping that this administration ‘‘gets’’ it and understands how

important the ‘‘A’’ team is.

One rumor that I have heard is that there is some talk about

eliminating existing Executive orders that deals with labor-manVerDate 11-MAY-2000 12:24 Aug 09, 2001 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 70977.TXT SAFFAIRS PsN: SAFFAIRS
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agement partnerships. I have to tell you something: Labor-management partnerships are very important if we are going to do something about the human capital crisis.

When I was Governor of Ohio, we initiated a quality management program, and we could not have done it without cooperation

from our unions. We did not call it quality management; we called

it ‘‘quality services through partnership.’’ And it was amazing what

happened to that workforce because of the fact that we started

working together, created teams, and started to solve problems by

committing ourselves to continuous improvement.

So the years of inattention to sound human resource management within the Federal Government have taken their toll. As I

have said on numerous occasions, and it bears repeating right now,

the average Federal employee is 46 years old. By 2005, 34 percent

of Federal employees will be eligible for regular retirement, and 20

percent more will be eligible for early retirement. Taken together,

that is more than half the Federal workforce. Now, I do not expect

them all to retire at once, but it is a serious problem.

It is amazing, when I have had people come in, prior to confirmation, Senator Durbin and I talk to them. Joe Albaugh, who is going

to be the new director of FEMA, came in, and I asked him if he

had looked at his workforce and its vulnerability in terms of retirement. And he said, ‘‘I did not even know it was a problem.’’ I asked, how many people do you have? He said 2,600. I said you

are running FEMA, and you are going to have storms and tornadoes and floods, and you are going to have to respond. He is taking

over after James Lee Witt, who I think is probably the best director

that President Clinton had.

So there is a potential for exodus. Now, some people say, ‘‘So

what?’’ I do hear that. I give speeches, and they say it is good to

see that we are going to get rid of our Federal employees. I am

hearing that too often and right now, from some people in parts of

the administration. Well, you do not have to worry about it. We are

going to get rid of people. They are going to go out the door.

A nursing shortage could adversely affect the Department of Veterans Affairs’ efforts to improve patient safety in VA facilities and

put veterans at risk. The stories about the VA and sub-par treatment are notorious.

But do you want to know something? That is not only a problem

at the VA; it is a problem throughout the country. We need more

nurses. And how is the Federal Government going to compete if it

does not have the tools to bring more nurses on board?

At the Social Security Administration, increasing demand for

services, imminent retirement of a large part of its workforce,

changing consumer expectations, and mixed success in past technology investments will challenge the agency’s ability to meet its

service delivery demands, which include faster and more accurate

benefit claims determinations and increased emphasis on returning

the disabled to work.

At the Department of Energy, headquarters and field staff lack

contract management skills to oversee large projects such as the

cleanup of radioactive and hazardous waste sites.

I met with the commissioners from the Nuclear Regulatory Commission the other day. Six times more people on their payroll are

4

over 60 than under 30. They all have Ph.D.’s and master’s degrees,

and the Commissioners are worried about losing experienced personnel. How are they going to do their work?

So this is something that we really need to be concerned about.

In over 30 years, as an elected public servant, I have come to learn

that the individuals who administer the programs and services on

which the public depends are the government’s greatest resource.

However, building a world-class civil service is not an end in and

of itself. The ultimate and most important goal is to improve Federal Government programs and the delivery of services to the

American people, to work harder and smarter and do more with

less. This can be accomplished most effectively by making wise investments in the employees who run the programs and know how

to make them work.

It is my hope that the activities of the Subcommittee will invite

an exchange of ideas and begin a process that will dramatically improve the management of human capital in the Federal Government.

I look forward to working on a bipartisan basis with my Subcommittee colleagues, the Bush Administration, other Members of

the Senate and House, as well as the Federal employees unions—

and I want to make it clear that they are very much a part of this.

We cannot get this job done without the cooperation of our unions,

and we have tried to stay in touch with them. Public policy think

tanks are also important, as well as other interested parties.

I am very pleased with the cooperation that the Subcommittee

has received, and I look forward to continuing to work with everyone.

The Subcommittee will hold hearings on solutions in the near future. The human capital crisis creates an opportunity for Congress

and the administration to reshape the Federal workforce in the

21st Century. It is time for us to roll up our sleeves and get to

work.

I am pleased that the Ranking Minority Member of the Subcommittee is here with us, Senator Durbin; and Senator Akaka,

welcome. I was explaining that you were on your way back from

the prayer breakfast. We are glad to have both of you here with

us.

I would now like to call on Senator Durbin for an opening statement.

OPENING STATEMENT OF SENATOR DURBIN

Senator DURBIN. Thank you very much, Senator Voinovich, and

thank you for this hearing, which is a continuation of an issue

which we have looked at before, and we should continue to look at.

I think the Chairman has adequately described the scope of the

problem in terms of the shortfall in Federal civil servants who will

be available in years to come. It is truly a troubling phenomenon

when we consider the major responsibilities which we entrust to

these Federal agencies. We want to make certain that we have men

and women who are capable and dedicated in those positions.

I am happy that the Comptroller General, David Walker, has

joined us today to give us his observations.

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I would just like to say in very general terms that I think our

strong economy is part of the problem in that a lot of job opportunities, usually paying more, have become available. Perhaps the

slowing down, downturn, however you want to characterize it, will

change that. I hope that that is not the tradeoff, that if we want

a strong Federal workforce, we have to pray that the private sector

is not that appealing. I think that is a false exchange and one that

we should reject. I think we can have both a strong economy and

a strong public workforce, and that is something we ought to focus

on in creating incentives for people to consider Federal public service.

A year or two ago, the Democrats met and invited a gentleman

from the Federal Communications Commission to come in and talk

about some of the things they are facing. The interesting thing was

that he was a man in his sixties who had retired from teaching at

a university and was very bright and really gave us some insight

into some of the more technical aspects of Federal oversight of the

telecommunications industry, which you can imagine is just changing by the day. But he quickly added that he did not have the

workforce to sustain this kind of surveillance and oversight.

Think about that for a second—where we expect the Federal

Government to be there as the final arbiter and protector for families and businesses across America in so many different aspects,

and whether we can attract people with the technical expertise and

dedication to do the job. And he said, quite frankly, we cannot.

Under the present circumstances in the area of information technology and communications, there are just so many more appealing

opportunities outside government, it is so difficult to bring people

in.

There are two additional things that I would like to comment on.

It was not that long ago that the great Rush Limbaugh and others

gloried in the closing down of the Federal Government, suggesting

that the American people would never notice. That kind of trash

talk from radio personalities diminishing the responsibility and

role of Federal agencies and the people who work there takes its

toll on the folks who have dedicated their lives to doing the right

thing for our country by being part of Federal public service.

