a

GAO

United States General Accounting Office

Report to Congressional Requesters

February 2003 HUMAN CAPITAL 

MANAGEMENT

FAA’s Reform Effort 

Requires a More 

Strategic Approach

GAO-03-156
In 1996, FAA initiated human capital reform initiatives in three broad areas, 

some of which required exemption from title 5, and some of which have 

been fully implemented. FAA has not yet completed implementation of 

some key initiatives. For example, FAA’s new compensation system 

remains unimplemented for about one-quarter of the agency’s workforce—

those staff whose unions have not reached agreements with FAA. FAA’s 

need to implement initiatives among a workforce with a wide range of skills 

and to negotiate changes with multiple unions were among factors that 

affected the pace and extent of reform implementation. 

Selected Initiatives within the Three Areas of FAA’s Reform, Including Whether an 

Exemption from Title 5 Was Required and Implementation Status 

FAA had little data with which to assess the effects of its reform effort. 

While FAA human capital officials cited positive effects of FAA’s reform 

effort, the views of managers and employees GAO interviewed were 

generally less positive. 

FAA’s lack of empirical data on the effects of its human capital initiatives is 

one indication that it has not fully incorporated elements that are important 

to effective human capital management into its overall reform effort. These 

elements include data collection and analysis, performance goals and 

measures, and linkage of reform goals to program goals. FAA human 

resource management officials said that the agency should have spent more 

time to develop baseline data and performance measures before 

implementing the broad range of reforms but that establishing these 

elements was a complex and difficult task. FAA has also not gone far 

enough in establishing linkage between reform goals and overall program 

goals of the organization. GAO found that the lack of these elements has 

been pointed out repeatedly in evaluations of FAA’s human capital reform 

effort, but FAA has not developed specific steps and time frames by which 

these elements will be established and used for evaluation. Incorporation of 

these elements could also help FAA build accountability into its human 

capital management approach. 

HUMAN CAPITAL MANAGEMENT 

FAA’s Reform Effort Requires a More 

Strategic Approach 

www.gao.gov/cgi-bin/getrpt?GAO-03-156.

To view the full report, including the scope 

and methodology, click on the link above. 

For more information, contact Gerald 

Dillingham, Ph.D., at (202) 512-2834 or 

dillinghamg@gao.gov. 

Highlights of GAO-03-156, a report to the 

Chairman, Subcommittee on Aviation, 

House Committee on Transportation and 

Infrastructure; Chairman, House 

Committee on Government Reform; and 

another requester 

February 2003 

In 1996, the Federal Aviation 

Administration (FAA) undertook a 

human capital reform effort under 

one of the most flexible human 

capital management environments 

in the federal government, 

including broad exemptions from 

title 5 laws governing federal 

civilian personnel management. 

GAO was asked (1) to examine the 

changes FAA initiated in its reform 

effort, including whether they 

required an exemption from title 5 

and their implementation status; 

(2) determine the effects of the 

reform effort according to available 

data and the views of FAA officials, 

managers, and employees; and (3) 

assess the extent to which FAA’s 

reform effort incorporated 

elements that are important to 

effective human capital 

management. 

This report makes 

recommendations to enable FAA to 

develop a more strategic approach 

to its reform effort. By building 

elements that are important to 

effective human capital 

management into its approach, 

FAA will be better able to evaluate 

the effects of its initiatives, use the 

evaluations as a basis for any 

strategic improvements, and hold 

agency leadership accountable. 

FAA will also be better able to 

share its results with other federal 

agencies and Congress. 

The Department of Transportation 

and FAA officials generally agreed 

with our recommendations. 
Page i GAO-03-156 Human Capital Management

Contents

Letter 1

Results in Brief 3

Background 6

FAA Initiated Personnel Changes in Three Broad Areas, Some of 

Which Required Exemptions from Title 5 9

Key Elements of Personnel Reform Have Not Yet Been Fully 

Implemented 17

FAA Had Little Data on Reform’s Effects, and Views of FAA Officials 

Often Differed from Views of Managers and Employees We 

Interviewed 24

FAA Has Not Fully Incorporated Elements Needed for Effective 

Human Capital Management 35

Conclusions 44

Recommendations 45

Agency Comments and Our Evaluation 46

Appendixes

Appendix I: Scope and Methodology 49

Appendix II: Structured Interview Form and Selected Results 51

Appendix III: Elements for Effective Human Capital Management 61

Appendix IV: Core Compensation Pay Bands and Grade Conversion for 

2002 64

Appendix V: FAA Human Resource Management Office’s Balanced 

Scorecard Performance Measures 66

Appendix VI: GAO Contacts and Staff Acknowledgments 68

GAO Contacts 68

Staff Acknowledgments 68

Tables Table 1: Overview of Human Resource Management Office’s 

Balanced Scorecard Performance Measures 39

Table 2: Chronology of Internal and External Evaluations of FAA’s 

Personnel Reform 41

Figures Figure 1: Implementation Status of Selected Initiatives within the 

Three Areas of FAA’s Personnel Reform That Did or Did 

Not Require an Exemption from Title 5 4
Contents

Page ii GAO-03-156 Human Capital Management

Figure 2: Selected FAA Human Capital Reform Initiatives and Their 

Need for an Exemption from Title 5 10

Figure 3: Career Level Pay Bands for Job Categories under Core 

Compensation 12

Figure 4: Implementation Status of Selected FAA Personnel 

Reform Initiatives 18

Figure 5: Compensation Systems Applicable to FAA’s Workforce 20

Figure 6: Compensation of Air Traffic Controllers in Field Facilities 

and Regional and Headquarters Offices, 2002 26

Figure 7: Number of FAA Employees Represented by Unions, 

1991-2001 28

Figure 8: Inspector General’s Comments on the Effects of 

Personnel Reform on Hiring Times 29

Figure 9: Funding Alternatives Used for Managers’ PCS 

Promotional Moves between Field Facilities, Fiscal Years 

1999-2001 31

Figure 10: Number of Formal EEO Complaints by Year 34

Figure 11: FAA Employees’ Views on the Model Work 

Environment 35

Figure 12: Volpe Center’s Views on Importance of Linkage 40

Figure 13: Study’s Views on FAA’s Implementation of Personnel 

Reform 43

Figure 14: Inspector General’s Views on FAA’s Implementation of 

Personnel Reform 43

Figure 15: Consultant’s Views on FAA’s Implementation of Personnel 

Reform 44

Figure 16: Eight Critical Success Factors Corresponding with the 

Four High-Risk Human Capital Challenges That Can Help 

Agencies Manage Human Capital Strategically 62

Figure 17: Six Key Practices for Effective Use of Human Capital 

Flexibilities 63
Contents

Page iii GAO-03-156 Human Capital Management

Abbreviations

CFR Code of Federal Regulations

EEO Equal Employment Opportunity

FAA Federal Aviation Administration

FAACMA FAA Conference Managers Association

FLRA Federal Labor Relations Authority

GFT Guaranteed Fair Treatment

GS General Schedule

NAPA National Academy of Public Administration

NATCA National Air Traffic Controllers Association

OMB Office of Management and Budget

OPM Office of Personnel Management

PCS Permanent Change of Station

This is a work of the U.S. Government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. It may contain copyrighted graphics, images or other materials. 

Permission from the copyright holder may be necessary should you wish to reproduce 

copyrighted materials separately from GAO’s product.
Page 1 GAO-03-156 Human Capital Management

United States General Accounting Office

Washington, D.C. 20548

A

February 3, 2003 Letr

The Honorable John L. Mica

Chairman, Subcommittee on Aviation

Committee on Transportation and 

Infrastructure

House of Representatives

The Honorable Thomas M. Davis III

Chairman, Committee on Government

Reform

House of Representatives

The Honorable David Weldon, M.D.

House of Representatives

The Federal Aviation Administration (FAA) is managing its personnel under 

one of the most flexible human capital management environments in the 

federal government. This is a result of 1995 legislation that granted the 

agency broad exemptions from laws governing federal civilian personnel 

management found in title 5 of the United States Code. Congress provided 

these flexibilities in response to FAA’s position that the inflexibility of 

federal personnel systems was one of the most important constraints to the 

agency’s ability to be responsive to the airline industry’s needs and to 

increase productivity in air traffic control operations. In 1996, FAA 

announced a sweeping reform of its personnel management system. As we 

have reported,1

 major change initiatives generally require a minimum of 5 

to 7 years to provide meaningful and lasting results, and so FAA’s 

implementation of personnel reform should now be approaching a point 

where such results might be discernable. As some other federal agencies, 

such as the National Aeronautics and Space Administration, have 

requested similar human capital flexibilities, and others, such as the 

Transportation Security Administration, are now operating under similar 

exemptions from title 5 requirements, FAA’s experiences in implementing 

its flexibilities could provide valuable information to Congress in 

considering whether to grant the use of such flexibilities at other agencies 

and in overseeing their use.

1

U.S. General Accounting Office, Managing for Results: Using Strategic Human Capital 

Management to Drive Transformational Change, GAO-02-940T (Washington, D.C.: July 15, 

2002).
Page 2 GAO-03-156 Human Capital Management

You asked us to review the status of FAA’s personnel reform. As agreed, we 

answered the following questions: 

• What changes did FAA initiate after being granted broad flexibilities in 

1995 and to what extent did these changes require exemptions from 

title 5? 

• What is the status of the implementation of FAA’s human capital reform 

initiatives, and what factors have affected the pace and extent of 

implementation? 

• What are the effects of FAA’s human capital reform initiatives according 

to data collected by FAA and the views of FAA human resource and 

labor management officials, managers and employees, and unions? 

• To what extent has FAA’s reform effort incorporated elements that are 

important to effective human capital management in the federal 

government?

To answer these questions, we reviewed personnel management 

requirements in title 5 and the changes FAA made to its personnel 

management system as a part of the agency’s reform effort. We collected 

and analyzed internal and external evaluations of different aspects of FAA’s 

personnel reform and the available data on the results of reform. We 

discussed reform with agency managers and human resource management 

officials and union representatives and conducted 176 structured 

interviews of randomly selected managers and employees in 27 field 

facilities nationwide, 6 of FAA’s 9 regional offices, and FAA headquarters. 

Because of limitations inherent in the relatively small sample size, we did 

not generalize the views and opinions of those randomly interviewed to all 

FAA employees. To augment the views and opinions collected from the 

structured interviews, we obtained and analyzed the data available on the 

results of the various initiatives provided by FAA’s Office of the Assistant 

Administrator for Human Resource Management and the lines of business2

and obtained the views of FAA senior managers in the five lines of business 

and representatives of employee associations. Finally, we considered FAA’s 

reform effort in light of elements of strategic human capital management 

2

FAA is composed of five separate organizations or lines of business: Air Traffic Services, 

Research and Acquisitions, Regulation and Certification, Airports, and Commercial Space 

Transportation.
Page 3 GAO-03-156 Human Capital Management

that we developed in 2002 and assessments of human capital management 

efforts and agencies’ use of personnel flexibilities that we 

have performed at other agencies.3

 Appendix I contains a more detailed 

description of the scope and methodology of our work. A copy of our 

structured interview questions with selected employee responses is 

provided in appendix II. We conducted our work from November 2001 to 

October 2002 in accordance with generally accepted government auditing 

standards.

Results in Brief In its human capital reform effort, FAA initiated changes in three broad 

areas—compensation and performance management, workforce 

management, and labor and employee relations—some of which required 

exemptions from title 5. In the area of compensation and performance 

management, FAA introduced two initiatives—a new, more flexible pay 

system in which compensation levels are set within broad ranges, called 

pay bands, and a new performance management system intended to 

improve employees’ performance through more frequent feedback with no 

summary rating. Both new systems required an exemption from title 5. In 

the area of workforce management, FAA undertook initiatives in workforce 

planning (the process by which an organization plans and manages the size, 

capabilities, diversity, and deployment of its workforce), hiring, training, 

and relocation of employees. While the planning and training initiatives 

generally did not require exemptions from title 5, other workforce 

management initiatives did require exemptions. In particular, exemption 

from title 5 requirements allowed FAA to establish its own competitive 

hiring process and bypass centralized government hiring system 

requirements. Finally, initiatives in the area of labor and employee relations 

included the establishment of new groups to represent unions and 

employees and a new policy initiative to promote diversity and an open 

work environment. Neither initiative required exemption from title 5, 

which continues to govern FAA’s labor relations.

While FAA has fully implemented some or all initiatives in each of the three 

broad areas of the reform effort it began in 1996, some key initiatives have 

3

U.S. General Accounting Office, A Model of Strategic Human Capital Management, GAO-02-

373SP (Washington, D.C., March 15, 2002); U.S. General Accounting Office, Human Capital: 

Effective Use of Flexibilities Can Assist Agencies in Managing Their Workforces, GAO-03-02

(Washington, D.C.: Dec. 6, 2002).
Page 4 GAO-03-156 Human Capital Management

not yet been fully implemented, and the pace and extent of implementation 

have been affected by several factors. In the area of compensation and 

performance management, FAA’s new compensation system has not yet 

been implemented for about one-quarter of the agency’s workforce whose 

unions have not reached a new pay agreement with FAA. FAA’s new 

performance management system had been implemented for about 20 

percent of the total workforce (15 percent nonunion employees and 5 

percent union employees) at the time of our review. In the area of 

workforce management, FAA implemented most initiatives in 1996 by 

allowing managers in the lines of business immediate use of new 

agencywide flexibilities for hiring and training employees. While FAA 

established similar agencywide policies for developing workforce plans for 

staff, this initiative has not been fully implemented. In the area of labor and 

employee relations, FAA implemented initiatives establishing new 

partnership forums for union and nonunion employees and a new model 

work environment program. While we did not determine all of the factors 

that may have affected the pace and extent of implementation, FAA’s need 

to implement initiatives among a workforce with a wide range of skills and 

workplace environments and to negotiate changes with 48 bargaining units 

within FAA’s nine unions were among factors that affected the pace and 

extent of reform implementation. Figure 1 shows selected initiatives in 

each of the three areas of reform, along with whether they required 

exemptions from title 5 and their implementation status. 

