Report to Congressional Committees

United States General Accounting Office

GAO

April 2001 MANAGING FOR

RESULTS

Human Capital

Management

Discussions in Fiscal

Year 2001

Performance Plans

GAO-01-236
Page 1 GAO-01-236 Human Capital Discussions in Performance Plans

April 24, 2001

The Honorable Fred Thompson, Chairman

Committee on Governmental Affairs

United States Senate

The Honorable George V. Voinovich, Chairman

The Honorable Richard J. Durbin, Ranking Member

Subcommittee on Oversight of Government

Management, Restructuring and the

District of Columbia

Committee on Governmental Affairs

United States Senate

The Honorable Daniel K. Akaka, Ranking Member

Subcommittee on International Security, Proliferation,

and Federal Services

Committee on Governmental Affairs

United States Senate

The Honorable Dan Burton, Chairman

Committee on Government Reform

House of Representatives

After a decade of government downsizing and curtailed investment, it is

becoming increasingly clear that today’s human capital (people) strategies

are not appropriately constituted to adequately meet current and emerging

needs of the government and its citizens in the most efficient, effective,

and economical manner possible. Attention to strategic human capital

management is important because building agency employees’ skills,

knowledge, and individual performance must be a cornerstone of any

serious effort to maximize the performance and ensure the accountability

of the federal government.

Because strategic human capital management is a pervasive challenge

across the federal government, we recently identified it as a

governmentwide high-risk area.1

 Specifically, our work has shown that the

systematic integration of human capital planning and program planning

 1

High-Risk Series: An Update (GAO-01-263, Jan. 2001).

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-236 Human Capital Discussions in Performance Plans

has not been adequately and uniformly addressed across the federal

government.2

 Further, our Performance and Accountability Series reports

have indicated that federal agencies are experiencing critical strategic

human capital challenges.3

 (See fig. 1).

Figure 1: Strategic Human Capital Challenges

Source: GAO analysis.

Addressing these challenges will require a cultural transformation

throughout the federal government that recognizes the dynamics

associated with a transition to a knowledge-based economy. The vast

majority of the needed improvements in human capital management could

be achieved if federal agencies took a comprehensive review of the size,

shape, and skills of their human capital profile and adopted a more

strategic and performance-based approach to managing their workforces.

This would require agency leaders to establish a baseline of their human

capital profile; build a business case for future human capital

requirements; and then make targeted investments as part of the agency

strategy to attract, develop, and retain the talent necessary to meet its

mission and goals. Further, agency leaders need to build employees’ skills,

knowledge, and performance; empower employees and provide them with

the tools to do their best; and implement the modern performance

 2

Managing for Results: Opportunities for Continued Improvements in Agencies’

Performance Plans (GAO/GGD/AIMD-99-215, July 20, 1999); and Managing for Results: An

Agenda To Improve the Usefulness of Agencies’ Annual Performance Plans

(GAO/GGD/AIMD-98-228, Sept. 8, 1998).

3

Performance and Accountability Series: Major Management Challenges and Program

Risks: A Governmentwide Perspective (GAO-01-241, Jan. 2001). In addition, see the

accompanying 21 reports on specific agencies, numbered GAO-01-242 through GAO-01-262.
Page 3 GAO-01-236 Human Capital Discussions in Performance Plans

management and incentives systems needed to foster individual

accountability and focus on achieving agency missions and goals. Agency

leaders also need to apply the tools and flexibilities already available

under existing laws and regulations to make substantial progress in

managing their human capital.

To help agency leaders begin a more systematic, in-depth, and continuous

effort to evaluate and improve their agencies’ human capital, we issued a

human capital self-assessment framework, which identifies a number of

human capital elements and underlying values that are common to highperforming organizations.4

 We also identified common principles that

underlay the human capital strategies and practices of the private sector

for federal agencies to consider as they work to improve their own human

capital management.5

 Some of these principles are to hire, develop, and

sustain leaders according to leadership characteristics identified as

essential to achieving specific missions and goals; hire, develop, and retain

employees according to competencies; and use performance management

systems, including pay and other meaningful incentives, to link

performance to results.

As part of the Government Performance and Results Act (GPRA) annual

performance planning requirements, agencies are to establish resultsoriented performance goals and describe the strategies and resources—

including human capital—needed to accomplish those goals. Given the

established GPRA requirements and the pervasive challenge the federal

government faces in strategic human capital management, we prepared

this report at our own initiative to provide a descriptive analysis of how, if

at all, the 24 agencies covered by the Chief Financial Officers (CFO) Act

addressed human capital in their performance plans for fiscal year 2001,

under which agencies are currently operating. Because of your interest

and the critical importance of strategic human capital planning, employee

empowerment, and performance management, we are addressing this

report to you.