The fact is we closed down the government, and people did notice. A lot of things happened that we did not want to happen

across America, and we learned our lesson after a few weeks.

But think about that steady drumbeat. We put up with enough

as politicians, but if somebody hears every single day how worthless they are, and it becomes a mantra across America, how appealing is that job in the long haul?

The other thing is that we have a responsibility when it comes

to these agencies in the way we budget them. If we do not give

them the resources so they can make adequate planning for their

future so they know that the job they are involved in today is of

value and has some long-term benefit, then, frankly, it is no surprise that many people look for greener pastures and a more satisfying work experience.

So I thank you for this hearing. I think you are addressing a

very serious problem, and I think it is one that we can make some

6

suggestions to the new administration and perhaps really improve

the situation.

One last point if I could. A president of a university in Chicago

came to see me a week or two ago, and we were talking about the

shortfall in teachers—I know the Chairman mentioned the shortfall in nurses, and that is a national problem. The shortfall in

teachers is the same. I said it is just alarming to me that we have

so many teachers who will be retiring so soon, and he said you

have to look at the individual teacher. He said a lot of these teachers are burned out, have no interest in this anymore, and do not

want to learn what they have to learn to be effective; it is time for

them to retire. But a lot of them who are just great are going to

be leaving, too. So when we talk about retirements, there are some

people who need to relax and look at a different side of life, but

there are also some very valuable people whom we want to keep

in public service, who make a contribution that cannot be replicated by a new employee.

Thanks, Mr. Chairman.

Senator VOINOVICH. Thank you, Senator Durbin.

That is interesting, because at the NRC, they have a lot of people

who are working now who could retire, and they stay because they

are dedicated and know that they are making a contribution; but

they could decide to leave, and much institutional knowledge would

be gone. So it is a real problem.

Senator Akaka, please.

OPENING STATEMENT OF SENATOR AKAKA

Senator AKAKA. Thank you very much, Mr. Chairman.

I am very pleased to be here with you, Chairman Voinovich, and

my colleague and Ranking Member, Senator Durbin, as we continue our discussion on the challenges facing the Federal Government in managing its personnel resources.

Our government operates with machines and with computers,

but the greatest asset of government is our human resources, and

that is what we are talking about today. Placing human resource

management on the GAO high-risk list will focus attention on ensuring a viable and effective workforce.

Chairman Voinovich is to be commended for his diligence and

commitment to this issue. I know that you are interested in pursuing legislative solutions, and I look forward to working with you,

Mr. Chairman, and with the Ranking Member in this endeavor.

As we renew these hearings on government management, we

should remember that we are referring to people, individuals who

have devoted their lives to public service as Federal employees. I

believe that all of us here today agree that the Federal Government

needs dedicated and qualified employees.

The question is how does the Federal Government best manage

and retain current employees, attract new personnel, and provide

competitive compensation to all. Proposals recommended and actions taken should be done in a fair and equitable manner.

I will work with the new administration to foster the relationship

between effective workforce management and organizational success, a point stressed in GAO’s January update.

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

The leadership demonstrated by this Subcommittee over the past

decade to ensure an efficient and effective Federal Government is

well known. However, strategic plans for performance measures

and annual performance reports will have little meaning until Federal agencies are given adequate budgets to utilize programs that

will help attract, retain, and train employees.

Tools and personnel flexibilities allowed under current law are

under utilized because agencies lack the money to carry them out.

The public’s perception of the Federal Government comes from the

top. In this time of unprecedented budget surpluses, I call on the

administration and my colleagues in Congress as well to provide

agencies with the funds needed to carry out the people’s business.

Mr. Chairman, I look forward to hearing from Mr. Walker, and

I thank you for holding this hearing today.

Thank you very much.

Senator VOINOVICH. Thank you very much, Senator Akaka, for

your opening statement. I think that the last portion of it was very

apropos, that there are tools available today in the Federal Government to keep individuals on board, to provide training, and to do

some other things, but the budgets in the past have not reflected

the amount of money that they need. I hope that this administration recognizes that fact and understands that if they are going to

have a competitive workforce, they are going to have to provide the

dollars to make it competitive.

Senator VOINOVICH. Mr. Walker, we have a custom of swearing

in our witnesses, so if you would stand, please, and raise your right

hand.

Do you swear to tell the truth, the whole truth and nothing but

the truth, so help you, God?

Mr. WALKER. I do.

Senator VOINOVICH. Thank you.

Please proceed.

TESTIMONY OF HON. DAVID M. WALKER,1 COMPTROLLER GENERAL OF THE UNITED STATES AND CHIEF EXECUTIVE OFFICER, U.S. GENERAL ACCOUNTING OFFICE, WASHINGTON, DC

Mr. WALKER. Thank you, Chairman Voinovich, Ranking Member

Durbin, and Senator Akaka.

I appreciate your collective continued interest in this very important topic. Like you, I wish that we had more participating in this

endeavor. It is going to take more than four of us in order to get

the job done in this area—but I think people might be amazed at

how much the four of us, working collectively together, can get

done in this area.

I have a very extensive statement that I have submitted for the

record, and I would like to hit the highlights if I could, and at the

end, I will cover some summary material with these two boards

that we were able to bring today.

Again, thank you for this opportunity to discuss the urgency of

the need to improve the way the Federal Government manages its

most valuable asset—its human capital, or its people.

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As we all know, many Federal employees have made the choice

to choose country over self and to maximize their self-worth rather

than their net worth. I think that we have to recognize that the

Federal Government represents about 20 percent of the overall

economy in the United States, and it has significant implications

on every American’s life as well as significant implications around

the world, being the only superpower on earth with unparalled

military, economic, and political capabilities.

Given that fact, we need to have the best and the brightest working for the Federal Government, doing the people’s business, looking out for the greater good to the extent that we are going to

maximize the performance and assure the accountability of the

Federal Government for the benefit of all Americans.

An organization’s people, its human capital, are its most critical

asset in managing for results. However, the Federal Government

has all too often acted as if Federal employees were costs to be cut

rather than assets to be valued. After a decade of government

downsizing and curtailed investments in human capital, it is becoming increasingly clear that today’s Federal human capital strategies are not appropriately constituted to meet the current and

emerging needs of the Federal Government and the Nation’s citizens.

I would like to touch on two key points today. First, strategic

human capital management is a pervasive challenge in the Federal

Government. At many agencies, human capital issues have contributed to serious programmatic problems and risks, and in most

cases, these risks are increasing rather than decreasing.

Second, addressing the Federal Government’s human capital

challenges is a responsibility that must be shared by a variety of

parties, including agency leaders, OMB, OPM, the Congress, and a

variety of other parties in the not-for-profit as well as the for-profit

sector, which I will touch on at the end.