Figure 1: Implementation Status of Selected Initiatives within the Three Areas of FAA’s Personnel Reform That Did or Did Not 

Require an Exemption from Title 5
Page 5 GAO-03-156 Human Capital Management

FAA had little data with which to assess the effects of its reform effort. 

While FAA human capital officials cited positive effects of FAA’s human 

capital reform effort, the views of managers and employees and union 

representatives were generally less positive. In the area of compensation 

and performance management, FAA had not systematically collected or 

analyzed data to support human resource management officials’ view that 

compensation changes had increased the agency’s ability to attract and 

retain employees. At the same time, many FAA managers and employees 

we interviewed were critical of the new compensation system. Nearly twothirds (110 out of 176) of those we interviewed disagreed or strongly 

disagreed that the new pay system is fair to all employees. We were able to 

find evidence of specific concerns regarding unfairness in disparities in pay 

for air traffic controllers. In addition, according to representatives of 

FAA’s Office of Labor Relations and employee unions, a general sense of 

unfairness over pay among some FAA employees outside of air traffic 

services has led to increased unionization among FAA employees. The 

number of employees in unions, as a percentage of the workforce, 

increased from 63 percent in 1995 to almost 80 percent in 2001. In the area 

of workforce management, human resource management officials provided 

limited data collected only for air marshals to support their view that 

external hiring times had decreased from an average of 6 months to as little 

as 6 weeks. In contrast, only 12 of the 46 managers we interviewed said that 

the speed of hiring has improved. Finally, FAA labor management officials 

cited a limited amount of data that indicated that the number of grievances 

filed at the national level by employees represented by unions had 

increased as evidence that new employee-union forums had not improved 

labor management relations. The managers and employees we interviewed 

had mixed views on the impact of labor and employee relations reform 

initiatives. 

FAA’s lack of empirical data on the effects of its human capital initiatives is 

one indication that it has not fully incorporated elements that we and 

others have identified as important to effective human capital management 

into its reform effort. These elements include data collection and analysis, 

performance goals and measures, and linkage of reform goals to program 

goals. Systems to gather and analyze relevant data provide a basis against 

which performance goals and measures can be applied. FAA human 

resource management officials said that the agency should have spent 

more time to develop baseline data and performance measures before 

implementing the broad range of reforms but that establishing these 

elements was a complex and difficult task. They said FAA was under 

significant pressure to rapidly implement reforms and that one impact of 
Page 6 GAO-03-156 Human Capital Management

FAA’s incremental approach to implementing the reforms was that baseline 

measures tended to change as more people were brought under the 

reformed systems. FAA has also not gone far enough in establishing linkage 

between reform goals and overall program goals of the organization, 

another element we have identified as important to effective human capital 

management. We found that the lack of these elements has been pointed 

out repeatedly in evaluations of FAA’s human capital reform effort, but FAA 

has not developed specific steps and time frames by which these elements 

will be established and used for evaluation. Incorporation of these 

elements could also help FAA build accountability into its human capital 

management approach.

This report makes recommendations designed to enable FAA to develop a 

more strategic approach to its reform effort. By building these elements 

into its approach, FAA will be better able to evaluate the effects of its 

reform initiatives, use the evaluations as a basis for any strategic 

improvements to its human capital management approach, and hold 

agency leadership accountable for the results of its human capital 

management efforts. Doing so would also enable the agency to share its 

results with other federal agencies and Congress. In commenting on the 

draft of this report, the Department of Transportation and FAA generally 

agreed with the report’s recommendations. They emphasized the 

complexity of the reform effort and said they have been making significant 

progress in developing needed elements for measuring the effectiveness of 

the new programs. 

Background The FAA’s mission is to provide a safe and efficient national aerospace 

system. FAA’s key aviation functions include regulating compliance with 

civil aviation safety standards and air commerce, operating the national air 

traffic management system, and assisting in the development of airports. 

The achievement of FAA’s mission is dependent in large part on the skills 

and expertise of its workforce. FAA consists of nearly 50,000 people, 

organized into 5 lines of business and several staff offices. Its workforce 

provides aviation services including air traffic control, maintenance of air 

traffic control equipment, and certification of aircraft, airline operations 

and pilots. FAA’s human resource management office is responsible for 

managing agencywide implementation of personnel reform and providing 

policy and guidance to regional human resource management divisions that 

manage the implementation of personnel reform within their areas of 

responsibility.
Page 7 GAO-03-156 Human Capital Management

In September 1993, the National Performance Review concluded that 

federal budget, procurement, and personnel rules prevented FAA from 

reacting quickly to the needs of the air traffic control system for new and 

more efficient equipment and flexibilities for attracting and hiring staff. In 

May 1994, building on these concerns, Congress directed the Secretary of 

Transportation to undertake a study of management, regulatory, and 

legislative reforms that would enable FAA to provide better air traffic 

control services without changing FAA’s basic organizational structure. The 

resulting FAA report to Congress, issued in August 1995,4

 concluded that 

the most effective internal reform would be to exempt FAA from most 

federal personnel rules and procedures.5

In reporting on FAA’s request for these exemptions in October 1995, we 

concluded that, if the Congress decided to provide FAA with new personnel 

authority, the agency could be used to test changes before they were 

applied governmentwide.6

 At that time, we emphasized the importance of 

establishing goals prior to the application of the new authority, noting that 

an evaluation of FAA’s efforts after some experience had been obtained 

would be important for determining the success of the effort and its 

governmentwide applicability. 

On November 15, 1995, Congress, in making appropriations for the 

Department of Transportation, directed the FAA Administrator to develop 

and implement a new personnel management system.7

 The law exempted 

FAA from most provisions of title 5 of the United States Code and other 

federal personnel laws.8

 The law required that FAA’s new personnel 

management system address the unique demands of the agency’s 

4

Federal Aviation Administration, Background Paper: Personnel Management Reform for 

the Federal Aviation Administration (Washington, D.C.: August 1995).

5

Unless explicitly exempted by law, all federal agencies must follow federal personnel rules 

and regulations under title 5 U.S.C., including rules governing how agencies (1) pay and 

reward employees; (2) hire, train, and transfer personnel; and (3) conduct labor and 

employee affairs. 

6

U.S. General Accounting Office, Exempting FAA From Procurement and Personnel Rules, 

GAO/RCED-96-27R (Washington, D.C.: Oct. 27, 1995).

7

P. L. 104-50, Fiscal Year 1996 Department of Transportation Appropriations Act.

8

Congress did not exempt FAA from provisions of title 5 pertaining to veterans’ preference; 

antidiscrimination; federal retirement, unemployment and insurance coverage; and 

limitations on the right to strike.
Page 8 GAO-03-156 Human Capital Management

workforce, and, at a minimum, provide greater flexibility in the 

compensation, hiring, training and location of personnel. Subsequent 

legislation9 reinstated title 5 requirements related to labor-management 

relations, and the Federal Aviation Reauthorization Act of 1996 placed 

additional requirements on FAA by requiring that any changes made to 

FAA’s personnel management system be negotiated with the agency’s 

unions. Accordingly, compensation levels became subject to negotiations 

with employee unions. On April 1, 1996, FAA introduced its new personnel 

management system. 

In January 2001, we designated strategic human capital management as a 

governmentwide high-risk area.10 As our January 2001 High-Risk Series and 

Performance and Accountability Series reports make clear, serious human 

capital shortfalls are eroding the ability of many agencies, and threatening 

the ability of others, to economically, efficiently, and effectively perform 

their missions.11 In 2002, our studies of human capital management in the 

federal government identified a variety of elements—critical success 

factors and practices for effective implementation of flexibilities—that are 

important for consideration of federal human capital management efforts. 

For example, systems to gather and analyze data, performance goals and 

measures, linkage between human capital management goals and program 

goals of the organization, and accountability are among the elements that 

we have identified as essential for effective strategic human capital 

management. Appendix III provides an overview of our March 2002 model 

for strategic human capital management12 and key practices for federal 

agencies’ effective use of human capital flexibilities we identified in 

December 2002.13

Many of these elements relate directly to weaknesses we have identified in 

our recent reviews of FAA. For example, in July 2001, we reported that a 

9

P. L. 104-122, Further Continuing Appropriations, Fiscal Year 1996, March 29, 1996.

10U.S. General Accounting Office, High-Risk Series: An Update, GAO-01-263 (Washington, 

D.C.: January 2001).

11U.S. General Accounting Office, Performance and Accountability Series—Major 

Management Challenges and Program Risks: A Governmentwide Perspective, GAO-01-241

(Washington, D.C.: January 2001).

12GAO-02-373SP.

13GAO-03-02.
Page 9 GAO-03-156 Human Capital Management

lack of performance measurement, evaluation, and rewards hindered the 

effectiveness of rulemaking reforms.14 In October 2001, we reported that 

the overall effectiveness of FAA’s training for air traffic controllers was 

uncertain and that FAA had not measured productivity gains from changes 

in controllers’ duties.15 We reported in June 2002 on FAA’s difficulties in 

acquiring and developing staff to meet agency needs through air traffic 

control workforce planning.16 Most recently, we reported in October 2002 

on the inability of air traffic control management to determine the impact 

of new relocation policies because of a lack of baseline data.17

FAA Initiated 

Personnel Changes in 

Three Broad Areas, 

Some of Which 

Required Exemptions 

from Title 5

Once exempted from most provisions of title 5, FAA initiated a broad set of 

personnel changes. For the purposes of this report, we grouped them into 

the areas of compensation and performance management, workforce 

management, and labor and employee relations. Figure 2 shows some of 

the major initiatives in each area, as well as whether they required 

exemptions from title 5 personnel rules.

14U.S. General Accounting Office, Aviation Rulemaking: Further Reform Is Needed to 

Address Long-standing Problems, GAO-01-821 (Washington, D.C.: July 9, 2001). 

15U.S. General Accounting Office, Air Traffic Control: FAA Enhanced the Controller-InCharge Program, but More Comprehensive Evaluation Is Needed, GAO-02-55 (Washington, 

D.C.: Oct. 31, 2001).

16U.S. General Accounting Office, Air Traffic Control: FAA Needs to Better Prepare for Impending 

Wave of Controller Attrition, GAO-02-591 (Washington, D.C.: June 14, 2002).

17U.S. General Accounting Office, Air Traffic Control: Impact of Revised Personnel 

Relocation Policies Is Uncertain, GAO-03-141 (Washington, D.C.: Oct. 31, 2002).
Page 10 GAO-03-156 Human Capital Management

Figure 2: Selected FAA Human Capital Reform Initiatives and Their Need for an Exemption from Title 5

a

FAA is not exempt from title 5 requirements governing labor-management relations.

New Compensation and 

Performance Management 

Systems Required Title 5 

Exemption 

FAA required exemption from title 5 rules in order to implement its new, 

broadbanded pay structure. Before obtaining that exemption, FAA paid its 

employees according to the General Schedule (GS) pay system mandated 

by title 5.18 In its 1995 report to Congress, FAA stated that the GS pay 

system—which rewarded employees for their length of service, rather than 

for their competencies, skills, or accomplishments—resulted in multiple 

levels of supervisors at the same grade level and pay range, an inability to 

grant pay increases until statutorily mandated time or experience 

requirements were satisfied, and the administrative burden of 

administering about 35 special GS pay rates that were exceptions to regular 

pay ranges. The Office of Personnel Management (OPM) echoed these 

concerns in an April 2002 report.19 OPM concluded that the GS system’s 

narrow pay ranges, time-based pay progression rules and across-the-board 

delivery of annual increases was not effective in promoting performancebased pay. 

18The GS pay system, as defined in title 5 U.S.C. 5332, consists of 15 grades and 10 steps 

within each grade—each grade representing a salary range and each step indicating the level 

of pay an employee receives in that salary range. Over time, an employee’s pay increases as 

the employee progresses through the steps within the grade or is promoted. An agency must 

determine that an employee’s performance is at least acceptable (i.e., “fully successful”) 

before the employee is granted the within grade step increase. 

19Office of Personnel Management, A Fresh Start for Federal Pay: The Case for 

Modernization (Washington D.C.: April 2002).
Page 11 GAO-03-156 Human Capital Management

Once exempted from these provisions of title 5, FAA replaced the 

traditional grade and step pay system with a broadbanded pay structure 

that provides for a wider range of pay and greater managerial flexibility to 

attract, retain, and reward employees. The new pay band system includes 

plans tailored to specific employee segments: a core compensation plan for 

the majority of nonunion employees and negotiated versions of the core 

compensation pay plan for employees represented by unions; a unique pay 

plan for air traffic controllers and air traffic managers; and an executive 

pay plan for nonpolitical executives, managers, and some senior 

professionals. 