 4

Human Capital: A Self-Assessment Checklist for Agency Leaders (GAO/OCG-00-14G, Sept.

2000).

5

Human Capital: Key Principles From Nine Private Sector Organizations (GAO/GGD-00-28,

Jan. 31, 2000).
Page 4 GAO-01-236 Human Capital Discussions in Performance Plans

We found that each agency discussed human capital to at least a limited

extent in its fiscal year 2001 performance plan and covered a variety of

activities. (See fig. 2). We provide examples in this report that illustrate

these activities.

Figure 2: Summary of Human Capital Activities Discussed in Annual Performance

Plans for Fiscal Year 2001

Source: GAO analysis of annual performance plans.

Overall, agencies’ plans reflected different levels of attention to human

capital, ranging from merely identifying human capital challenges to

putting forward solutions to address those challenges, such as by defining

actual plans, committing resources, and assigning accountability. For

example, some agencies identified the unique human capital challenges

they confront within their broad operating environment, but they did not

include specific strategies or goals for resolving those challenges. In other

cases, agencies set specific annual performance goals to address a human

capital challenge or articulated human capital strategies that are being

used.

Results in Brief
Page 5 GAO-01-236 Human Capital Discussions in Performance Plans

When viewed collectively, we found that there is a need to increase the

breadth, depth, and specificity of many related human capital goals and

strategies and to better link them to the agencies’ strategic and

programmatic planning. For example, very few of the agencies’ plans

addressed

• succession planning to ensure reasonable continuity of leadership;

• performance agreements to align leaders’ performance expectations with

the agency’s mission and goals;

• competitive compensation systems to help the agency attract, motivate,

retain, and reward the people it needs;

• workforce deployment to support the agency’s goals and strategies;

• performance management systems, including pay and other meaningful

incentives, to link performance to results;

• alignment of performance expectations with competencies to steer the

workforce towards effectively pursuing the agency’s goals and strategies;

and

• employee and labor relations to ground a mutual effort on the strategies to

achieve the agency’s goals and to resolve problems and conflicts fairly and

effectively.

As our self-assessment guide makes apparent, agencies must address a

range of interrelated elements to ensure that their human capital

approaches effectively support mission accomplishment.6

 Agencies will

need to follow up through effective implementation and assessment to

determine whether their plans lead to improvements in human capital

management and programmatic outcomes. The human capital discussions

in the fiscal year 2001 plans, therefore, can serve as a starting point from

which to gauge progress in subsequent efforts and plans. We plan to

continue our review of human capital discussions in agencies’ fiscal year

2002 performance plans. In commenting on a draft of this report, the

Acting Director, Office of Personnel Management (OPM), generally agreed

with the contents of this report and said that it would make a useful

contribution to agencies’ strategic human capital management. The Office

of Management and Budget (OMB) staff provided technical suggestions,

which we have incorporated where appropriate.

 6

GAO/OCG-00-14G, Sept. 2000.
Page 6 GAO-01-236 Human Capital Discussions in Performance Plans

GPRA calls for agencies to address human capital in the context of

performance-based management and specifically requires that annual

performance plans describe how agencies will use their human capital to

support the accomplishment of their goals and objectives. In addition,

OMB’s fiscal year 2001 guidance for agencies’ annual performance plans

(OMB Circular No. A-11, Part 2) states that agencies’ annual plans may

include agencywide goals for internal agency functions and operations,

such as employee skills and training, workforce diversity, retention,

downsizing, and streamlining. Building on the fiscal year 2001 guidance,

the fiscal year 2002 guidance notes the increased emphasis on the use of

workforce planning and other specific strategies that align human capital

with the fulfillment of an agency’s mission. The fiscal year 2002 guidance

specifies for the first time that agencies should include performance goals

covering human capital management areas, such as recruitment, retention,

skill development and training, and appraisals linked to program

performance.

We have noted that the more useful annual performance plans discuss, or

refer to a separate plan, the human capital needs—in terms of knowledge,

skills, and abilities—necessary for achieving goals and the workforce

planning methods by which these needs were determined.7

 Also, the more

useful plans describe how strategies—in such areas as recruitment and

hiring, retention and separation, training and career development,

employee incentives, and accountability systems—meet workforce needs

and support the achievement of goals.