To help focus on this critically important issue, we recently

added strategic human capital management to the list of Federal

programs and operations we identified as being high risk. We determined that the Federal Government’s current approach to strategic human capital management met all three of the criteria that

we had adopted for identifying governmentwide high-risk areas.

First, strategic human capital management challenges are evident

at multiple agencies—and in fact I would say most agencies.

Second, these challenges affect a significant portion of the government’s total budget or other resources. And third, these challenges constitute a deficiency that should be monitored and addressed through individual agency actions as well as through OMB

and OPM initiatives, legislative action, and congressional oversight.

The leadership provided by this Subcommittee and the Senate

Committee on Governmental Affairs has been especially helpful

and important in focusing attention on this area and our related

challenges. Working together on a bipartisan basis, I think, lays a

foundation for eventual human capital reforms, both administratively and legislatively. And I might note that I have a copy here

of the report of this Subcommittee with me. I believe it is an outVerDate 11-MAY-2000 12:24 Aug 09, 2001 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 70977.TXT SAFFAIRS PsN: SAFFAIRS
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standing document. I think it is a foundation for progress, a good

building block to move from in seeing the way forward in this area.

Widespread inattentiveness to strategic human capital management has created a governmentwide risk, one that is fundamental

to the Federal Government’s ability to effectively serve the American people, both now and in the future.

The landmark Federal management reforms of the 1990’s addressed most but not all of the essential elements of modern performance management. Unfortunately, they did not address the

most critical element of modern performance management, and

that is the people dimension.

There are three key enablers that are necessary to maximize any

organization’s potential, whether it be in the for-profit sector, the

not-for-profit sector, or the government—people, process, and technology—and people are by far the most important element.

Mr. Chairman, we believe that Congress will eventually want to

address human capital legislative reforms similar to those discussed in your report—reforms in such key areas as improving the

Federal hiring system, providing more flexible pay approaches, enhancing career development and training, and improving employee

accountability.

However, we also believe that Federal agency leaders cannot afford to wait for these kinds of legislative reforms to arrive. Their

first priority must be to provide the leadership and to take the

steps that they can within current law to improve their human

capital management using authorities that already exist. In many

cases, we believe that a vast majority of what needs to be done in

this area can be done within the context of current law. In the end,

we will need legislative reforms and comprehensive reforms, and

we should work to achieve a consensus on those necessary reforms.

But in the interim, it is absolutely essential that all of the key

players do everything they can within the context of current law

to use all the flexibilities available under current law, and very

few, if any, agencies are doing that at the present point in time.

Again, our view is that the vast majority of needed improvements

can be achieved if agencies take a more strategic and performancebased approach to managing their workforces—for example, by performing effective workforce planning, developing performance goals

and measures to meet these challenges, and by linking employee

performance to results and to their overall strategic plan.

What is needed is leadership, vision, commitment, persistence,

and accountability. This is a multi-year effort.

Now that strategic human capital management has been added

to the list of high-risk areas, it is logical to ask what is it going

to take to get off the list. The answer is twofold. First, the key

players in the human capital area—agency leaders, OMB, OPM,

the Congress, and human capital professionals throughout the government—need to play their part in effectuating meaningful and

lasting change. Just as modern performance management principles have been brought to the Federal financial management,

information technology management, and strategic planning performance management areas, they must also be brought to the

human capital management area.

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Second, we need to see measurable and sustainable improvements in the economy, efficiency, and effectiveness with which the

government as a whole and individual agencies manage their

workforces to achieve their missions and goals, and in ways that

are fundamentally linked to their strategic planning under GPRA,

and that also need to be linked to their resource allocations and

their budgetary requests.

Although Federal human capital management is a high-risk

area, Federal employees are not the problem; rather, the problem

is the lack of a consistent strategic approach to marshalling, managing, and maintaining the human capital needed to ensure that

we are maximizing the government’s performance and assuring its

accountability.

The Federal Government’s approach to people management includes a range of outmoded attitudes, policies, and practices that

warrant serious and sustained attention. To view Federal employees as a cost to be cut rather than an asset to be valued would be

taking a narrow and shortsighted view, one that is obsolete and

must be changed.

In many government entities, the transition to modern performance management, and along with it, to strategic human capital

management, will require a cultural transformation. Hierarchical

management approaches will need to yield to partnerial approaches. Process-oriented ways of doing business will need to yield

to results-oriented ones. And silohed or stovepiped organizations

will need to become integrated organizations if they expect to make

the most of the knowledge, skills, and abilities of their people. And

they will need to look externally and to partner more across government, Federal, State, and local governments, internationally, as

well as the private sector and not-for-profit sector to get the job

done in these changing times.

Agencies that expect to make the best use of their people will

need to establish a strong performance-oriented culture including

appropriate performance measures and rewards, and to focus on

continuous learning and knowledge management that supports employees and helps them to maximize their potential and to achieve

their organizational mission.

Many Federal agencies lack organizational cultures that promote

high performance and assure accountability. In fact, the results of

our calendar 2000 survey of Federal managers indicated that in

some key areas, agencies may be losing ground in their efforts to

change their more performance-oriented culture that focuses on results and outcomes rather than outputs and processes.

Agency leaders and managers have a number of strategies available to them to help them steer their cultures to support agency

goals. These include modern performance management incentive

approaches directed at either individual employees, teams, or both

to help empower and motivate staff, reward high performance, and

assure accountability.

Mr. Chairman, I would now like to turn to the two boards, because I think they help to demonstrate an important point. Then,

I will summarize and would be happy to answer any questions that

you may have.

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First, the board on my right is intended to demonstrate that in

order to effectively address the human capital challenge, it is a

shared responsibility. It goes from the President throughout the

Executive Branch; it includes the Legislative Branch; it includes

the private sector, the not-for-profit sector, as well as the media.

Let me hit a few highlights.

The President sets the tone. The President must recognize that

in order for the Federal Government to maximize its performance

and assure its accountability, it has to have modern and effective

human capital/people strategies; that people are the ones who get

the job done; and that in order to move to more performance management-based approaches and results-based approaches, we have

got to deal with our people challenges, both administratively and

eventually legislatively as well.

He needs to promote public service. It is extremely important to

recognize that while a lot of things can be done in the private sector more efficiently, effectively, and economically, there are some

things that you can never have the private sector do. The private

sector cannot be entrusted with watching out for the greater good.

Public workers have a duty of loyalty to the greater good, to serve

the collective best interest of all, not the narrow interests of a few.

And while there are certain things that can and should be done by

the private sector, there are certain core governmental functions

that must be done by government employees, that are compensated

reasonably and that we can have, not only for today but for tomorrow, in order to get the job done.

OMB, for example, needs to provide more leadership from a strategic perspective, to link strategic human capital management

planning with overall strategic planning, to link resource allocations with what is needed in order to perform agency missions, to

coordinate at the secretary and deputy secretary level the important aspects of human capital management in moving toward a

more results-oriented government that maximizes performance and

assures accountability.