To illustrate the pay band system, under core compensation, the GS 15-

grade pay schedule and step pay increases were replaced with a system in 

which employees are placed in a pay band under nine job categories 

including a specialized category that comprises eight specialized 

occupations. Each career category contains two to five pay bands. Each 

pay band represents a minimum and a maximum range of pay. For 

example, the base pay for a band “D” clerical support employee is at least 

$23,600 but no more than $35,400. Figure 3 shows the distribution of pay 

bands for career level job categories under core compensation. (For a more 

detailed comparison of the GS system and core compensation plan, see 

app. IV.) 
Page 12 GAO-03-156 Human Capital Management

Figure 3: Career Level Pay Bands for Job Categories under Core Compensation

Note: Additional pay bands apply to management levels for all of the job categories with the exception 

of students.

In its 1995 report to Congress, FAA reported that the federal performance 

management system under title 5 limited the ability of agency managers to 

reward their best employees. After being exempted from this system, FAA 

incorporated performance management elements into the new 

compensation system to encourage results-oriented behavior and to 

recognize and reward performing employees via permanent annual salary 

increases. For example, under its core compensation plan, all employees 

are eligible for a permanent pay increase, called an organizational success 

increase, based on the Administrator’s assessment of the extent to which 

the entire agency has achieved its annual agency goals. In addition, notably 

high-performing individuals may receive an additional permanent pay 

increase, called a superior contribution increase, based on supervisory 
Page 13 GAO-03-156 Human Capital Management

recommendation.20 FAA has criteria for awarding superior contribution 

increases. These criteria include collaboration, customer service and 

impact on organizational success. Additional criteria may be used by some 

lines of business and staff offices because of their unique needs. FAA is not 

required to grant cost of living allowances or locality pay increases but 

elected to continue providing these pay adjustments, which are generally 

applicable to the federal pay system.21

FAA’s 1995 report to Congress also stated that the federal performance 

management system limited the ability of agency managers to deal with 

unacceptable performance. FAA’s legislative exemption from title 522

enabled the agency to establish its new performance management system. 

According to human resource management officials, this system focuses on 

human capital development by helping to make individual employees 

aware of their roles and responsibilities in helping the agency achieve its 

program goals and provides ongoing feedback and written evaluations to 

improve individual employee performance. The new performance 

management system incorporates a variety of feedback approaches in 

addition to traditional supervisor-to-employee feedback, including 

performance plans that discuss managers’ and employees’ agreements 

regarding job expectations and feedback from the employee to the 

supervisor. At the end of the performance evaluation cycle, employees 

receive a narrative performance summary instead of a year-end rating that 

defines employees’ performance in specific categories.23 The performance 

summary reflects an assessment of achievements based on outcomes and 

expectations, while professional competencies such as collaboration and 

customer service are elements of the new compensation system. As a 

result, the performance management system is not directly linked to pay 

for performance elements of FAA’s new compensation system. While FAA’s 

program documentation described union involvement and the use of 

20Under core compensation, employees that do not meet minimum requirements do not 

receive either of the permanent pay increases.

21Cost of living allowances are base pay differentials paid to employees working in locations 

outside the contiguous United States that have substantially different local economies. 

Federal pay rules provide locality pay for approximately 30 metropolitan areas and one area 

covering the “rest of the United States.”

225 U.S.C. 4302(b) and 5 C.F.R. 430.201.

23Title 5 requires the development and submission of a summary rating; since FAA’s new 

system does not include a summary rating, the agency’s exemption from title 5 enabled FAA 

management to adopt the new system.
Page 14 GAO-03-156 Human Capital Management

employee focus groups in the development of the system, FAA did not 

systematically validate the final version of the performance management 

system with all employees before beginning implementation in 2002. 

Human resource officials said they planned to validate the new system by 

obtaining employee input through an employee attitude survey in 2003 and 

through continuing negotiations with employee unions and that these 

would allow for continuing refinements.

Some Workforce 

Management Initiatives 

Required Exemption from 

Title 5 

Some of FAA’s workforce management reform initiatives required 

exemption from title 5 while others did not. For example, FAA’s workforce 

planning initiative did not require an exemption from title 5. On the other 

hand, changes in procedures governing hiring and locating staff, as well as 

some training initiatives, such as fee-for-service training programs, did 

require exemptions from title 5. 

In requesting exemption from title 5 requirements governing hiring and 

locating staff in 1995, FAA cited inefficiencies of working through OPM to 

hire and geographically place qualified staff at key facilities or to reassign 

employees in response to changing needs. According to an FAA staffing 

task force, the agency had lost highly qualified candidates because 

managers could not fill jobs in a timely manner. FAA estimated that it took 

an average of 6-8 months to bring a new hire onboard from outside the 

federal service using OPM as a hiring source and that it took, on average, 60 

days to permanently fill a position internally. FAA also considered OPM 

allocations for executive positions excessively rigid, as any increases to the 

allocation provided had to be supported by the Department of 

Transportation and approved by OPM.24 Moreover, FAA stated that the 

temporary internal movement process (from one FAA location to another), 

also governed by OPM regulation, was equally inflexible because it limited 

the duration of temporary assignments, and imposed onerous processing 

requirements. The movement process required paperwork to be processed 

every 120 days and could require up to seven separate personnel actions for 

a 2-year temporary assignment. 

FAA’s 1995 request for flexibilities in the area of training was based on 

perceived redundancies and inefficiencies in its training programs. 

According to an FAA personnel reform training task force report in 1996, 

245 U.S.C. 3392, 3393.
Page 15 GAO-03-156 Human Capital Management

centralized agency training programs required by title 525 provided standard 

training that did not always address specific business needs. FAA also 

requested exemption from title 5 in order to have flexibility to provide 

unfunded or partially funded moves of employees to locations where they 

and their skills are most needed. According to FAA Air Traffic Services and 

human resource management officials, FAA historically interpreted title 5 

rules as a requirement to fully reimburse all Permanent Change of Station 

(PCS) moves since the agency considered all such moves to be in the 

interest of the federal government. 

After Congress provided FAA with its new flexibilities, FAA developed a 

new framework for workforce planning to guide executive, occupational, 

and managerial/supervisory workforce planning. This did not require an 

exemption from title 5. With regard to hiring, FAA used its exemption from 

title 5 to establish hiring policies that allow FAA to hire applicants directly 

from outside the government and from other federal agencies without 

going through OPM. To do so, FAA established three hiring approaches: (1) 

using centralized registers, (2) announcing vacancies, and (3) authorizing 

on-the-spot hiring.26 According to FAA human resource management 

officials, the agency also used its exemption from title 5 to streamline 

staffing by decreasing the number of appointment types from 14 to 2 

(temporary and permanent) and hiring authorities from approximately 500 

to 1.27 FAA also established a flexible system for adjusting the number of 

executive positions in response to shifting agency priorities. This new 

system allows the Administrator to establish new executive positions and 

reassign and select the top management team. 

In the area of training, FAA (1) delegated responsibility for managing 

training funds and programs to its lines of business, (2) allowed users to 

select training from multiple providers, (3) created fee-for-service training 

255 U.S.C. 4107.

26FAA uses on-the-spot hiring for specific occupations designated as hard-to-fill (such as 

engineers at certain levels) and for special appointing authorities such as outstanding 

scholar and welfare-to-work. 

27According to the Accompanying Report to the National Performance Review, HRM01: 

Create a Flexible and Responsive Hiring System Office of the Vice President, (Washington, 

D.C.: 1993): the federal hiring “system is overly constrained by statute and regulation; over 

300 appointing authorities provide little useful management information and require 

interpretation by personnel specialists.” 
Page 16 GAO-03-156 Human Capital Management

programs, and (4) provided broader authority to fund degree programs for 

employees. The latter two initiatives required exemptions from title 5.28

Another area of workforce management for which FAA used its exemption 

from title 5 requirements was relocating employees. 29 As part of its reform, 

FAA delegated the authority to determine eligibility for and amount of 

benefits to each line of business and provided three PCS funding options: 

(1) full PCS reimbursement, (2) fixed relocation payments,30 and (3) 

unfunded moves. As before reform, if the move is in the interest of the 

government, FAA will fully reimburse the individual for costs associated 

with the move.31 Under the new PCS rules, if FAA determines that it will 

derive some benefit from a move, even though the move is not in the 

interest of the government, the agency may offer a fixed relocation 

payment of up to $25,000. If a move is not in the interest of the government 

and FAA does not determine that it will derive some benefit from the move, 

there is no basis for offering PCS funding. However, as a result of FAA’s 

personnel reform, employees may choose to make unfunded moves at their 

own expense for personal reasons, to gain experience needed for 

professional advancement, or for promotion. 

Most Labor and Employee 

Relations Initiatives Did Not 

Require Exemptions 

FAA was ultimately not exempted from title 5 requirements governing 

labor-management relations. As part of its overall reform effort, it 

undertook several initiatives in the area of labor relations that did not 

require exemption from title 5. For example, FAA and its unions 

established a new forum—the National Labor Management Partnership 

Council—for union representatives and senior management to exchange 

information and ideas. To improve overall employee relations, FAA also 

established a new forum for nonunion employees to facilitate 

communications between employees and FAA management that also did 

28While FAA was granted an exemption from title 5 training requirements by Congress, the 

President also has the authority to exempt federal agencies from title 5 training 

requirements (5 U.S.C. 4102(b)).

295 U.S.C. 5724 and 5724a.

30For a more detailed discussion of FAA’s use of PCS benefits, see GAO-03-141.

31Under title 5 rules, federal agencies may elect to pay for the expenses of transportation of 

immediate family and of household goods and personal effects to and from the assignment 

location for a PCS move when it is in the interest of the federal government.
Page 17 GAO-03-156 Human Capital Management

not require an exemption from title 5.32 Similarly, in consultation with union 

and nonunion employee groups, FAA developed a new policy promoting a 

Model Work Environment to create and maintain an effective working 

environment for its employees by managing diversity and practicing equal 

employment opportunity and affirmative action. In addition, on July 1, 

1998, FAA established an Accountability Board to standardize procedures 

to insure management's uniform and effective handling of sexual 

harassment allegations and related misconduct of a sexual nature. In July 

2000, the scope of the Board was expanded to include harassment and 

other misconduct that creates or may create an intimidating, hostile or 

offensive work environment based on race, color, religion, gender, sexual 

orientation, national origin, age and disability. The establishment of the 

Board did not require exemption from title 5. 

FAA required exemption from title 5 to establish the Guaranteed Fair 

Treatment Program, an alternative dispute resolution method in which a 

three-person review panel adjudicates employee grievances. FAA intended 

the new program to be the only method by which employees not covered 

by a union agreement could seek administrative reviews of grievances and 

to replace the traditional approach under title 5 rules involving the Merit 

Systems Protection Board.33 (As discussed later, FAA was later required by 

Congress to reinstate the traditional title 5 process and now offers 

employees the choice of the two processes for resolving disputes.)

Key Elements of 

Personnel Reform 

Have Not Yet Been 

Fully Implemented 

While FAA has completed many of the initiatives that required changes to 

policy and procedures, it has not yet completed implementation of some of 

the more complex elements of the personnel reform it began in 1996, 

specifically compensation and performance management systems and 

workforce planning initiatives (see fig. 4). FAA officials said that the 

diversity of skills and duties of FAA’s workforce as well as negotiations 

with unions that represented a large number of employees has slowed 

somewhat the pace and extent of implementation of compensation and 

performance management initiatives. 

325 C.F.R. 251.

33OPM has recognized the need to reduce costly and time-consuming formal complaints and 

grievances and encourages federal agencies to resolve disputes at the lowest possible level 

through a variety of alternative dispute resolution methods (60 Federal Register 47039, 

September 11, 1995).
Page 18 GAO-03-156 Human Capital Management

Figure 4: Implementation Status of Selected FAA Personnel Reform Initiatives

According to the Assistant Administrator for Human Resource 

Management, FAA’s implementation strategy was to establish a broad 

policy framework and then focus incrementally on individual elements of 

reform to eventually achieve full implementation. Between April 1996 and 

October 1998, for certain workforce management and labor and employee 

relations initiatives, FAA defined the new flexibilities available through 

agencywide “corporate” policies and then empowered the individual lines 

of business to adapt and make use of the new tools as appropriate. 

According to human resource management officials, these initiatives 

helped FAA “jump-start” its reform effort, while other reform initiatives, 

such as compensation, required varying incremental degrees of 

development because of the diverse characteristics of FAA’s workforce. 

Human resource management officials said other initiatives, such as 

workforce planning, were considered to be of a lower priority in terms of 

implementation. 
Page 19 GAO-03-156 Human Capital Management

Most Employees Are Paid 

Under New Compensation 

Systems, but 

Implementation of the New 

Performance Management 

System Has Been Limited

As of September 30, 2002, FAA had fully implemented its broadbanded 

compensation plans, including the performance incentive increases, for 

about three-quarters of the agency’s workforce. About 8,000 nonunion 

employees are paid under the core compensation plan, all senior 

executives (about 180) are paid under the executive compensation plan, 

and about another 9,000 employees represented by three of FAA’s nine34

unions are paid under negotiated versions of the core compensation plan. 