Addressing the federal government’s human capital challenges is a

responsibility shared by many parties. We have noted that OPM and OMB

have substantial roles to play in fostering a more results-oriented

approach to strategic human capital management across the government.8

OPM has begun stressing to agencies the importance of integrating

strategic human capital management with agency planning. OPM has also

rolled out a workforce planning model, with associated research tools, and

has launched a Web site to facilitate information-sharing about workforce

planning issues. In addition, OPM has published A Handbook for

Measuring Employee Performance: Aligning Employee Performance Plans

 7

Agency Performance Plans: Examples of Practices That Can Improve Usefulness to

Decisionmakers (GAO/GGD/AIMD-99-69, Feb. 26, 1999).

8

Human Capital: Meeting the Governmentwide High-Risk Challenge (GAO-01-357T, Feb. 1,

2001).

Background
Page 7 GAO-01-236 Human Capital Discussions in Performance Plans

with Organizational Goals. Recently, OPM revised the Senior Executive

Service performance management regulations so that a balanced

scorecard of customer satisfaction, employee perspectives, and

organizational results is to be used by agencies to evaluate executives’

performance.

OPM’s sustained commitment and attention will be critical to making a

real difference in the way federal agencies manage human capital. It is

likely that OPM will continue moving from “rules to tools,” and that its

most valuable contributions in the future will come less from traditional

compliance and approval activities than from its initiatives for assisting

agencies as a strategic partner. For example, we have noted that OPM

could make a substantial contribution by continuing to review, streamline,

and simplify OPM regulations and guidance to determine their continued

relevance and utility. Related to this, we also have noted that OPM could

make human capital flexibilities and best practices more widely known to

agencies by communicating “how to” success stories and taking full

advantage of its ability to facilitate information-sharing and outreach to

human capital managers throughout the federal government.

While OMB had played a limited role in strategic human capital

management, recent actions show OMB’s growing interest and potential

importance in working with agencies to ensure that they have the human

capital capabilities needed to achieve their strategic goals and missions.

First, the President’s fiscal year 2001 budget gave new prominence to

human capital management by making the alignment of federal human

capital to support agency goals a Priority Management Objective. Another

positive step is the increased attention to strategic human capital issues in

OMB’s Circular No. A-11, Part 2, guidance to agencies on preparing the

fiscal year 2002 performance plans.

Most recently, in another important and positive step, the President’s fiscal

year 2002 budget notes that the current civil service system does not do all

it should to reward achievement or encourage excellence and limits the

ability of agencies to compete successfully for highly skilled senior talent.

The budget states that the administration will seek legislation to provide

program managers new and expanded workforce restructuring tools.

According to the budget, these actions, combined with improved

accountability through better linkage of program performance with budget

decisionmaking and other reforms, will make the federal government

more responsive and effective.
Page 8 GAO-01-236 Human Capital Discussions in Performance Plans

OMB is perfectly positioned to assume greater leadership over

governmentwide strategic human capital issues. First, given its central role

in the budget process and responsibility for overall leadership over

executive branch management improvement, OMB has the ability to

leverage the cabinet secretaries and deputy secretaries to help ensure that

their agencies view strategic human capital management as critically

important in their overall strategic planning, performance management,

and budgeting efforts. Second, OMB has the ability through resource

allocations to help ensure that agencies give greater attention to the

linkages between agency missions and the human capital needed to

pursue them.

To meet our objective, we reviewed the fiscal year 2001 performance plans

that the 24 CFO agencies submitted to Congress. In addition, we reviewed

our individual reports on agencies’ fiscal year 2001 performance plans;

GPRA requirements for agencies’ performance plans; guidelines contained

in OMB’s Circular No. A-11, Part 2; and our guidance, reports, and

testimonies discussing strategic human capital management.9

 We selected

examples based on our guides to assist agencies and Congress with

effectively implementing GPRA, specifically our guides to improving the

usefulness of agency performance plans.10

We did our work from September 2000 to March 2001 in Washington, D.C.,

in accordance with generally accepted government auditing standards. We

requested comments on a draft of this report from the Director of OMB

and the Acting Director of OPM, and we asked officials in each of the

agencies profiled to verify the accuracy of the information presented from

their respective fiscal year 2001 performance plans. We incorporated their

comments where applicable. We did not independently verify the accuracy

of the information contained in the agencies’ fiscal year 2001 performance

plans.