The ‘‘M’’ in OMB must be capitalized, and the human capital dimension from a strategic standpoint must be an integral element

of the management area.

OPM must lead with regard to planning and review and update

of existing policies and practices. It is important to review existing

guidance in light of changed conditions. Where can they be streamlined; where can they be simplified; where can more flexibility be

provided while assuring adequate protections to prevent abuse?

This is critically important. They should provide more tools rather

than rules. They can end up providing methodologies, best practices, and other types of things to help others understand what you

can do in the context of current law and what has worked, and

share those successes, if you will.

I am pleased to say that they have been doing more in that area

lately, and I think that that is great, but much more needs to be

done. Departments and agencies, secretaries, deputy secretaries

need to be focused on these issues. Realistically, it is going to be

the deputy secretary who normally would be the chief operating officer. This is a key element of achieving mission. They need to be

focused on this area and held accountable in this area.

12

The Congress needs to consider human capital issues in conjunction with confirmations of key appointees, in conjunction with oversight of departments, agencies, and key programs, as well as whatever legislation might be appropriate in this area.

The GAO will continue to share our experiences, to help others

help themselves, as we have been with our best practice guides and

our self-assessment guides and sharing the experiences that we

have, because we are trying to become a model agency. And just

because we do it a certain way does not mean it is the only way

to do it, but we do have some experiences that we are willing to

share and have been sharing with others to help them help themselves.

We will review what others do, and we will make recommendations as appropriate as to the way forward.

The private sector can partner with government. I am pleased to

say that I met with Pete Smith, of the Private Sector Council, and

they are very interested in trying to do more in this area, to try

to share knowledge and experience between the private and public

sectors, to try to create relationships, buddy systems, and so on, for

senior executives in the private sector to be able to consult with

their counterparts in the public sector, because the fact of the matter is it is in everybody’s interest, including the private sector’s interest, to have a government that functions in a way that maximizes performance and assures accountability.

Foundations can partner and can do research in this area. The

academic community obviously can do more to try to help identify

and encourage individuals who are interested in public service in

various ways. And the media must do more in the area of investigating and reporting on the critical challenges that we have in

this area.

With regard to the context of current law, it is important to note

that while legislation ultimately will be needed, there is a lot that

can and should be done in the context of current law.

The first thing that agencies should probably do—which is not on

here, but I will mention it—is a self-assessment. They need to assess where they are and where they stand. Our self-assessment

guide is being used by a number of agencies, including NASA, Social Security, and a variety of others, toward that end. They need

to engage in workforce planning, to look at the profile of their

agency, what are the projections as to what it is going to look like

3 years, 5 years, 10 years from now, and what are the challenges

that relate thereto.

They need to engage in succession planning. Just because people

are eligible to retire does not mean they are going to immediately,

but eventually, they will. There is a lot of skill, a lot of knowledge,

a lot of institutional memory that will go out the door. That, coupled with the fact that many departments and agencies had hiring

freezes for a number of years in the 1990’s, resulted in a double

whammy, whereby a significant percentage of the Federal workforce is going to be exiting, and yet we have not had that many

people coming into the pipeline to be able to position us for the future.

We have to revise and reinvigorate recruiting and college relations efforts. We have to update our training programs and invest

13

in our people. Let us face it—government needs to be a knowledgebased and learning organization. We will never be able to pay people in the government what they could potentially earn in the private sector, but we can offer them other things that the private sector cannot. We can offer them the ability to make a difference in

people’s lives. We can offer them challenging work. We can offer

them a learning environment where they are learning on a continuing basis. We can offer them a better balance between work

and family. We can offer them somewhat enhanced job security. We

need to recognize that. We need to sell what we have to sell, and

we also need to address some of the areas where we are not as

competitive or have taken shortsighted actions in the past years.

We need to obviously strive for diversity, because one of the great

strengths of our country is diversity. It is one reason why we are

really a microcosm of the world. But in the end, while we need to

take affirmative steps to achieve and maintain diversity, we also

need to make decisions based on skills, knowledge, and performance.

We really need to focus on our outdated performance appraisal

and reward system. Mr. Chairman, one area where I think there

has to be much more focus is the performance appraisal systems

in the Federal Government, which for the most part are broken— they are fundamentally broken. They do not provide meaningful information to individuals or to management. Performance appraisal

systems must provide meaningful information to help everybody,

that helps to recognize and reward top performers and helps to

deal with nonperformers. For the most part, the systems in the

government do not get the job done. They need to be competencybased. They need to focus on skills, knowledge, and performance.

They need to address those fundamental elements. And if you do

not have a modern and effective performance appraisal system, you

do not have much.

Employer-labor relations—we need to have constructive versus

confrontational approaches. There are many ways to get there, but

we have got to have constructive approaches to engage with each

other.

We need to tap the knowledge of our employees. There is tremendous knowledge on the part of these employees. We need to have

employee suggestion programs; we need to understand what their

preferences are from the standpoint of their assignments. People

generally have a lot of ideas on how to improve economy, efficiency,

and effectiveness; we need to tap their ideas, and we also need to

understand what their preferences are so we can match them to

the agencies’ needs when possible. They are probably going to do

their best if we have them in a slot that is aligned with their skills

and knowledge and their interests.

We need to be more competitive in compensation, especially in

certain critical occupations and at the executive level.

We need to take advantage of flextime to help balance work and

family. We also need to consider flexi-place to the extent that it is

appropriate, although I will tell you, Mr. Chairman, that I do not

think that flexi-place is for everybody. Flexi-place has to be determined based upon what the person’s job and function is and also

what their personal attributes and interests are. Some jobs and

14

functions can facilitate flexi-place, and some individuals can handle

that, and many cannot. So I think we have to be very careful when

we set targets so we make sure that we are setting those targets

based on an informed basis, recognizing what I think Senator Durbin said, that there may be some people that it works for and some

for whom it does not. You talked about retirement—there are some

who might be ready to retire, and there might be a mutual benefit;

but there are some who are not, and we still need them.

In that regard, as one example that I have in my testimony, we

need to look at innovative approaches like how can we allow people

and encourage people to retreat into retirement. Right now, our

systems and our policies in the government are such that you pretty much have to make an all-or-nothing decision—you are either

going to work full-time, or you are going to retire. We need to have

more part-time employment. We need to have more job-sharing. We

need to look at our pension laws, just as the private sector is doing,

to figure out how we can allow people to maybe go from full-time

work to part-time work and possibly draw on part of their pension,

so they can maintain their standard of living.

We need to be creative to find out what we can do to manage

succession and manage the migration of people outside the government.