Because the performance incentive elements of the new system were not 

incorporated until late 2001, fiscal year 2002 will be the first year in which 

all employees under core compensation experience a full cycle with all the 

elements of its reformed compensation system fully in place.35 In addition, 

more than 19,000 air traffic controllers are paid according to a specialized, 

negotiated pay plan that includes pay banding36 and superior contribution 

increases. The remainder of FAA’s workforce (about 13,000),37 most notably 

those union employees whose union has not reached a new agreement with 

FAA, continues to be compensated under the traditional GS grade and step 

system under title 5 rules, as shown in figure 5. 

34Nine different unions represent various employee segments at FAA. Bargaining units 

within each union represent a specific employee segment based on profession or technical 

area. For example, NATCA has a bargaining unit called NATCA-AT for air traffic controllers, 

as well as five separate bargaining units collectively known as NATCA-AF, which represents 

engineers and architects that manage the maintenance of equipment at air traffic control 

facilities and perform other air traffic-related operations. In total, there are 48 different 

bargaining units at FAA.

35The research and acquisition organization and the office of the chief information officer 

participated in a pilot of the complete Core Compensation Plan, which included assessment 

and payout under the organizational and individual performance-based pay elements.

36Air traffic control pay bands are based on the amount of air traffic and complexity of 

airspace controlled by its field facilities, rather than solely on the roles and responsibilities 

of the air traffic control position description. 

37In addition, approximately 330 FAA employees are paid under a prevailing rate, 

locality-based system similar to that applicable to federal blue-collar employees. 
Page 20 GAO-03-156 Human Capital Management

Figure 5: Compensation Systems Applicable to FAA’s Workforce

Note: “Other” includes the wage grade plan for employees paid by the hour. 

The implementation of FAA’s new performance management system has 

not yet been completed for most FAA employees. In 1995, prior to its 

reform effort and in response to new performance management regulations 

issued by OPM,38 FAA decided to establish a separate way of managing 

performance. At this time, it uncoupled its performance management 

system from its compensation system, based performance appraisals on a 

two-tiered evaluation (“meets expectations” or “does not meet 

expectations”) of employees’ performance against performance standards, 

provided for year-end summary ratings, and established supplemental 

criteria (such as making a significant contribution to the efficiency, 

economy, or improvement of government operations) to use as a basis for 

merit pay. In 1999, as part of its reform effort, FAA began development of a 

new performance management system. This new system consists of a 

narrative evaluation of employees’ performance against performance 

standards combined with feedback and coaching. The new performance 

38Office of Personnel Management, Deregulation of Performance Management and 

Incentive Awards: Final Rule, 5 C.F.R. 430 et al., 60 Federal Register 43936, August 23, 1995.
Page 21 GAO-03-156 Human Capital Management

management system does not provide for a year-end summary rating or a 

basis for merit pay. Instead, the new compensation system includes criteria 

that are separate and distinct from the performance management system 

(such as collaboration, customer service, and impact on organizational 

success) for awarding merit-based pay raises, which are called superior 

contribution increases. FAA implemented this new performance 

management system on October 1, 2001, for the Office of Human Resource 

Management, the Office of Regions and Center Operations, and the 

Regulation and Certification line of business. Since October 2001, 

additional staff in a variety of FAA organizations have been placed under 

the new performance management system, bringing the total under the 

system to about 20 percent of FAA’s total workforce. As with the 

compensation system, the new performance management system must be 

included in the negotiated agreements with FAA’s employee unions.

While Most Workforce 

Management Initiatives 

Have Been Completed, 

Workforce Planning Is in 

Progress

FAA implemented most workforce management initiatives in 1996 by 

defining the flexibilities available through agencywide “corporate” 

policies39 and empowering the individual lines of business to adapt and 

make use of the new tools as appropriate for their staff. The individual lines 

of business adapted agencywide policies detailing the flexibilities available 

for hiring, training, and relocating employees by issuing parallel policies to 

guide their respective workforces and address any applications unique to 

their staff. While FAA established similar agencywide corporate policies 

and guidance for developing workforce plans for three staff levels—

executive, managerial and supervisory, and occupational—this initiative is 

still under way. 40 FAA began its executive workforce planning in 

November 2000. Development of Individual Development Plans for 

executives—the final element of the executive workforce planning effort—

was originally scheduled to be finalized in August 2001 but was still under 

way at the time of our review. FAA has not yet initiated its managerial and 

supervisory workforce planning effort. This effort is set to begin in fiscal 

39Agencywide policies governing travel were published in 1998.

40Workforce planning is the process by which an organization plans and manages the size, 

capabilities, diversity, and deployment of its workforce. It should include developing 

strategies for integrating hiring, recruiting, training, and other human capital activities in a 

manner that meets the agency’s long-term objectives to ensure that appropriately skilled 

employees are available when and where they are needed to meet an agency’s mission. 

Workforce plans should include the collection of valid and reliable data on such indicators 

as distribution of employee skills, retention rates, and retirement eligibility by occupation 

and organizational unit. 
Page 22 GAO-03-156 Human Capital Management

year 2003. FAA’s occupational workforce planning, which was originally 

scheduled to be completed in September of 2001, was still under way at the 

time of our review. Human resource management officials said that four of 

the five lines of business—Airports, Air Traffic Services, Regulation and 

Certification, and Research and Acquisitions—had completed their 

occupational workforce plans, and the remaining line of business—

Commercial Space Transportation—was still developing a plan. 

Labor and Employee 

Relations Initiatives Have 

Been Implemented 

FAA announced a series of agencywide policies governing labor and 

employee relations in 1996 that established the National Labor 

Management Partnership Council, the National Employees Forum, the 

Guaranteed Fair Treatment Program, and a policy promoting a Model Work 

Environment. FAA required less time to develop and implement these 

changes because comparable labor and employee representative groups 

were already in place prior to the reform effort and FAA had existing 

appeal processes and workplace improvement policies that served as a 

basis for the Guaranteed Fair Treatment Program and Model Work 

Environment. 

Characteristics of FAA’s 

Workforce and the Need to 

Negotiate Changes Have 

Affected the Pace and 

Extent of Reform 

Implementation

The variety of skills and areas of technical expertise represented in FAA’s 

workforce has affected the implementation of the agency’s new 

compensation plan. For example, the agency has a unique pay plan for air 

traffic controllers in the field based on the complexity of the facility, while 

FAA’s new core compensation plan is based on the duties and 

responsibilities of 16 different types of positions (ranging from students to 

pilots to physicians). 

The schedule for implementing changes in compensation and performance 

management has been dictated, in part, by the timing of negotiations with 

employee unions and the ability of FAA and its unions to reach agreement 

on the new systems. For example, because FAA’s contract with the National 

Air Traffic Controllers Association (NATCA), the organization representing 

FAA’s largest group of unionized employees, had expired, management had 

to negotiate a new agreement in 1998 before it had completed development 

of its new core compensation pay plan. While the air traffic pay plan, like 

the core compensation plan, is intended to include annual pay increases 

based on individuals’ performance, these performance-based increases 

have not been implemented as intended due to an unresolved dispute 

between NATCA and FAA management over the details of implementation. 

As a result, the air traffic pay plan distributed annual performance-based 
Page 23 GAO-03-156 Human Capital Management

incentive pay equally among all union members for fiscal years 1999, 2000, 

and 2001, unlike the core compensation plan developed for the rest of the 

agency in which only higher performing individuals may receive 

performance-based incentive pay. At the time of our review, FAA and the 

air traffic controllers union had not yet determined how fiscal year 2002 

and future years’ incentive pay increases would be allotted.

According to human resource management officials, the new core 

compensation has not been negotiated for union employees that represent 

about 30 percent of FAA’s total workforce, and the need to negotiate the 

incorporation of compensation and performance management initiatives 

into union contracts has increased the length of time needed to negotiate 

some contracts. For example, before 1996, FAA and the Professional 

Airways System Specialists union took from 3 to 14 months to negotiate an 

agreement, but the negotiation time more than doubled to 29 months for 

the latest agreement. FAA and the National Association of Air Traffic 

Specialists have been attempting to negotiate a new contract since 1997, 

and the parties had not yet reached agreement at the time of our review. 

Labor relations officials attributed increases in negotiation times to the 

expanded scope of contract negotiations, which now includes negotiating 

compensation that historically was not negotiated. The performance 

management system has also not yet been implemented for most of the 

unionized segments of the agency’s workforce. According to FAA officials, 

2,324 union employees in FAA’s Office of Regions and Center Operations 

and Office of Public Affairs, representing only about 5 percent of FAA’s 

total workforce represented by unions, were under the new system at the 

time of our review. 
Page 24 GAO-03-156 Human Capital Management

FAA Had Little Data on 

Reform’s Effects, and 

Views of FAA Officials 

Often Differed from 

Views of Managers and 

Employees We 

Interviewed

FAA had little or no data on the effects of many of the reform initiatives. 

Human resource management officials cited positive effects of the reform 

initiatives in the areas of compensation41 and workforce management, 

while in the area of labor and employee relations, labor management 

officials provided a limited amount of data suggesting that labor relations 

had not improved. Managers and employees with whom we spoke in our 

interview effort generally cited less positive views on the effects of reform 

initiatives. 

FAA Lacked Data on Effects 

of Compensation Changes; 

Officials Said Compensation 

Changes Increased 

Flexibility, While Managers 

and Employees Perceived 

Inequities in the New Pay 

System 

FAA had not systematically collected or analyzed data to determine 

whether the new compensation system had achieved its objective of 

increasing the agency’s ability to attract and retain employees. Human 

resource management officials said the new compensation system had 

achieved this objective. They said the initiative had made the agency more 

competitive in hiring because FAA can now offer higher starting salaries 

within the wider-range of pay afforded by the pay bands. In addition, air 

traffic officials we spoke with said that the air traffic control pay plan has 

made it easier to staff hard-to-fill positions at busier air traffic facilities. 

They noted, however, that they did not have a definition for hard-to-fill 

positions and had not tracked the extent to which positions they might 

consider hard to fill had been filled more or less quickly since the new pay 

plan was instituted. 

In contrast, many FAA managers and employees we interviewed were 

critical of the new compensation system. Nearly two-thirds of those 

responding to our structured interview (110 of 176) disagreed or strongly 

disagreed that the new pay system is fair to all employees.42 While we did 

not attempt to evaluate the concerns raised during interviews, we did find 

some evidence that helps explain these perceptions of unfairness. For 

example, concerns about air traffic controller pay disparities are supported 

41Because 2001 was the first year of implementation for the new performance management 

system, we did not obtain views on its effects.

42In our interview, we did not specifically ask whether managers’ and employees’ perception 

of the fairness of the new compensation system was based on its treatment of protected 

categories such as sex or race, but no interviewees mentioned this issue in their elaboration 

of their views.
Page 25 GAO-03-156 Human Capital Management

by a Department of Transportation Inspector General report. This report 

found that FAA’s initial implementation of the new compensation system 

led to inequities in pay between air traffic managers, supervisors, and 

specialists in field facilities, who are covered by the air traffic pay plan that 

FAA negotiated with NATCA in October 1998, and a much smaller group of 

air traffic managers and supervisors in regional and headquarters locations, 

who (together with other FAA managers and employees) are covered by 

the new core compensation plan. Because of differences between the two 

plans, managers and employees transferring from regional and 

headquarters locations to field facilities were not eligible for the same pay 

increases as those who were already assigned to field facilities in October 

1998. 

To address this situation, FAA issued new guidance in July 2001 that 

established consistent rules for setting pay when employees move within 

and among the various pay systems in FAA, including movements between 

field positions and positions in regional offices and headquarters. Even so, 

perceptions of unfairness persist. According to the President of the FAA 

Conference Manager’s Association (FAACMA), the new guidance created 

the perception among some managers and employees of a financial 

disincentive for air traffic controllers to move from field facilities to 

regional offices or headquarters to gain supervisory and managerial 

experience. Further, the FAACMA President, as well as some controllers 

with whom we spoke, stated that such a move would result in a significant 

loss of pay—generally about $10,000 to $20,000. “Because of pay 

discrepancies,” one regional air traffic manager said, “we can’t get highly 

paid employees to move over to management positions.” Human resource 

management officials said that, while some field employees who move to 

positions in regional offices or headquarters would see a pay reduction of 

$10,000 or $20,000, not all such moves would result in such a pay reduction.

According to our review of FAA’s July 29, 2001, guidance, an unfair 

disparity in pay between air traffic controllers would be created only when 

managers and employees were paid above or below established pay bands. 

At our request, FAA analyzed the salaries of its air traffic control staff and 

determined that 327, or fewer than 2 percent, of about 20,000 controllers 

(including supervisors, managers, and employees) were paid above current 

pay band maximums. (FAA’s analysis did not identify any staff being paid 

below established pay band minimums for their positions.) 

When we compared the distribution of 2002 base pay for all air traffic 

controllers in field facilities and in regional and headquarters facilities, we 
Page 26 GAO-03-156 Human Capital Management

found that the regional and headquarters controllers are generally paid less 

under core compensation than the field controllers are paid under the air 

traffic pay plan. As shown in figure 6, the percentage of controllers paid 

between $100,000 and $130,000 is smaller in the regions and in 

headquarters than in the field. This is consistent with FAA’s goal of 

providing higher levels of pay to controllers in an operational environment. 

In addition, the percentage of controllers paid between $60,000 and $80,000 

is greater in the regions and in headquarters than in the field. 

Figure 6: Compensation of Air Traffic Controllers in Field Facilities and Regional and 

Headquarters Offices, 2002

According to human resource management officials, the pay rates of many 

field employees and supervisors can be accommodated within the pay 

ranges of regional office and headquarters management positions, as 

shown above. Thus, they said that pay discrepancies should not affect the 

ability to entice field employees to move into management positions. 