 9

GAO/OCG-00-14G, Sept. 2000; Human Capital: Managing Human Capital in the 21st

Century (GAO/T-GGD-00-77, Mar. 9, 2000); and GAO/GGD-00-28, Jan. 31, 2000.

10GAO/GGD/AIMD-99-69, Feb. 26, 1999; The Results Act: An Evaluator’s Guide to Assessing

Agency Annual Performance Plans (GAO/GGD-10.1.20, April 1998); and Agencies’ Annual

Performance Plans Under the Results Act: An Assessment Guide to Facilitate

Congressional Decisionmaking (GAO/GGD/AIMD-10.1.18, Feb. 1998).

Scope and

Methodology
Page 9 GAO-01-236 Human Capital Discussions in Performance Plans

Agencies’ fiscal year 2001 performance plans covered a variety of human

capital activities, as illustrated by the following examples.

1. Recruit and Retain Employees on the Basis of Current and

Projected Needs. A high-performing organization identifies the best

strategies for filling its talent needs through recruiting and hiring and

follows up with appropriate investments to develop and retain the best

possible workforce.

Agencies’ performance plans reflected different levels of attention to

employee recruitment and retention. As part of a discussion of challenges

confronting the agency, the U.S. Mint’s fiscal year 2001 plan notes that a

key issue facing the agency is its ability to attract and retain employees

with the skills needed to perform the agency’s unique mission. The Mint

explains that it is difficult for the agency to successfully compete for and

retain employees with skills more commonly found in the private

manufacturing and marketing sectors as well as in information technology.

The Mint notes that it is exploring ways to increase the attractiveness of

employment, such as rewarding and evaluating employees in accordance

with its strategic plan goals and objectives, although the plan does not

provide any performance goals or measures directly associated with the

Mint’s human capital challenges or initiatives.

Going beyond describing challenges facing the agency, the Department of

Justice set a goal to “strengthen human resource recruitment and retention

efforts, providing for a workforce that is well-trained and diverse.”

Specifically, Justice states that on the basis of an assessment of

recruitment and retention issues, the Immigration and Naturalization

Service (INS) needs to recruit and retain qualified Border Patrol agents.

Consequently, INS set a fiscal year 2001 target to increase its deployment

of border patrol agents to 9,807 from the level of 7,982 achieved in fiscal

year 1998. (See fig. 3.) As part of its human capital strategy to increase the

number of these agents on board, the plan states that INS will train over

200 border patrol agents as recruiters, establish a toll-free job information

hotline, and consider recruitment bonuses. Consistent with GPRA

requirements for annual performance plans, INS also describes its

procedures to validate and verify its data on the number of agents on

board.

Human Capital

Activities Discussed

in Annual

Performance Plans

for Fiscal Year 2001
Page 10 GAO-01-236 Human Capital Discussions in Performance Plans

Figure 3: INS’ Data Related to Border Patrol Agents

Source: U.S. Department of Justice, Fiscal Year 2001 Summary Performance Plan.

Our work has found that the Department of Defense (DOD) faces an

especially significant challenge in retaining the hundreds of thousands of

new recruits it enlists each year.11 DOD set a performance goal to “recruit,

retain, and develop personnel to maintain a highly skilled and motivated

force capable of meeting tomorrow’s challenges” and states it will use four

measures—enlisted recruiting, recruit quality benchmarks, active

retention rates, and reserve attrition rates—to demonstrate its progress in

meeting this goal. Specifically, for its enlisted recruiting measure, DOD set

a fiscal year 2001 target of 205,248 for new active force personnel and

notes that this target allows for discharges, promotions, and anticipated

retirements to maintain statutorily defined military end-strengths. DOD

reports that in fiscal year 1999 it recruited 186,600 personnel and had not

met its target of 194,500. According to its plan, DOD intends to improve

the results of its recruiting efforts by expanding advertising, increasing the

number of recruiters, and providing enhanced enlistment bonuses.

 11Human Capital: Major Human Capital Challenges at the Departments of Defense and State

(GAO-01-565T, Mar. 29, 2001); Major Management Challenges and Program Risks:

Departments of Defense, State, and Veterans Affairs (GAO-01-492T, Mar. 7, 2001); and

Major Management Challenges and Program Risks: Department of Defense (GAO-01-244,

Jan. 2001).
Page 11 GAO-01-236 Human Capital Discussions in Performance Plans

2. Hire a Diverse Workforce. A high-performing organization maintains

an environment characterized by inclusiveness that reflects a variety of

styles and personal backgrounds and is responsive to the needs of

diverse groups of employees.