The bottom line is this, Mr. Chairman. Federal employees represent an asset that needs to be valued, not a cost that needs to

be cut. I am not saying there are not opportunities for streamlining

in some areas of the government—there are—but they need to be

based on considered analysis. We need to be careful not to just

have arbitrary numbers that we come up with that we are managing toward, and we need to make sure we do the kind of due diligence and the kind of planning to make sure that the right decisions and actions are being taken.

This is a high-risk area, and the risk is increasing. The good

news is that, I think, it is now on the radar screen, and I believe

that by working collectively, with all of these players doing their

part, we can make a lot of progress quickly in trying to help manage this. But it is going to take years to effectively deal with the

challenge that has built up over a decade or more.

This area is the missing link in results-oriented government, in

maximizing performance and assuring accountability, both administratively and legislatively. In the end, we will need legislative reforms, but we have got to do what we can in the context of current

law, and we need to move toward consensus on what those reforms

ought to be. They should provide more management flexibility, but

adequate protections to prevent employee abuse.

Mr. Chairman, I really do appreciate your interest and efforts,

those of Senator Durbin and Senator Akaka. I know that you are

all sincere about this, I know that you are dedicated, and I look forward to working with you in the future to try to help manage this

risk and address this challenge.

Thank you.

Senator VOINOVICH. Thank you, Mr. Walker.

Senator Durbin will preside for about 5 minutes.

Senator DURBIN [presiding]. Thank you, Mr. Chairman.

15

Mr. Walker, I want to ask you about your methodology in coming

to your conclusions. Did you discuss some of these concerns with

the actual employees themselves, and did you have any surveys or

focus groups of people who were already in Federal public service,

those who have left and those who are contemplating retirement?

Mr. WALKER. Senator Durbin, we have done a lot of work in this

area, and we are doing more and more as time goes on. We have

done work at individual agencies; we have also done work in the

past where we have looked at things like, for example, succession

planning, what are some of the challenges the government has

with regard to retirement trends and eligibility for retirement. We

have also done some work on surveying segments of the employee

population. We have surveyed, for example, Federal executives,

SES members, in a variety of areas. We have also surveyed some

cases of military personnel with regard to why are they leaving the

service. So we have done a lot of work in this area. We have not

surveyed every agency.

Senator DURBIN. I understand. That is a big undertaking, and I

would not expect that. But it would seem to me that that would

be a great starting place. I go back to the conversation I had with

the president of the university about teachers. I asked what brings

a person to teaching. He said, by and large, a great teacher. They

had an experience at some point in their lives, and they said this

great teacher changed my life, and I would like to change someone

else’s.

I am wondering what the motivation is for Federal public service

or if there is one. It may be elusive. Maybe it is not that simple.

I went on to ask him how important is money to a person who

takes up teaching. He said that initially it is almost unimportant;

they are really focused on doing something with their lives that has

meaning to them. But, he said, I will tell you something we found

out—after 3 years, we lose 30 percent of these new teachers. Guess

why? They get married. They start thinking of the world a little

differently, about what it takes to sustain and raise a family.

I am wondering if we have done anything along these lines to

sort out the motivation to move toward Federal service, what really

brings a person to it, what are the sources—and I imagine each

agency might come at this a little differently. Where do you find

people with an interest in the issues of the Department of Agriculture? Do they just come at random and learn them, or do they

come from specific areas where we might be mining for resources

in the future? And what does it take to convert a person from a

casual employee to a committed and career employee? What are

the things they look for? Could it be that after a few years, when

they are thinking about families, child care all of a sudden becomes

a major concern and that if we decided to focus resources on child

care as part of public employment, part of Federal employment, a

lot of people would make that commitment beyond the first few

years and say this is worth staying for another 4 or 5 years, because I have a resource here at my disposal that I might not have

if I branch out and try to find a new job?

Mr. WALKER. Let me respond. First, I think we need to do more

survey work governmentwide, and obviously, I think that is something that OPM can do, and they have done some of that in the

16

past. I think that individual departments and agencies need to do

work in this area, too, because every government department and

agency and every program is not the same; the type of people you

have, the skills and knowledge, and the recruting sources will be

different.

Let me tell you, for example, what we have done at GAO. We

make extensive use of surveys. For example, about a year ago, we

did an agency-wide survey of every GAO employee, and we asked

them a range of questions—why are you working here, what do you

like, what are you concerned about—a whole range of issues. We

do surveys of all new hires. We do surveys of retirees. We do surveys of other segments of the population and ask questions like

why did you come here; how long do you plan to stay here; what

will be the critical factors that will be determinant of whether or

not you are going to stay and how long you are going to stay; why

did you leave?

Senator DURBIN. What are the critical factors that you hear coming back to you?

Mr. WALKER. What I hear from GAO, as an example, the reason

why people come to work for GAO is: One, the work—we have very

challenging work; second, to be able to make a difference; the third

reason is the people; the fourth reason is being able to achieve a

better balance between work and family. Those are the reasons

why people come to GAO.

If you talk about compensation, we can be reasonably competitive

at the entry level, depending upon what type of graduate we are

talking about. If we are talking about, for example, a master’s in

public administration, which a lot of our people have, we can be

competitive. For an accounting degree, we can be competitive. But

for certain other degrees—law degree, a Ph.D. in economics, a master’s in information technology—we have a problem.

So what we try to do is to sell what we have to sell; we try to

understand, once people are on board, what will help to keep them

on board, and we try to gear our programs and policies toward

those areas where we think we are going to get the biggest return

on investment.

One example at GAO is that we found if we can keep people for

3 years, they are likely to stay a lot more years. So we are going

to try to gear our tuition reimbursement efforts and a lot of other

things toward trying to keep people for at least 3 years.

Senator DURBIN. And we are going to help you with that, because

we know the authority is there. We went into this, and something

that I have focused on is student loan forgiveness—what the Federal Government can do to say to someone we may not offer you

the greatest salary, but guess what—we are going to help you pay

back your student loan. So they come in and say this makes

sense—I would take the money from another job and put it back

into that student loan anyway, so I can understand how I can calculate this out to my benefit, ultimately.

But of course, we have to provide the money to the agencies, we

have to appropriate the money for this to happen. It is a great concept, but if they do not have the money for it to happen, they will

not attract these great people.

17

Mr. WALKER. Let me touch on that, Senator, because you are exactly right. For example, there are two issues. First, do you have

the authority to do it—and up until recently, agencies did not have

the authority. Congress gave the authority, and OPM issued regulations—and they are going to have to reissue them because they

were not as up-to-date as they needed to be as to scope and as to

flexibility, and they are in the process of doing that—but then, you

have to have the money.

What I have found in that regard—because I do recruiting myself

at some major universities to try to promote public service and interest people in working for the government in general and GAO

in particular—is that a lot of the students face a double whammy.