However, it is understandable that some air traffic managers and 

controllers perceive a financial disincentive for moving from the field to a 

regional office or headquarters because, although the range of pay under 
Page 27 GAO-03-156 Human Capital Management

both systems is comparable, the number of higher paid positions is greater 

in the field than in the regional offices or headquarters. To the extent that 

these perceptions persist, FAA may find it more difficult to place its most 

experienced air traffic managers in regional offices and headquarters. 

However, this disparity is consistent with FAA’s goal of basing pay on the 

operational environment and is explicitly stated in FAA’s July 2001 pay plan 

for air traffic managers and controllers. 

A general perception of unfairness regarding FAA’s new compensation 

system has led to increased unionization among FAA employees outside of 

the air traffic services line of business as well as within it, according to 

both internal and external sources. FAA human resource officials said that 

considerable unionization began before such systems as core 

compensation were implemented and that most concerns cited during 

unionization efforts were of uncertainty and loss of guarantees, not of 

unfairness. However, the introduction of the pay system corresponded with 

an acceleration in the increase in employees seeking union representation 

after FAA began its reform effort. For example, employees represented by 

unions (as a percentage of FAA’s total workforce) increased from 63 

percent prior to the reform in 1995 to 66 percent in 1998 and to 79 percent 

by 2001. FAA labor relations officials and FAA spokespersons for new 

unions at FAA told us that a perceived inequity regarding pay was the prime 

reason new unions were formed. A 1999 study by the National Academy of 

Public Administration (NAPA) also found that real and perceived inequities 

in levels of pay were “major contributors to the view among a growing 

number of [FAA] employees that you must belong to a union to get your fair 

share.”43 A more recent FAA study in 2001 likewise acknowledged that the 

new pay system “may be one possible explanation” for the increase in 

unionization.44 Between 1998—when FAA began testing and 

implementing its new pay system—and 2001, the number of employees 

choosing representation by unions increased nearly 20 percent (from about 

32,800 to more than 38,800 employees). Figure 7 shows the number of FAA 

employees represented by unions from 1991 through 2001.

43Personnel Reform in the Federal Aviation Administration, National Academy of Public 

Administration, August 1999.

44Phase II Evaluation: A Snapshot of Core Compensation Plan Implementation in FAA, 

Assistant Administrator for Human Resource Management Evaluation Staff, FAA, 

September 2001.
Page 28 GAO-03-156 Human Capital Management

Figure 7: Number of FAA Employees Represented by Unions, 1991-2001

Because FAA had not completed a full appraisal cycle for staff under its 

new performance management system at the time of our review, FAA had 

little data, and we were not able to obtain the views of managers and 

employees on the effects of the new system. We noted that FAA’s 

performance management approach does not use a multi-tiered rating 

system to rate performance. We have previously raised concerns that such 

approaches may not provide enough meaningful information and 

dispersion in ratings to recognize and reward top performers, help 

everyone attain their maximum potential, and deal with poor performers. 

According to human resource management officials, the compensation 

system provides a means of recognizing and rewarding top performers 

through separate assessments not directly linked to performance 

assessments under the performance management system. 

The measurable element related to performance management is the 

number of employees that receive superior contribution increases under 

FAA’s new compensation system. About 20 percent of employees are to 

receive the highest superior contribution increases (1.8 percent addition to 

base pay) and 45 percent are to receive the next highest level of superior 

contribution increases (0.6 percent increase in base pay). 
Page 29 GAO-03-156 Human Capital Management

Human Resource 

Management Officials Had 

Limited Data to Support 

Their Views that Workforce 

Management Initiatives Had 

Increased Flexibility, While 

Some FAA Managers Were 

Less Positive 

Whereas human resource management officials provided some limited data 

to support their views that reform initiatives had improved the agency’s 

flexibility in hiring and relocating employees, the managers we spoke with 

were less likely to see positive results. According to human resource 

management officials, FAA’s use of the new hiring flexibilities, though 

restricted by hiring freezes, has reduced external hiring times from an 

average of 6 months to as little as 6 weeks. They said the examples they 

provided for air marshal hiring were intended to provide an illustration that 

the policies allow positions to be filled quickly, even in the case of large 

recruitment efforts. However, the Department of Transportation’s Office of 

Inspector General, when reviewing FAA’s personnel reform in 1998, 

questioned FAA’s ability to support this assertion in the absence of data.45

(See fig. 8.) 

Figure 8: Inspector General’s Comments on the Effects of Personnel Reform on 

Hiring Times

Throughout our review, we asked FAA officials from both the human 

resource management office and lines of business for any documentation 

or data to support the reduction in hiring times and they were unable to 

provide any such data. At the close of our review, however, human 

resource management officials cited some limited data resulting from the 

Federal Air Marshal Program. According to FAA human resource 

management officials, the program following the terrorists’ attacks on 

September 11, 2001, was one of the largest recruitment efforts ever 

undertaken by FAA. (FAA received and processed more than 200,000 

applications.) According to FAA officials, it would not have been possible 

to fill the air marshal positions in the numbers and time frames required 

without the flexibilities available under FAA’s personnel system. They 

provided data reflecting a sample of approximately 1,000 candidates for the 

45Department of Transportation, Office of Inspector General, Personnel Reform: Recent 

Actions Represent Progress But Further Effort Is Needed To Achieve Comprehensive 

Change, Sept. 30, 1998.
Page 30 GAO-03-156 Human Capital Management

air marshal positions. Of those candidates hired, about 30 percent (140) 

were hired and placed within 6 weeks. In total, 70 percent (333) were hired 

and placed within 8 weeks.46

In contrast to the positive views of human resource management officials, 

FAA managers had less positive views on the effects of hiring reforms, 

while employees, who are less involved in the hiring process, had mixed 

views. Among the 46 managers we interviewed, only about a third (15) 

agreed or strongly agreed that the initiatives have improved the ability of 

their line of business or staff office to fill job vacancies. Furthermore, only 

12 of the 46 managers believed the speed of hiring has improved. These 

opinions, while not necessarily representative of all FAA managers today, 

are similar to the views expressed by FAA managers in 1998.47 According to 

a survey FAA conducted then, 34 percent of managers responding said that 

FAA’s streamlined staffing procedures had made it easier to fill vacancies in 

their organization, and 32 percent said the speed of hiring had improved. 

Human resource management officials also said that new policies 

governing the relocation of employees had given managers more flexibility 

in relocating employees and employees more flexibility in making career 

decisions. Under these new policies, FAA may provide fixed relocation 

payments as well as full funding for PCS moves, and it allows unfunded 

moves, which were not allowed under FAA's prior policy. Figure 9 shows 

that the majority of moves between field offices for managers from fiscal 

year 1999 through 2001 (the only years and type of moves for which data 

were available) were unfunded. 

46GAO is conducting a separate review of the hiring and recruitment program for federal air 

marshals. 

47FAA Personnel Reform: Implementation Status Report, prepared for FAA by the Human 

Resources Research Organization, January 1998.
Page 31 GAO-03-156 Human Capital Management

Figure 9: Funding Alternatives Used for Managers’ PCS Promotional Moves between 

Field Facilities, Fiscal Years 1999-2001

In contrast to the positive views of FAA human resource management 

officials, FAACMA representatives raised concerns about the impact of the 

new policies in the air traffic services line of business, suggesting that they 

might have unintended consequences, including a reduction in the number 

of qualified applicants, a reduction in the diversity of potential applicant 

pools and subsequent discrimination in filling positions, and a negative 

impact on employee morale if fluctuations in the annual funding for 

relocation payments led to disparities in the payments for comparable 

moves over time.48 Air traffic officials said they were still reviewing these 

concerns and planned to comment in the near future.49

48FAACMA, Legislative Briefing Book, 107th Congress-Second Session, March 2002.

49For more information about FAA’s new PCS policies and FAACMA’s concerns, see GAO-03-

141.
Page 32 GAO-03-156 Human Capital Management

FAA Had Some Data 

Suggesting Mixed Effects of 

Labor and Employee 

Relations Initiatives, While 

Officials, Managers, and 

Employees Held a Variety of 

Views 

Although FAA’s Office of Labor Relations did not have historical, 

agencywide data to quantify an increase in grievances, FAA labor 

management officials said the number of grievances50 filed at the national 

level by employees represented by unions had increased and this increase 

was a sign that the initiatives had not achieved the reform objective of 

establishing a collaborative labor-management relations environment that 

would minimize the traditional adversarial relationship. They said that the 

number of grievances filed began to increase following personnel reform 

changes the agency had made. For example, they noted that in 1999, the 

core compensation plan was implemented and grievances increased. 

However, human resource officials said that grievances by union 

employees could not have pertained to implementation of the 

compensation pilot because the pilot test only applied to nonunion 

employees, not to union employees. The Office of Labor Relations 

implemented a new system for tracking grievance data in October 2001 and 

began systematically collecting information on the sources (such as 

headquarters, regions, and unions) and subject (such as compensation, use 

of leave, and discipline) of grievances filed across the agency. 

While limited data suggested that FAA’s introduction of an alternative 

dispute resolution program for employees not represented by unions did 

reduce the processing times for resolving appeals, employees’ reactions to 

the new system suggest that many employees did not see this initiative as 

an improvement. FAA introduced its internal alternative dispute resolution 

approach—the Guaranteed Fair Treatment Program—in April 1996 in an 

effort to streamline the appeals process. This approach met with resistance 

from employees and led Congress, in 2000, to reinstate the traditional title 5 

process that uses the Merit Systems Protection Board.51 As a result, FAA 

now offers employees the choice of using either the guaranteed fair 

treatment program or the traditional title 5 process. The only data human 

resource officials were able to provide on appeals dated back to fiscal year 

1997. Although these data are old, they indicated that for fiscal year 1997, 

appeals went through the guaranteed fair treatment process more quickly 

(5 to 7 months) than through the Protection Board process (10 months). 

Even so, the Deputy Assistant Administrator for Labor Relations said that 

employees, who have been able to choose between the two processes, have 

50Grievances are concerns expressed by an employee or the union about a condition of 

employment or an allegation that a contract has not been properly interpreted and applied. 

51P.L. 106-181, sec. 307.
Page 33 GAO-03-156 Human Capital Management

generally not chosen to use the guaranteed fair treatment process. He said 

that one reason employees have not used the guaranteed fair treatment 

process is because its potential benefits, such as the employee’s right to 

help select the arbitrator, have not been effectively communicated to them. 

In addition, according to the Deputy Assistant Administrator, both FAA 

managers and union leaders have complained about having to pay the cost 

of the arbitrator, while employees have complained about having to pay 

their own legal fees for attorneys regardless of the outcome of the appeal. 

FAA reimburses an employee’s legal fees if the employee wins his/her 

appeal when using the Protection Board's process.

Most FAA managers and employees we interviewed said that labor and 

employee relations had changed in the last 5 years. For example, 130 of the 

176 managers and employees we interviewed agreed or strongly agreed 

that labor-management relations had changed in the last 5 years. Of those 

130, 75 said that labor-management relations had declined. Similarly, 130 of 

the 176 managers and employees we interviewed said employee morale had 

changed in the last 5 years, and of those 130, 99 said that employee morale 

had declined. While employees’ perceptions regarding the changes in labor 

and employee relations cannot be linked directly to FAA’s personnel 

reform, some employees cited specific reform initiatives, such as 

compensation and the Model Work Environment established to improve 

employee relations, when discussing the decline of labor-management 

relations and morale. 

Union representatives for three of FAA’s nine unions said that a complaint 

filed against FAA by the Federal Labor Relations Authority (FLRA) in 

March 2001 had reduced collaboration between labor and management. 

FLRA charged FAA with bargaining in bad faith because it had refused to 

sign an agreement negotiated with the American Federation of State, 

County and Municipal Employees, a union that represents employees at 

FAA headquarters. FAA management did not sign the agreement and 

submitted it instead to the Office of Management and Budget (OMB) for 

review. OMB subsequently disapproved some portions of the contract. 

Following an investigation of the circumstances, FLRA directed FAA 

management and the union to sign and implement the contract. However, 

in September 2002, an administrative law judge recommended that FLRA 

dismiss the union's complaint, finding that FAA clearly gave notice to the 

union of the OMB approval condition and that the union agreed to that 

condition.
Page 34 GAO-03-156 Human Capital Management

In the area of employee relations, FAA provided us with some data that 

may support the views of FAA officials that the Model Work Environment 

has had a positive effect. A recent decline in the number of equal 

employment opportunity (EEO) complaints may, to an unknown extent, 

reflect the effects of FAA’s Model Work Environment. These complaints are 

concerns expressed by employees about legally prohibited discrimination 

on the basis of race, color, religion, sex, national origin, age, or handicap. 

An analysis by FAA’s Office of Civil Rights of data it had collected on the 

number and types of formal EEO complaints showed that while such 

complaints increased in the years immediately following the 

implementation of the Model Work Environment in 1996, they began to 

decline 3 years later. As figure 10 shows, the number of EEO complaints 

increased from 412 in 1996 to 635 in 1998 and then declined to 485 in 2001. 

Figure 10: Number of Formal EEO Complaints by Year

Note: The most frequently filed complaints between 1997 and 2001 were for promotion/nonselection 

and nonsexual harassment, followed by complaints about terms or conditions of employment, 

assignment of duties, and training.