Agencies present different approaches in their performance plans to

address diversity. For example, the National Science Foundation focuses

on the total number of hires to science and engineering positions from

underrepresented groups. The Department of the Interior plans to increase

the general diversity of its workforce rather than the growth rate of

specific groups and set a goal to increase the diverse representation of its

total workforce by at least 3.1 percent for fiscal year 2001 from an

unspecified fiscal year 1997 level. Interior states that more detailed

supporting documents are being developed.

The Department of Housing and Urban Development (HUD), on the other

hand, set a goal to continue to improve its workforce diversity by

increasing the percentage of specific underrepresented groups, including

Hispanics, women, and women and minority managers, by 0.3 percentage

points. For example, HUD intends to focus on increasing the share of

Hispanics to 7.4 percent of employees in fiscal year 2001, based on

estimated achievement of 7.1 percent representation in fiscal year 2000.

Hiring a diverse workforce can be one aspect of ensuring that HUD has the

appropriate mix of staff with the proper skills to carry out its missions.

HUD’s human capital has been an area of focus under our high-risk

program since 1994.12

3. Identify Skills and Training Needs and Provide Development

Opportunities. A high-performing organization makes appropriate

investments in education, training, and other developmental

opportunities to help its employees build the competencies needed to

achieve the organization’s mission.

Some agencies describe in their fiscal year 2001 performance plans their

efforts to identify the skills and training needs of employees. For example,

the Federal Technology Service (FTS), a major component of the General

Services Administration (GSA), describes its strategy to identify core

competencies for each profession, create individual development plans,

and provide employees with state-of-the-art technology and tools to help

 12GAO-01-263, Jan. 2001.
Page 12 GAO-01-236 Human Capital Discussions in Performance Plans

improve overall performance. Although it did not provide details, FTS also

plans to increase its investment in employee training by providing

employees with an individual training budget of 1 percent of salaries—in

addition to the normal 4 percent training allocation—which is intended to

allow employees to have a direct role in their own development. To

measure progress towards its performance goal to provide increased

opportunities for employee development and respond to employee needs,

FTS used a survey that GSA administered to over 13,000 employees on

FTS’ quality culture and organizational climate. The survey used a 7-point

response scale and included 87 questions covering 15 categories, such as

learning and development, communication, and teamwork. To measure its

performance, FTS uses a composite indicator that combines the responses

across all the questions. However, the GSA plan does not discuss the

validity of the composite indicator as a measure of performance or its

usefulness to GSA in pinpointing improvement opportunities.

A few fiscal year 2001 performance plans describe agencies’ strategies to

focus attention and resources on employee development. For example, the

Environmental Protection Agency (EPA) plan states that the agency faces

a future of formidable programmatic challenges, accelerating change, and

competition in recruiting people with the skills needed to effectively carry

out its mission. To address these concerns, EPA recognizes that it needs to

make a continual investment in developing its workforce. EPA reported

that it conducted a workforce assessment that identifies critical skills

needed through 2020. Although the plan does not provide details on the

needed skills, it describes several training programs based on this

workforce assessment. These programs include (1) the New Skills/New

Options, which will equip support staff with needed skills to assume vital

roles in EPA; (2) the Mid-level Development Program, which will provide

crosscutting skills and competencies to mid-level employees to enable

them to be successful in a more dynamic and interdependent workplace;

(3) the Leadership Development Program, which will develop supervisors,

managers, and executives who will foster continued professional

development; and (4) the EPA Intern Program, which will recruit a cadre

of diverse employees. We recently reported that one of EPA’s performance

and accountability challenges is to place greater emphasis on developing a

comprehensive human capital approach.13

 13Major Management Challenges and Program Risks: Environmental Protection Agency

(GAO-01-257, Jan. 2001).
Page 13 GAO-01-236 Human Capital Discussions in Performance Plans

The Department of Education surveyed its managers on their staffs’

knowledge and skills for carrying out Education’s mission. Education then

set a goal for fiscal year 2001 that 70 percent of its managers, from a fiscal

year 1998 baseline of 58 percent, agree that staff possess adequate

knowledge and skills. (See fig. 4.) Education’s strategy for achieving its

goal is to introduce a broad range of new training and development

programs in a variety of formats, such as customized training for teams;

and to continue to provide development opportunities for its employees,

such as university course offerings, programs sponsored by the U.S.