What do I mean by that? Not only do they not make as much

money in government, but they have all this debt. And even if they

want to work in government—if that is where their heart is, in

public policy schools—they may not be able to because of the double whammy of not making as much money and being burdened

with all this debt and having to pay it off.

So I think the use of tuition reimbursement is a very valuable

tool, but you are right that you have to have the resources.

Senator DURBIN. How do we find that out? I am wondering if we

have to look at the budget request from the administration, which

we will receive very shortly, I wonder how many of them will even

include this as a line item. Agencies which you have already identified as having critical needs in terms of retaining and attracting

new people—I am just curious as to how many of them are considering this as a viable option to include it in their budget requests,

and I will make a point of looking for that, being on the Appropriations Committee. I think that if we hear from them that they have

a shortfall, whether it is the FCC or some other agency, and they

think that if they have student loan forgiveness, they can start to

bring in some very talented people, that makes sense, and I think

we want to pursue that if we can.

Mr. WALKER. Well, I have to be careful how far I go, because I

know that once you submit your budget, it is the property of the

Congress. I will tell you that it is a line item in our budget.

Senator DURBIN. Good. May I ask you another question about

health insurance for Federal employees. Some numbers that the

staff here have put together suggest that the Federal employees’ health plan, which frankly, I think in many respects may be one

of the best in the world, certainly in the United States, that gives

so many options to individuals, those of us covered by it, in terms

of picking the right coverage for our families—I am also told that

in terms of the contribution from employees that the Federal employees are making a substantially larger contribution for their

health insurance than people in the private sector. Have you looked

into that?

Mr. WALKER. I do not recall if we looked into it lately, Senator.

I will check and get back to you. I will tell you this, that I think

one of the things we have to be careful of is that in addition to

looking at individual elements like that, for example, health benefits—and I think it is important to look at that—one of the things

that we also have to do when we look into those areas is to look

at the overall package, because there are going to be some areas

18

where we do better, and there are going to be some areas where

we do not do as well. The key from a portfolio standpoint is how

do we do in the aggregate.

Senator DURBIN. Exactly. Let me ask your folks to please take

a look at the Year 2000 Survey of Public and Private Employer

Health Benefits by the Kaiser Family Foundation. This is what

they found—and again, the benefit package is critical here—but assuming for a second that they are comparable, listen to the difference. The average monthly employee share for health care is $28

for single coverage in the private sector. According to OPM, the average monthly Federal employee share of cost for health insurance

is $131—a phenomenal difference. The figures for family coverage

are just as dramatic. The average employee in the private sector

pays $138 a month; the average Federal employee pays $300 a

month.

So I would appreciate it if you would take a look at that, because

when we talk about compensation and benefits, if we can raise the

salary, it is one thing, but if the cost of the benefits goes up dramatically and takes away that increase, then the person will say

I do not have the purchasing power even though my salary looks

a little better.

I hope you can take a look at that as one of those aspects.

Thank you very much, Mr. Walker.

Mr. WALKER. Thank you, Senator.

Senator DURBIN. Senator Akaka, please.

Senator AKAKA. Thank you very much, Senator Durbin.

I listened carefully to your testimony, Mr. Walker, and I looked

with great interest at the charts that you have provided. I am glad

to hear what you think about human capital and what it means to

our government.

You pointed out that we—and when I say ‘‘we,’’ I mean the government—do not address the people dimension enough, which you

feel is very important in managing the workforce. You pointed out

that there were four issues—leadership, vision, commitment, and

persistence.

And you note, a Federal agency’s first priority must be to provide

leadership and take administrative steps using authorities already

available under existing law. Agencies have the authority to recruit

employees through the use of commercial recruiting firms and employment services. Agencies may provide recruiting or relocation

bonuses to help, offer student loan repayment, and give retention

allowances to employees.

However, we keep coming back to whether or not the level of

agency appropriations is adequate. How do agencies weigh workforce needs with their annual budgetary requests, and to what extent should OMB work with agencies to develop strategic human

resource goals?

Mr. WALKER. First, I think that not enough attention has historically been paid to look at this from a strategic perspective, and

OMB really has not been a player at all in the area of human capital. I think that they need to be a player, but obviously, OPM is

going to be involved on a day-to-day basis and in a much more extensive manner.

19

OMB needs to be involved from the standpoint of how do you end

up coordinating at the secretary and deputy secretary level; how do

you link this to overall strategic planning; how do you link this to

resource allocation?

Senator Akaka, I think that, first, there will be additional money

needed to deal with some of these issues. There is no question

about that. At the same time, I also believe that we should not

merely assume over the longer term that we need to keep everything we have and add on top of it. One thing that people must

do that most have not done is take a hard look at what is their

mission, what are they trying to accomplish, how many people do

they need to get that done, what kind of skills and knowledge do

they need to have in order to do that.

So we need to look at not just the issue of whether you need to

be investing more in training, whether you need to have more

money for tuition reimbursement, but we also need to be taking

steps over a period of time to realign and restructure the workforce, because in the end, in some circumstances, the answer may

be that you do not have as many people, but they are higherskilled, compensated better, and compensated more for performance.

So I think that, yes, we will need more money, but we need to

engage in that fundamental reassessment and workforce strategic

planning, which will take a number of years in order to get to

where we need to be.

Senator AKAKA. I am glad to hear that as you look at mission

statements, core values, goals and strategies, these intentions

should be integrated with their human capital strategies so that

goals may be met, as you point out here.

My question, then, is has GAO done an assessment of short-,

mid-, and long-term future needs for government employees in specific fields, such as contract specialists, secretaries, and even park

rangers?

Mr. WALKER. We have done some work in that area, but we have

not yet done a lot of work in that area. We did enough to satisfy

ourselves as to the scope and magnitude of the challenge to make

it a high-risk area governmentwide. We have done some work, for

example, at the Forest Service, we have done work at the acquisition workforce at DOD, we have done some work at NASA, and we

are familiar with some of the things going on at SSA.

But frankly, I think this is an example of where OPM needs to

be actively involved. We are in the Legislative Branch, and the Executive Branch needs to be taking the lead in dealing with these

issues. We are happy to be helpful, and we are happy to do the

work that Congress asks us to do, but it is important that we not

be the ones who are doing work that should otherwise be done by

OMB or OPM.

Senator AKAKA. As we try to meet the challenges and define the

problems, do you believe that there is a lack of recognition on the

part of Federal agencies that workforce problems are serious

enough to warrant adding it to the high-risk list, and if so, why?

Mr. WALKER. I can tell you that I have not had one agency disagree with our decision to put this on the high-risk list. Obviously,

I have only had interactions with a few. I have had a number of

20

them agree that it is time that we focus more time and attention

on this.