About three-quarters of the FAA managers and employees we interviewed 

(134 of 176) agreed or strongly agreed that they understood the goals of the 

Model Work Environment. These goals include reflecting diversity and 

eliminating discrimination and harassment in the workplace, which are 

common causes of equal employment opportunity complaints. While some 

employees cited positive effects of the program, other employees were 
Page 35 GAO-03-156 Human Capital Management

skeptical of its impact. Figure 11 illustrates FAA employees’ divergent 

views on the Model Work Environment. 

Figure 11: FAA Employees’ Views on the Model Work Environment

Note: Quotations are from an FAA employee in headquarters and an air traffic employee in a regional 

office, respectively.

Even though the decrease in the number of EEO complaints cannot be 

directly linked to the Model Work Environment initiative, the availability of 

data and analysis on EEO complaints could provide one objective basis for 

FAA to discuss the effects and assess the efficacy of this policy and address 

the concerns of those employees who view its impact less positively.

FAA Has Not Fully 

Incorporated Elements 

Needed for Effective 

Human Capital 

Management 

FAA’s lack of empirical data on the reform effort’s effects is one indication 

that it has not fully incorporated elements that we and others have 

identified as important to effective human capital management into its 

reform effort. Systems to gather and analyze relevant data provide a basis 

against which performance goals and measures can be applied. FAA human 

resource management officials said that the agency should have spent 

more time to develop baseline data and performance measures before 

implementing the broad range of reforms but that establishing these 

elements was a complex and difficult task. They said FAA was under 

significant pressure to rapidly implement reforms and that one impact of 

FAA’s incremental approach to implementing the reforms was that baseline 

measures tended to change as more people were brought under the 

reformed systems. FAA also has not gone far enough in establishing linkage 

between reform goals and program goals of the organization, another 

element we have identified as important to effective human capital 

management. We found that the lack of these elements has been pointed 

out repeatedly in evaluations of FAA’s human capital reform effort, but FAA 

has not developed specific steps and time frames by which these elements 

will be established and used for evaluation. Incorporation of these 

elements could also help FAA build accountability into its human capital 

management.
Page 36 GAO-03-156 Human Capital Management

FAA’s Human Capital 

Reform Effort Lacks 

Needed Data Collection and 

Analysis, Performance 

Goals and Measures, and 

Linkage of Reform Goals to 

Program Goals of the 

Organization

The lack of baseline and comparative data for analysis and the lack of 

performance goals and measures has made it difficult to objectively 

evaluate the effects or success of FAA’s reform effort. Systems to gather 

and analyze relevant data provide a basis against which performance goals 

and measures can be applied. FAA human resource management officials 

agreed that the agency should have spent more time to develop baseline 

data and performance measures before implementing the broad range of 

reforms but said that establishing measures and goals and reaching 

consensus on their use was a complex and difficult task with which all 

federal agencies struggle. They said the agency was under significant 

pressure to rapidly implement reforms, and that one impact of FAA’s 

incremental approach to implementing the reforms was that baseline 

measures tended to change as more people were brought under the 

reformed systems. 

Human resource management officials also said that, while FAA has not 

systematically collected data and analyzed results to identify the benefits of 

all of the reform initiatives, the Office of Human Resource Management has 

taken a number of steps since 1998 to increase evaluation and 

measurement of some human resource management activities and outputs. 

Actions they cited (in addition to the previously discussed evaluations of 

compensation implementation) included meeting with consultants, human 

resource managers and intergovernmental groups and providing briefings 

to FAA management. While we were in the final stages of our review, they 

prepared, in response to our request, an informal report52 that described 

the type of measures they were planning to, or had recently begun to apply 

as part of a “Balanced Scorecard” approach53 to assessing human resource 

management activities. The measures in the scorecard approach are based 

on existing sources of data—customer surveys conducted by the 

Department of Transportation and FAA employee attitude surveys—as well 

as new data related to the hiring process, such as the “Time to Fill” (a 

vacancy) questionnaire, results from employment selection feedback 

questionnaires, a survey for new recruits and, since December 1999, a 

separation survey for employees leaving the agency. Human resource 

52Office of the Assistant Administrator for Human Resources Management, “An Informal 

Discussion of the FAA’s Human Resource Management Balanced Scorecard” August 21, 

2002.

53A scorecard approach is a framework for measuring and managing performance also used 

by OMB and OPM to track how well departments and agencies are executing management 

initiatives.
Page 37 GAO-03-156 Human Capital Management

officials said they had been “strategically refining” the employee attitude 

survey since 1995 to address key human capital issues, such as clarity of 

performance expectations and workforce planning.

Our work on strategic human capital management in the federal 

government has found that many federal agencies have difficulties in 

defining goals and measures and developing and using performance 

information to evaluate the effectiveness of human capital management 

efforts but that high-performing organizations do so. In cases where 

evaluations show that sufficient progress is not being made, highperforming organizations use data to identify opportunities for 

improvement. Similarly, the National Association of Public Administration 

(NAPA) has reported the need for performance data, goals, and evaluation 

to determine progress, make midcourse corrections, and assign 

accountability for achieving the desired outcomes in federal human capital 

management efforts.54 NAPA reported that, in the absence of such 

systematic evaluation information, the human capital management process 

will be driven by anecdotal information that may, or may not, reflect the 

condition of human capital management in the organization. 

Elements we have identified55 as facilitating the success of improvement 

initiatives include establishing

• clear goals and objectives for the improvement initiative, 

• concrete management improvement steps that will be taken, 

• key milestones that will be used to track the implementation status, and 

• cost and performance data that will be used to gauge overall progress.

In addition to the lack of performance data, the performance goals and 

measures for personnel reform in FAA’s human resource management and 

strategic mission plans are qualitative and do not consistently lend 

themselves to measurement or assessment, as they are not specific, 

54National Academy of Public Administration, Implementing Real Change in Human 

Resources Management: The Case for Transforming Public-Sector Human Resources 

Management, July 2000.

55U.S. General Accounting Office, Management Reform: Elements of Successful 

Improvement Initiatives, GAO/T-GGD-00-26 (Washington, D.C.: Oct. 15, 1999).
Page 38 GAO-03-156 Human Capital Management

measurable, and time-based. For example, the goal related to reform in 

FAA’s 1999 human resource management strategic plan is to “ensure that 

FAA has the right people doing the right work at the right time at the right 

cost” and has the following measures associated with it:

• increased flexibility to pay competitive salaries; 

• increased ability to attract and retain high performers; 

• increased managerial flexibility to assign, locate, and manage the 

performance of employees more effectively; and

• decreased hire cycle time.

This goal and its associated measures do not lend themselves to specific, 

quantitative, and time-based evaluation. For example, while “decrease hire 

cycle time” implies that hire cycle time will be measured as part of 

evaluating the achievement of this goal, it does not establish a quantitative 

basis for assessment or specify a period of assessment. A more specific, 

quantitative, and time-based measure might be to “decrease median or 

average hire cycle time by September 2003 by X percent (from median or 

average cycle time for fiscal year 2002) for Y percent of all new hires.”

We reported on FAA’s weaknesses in developing and using performance 

information in our report on the results of governmentwide surveys of 

performance management issues in May 2001.56 In that report, we found 

that FAA managers we surveyed reported they did not consistently use 

performance measures or data and that FAA was worse than the rest of the 

federal government on multiple aspects of performance measurement and 

the use of performance information. For example, we found that the 

agency was statistically significantly lower than the rest of the government 

in the percentage of managers who reported that they had outcome, 

customer service, or quality performance measures; and in the percentage 

of managers who reported that they used performance information to set 

program priorities, allocate resources, adopt new approaches, or 

coordinate program efforts. 

56U.S. General Accounting Office, Managing For Results: Federal Managers’ Views on Key 

Management Issues Vary Widely Across Agencies, GAO-01-592, (Washington, D.C. May 25, 

2001). 
Page 39 GAO-03-156 Human Capital Management

At the time of our review, human resource management officials were still 

in the process of developing baseline data, performance goals and 

measures and were still working to identify potential linkages between its 

human capital management reforms and program goals of the organization. 

The types of data and measures proposed by human resource management 

officials are comparable to those that have been historically suggested—

many of them since FAA initiated development of its personnel reform in 

1995—and their implementation is an important effort. However, the 

balanced scorecard measurement approach proposed by human resource 

management officials focuses primarily on the work environment and 

processes within the Office of Human Resource Management and the hiring 

process rather than on the many other human capital management reform 

initiatives being implemented across the agency. According to FAA human 

resource management officials, the office had been working for more than 

a year to expand the scope of the scorecard to incorporate measures with 

wider implications for all of FAA in response to discussions with human 

resource managers and based on information from FAA customers and 

employees. Table 1 provides an overview of the balanced scorecard 

measures proposed by the human resource management office, 

highlighting those that focus on the activities and output of the Office of 

Human Resource Management. An expanded overview of these 

performance measures that includes areas of measurement and proposed 

data sources is provided in appendix V. 

Table 1: Overview of Human Resource Management Office’s Balanced Scorecard 

Performance Measures

Measurement 

perspectives Performance measures

Customer Human Resource 

Management Office 

service excellence

Human Resource 

Management Office 

consultation and 

expertise valued

Human Resource 

Management Office 

innovation and 

leadership

Performance Human Resource 

Management Office 

results meet goals

Efficient use Of Human 

Resource Management 

Office resources

Improved practices 

within Lines of 

Business

Internal 

processes

Consistent human 

resource management 

policy interpretation

Effective labormanagement 

relationships

Attract and retain 

high caliber 

employees 

Human Resource 

Management 

Office employee

Empowered Human 

Resource 

Management Office 

employees

Satisfied Human 

Resource Management 

Office employees

Rewarding Human 

Resource 

Management Office 

work environment
Page 40 GAO-03-156 Human Capital Management

Source: FAA. 

Note: Shaded areas indicate measures focused internally on the Office of Human Resource 

Management.

Clearly linking an agency’s overall human capital management strategy to 

its program goals is another element we have identified as key to effective 

human capital management. In a 1997 review of FAA’s personnel reform, 

the Volpe National Transportation Systems Center highlighted this issue of 

linkage, as shown in figure 12.57 

Figure 12: Volpe Center’s Views on Importance of Linkage

While FAA has taken some steps to link its human capital reform initiatives 

to its program goals, these steps do not go far enough to help the agency 

measure the reform’s success. Specifically, FAA incorporated various 

aspects of personnel reform into its 1999 strategic human resource 

management plan,58 which stated that performance measurement was to 

focus on attaining organization goals but did not establish the measures 

with which to do so. Similarly, FAA’s 2001 strategic plan, prepared under 

the Government Results and Performance Act, includes a goal for the 

agency to “fundamentally change the way it operates by implementing 

personnel reform” but does not explicitly link this goal for personnel 

reform to organizational program goals of aviation safety and system 

efficiency. Human resource management officials said that organizational 

and individual incentive goals established under the compensation system 

Learning and 

growth

Capitalize on Human 

Resource 

Management Office 

talent

Increase Human 

Resource Management 

Office capacity to 

improve

Leverage Human 

Resource 

Management Office 

data/information

57Volpe National Transportation Center, FAA Personnel Reform Evaluability Assessment, 

April 1997.

58Federal Aviation Administration, Human Resources Strategic Plan 1999-2002, April 1999.

(Continued From Previous Page)

Measurement 

perspectives Performance measures
Page 41 GAO-03-156 Human Capital Management

explicitly linked individual performance to agency goals including safety 

and system efficiency and that the standards for performance under FAA’s 

new performance management system directly reflect agency and 

organizational programmatic goals. Nonetheless, linkage between FAA’s 

personnel reform goals and the agency’s programmatic goals continues to 

be weakened by a lack of specific, quantitative, and time-based measures 

and goals.

FAA’s lack of relevant data, analysis, and performance goals and measures 

has been repeatedly articulated since 1995 by other internal and external 

reviews of the reform effort. While these reviews have called for FAA to 

incorporate these elements into its reform effort, and several recent studies 

have also highlighted the issue of linkage, FAA has not established and 

carried out a plan with specific steps and time frames for doing so. A 

chronology of these studies is provided in table 2.

Table 2: Chronology of Internal and External Evaluations of FAA’s Personnel Reform 

Date Evaluation Result

October 1995 Exempting FAA From Procurement and 

Personnel Rules, U.S. General 

Accounting Office

In reporting on FAA’s request for legislative flexibilities, GAO emphasized 

the importance of establishing goals prior to the application of the new 

authority, noting that an evaluation of FAA’s efforts after some experience 

had been obtained would be important for determining the success of the 

effort and its governmentwide applicability. 

December 1995 Best Practices in HRM: Briefing to FAA 

Personnel Reform Task Forces, FAA

An evaluation briefing prepared for FAA’s personnel reform task forces 

identified measurement of human resource practices and processes as an 

essential element for creating a strategic context for personnel reform.

March 1996 Proposed Personnel Reform Evaluation 

Strategy, FAA

This report identified evaluation measures for FAA’s personnel reform and 

strategies for engaging stakeholders in measuring the results of reform 

initiatives.

April 1997 FAA Personnel Reform Evaluability 

Assessment, Volpe National 

Transportation Systems Center

The Center conducted an assessment to evaluate potential performance 

indicators for measuring the effectiveness of reform efforts and concluded 

that reform principles were not stated in terms of tangible outcomes that 

could be easily measurable and there was no clear sense of priority among 

them.