Department of Agriculture (USDA) Graduate School, and the on-line

Learning Network. Consistent with the practices that we have reported

that can make performance plans more useful, Education describes its

data source to measure this goal, validation procedures, and data

limitations.14

Figure 4: Education’s Data Related to Staff Knowledge and Skills

Source: U.S. Department of Education, Vol. 1, Department-wide Objectives: 1999 Performance

Reports and 2001 Plans.

4. Link Executive Performance to Organizational Goals. A highperforming organization aligns performance expectations for its

leaders with organizational goals to enhance accountability for

performance.

We recently reported on the emerging benefits from selected agencies’ use

of performance agreements with their senior political and career

 14GAO/GGD/AIMD-99-69, Feb. 26, 1999.
Page 14 GAO-01-236 Human Capital Discussions in Performance Plans

executives as one approach to defining accountability for specific goals,

monitoring progress during the year, and then contributing to performance

evaluations.15 Two agencies discussed in that report—the Department of

Transportation (DOT) and the Department of Veterans Affairs’ (VA)

Veterans Health Administration (VHA)—discuss in their fiscal year 2001

performance plans their continued use of performance agreements. For

example, DOT states that it is cascading the performance agreement goals

between the Secretary and administrators or departmental officers to all

Senior Executive Service members within the framework of its

performance evaluation system. VHA’s implementation of individual

performance agreements is negotiated between the Under Secretary for

Health and all senior executives in VHA. These agreements contain

quantifiable performance targets and other organizational priorities to

which executives are held accountable for achieving.

In addition to a discussion on performance agreements, VA cites in its plan

other activities under way to enhance accountability for performance. For

example, the Veterans Benefits Administration (VBA) integrated a

balanced scorecard of performance measures into its executive appraisal

system on such areas as service delivery, customer service, and employee

satisfaction. VBA has established an automated Balanced Scorecard that is

available to all employees via VA’s Intranet and reports results at both the

operational and strategic levels. VA also notes in its fiscal year 2001

performance plan that the National Cemetery Administration developed

and is using consistent performance standards for all cemetery directors

that are linked to its strategic goals. These performance standards address

the areas of customer service and stewardship of VA’s national cemeteries,

employee development, and cemetery operations.

5. Attend to Work Environment. A high-performing organization

provides employees appropriate technology to perform their work and

a safe environment to help elicit their best performance.

As indicated in their performance plans, some agencies are trying to create

work environments that support employee performance. For example, in

USDA’s fiscal year 2001 performance plan, the National Agricultural

Statistics Service (NASS) links the work environment—and particularly

the availability of information technology—to improved performance.

 15Managing for Results: Emerging Benefits From Selected Agencies’ Use of Performance

Agreements (GAO-01-115, Oct. 30, 2000).
Page 15 GAO-01-236 Human Capital Discussions in Performance Plans

Specifically, NASS set a target in fiscal year 2001 that 90 percent of

employees “strongly agree” or “agree” that the work environment is not an

impediment to doing their jobs well. The plan reports that in both fiscal

years 1998 and 1999, 80 percent of employees “strongly agree” or “agree”

that the work environment was not an impediment; the target for fiscal

year 2000 was 85 percent. To accomplish this goal, NASS plans to

implement new systems, such as a local area network, video conferencing,

and document archiving and retrieval systems. According to the plan,

NASS will use periodic organizational climate surveys to track employees’

ratings of their work environment.

The Social Security Administration (SSA) set a strategic objective “to

provide a physical environment that promotes the health and well being of

employees.” As one of its performance measures, the agency will use a

survey to measure the percentage of employees reporting that they are

satisfied with the level of security in their facilities. SSA set a goal for

fiscal year 2001 that 75 percent of employees are satisfied with security in

their facilities, compared to 64 percent in fiscal year 1998. (See fig. 5.) To

achieve this objective, SSA states in its plan that it will continue to

enhance ongoing programs for assessing and addressing security

requirements and for identifying and resolving health and safety problems

in the workplace.
Page 16 GAO-01-236 Human Capital Discussions in Performance Plans

Figure 5: SSA’s Strategic Objective Related to Physical Environment

Source: Social Security, Performance Plan for Fiscal Year 2001, Revised Final Performance Plan for

Fiscal Year 2000.
Page 17 GAO-01-236 Human Capital Discussions in Performance Plans

6. Establish an Employee-Friendly Workplace. A high-performing

organization provides work-life programs and services that improve an

employee’s ability to balance work and family obligations and enhance

job satisfaction.