There are some people who express concern, agencies that may

have direct responsibilities, that say, look, we are doing more in

this area now—and I think that has to be acknowledged. For example, OPM is doing more in this area, and they have done some

things to help in the last year or so. But this is such a serious and

pervasive problem that we felt compelled to designate it high risk,

primarily because it met our criteria and because of the pervasiveness and the serious nature of it.

The problem, Senator Akaka, from my perspective—let us take

what happened in the nineties. In some cases, people celebrated— and whether they should have or not is a different question—the

fact that the Federal workforce declined significantly in the nineties. But the question is at what price? In many cases, what ended

up happening was that those reductions-in-force were not wellthought-out; they were not part of an overall workforce realignment or workforce planning strategy. In addition to that, in many

cases, people quit hiring. People eliminated performance rewards.

They cut back on training. They cut back on enabling technology.

You might be able to do that for a year; you cannot do it for multiple years, because what happens is that you mortgage the future,

and you undercut your capacity to perform in the future.

So that is what has happened, and it is going to take us a number of years to get to where we need to be—and hopefully, making

this high risk will attract light; with light comes heat, and with

heat comes action. That is what we need.

Senator AKAKA. Thank you for your responses.

Mr. Chairman, I have other questions, but I thank you.

Senator VOINOVICH. Thank you, Senator Akaka.

Mr. Walker, have you had a chance to look at any of the transition documents that the Clinton Administration turned over to the

Bush Administration?

Mr. WALKER. I have not. I obviously have read what has been in

the press, and I did have an extensive meeting with OMB Director

Daniels, who was very interested in the work that we had done in

this area and, at least at that preliminary meeting. He felt that

OMB needed to be doing a lot more in the management area and

felt that this was a serious issue that needed to be addressed. So

I was encouraged by that, but it is early in the ball game.

Senator VOINOVICH. It would seem to me that when the baton

was handed over to the new administration, one thing that you

would want to do—it is the kind of thing that we prepared in our

transition documents in Ohio—is acknowledge that we have some

problems here, to give the new administration a heads-up. I would

be interested to know—and maybe the Subcommittee could find

out—whether some of those things were in those transition documents.

Mr. WALKER. For the record, Mr. Chairman, I do not know if

they are, but we wanted to make sure that we did what we could

within our span of control to make sure it was on the radar screen.

And we did two things there: One, obviously, we put it on the highrisk list, which is justified for the reasons that I articulated, I believe; but second, on our website, which is www.gao.gov, we have

21

a separate section which is dedicated to Congressional and Presidential transition issues and summarizes electronically for every

major department and agency and a number of functions governmentwide the work that we have done and what we see as the

major challenges. That, frankly, is an extremely vuluable tool not

just for the new administration but for the Congress as well that

I would encourage your staff to become familiar with.

Senator VOINOVICH. We should try to see if we can get our hands

on some of those transition documents to see how they have been

put together. I know that OPM made a real effort in the last year

and a half to move into this area, and they may have communicated that to the agencies and asked them to do it.

Mr. WALKER. I spoke with Janice Lachance on numerous occasions, and I would like to acknowledge for the record that I think

OPM has done a lot more in the last year or year and a half in

this area. There is no question about that. But there is so much

more that needs to be done—and frankly, they cannot do it all. As

this board demonstrates, they have an important role to play, but

they are a piece of the overall pie. Leadership starts at the top and

involves both the Executive Branch and the Legislative Branch as

well as various other parties.

Senator VOINOVICH. I noticed you said that the deputy secretary

is the chief administrative officer, and that is a key position in Federal agencies.

Mr. WALKER. It is. From a practical standpoint, I think the secretary is going to be focused on policy issues, the secretary is going

to be focused on external affairs. Somebody at a very high level has

to be focused on getting things done, and not only getting the job

done today, but preparing for tomorrow. If it is not the deputy secretary, it needs to be somebody right at that level, because they

have to have access to the secretary. They have to have the secretary’s support. It is not something that you can expect to get

done in middle management; it starts at the top.

Senator VOINOVICH. I will present your work to the chairmen of

the authorizing committees before which the nominees from the departments will be coming, with questions on those agencies’ high

risk areas. Senator Durbin, I am sharing that information with the

ranking members also, because I think that part of the problem

here is that we are not tough enough on management issues in

some of these confirmation hearings. You cannot do too much about

the secretaries—you honor the President’s choice—and I know they

are going to have difficulty getting people, but it seems to me that

we have an obligation to make sure that the people they are bringing into those top jobs know something about management, the

problems that exist, and have some experience in dealing with

them. I have observed in the 2 years that I have been in the Senate

that so many of the things that we are talking about should actually be done in the agencies themselves. We should not even be

bothered with these things; they should be doing them as part of

their everyday work.

So I think that we can try to make sure that the appointees in

this administration are aware of the problems.

You have talked to Mr. Daniels, and I have talked to Mr. Daniels, and I have heard very little about the human capital crisis.

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We have heard about tax reductions and on-budget surpluses and

so on, and that is usually the main thing that OMB concentrates

on.

I would like to ask you how would you organize this thing from

the top on down to make sure that human capital is addressed?

Mr. WALKER. I think the key player at OMB, taking OMB as an

example, is probably the Deputy Director for Management. Clearly,

for the Director, Mitch Daniels, it has to be on his radar screen,

he has to be aware of it and focused on it, because one thing that

has to happen here is that there has to be a better linkage between

resource decisions on the budget side and strategic planning, including the human capital aspect, which is on the management

side.

So the DDM is going to be critically important. The DDM is not

going to be able to do it alone, because the DDM has responsibility

for financial management, information technology, the regulatory

process, so they are going to have to have some other resources— not necessarily a lot, but high-quality resources there.

I think that if you end up leveraging those resources through

interagency councils—the past administration had something called

the President’s Management Council, which was really the deputies, the chief operating officers, who focused on key issues—that

is a good idea; having one in the human capital area, making sure

that we have people who are strategic players in those jobs would

be a good thing to do.

My personal view is that OMB needs to be working with the various departments and agencies, and primarily it is going to be the

deputy secretaries and below who are focused on it. OMB is going

to be driving the effort to maximize performance and assure accountability within the context of what the government currently

is, and I do not think they have been a very active player in this

area in the past. Hopefully, that will change.

Senator VOINOVICH. If you were in Mitch Daniels’ shoes right

now, and you were aware of the fact that you had a human capital

crisis, and you were going to do something short-term to try to

jump-start the situation, what would you do?

Mr. WALKER. I think one of the first things that I would do, in

addition to getting some additional resources and having some

focus on it in OMB, is to piggyback on the current budget process

they already have. Every year, you have to do a budget. Every

year, agencies are presenting information to OMB about what their

challenges are, what they are going to accomplish, and what resources they need in order to be able to accomplish their objectives.