September 1997 The FAA Human Resource Management 

System Evaluation Plan: Interim Report, 

Human Resources Research 

Organization

This study linked the reform initiatives with proposed indicators of reform 

implementation, and potential intermediate and final outcomes to facilitate 

program evaluation.

January 1998 FAA Personnel Reform: Implementation 

Status Report, Human Resources 

Research Organization

This report identified a lack of baseline set of data and concluded “there 

has been no effort to establish systematic measurement systems over the 

remaining course of personnel reform implementation. Without baseline 

data and the ability to measure current status it is difficult to assess 

whether or not objectives are being met.”
Page 42 GAO-03-156 Human Capital Management

Source: GAO.

Several of these studies also attributed problems related to a lack of 

ownership for the reform effort or a lack of accountability for 

implementation or results. For example, in 1999, the National Academy of 

September 1998 Personnel Reform: Recent Actions 

Represent Progress But Further Effort Is 

Needed to Achieve Comprehensive 

Change, Department of Transportation 

Office of Inspector General

This report concluded that FAA had not identified the specific results it 

expects to achieve from these programs or established outcome goals and 

measures to accurately demonstrate that its personnel reform initiatives 

were effective in resolving the original problems that led to reform.

September 1998 The FAA Personnel Reform Evaluation 

Plan, Human Resources Research 

Organization

This report presented a general framework for evaluation of personnel 

reform initiatives and concluded, “...it is critical for the agency to develop 

and implement evaluation and measurement systems to assess the results 

and success of these large-scale HRM [human resource management] 

change efforts.”

April 1999 FAA Manager Satisfaction with 

Personnel Reform Implementation and 

HR Customer Service, Human 

Resources Research Organization

This study recommended that FAA develop a strategy for personnel reform 

to identify long-term objectives and outcomes, address how reforms would 

support accomplishment of mission goals, assess the current status of 

implementation, develop performance measures, and develop a 

comprehensive schedule for implementing reform initiatives.

July 1999 Personnel Reform Evaluation Database: 

Baseline Report, FAA

This report provides a framework for the development of a database to 

evaluate personnel reform measures.

August 1999 Personnel Reform in the Federal 

Aviation Administration: Three Year 

Status Report, National Academy of 

Public Administration

The Academy concluded that the lack of baseline data and specific 

measures to assess the effectiveness of personnel reform and establish a 

basis for continuous improvement was a major issue for FAA that “must be 

resolved if personnel reform is to achieve its full potential.”

November 1999 A Communication Strategy for Improved 

HRM Evaluation and Measurement, FAA

This report provides a framework for encouraging the evaluation and 

measurement of human resource management programs and services 

and cultivating, understanding, and using evaluation tools, data, reports 

and recommendations to improve the quality of human resources products 

and services.

January 2002 Human Resource Performance 

Measures for the FAA, Booz-AllenHamilton

This briefing recommends expanding the focus of the Office of Human 

Resource Management’s balanced scorecard to additional measures 

dealing with attracting and retaining a talented workforce, as well as linking 

the outputs/outcomes of human resource initiatives to the agency’s 

mission goals.

September 2002 Federal Aviation Administration: FiveYear Review of Personnel Reform and 

Strategies for the Future, Deloitte & 

Touche, LLP

This most recent study of the agency’s progress in personnel reform found 

that the reform effort had suffered from a shortage of baseline data and 

metrics to measure the impact of various initiatives on agency operation 

and strategic objectives. Accordingly, the report recommended that the 

Office of Human Resource Management expand the collection of hard data 

and the use of objective metrics to evaluate the effectiveness of personnel 

reform initiatives.

(Continued From Previous Page)

Date Evaluation Result
Page 43 GAO-03-156 Human Capital Management

Public Administration identified the lack of ownership for personnel 

reform as a challenge that must be resolved.59 (See fig. 13.)

Figure 13: Study’s Views on FAA’s Implementation of Personnel Reform

As shown in figure 14, a 1998 departmental review found that FAA had not 

clearly established accountability for implementation of the reform 

initiatives.60

Figure 14: Inspector General’s Views on FAA’s Implementation of Personnel Reform

According to the most recent assessment of the status of FAA’s personnel 

reform, published by a consultant in September 2002 and shown in figure 

15, a lack of ownership and inconsistent support for personnel reform by 

FAA’s executive management team has impaired reform implementation 

efforts. 61

59National Academy of Public Administration, Personnel Reform in the Federal Aviation 

Administration: Three Year Status Report, August 1999.

60Department of Transportation, Office of Inspector General, Personnel Reform: Recent 

Actions Represent Progress But Further Effort Is Needed To Achieve Comprehensive 

Change, Sept. 30, 1998.

61Deloitte & Touche, LLP, Federal Aviation Administration: Five-Year Review of Personnel 

Reform and Strategies for the Future, (McLean, VA., Sept. 2002.) p. 6.
Page 44 GAO-03-156 Human Capital Management

Figure 15: Consultant’s Views on FAA’s Implementation of Personnel Reform 

Our work on effective human capital management at federal agencies has 

found that building accountability into an agency’s human capital approach 

is important to the effective use of human capital flexibilities. Furthermore, 

we have found that in high performing organizations, managers are held 

accountable for achieving strategic goals, and clearly defined performance 

expectations are in place to hold employees and teams at all levels 

accountable. Establishing systems for gathering performance data and 

incorporating specific, time-based performance measures and goals that 

are linked to the agency’s program goals into the reform effort would 

improve the agency’s ability to set more meaningful strategic goals for its 

human capital reform effort and more clearly defined performance 

expectations for its human capital management. Together, this would help 

the agency build accountability into the reform effort and its overall human 

capital management approach. 

Conclusions Congress granted FAA flexibilities in its human capital management so that 

the agency could more effectively manage its workforce and achieve its 

mission. Yet, more than 7 years after the agency received broad exemptions 

from laws governing federal civilian personnel management, it is not clear 

whether and to what extent these flexibilities have helped FAA to do so. It 

is clear that FAA has faced significant challenges in implementing its 

human capital reform initiatives and evaluating the success of its effort. 

Challenges, including implementing reform initiatives throughout its 

workforce with a wide range of skills and negotiating agreements with 

employee unions, reflect difficulties that may be faced by other federal 

agencies that seek to implement human capital management flexibilities. 

FAA is not able to determine the effectiveness of its human capital reform 

initiatives because it has not incorporated key elements of effective human 

capital management into its effort thus far. While FAA has established 

preliminary linkages between its reform goals and the agency’s program 
Page 45 GAO-03-156 Human Capital Management

goals, the lack of explicit linkage will make it difficult to assess the effects 

of the reform initiatives on the program goals of the organization even after 

data, measurable goals, and performance measures for human capital 

management efforts are established. FAA has acknowledged the 

importance of establishing these elements. It has repeatedly said that it is 

working to collect and analyze data and develop performance goals and 

measures, but it has not completed these critical tasks, nor has it 

established specific steps and time frames by which it will do so. As FAA 

moves forward, a more strategic approach to its reform effort would allow 

it to better evaluate the effects of its reform initiatives, use the evaluations 

as a basis for any strategic improvements to its human capital management 

approach, and hold agency leadership accountable for the results of its 

human capital management efforts. Doing so would also enable the agency 

to share its results with other federal agencies and Congress. 

Recommendations In order to acquire the information needed to make more informed 

strategic human capital decisions and better ensure that FAA’s personnel 

reforms achieve their intended results in a timely fashion, we recommend 

that the Secretary of Transportation direct the FAA Administrator to 

• develop empirical data and establish specific, measurable, time-based 

goals and performance measures related to these goals; and use them to 

evaluate the effects of the reforms on the agency’s human capital 

management, programs, and mission so that the agency can make any 

needed improvements. Developing these evaluation tools is particularly 

urgent for those initiatives, such as FAA’s new compensation system for 

air traffic employees, for which possible negative effects have been 

raised by employees; and FAA’s new performance management system.

• define and describe explicit linkages between human capital 

management reform initiatives and program goals of the organization. 

• establish time frames by which data will be collected and analyzed and 

by which goals, performance measures, and explicit linkage will be 

established and used to evaluate the success of the reform initiatives 

and hold agency leadership accountable for the results of its human 

capital management efforts. 
Page 46 GAO-03-156 Human Capital Management

Agency Comments and 

Our Evaluation

We provided a draft of this report to the Department of Transportation for 

its review and met with Department of Transportation officials, including 

FAA's Assistant Administrator for Human Resource Management, to obtain 

their comments. The department officials generally agreed with the 

report's recommendations and indicated that the findings presented in the 

audit report would be useful as FAA moves forward with its human capital 

reforms. They also noted issues in three areas. 

First, these officials emphasized that implementing a new human capital 

system within an existing workforce presented FAA with a significant 

challenge, given the size of FAA's workforce, the large unionized 

population, and the variety of occupations and functions within the agency. 

Second, while these officials agreed that establishing more definitive 

measures and baseline data, as identified in our recommendations, are 

important in determining the effectiveness of the new human capital 

programs, they stated that they have been making significant progress in 

developing those measures. 

Third, in responding to our concern that FAA is not able to determine the 

effectiveness of its human capital reform initiatives because it has not 

incorporated key elements of effective human capital management into its 

effort, these officials told us that FAA used the results of its pilot testing 

and phased implementation approach to modify systems to ensure 

effectiveness before full implementation and that subsequent assessments 

were conducted to determine whether the programs were accomplishing 

the intended goals. They said that FAA already has substantial information 

to indicate that its new programs and initiatives are on the right track and 

should be effective in meeting the reform effort’s intent. As examples, they 

referred to reviews by NAPA and the consulting firm Deloitte & Touche, 

which they said had characterized FAA’s human capital reforms as “stateof-the-art.” The officials stated that FAA’s design process had been 

characterized in the NAPA review as yielding high-quality policies, and 

FAA’s reform effort had been characterized in the NAPA review as heading 

in the right direction and as “a change management issue that is 

unparalleled in the federal sector.” They further stated that Deloitte & 

Touche’s review had found that the guiding principles and objectives of 

FAA’s personnel reform were sound, and that some programs have already 

been largely successful, such as streamlined recruitment and staffing 

processes. Notwithstanding the characterizations in these assessments, 

both NAPA and Deloitte & Touche raised concerns about issues we found 

in our review, particularly FAA’s lack of baseline data and specific 
Page 47 GAO-03-156 Human Capital Management

performance measures to assess the effectiveness of its reform effort and 

establish a basis for continuous improvement. 

Department officials also said that FAA’s new human capital system is 

consistent with the President’s Management Agenda and the 

Administration’s Human Capital Plan, and that other federal officials have 

touted the types of programs FAA developed and implemented as the wave 

of the future for the rest of the federal government. FAA emphasized that 

its agency is unique among federal agencies in implementing a 

performance-based and market-based pay system applicable to both 

nonunion and union employees, which clearly links annual pay 

adjustments to key agency programs and to individual employee 

performance and contributions. We agree that other federal agencies 

considering human capital reform may find FAA’s programs and 

experiences useful to consider, as FAA was granted human capital 

flexibilities in 1995 and has been working since to implement its human 

capital reform effort. In fact, we feel that this increases the importance of 

FAA’s efforts to effectively evaluate its reform. However, based on our prior 

work on human capital management, we found in our review that FAA’s 

efforts to link its human capital reform initiatives to its program goals do 

not go far enough to help the agency measure the reform’s success and that 

linkage between FAA’s personnel reform goals and the agency’s 

programmatic goals continues to be weakened by a lack of specific, 

quantitative, and time-based measures and goals. 

FAA also provided technical clarifications, which we included in the report 

where appropriate. 

We are sending copies of this report to the Administrator, Federal Aviation 

Administration. We also will make copies available to others upon request. 

In addition, the report will be available at no charge on the GAO Web site at 

http://www.gao.gov.
Page 48 GAO-03-156 Human Capital Management

If you or your staff have any questions about this report, please call me at 

(202) 512-3650. Key contacts and major contributors to this report are 

listed in appendix VII.

Gerald L. Dillingham, Ph.D.

Director, Physical Infrastructure Issues
Page 49 GAO-03-156 Human Capital Management

Appendix I

Scope and Methodology AAppenednxidexiIs

To determine the human capital changes that FAA initiated after being 

granted broad flexibilities in 1995 and the extent to which these reform 

initiatives required exemptions from title 5, we reviewed federal personnel 

management requirements under title 5, agency documents identifying 

personnel reform initiatives, and reports by OPM on personnel 

management flexibilities already available under title 5. We also discussed 

the changes with officials from FAA’s Office of the Assistant Administrator 

for Human Resource Management and OPM. 

To determine the status of implementation of FAA’s personnel reform and 

factors that have affected reform implementation, we collected and 

analyzed internal and external evaluations—including those conducted by 

the Department of Transportation’s Office of Inspector General and 

NAPA—of different aspects of FAA’s personnel reform and the available 

data on the results. We also discussed the status of, and barriers to, 

implementation of personnel reform initiatives with FAA human resource 

management officials and representatives from the lines of business. 