Some agency performance plans discuss how they intend to improve the

workplace through expanded work-life services. For example, the

Department of Labor states that it will continue to offer referral services

for employees in the work-life areas of childcare, elder care, and adoptive

services. Also, the plan states that services will include a toll-free “1-800”

telephone counseling service and the use of the Internet as an additional

feature to access referral resources. In addition, Labor will review internal

practices and procedures to improve worker accommodations, among

other things.

To improve job satisfaction and the quality of work life, the Indian Health

Services (IHS) of the Department of Health and Human Services set a

performance measure to improve its overall Human Resource

Management Index (HRMI) score to at least 95 points in fiscal year 2001

from a baseline of 93 points in fiscal years 1998 and 1999. The HRMI

employee survey measures 14 different work-related issues, such as

management culture and employee morale, and is used to determine if the

agency’s human resource program is meeting employee and management

expectations. According to its plan, IHS expects to raise the HRMI score

by at least one point each year. The IHS plan notes that the HRMI has been

in use at the Department since 1991 and is designed to be a valid measure

of management practices that are important to organizational

performance. The IHS plan also notes that the agency is taking several

actions to improve its HRMI score, but IHS does not detail how the actions

will help it achieve the one-point improvement goal and, ultimately,

organizational performance.

7. Choose an Appropriate Organizational Structure. A highperforming organization recognizes the importance of choosing a

structure that supports the organization’s mission and takes into

account its present and future needs.

The transition to a knowledge-based government will increasingly prompt

federal agencies to adopt flat, flexible, and team-oriented organizational

structures. For example, the Department of Health and Human Service’s

Administration for Children and Families (ACF) states in its fiscal year

2001 performance plan that it intends to reduce bureaucratic levels and

rely more on teams in an effort to support its strategic goal to build a
Page 18 GAO-01-236 Human Capital Discussions in Performance Plans

results-oriented organization. Specifically, ACF set a goal to increase

manager-to-staff ratio from 1:4.6 in fiscal year 1993 to 1:9 in fiscal year

2001. ACF reports that the fiscal year 1999 target was not attained and

lowered its fiscal year 2000 target because of staff separations and severe

outside hiring limitations. ACF provides trend data from fiscal year 1995

and cites personnel data as the data source.

8. Streamline, Simplify, and Expedite Personnel Operations. A

high-performing organization tailors its personnel operations to

quickly bring needed talent on board and to make progress in the “war

for talent” in a competitive, knowledge-based economy.

Some agency performance plans describe their efforts to make their

human capital processes more efficient. According to OPM’s fiscal year

2001 performance plan, its Office of Human Resources and Equal

Employment Opportunity (OHREEO) works as a business partner with

OPM managers to assist them in maximizing the use of the agency’s human

resources toward accomplishing OPM’s goal to recruit, develop, and

maintain a highly skilled and diverse workforce. In support of this goal,

OHREEO plans to streamline and automate staffing processes and,

specifically, to reduce all recruitment and hiring cycle times to an average

of 48 days in fiscal year 2001 from a baseline average of 58 days in fiscal

year 1999. The plan notes that the data on cycle time are retrieved from

various documents that track the dates when (1) OHREEO receives the

Request for Personnel Action, (2) the vacancy announcement opens, and

(3) the selection list is sent to the selecting official.

The Department of Commerce describes “Commerce Opportunities OnLine” (COOL) as an automated, Web-based vacancy announcement,

application, and referral system. This system is intended to broaden

Commerce’s distribution of vacancy announcements to anyone who has

access to the Web, reduce the time to disseminate announcements to

applicants, and provide applicants an on-line avenue for submission of

their applications. COOL also is to benefit Commerce managers by

permitting on-line issuance of referral lists of eligible candidates to the

selecting official, facilitating e-mail communication between the selecting

official and applicant, and allowing the selecting official to automatically

notify the Human Resource Office when he or she has completed the

selection process.
Page 19 GAO-01-236 Human Capital Discussions in Performance Plans