You could probably do more by piggybacking on that process to

identify what some of the issues are and how they plan to address

some of those issues while you are trying to staff up and figure out

what your longer-term strategy is. At least that gets the issue on

the radar screen.

Senator VOINOVICH. Well, I understand the budget that they are

dealing with is the one that was submitted to them by the Clinton

Administration, and now they are going over that budget themselves. So your suggestion might be as part of the review of that

budget to ask the new secretaries and their teams to evaluate the

human capital situation in their agencies, to look at the tools that

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they have available to them, as Senator Durbin said, that they

have not been utilizing because the budget has not been there, and

to then try to fold that into their budget request to Congress.

Mr. WALKER. I think the other thing that could happen is that

OPM could engage in a much more fundamental review of their existing guidance and where there are opportunities to streamline

and simplify, and to provide more flexibility for management clarity while incorporating adequate protections for employees. In addition, OPM can do more in the area of educating people as to what

they can do within the context of current law and pointing to success stories where people have been able to accomplish a lot within

the context of current law. They have started to do some things in

that area; I think more would be good.

Senator VOINOVICH. That is what worries me, that they will try

to use these flexibilities, we will not pass a sufficiant budget, they

will not have the resources to use the tools that they have, and we

have lost a year.

You have OPM, you have the Office of Management and Budget.

Do you think that this thing can work the way it is organized? I

have found in my experience that if you have good people, and they

work together in clusters, most of the time, you can get things

done. But do you think the organizational structure that we have

is an impediment to dealing with this problem?

In other words, we have had years and years and years of neglect, and so often in an organization, sometimes the reason why

that happens is because it is laid out the wrong way, and if you

had had it organized in a different way, perhaps it would not have

taken place. Would you comment on the current organization and

whether you think it is adequate, or do you think it would be better

if we came up with a different organization that might give this

issue the priority that it has not been getting?

Mr. WALKER. I do not think that the current approach has

worked, and that is one reason why we have this designated as

high risk.

As I said, I do not think that OMB has done enough in the ‘‘M’’ area, in general, and the human capital area, in particular. I do not

think, quite frankly, that the departments and agencies have really

been adequately focused on this, the top leadership, especially the

political leadership, in part because they have a shorter horizon,

and because they have a number of other things that they are trying to accomplish within the period of time that they are going to

be there.

I think one of the things that we need to do is not only recognize

that there is a problem, but we have to put a structure and a

mechanism in place that recognizes that it is going to take a number of years to deal with this, so therefore, it is getting the attention and support of the top political leadership, but it is also

making sure that we have some structure that will still be able to

survive the transition when there are changes in secretaries, deputy secretaries, Presidents, or whatever, because this is a

multiyear effort.

Senator VOINOVICH. Well, one thing that has happened in my

State is that we adopted total quality management—we call it

quality service through partnership—involving the unions, and the

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success that we had with it is almost a guarantee that it will continue, because people realize how this thing works and how good

it makes them feel. But it took training for 8 to 9 years to really

do it right. In some of these areas, it is going to take a long time

for it to become part of the tradition and fabric of the government.

Mr. WALKER. Ultimately, you have to make it a priority, you

have to designate responsibility, and you have to incorporate appropriate accountability mechanisms. And it is not one single player, as this demonstrates. A lot of players have to be involved in this

area in order for us to get to where we need to be.

I totally agree—you have to involve not only employees but employee organizations, and failure to do that is a prescription for

failure.

Senator VOINOVICH. As I mentioned to you, one of the things that

I am concerned about is that there is talk—and I do not know if

Senator Durbin knows this—about eliminating an Executive order

regarding labor-management partnerships, which I think are fundamental to any opportunity to move forward in some of the areas

that we are talking about, because if labor and management are

not working on it together, it will not happen; I know that from my

past experience.

I think the other thing that would probably help would be if the

President himself talked about employees being assets to be valued

and not costs to be cut. As Senator Durbin said, I think there is

an attitude on the part of some people that people who work in

government are not as good as people who work in the private sector. You are only as good as your team. I think it is really important that it starts from the top, that the leader says this is an important issue and gets the message out to government employees

that they are important, and recognizes that some of the incentives

have not been there and that the government has done a lousy job

of providing training money so they can upgrade their skills and

that government can be an exciting place to work.

I just returned from a 2-day seminar on public health in Florida,

and I was speaking with some of the people from the John F. Kennedy School of Government at Harvard University. They asked me

to come and talk there, because the impression that many of their

students have is that the Federal Government is not a very exciting place to work anymore. I think it was Paul Light who did a

study that showed that we have had a great diminishment of people who are interested in coming to work for the Federal Government.

So this has to be, I think, a cause celebre if we are going to have

a government that works. I keep talking to my private sector

friends and indicating to them that if all of these regulatory agencies do not have the competent people they need to get the job

done, it will negatively impact on our economy. Some people do not

seem to understand how important that is.

Mr. WALKER. I think that you are exactly right, Senator, and

that is why I say that the private sector has a stake in this, too.

Here is the way I look at it. The people that we are talking about

end up being directly responsible for doing whatever the Federal

Government does with $1.9 trillion. As a taxpayer and a citizen, I

sure hope that we have bright, competent, and dedicated public

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servants doing that work, not only for the impact that it has on our

domestic economy, but for the impact that it has on the world.

At the JFK School, for example, and many other public policy

schools, one thing they are finding is that over half of their graduates are not going into government, and a higher number are

going into consulting firms. Well, you can make a difference by

working on government projects with consulting firms, but it is

fundamentally different. It is the fundamental difference between

being an advisor and being on the front line.

But we have to be able to help reinstill interest in public service.

We have to recognize the importance of it, and we have to appreciate the value that is provided by people who do a good job in this

area, because we have enough barriers and obstacles already to

deal with.

Senator VOINOVICH. Right. But it is interesting that some of the

very things we are talking about, many other private organizations

in this country are experiencing, not as severely as we are, but

they have their problems attracting people, too, and that means

that our job is that much more difficult because we are so far behind in some of these areas where we need to be competitive.

Mr. WALKER. Many private sector organizations, quite frankly,

have not treated their people as an asset, either, but they are recognizing, because they are in a competitive business and a marketbased economy, that they have to. We are currently in a knowledge-based economy, and what is the source of all knowledge—people. The sooner we realize that, the better off we will be.

Senator VOINOVICH. Senator Durbin, do you have any other questions?

Senator DURBIN. No, Mr. Chairman.

Senator VOINOVICH. Mr. Walker, we thank you very much for

coming today, and we look forward to working with you, and hopefully, 2 years from now, we can look back and say we made a dent

in this. Thank you.

Mr. WALKER. Thank you very much.

Senator VOINOVICH. The Subcommittee is adjourned.

[Whereupon, at 11:52 a.m., the Subcommittee was adjourned.]

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