Designing, implementing, and maintaining a strategic human capital

management focus are critical to maximizing the performance and

ensuring the accountability of the federal government for the benefit of the

American people. We found that the ways in which agencies discussed

human capital challenges in their fiscal year 2001 performance plans

reflected different levels of attention to the critical human capital

challenges agencies face. When viewed collectively, we found that there is

a need to increase the breadth, depth, and specificity of many related

human capital goals and strategies. The plans’ discussions of human

capital should continue to show progress in moving away from form to

substance, or from simply describing human capital challenges to detailing

the what, why, how, and when of the strategies to address those

challenges. The discussions should also demonstrate a better link between

human capital management and the agencies’ strategic and programmatic

planning to maximize performance and ensure the best resource

allocation. Overall, with the increasing attention to human capital, the

fiscal year 2001 plans showed that substantial opportunities exist for

improvements, and we expect that agencies will continue to refine their

goals and strategies as they focus on a more systematic, in-depth, and

continuous effort to evaluate and improve their human capital

management. Agencies will need to follow up through effective

implementation and assessment to determine whether their plans lead to

improvements in human capital management and programmatic outcomes.

We provided a draft of this report to the Director of OMB and the Acting

Director of OPM on January 23, 2001, for their review and comment. We

subsequently shared with the Director of OMB and the Acting Director of

OPM portions of the draft that we updated to reflect our testimonies on

human capital and the President’s fiscal year 2002 budget.16 The Director of

OMB did not provide written comments; however, OMB staff provided

technical suggestions, which we have incorporated where appropriate.

OPM’s Acting Director provided written comments in his February 9, 2001,

letter, which is included in appendix I. In that letter, he stated that this

report would make a useful contribution to the ongoing agency

implementation of GPRA and to the increased attention to the federal

government’s strategic human capital management. He also provided

 16GAO-01-565T, Mar. 29, 2001; GAO-01-492T, Mar. 7, 2001; and GAO-01-357T, Feb. 1, 2001.

Concluding

Observation

Agency Comments

and Our Evaluation
Page 20 GAO-01-236 Human Capital Discussions in Performance Plans

several suggestions that OPM believes would make the report even more

useful.

OPM suggested, and we have included in the report, a reference to its 1999

publication A Handbook for Measuring Employee Performance: Aligning

Employee Performance Plans with Organizational Goals as another tool to

help agencies in their efforts.

OPM stated that the draft report “leaves an impression that agencies have

not taken any previous actions to include human resources management

actions in their strategic and annual planning” and did not acknowledge

other examples of human capital activities under way. As the draft report

noted, the scope of this review focused on human capital activities

discussed in agencies’ performance plans for fiscal year 2001. Therefore,

we did not consider prior performance or strategic plans, or other human

capital activities in the analysis for this report.

OPM suggested that we be clear that the report does not include all

instances of human capital planning that we found in the fiscal year 2001

performance plans. We did not intend to imply that the report describes

each reference to human capital issues in agencies’ annual performance

plans. Rather, as stated in the draft, we selected examples based on our

guides to assist agencies and Congress with effectively implementing

GPRA, specifically our guides on improving the usefulness of agency

performance plans.

Finally, OPM suggested that it would be helpful to emphasize that

managing the effective tactical use of several existing flexibilities is its

own challenge, particularly in view of the limited resources, and agencies

would do well to develop coordinated approaches to their use. This point

is beyond the objective and scope of our review and, therefore, not

included in our discussion.

We are sending copies of this report to Senator Joseph Lieberman,

Ranking Member of the Senate Committee on Governmental Affairs;

Senator Thad Cochran, Chairman of the Senate Governmental Affairs’

Subcommittee on International Security, Proliferation, and Federal

Services; Representative Henry Waxman, Ranking Minority Member of the

House Committee on Government Reform; the Honorable Mitchell E.

Daniels, Jr., Director of OMB; Steven R. Cohen, Acting Director of OPM;

and other interested parties. We will also make this report available to

others upon request.
Page 21 GAO-01-236 Human Capital Discussions in Performance Plans

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

Shames on (202) 512-6806. Key contributors to this report were Dottie Self

and Janice Lichty.

J. Christopher Mihm

Director, Strategic Issues
Appendix I: Comments From the Office of

Personnel Management

Page 22 GAO-01-236 Human Capital Discussions in Performance Plans

Appendix I: Comments From the Office of

Personnel Management
Appendix I: Comments From the Office of

Personnel Management

Page 23 GAO-01-236 Human Capital Discussions in Performance Plans
Appendix I: Comments From the Office of

Personnel Management

Page 24 GAO-01-236 Human Capital Discussions in Performance Plans (410608)
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