To determine the views of FAA managers and employees on the effects of 

FAA’s personnel reform initiatives we conducted a series of structured 

interviews with 176 randomly selected FAA managers and employees. Our 

structured interview included questions about how the agency manages its 

employees, compensation and performance management, and labor and 

employee relations. We discussed the design of these questions with 

officials from FAA and with representatives from FAA’s five largest 

unions—the National Air Traffic Controllers Association (about 19,500 

members), the Professional Airways Systems Specialists (about 11,600 

members), the National Association of Air Traffic Specialists (about 2,300 

members), the American Federation of State, County and Municipal 

Employees (about 2,000 members), and the American Federation of 

Government Employees (about 1,500 members). We then pre-tested the 

structured interview with managers and employees in FAA’s Southern 

Region and made appropriate revisions. 

To maximize our chances of obtaining the views of managers and 

employees across the different segments of FAA’s workforce, we applied a 

judgmental stratification to our random sample (therefore, it may not be 

representative of the actual composition of FAA’s workforce): 25 percent 

managers, and 75 percent employees; and 60 percent Air Traffic 

Services/air traffic control staff, 40 percent from the rest of FAA. In 

addition, for non-headquarters respondents, we selected 70 percent of our 

respondents from field facilities and 30 percent from regional offices. Our 
Appendix I

Scope and Methodology

Page 50 GAO-03-156 Human Capital Management

respondents were randomly selected from electronic lists of names 

provided by FAA.

We conducted our structured interviews at FAA headquarters in 

Washington, D.C.; FAA’s Mike Monroney Aeronautical Center in Oklahoma 

City, Oklahoma; and field facilities and regional offices in six of FAA’s nine 

geographic regions, including offices in the immediate vicinity of 

Anchorage, Alaska; Atlanta, Georgia; Chicago, Illinois; Dallas, Texas; Los 

Angeles, California; and New York City, New York. Field facilities we visited 

included air traffic control towers, en route centers, automated flight 

service stations, terminal radar approach control centers, airports district 

offices, and flight standards district offices. A total of 176 FAA staff 

participated in our survey throughout the months of May, June, July, and 

August 2002. The information obtained through this survey pertains to only 

these 176 respondents and cannot be generalized to any other population. 

However, because we selected interview respondents at random, we have 

increased the chances of capturing the breadth of opinions across the 

agency. A copy of our structured interview and the summary results for our 

close-ended questions is provided in appendix II. To augment the views and 

opinions collected from the structured interviews, we also obtained the 

views of FAA senior managers or representatives of all five lines of 

business and representatives of employees’ associations. 

To determine the extent to which FAA management and employees’ views 

were supported by data, we examined the results from FAA’s employee 

attitude surveys conducted between 1997 and 2000, as well as other 

internal surveys of executives, managers, and supervisors related to 

various aspects of FAA’s personnel reform effort. In addition, we collected 

available data from FAA’s Office of Human Resource Management and 

Office of Civil Rights. 

To determine how FAA’s experiences compared with our findings from our 

human capital management work at other agencies, we reviewed our 

human capital management audit work that focused on federal agencies’ 

efforts to implement improvement initiatives and human capital 

flexibilities, as well as work conducted by other organizations involved in 

assessing federal agencies’ reform efforts including OPM and NAPA, and 

we compared our findings on FAA’s experiences with these findings. 

We conducted our work in accordance with generally accepted government 

auditing standards from November 2001 through October 2002.
Page 51 GAO-03-156 Human Capital Management

Appendix II

Structured Interview Form and Selected 

Results ApendxiI

STRUCTURED INTERVIEW FORM AND SELECTED RESULTS

ATC (A)/Non-ATC (NA): ________

 Regional Office (RO)/Field Office (FO): ________

Manager or Supervisor (MS)/Employee (E): ________

Location (AT, AN, CH, DA, NY, LA)/ID Number:________

Thank you for meeting with us today. We work with the General Accounting Office in

Washington DC and we’ve been asked by Congress to see how the personnel reforms at

FAA are going. One of the ways we’re doing that is by asking FAA employees like you to

tell us about how the personnel reforms here are affecting you, your ability to perform

your work, and your unit’s ability to achieve its mission- in both good and bad ways.

We’re going to several different regions and talking to many employees- we selected your

name at random and appreciate your willingness to talk to us. I will be asking you a

series of questions, some you can answer from a range of standard responses like

strongly agree to strongly disagree, and others will give you an opportunity to provide a

little bit more specific information. ____ will be taking notes to be sure that we capture

all you have to say. Your responses are confidential- we won’t report your name with

anything you say here and we’ll report our results as a summary of what everyone tells

us. The entire interview should take about 30 minutes. Do you have any questions

before we begin?

(Personnel reform includes: hiring, training, compensation, performance

management, labor and employee relations, among others.)

1. To start with, how knowledgeable are you about FAA’s personnel reform efforts?

Which reform(s) do you know most about? Least about?

Section A

The first set of questions I’ll ask deal with how FAA manages its workforce. For the next

question and others throughout the survey, I’d like you to use this scale for your answerplease tell me if you strongly agree (SA), agree (A), disagree (D) or strongly disagree (SD).

2. I receive the training I need to do my job effectively.

Circle response: SA A D SD NA/Don’t know

____
Appendix II

Structured Interview Form and Selected 

Results

Page 52 GAO-03-156 Human Capital Management

Strongly

Agree

N

Agree

N

Disagree

N

Strongly

Disagree

N

NA/Don’t

Know

N

Total 42 93 30 8 3

Managers 11 29 5 0 1

Employees 31 64 25 8 2

ATC 20 48 13 4 2

Non-ATC 22 45 17 4 1

Field Office 27 51 14 3 2

Regional

Office

15 42 16 5 1

3. Could you give me more detail about that? How has the fact that the lines of

business are responsible for funding and managing training affected the amount

and/or quality of training you’ve received?

4. What, if any, training do you need that your line of business (or staff office) has not

provided?

5. Using the scale again: The ability of my line of business (or staff office) to efficiently

and effectively fill job vacancies has improved in the last 5 years.

Circle response: SA A D SD NA/Don’t know

____

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 12 35 55 47 27

Managers 3 12 18 10 3

Employees 9 23 37 37 24

ATC 7 15 26 31 8

Non-ATC 5 20 29 16 19

Field Office 9 22 22 29 15

Regional

Office

3 13 33 18 12
Appendix II

Structured Interview Form and Selected 

Results

Page 53 GAO-03-156 Human Capital Management

6. Has the speed of hiring improved? How? {Pause for response} Has the quality of

candidates improved? How?

Section B

The next set of questions I’ll ask deal with the new pay and performance management

systems including the new pay bands and pay-for-performance system, as well as, the

“meets/does not meet standards” performance rating system implemented in 1996.

7. Using the scale again: I am better off under the new pay band system than under

the grade and step pay system.

Circle response: SA A D SD NA/Don’t know

____

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 40 45 28 32 31

Managers 7 18 9 7 5

Employees 33 27 19 25 26

ATC 36 20 9 12 10

Non-ATC 4 25 19 20 21

Field Office 38 18 10 13 18

Regional

Office

2 27 18 19 13

8. Using the scale again: I think the new pay system is fair to all employees.

Circle response: SA A D SD NA/Don’t know

____

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 16 37 58 52 13

Managers 0 7 18 20 1

Employees 16 30 40 32 12

ATC 15 21 24 23 4

Non-ATC 1 16 34 29 9
Appendix II

Structured Interview Form and Selected 

Results

Page 54 GAO-03-156 Human Capital Management

Field Office 16 23 26 21 11

Regional

Office

0 14 32 31 2

9. What do you like about the new pay system? Is there anything you don’t like about

the new pay system?

10. Using the scale again: Separating cash awards from performance appraisals has

made the appraisal process more fair.

Circle response: SA A D SD NA/Don’t know

____

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 14 46 49 23 44

Managers 4 16 12 7 7

Employees 10 30 37 16 37

ATC 10 23 25 8 21

Non-ATC 4 23 24 15 23

Field Office 10 24 23 11 29

Regional

Office

4 22 26 12 15

11. Using the scale again: The way my most recent formal performance appraisal was

handled gave me useful information for improving my performance.

Circle response: SA A D SD NA/Don’t know

____

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 16 56 57 33 14

Managers 3 15 21 6 1

Employees 13 41 36 27 13

ATC 8 28 31 17 3

Non-ATC 8 28 26 16 11
Appendix II

Structured Interview Form and Selected 

Results

Page 55 GAO-03-156 Human Capital Management

Field Office 10 28 30 19 10

Regional

Office

6 28 27 14 4

12. Using the scale again: Awards and recognition more appropriately reflect

employees’ performance today than 5 years ago.

Circle response: SA A D SD NA/Don’t know

____

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 14 40 71 28 23

Managers 3 14 19 7 3

Employees 11 26 52 21 20

ATC 9 26 29 16 7

Non-ATC 5 14 42 12 16

Field Office 9 27 30 17 14

Regional

Office

5 13 41 11 9

13. Using the scale again: FAA’s process for promotion better targets qualified people

now than it did 5 years ago.

Circle response: SA A D SD NA/Don’t know

____

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 0 34 65 43 34

Managers 0 13 15 12 6

Employees 0 21 50 31 28

ATC 0 13 35 25 14

Non-ATC 0 21 30 18 20
Appendix II

Structured Interview Form and Selected 

Results

Page 56 GAO-03-156 Human Capital Management

Field Office 0 18 29 28 22

Regional

Office

0 16 36 15 12

14. To what extent have managers and supervisors become more (or less) accountable

for achieving agency goals in the last 5 years?

Section C

The next set of questions I’ll ask deal with labor relations and employee relations.

15. Using the scale again: FAA’s employee unions have had a positive impact on

implementing personnel reform in the agency.

Circle response: SA A D SD NA/Don’t know

____

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 31 55 50 25 15

Managers 4 9 15 14 4

Employees 27 46 35 11 11

ATC 23 30 19 9 6

Non-ATC 8 25 31 16 9

Field Office 25 34 19 8 11

Regional

Office

6 21 31 17 4

16. Do you think labor-management relations have changed in the last 5 years? (As

applicable) How? What specifically has driven this change?

17. Do you think employee morale has changed in the last 5 years? (As applicable) How?

What specifically has driven this change?

18. Using the scale again: FAA employees had sufficient opportunities to provide input

for personnel reform policies and initiatives before they were finalized and

implemented.

Circle response: SA A D SD NA/Don’t know

____
Appendix II

Structured Interview Form and Selected 

Results

Page 57 GAO-03-156 Human Capital Management

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 9 52 44 36 35

Managers 2 13 16 12 3

Employees 7 39 28 24 32

ATC 6 23 20 22 16

Non-ATC 3 29 24 14 19

Field Office 6 31 20 17 23

Regional

Office

3 21 24 19 12

19. Using the scale again: I understand the goals of the Model Work Environment.

Circle response: SA A D SD NA/Don’t know

____

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 34 100 30 4 8

Managers 19 23 3 1 0

Employees 15 77 27 3 8

ATC 19 50 13 2 3

Non-ATC 15 50 17 2 5

Field Office 17 57 17 1 5

Regional

Office

17 43 13 3 3

20. Please describe the effect Model Work Environment has had (if any) on employee

morale.

21. Using the scale again: I have received sufficient and timely information on

personnel reform changes that affect my job.

Circle response: SA A D SD NA/Don’t know

____
Appendix II

Structured Interview Form and Selected 

Results

Page 58 GAO-03-156 Human Capital Management

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 10 101 41 17 7

Managers 2 25 16 3 0

Employees 8 76 25 14 7

ATC 5 45 22 9 6

Non-ATC 5 56 19 8 1

Field Office 6 57 19 11 4

Regional

Office

4 44 22 6 3

22. What personnel reforms have been particularly well communicated? Which

method(s) of communication work(s) best or would work best? Worst?

Section D

The last set of questions deal with the overall result of personnel reforms at FAA.

23. Using the scale again: Personnel reform has made FAA a better place to work.

Circle response: SA A D SD NA/Don’t know

____

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 11 60 58 32 15

Managers 3 12 23 7 1

Employees 8 48 35 25 14

ATC 7 33 27 13 7

Non-ATC 4 27 31 19 8

Field Office 8 38 27 13 11

Regional

Office

3 22 31 19 4

24. Using the scale again: Personnel reform will make FAA a better place to work.
Appendix II

Structured Interview Form and Selected 

Results

Page 59 GAO-03-156 Human Capital Management

Circle response: SA A D SD NA/Don’t know

____

Strongly

Agree

Agree Disagree Strongly

Disagree

NA/Don’t

Know

Total 14 84 34 25 19

Managers 6 26 7 5 2

Employees 8 58 27 20 17

ATC 8 40 19 10 10

Non-ATC 6 44 15 15 9

Field Office 8 51 14 13 11

Regional

Office

6 33 20 12 8

25. What are the 3 most positive outcomes of FAA’s personnel reform efforts?

26. What are the 3 most negative outcomes of FAA’s personnel reform efforts?

27. What kinds of comments have you heard about the personnel reforms we’ve been

discussing today from your co-workers?

28. Do you have any suggestions for improving FAA’s implementation of personnel

reform?

Okay, although we won’t be using your name with this information, I would like to ask just

a couple of questions about your position here.

29. How long have you worked at FAA? _____.

Median Mean Standard

Deviation

Total 16.0 16.4 9.6

Managers 20.0 20.7 9.2

Employees 15.0 14.9 9.4

ATC 19.0 18.2 8.1

Non-ATC 14.0 14.7 10.7
Appendix II

Structured Interview Form and Selected 

Results

Page 60 GAO-03-156 Human Capital Management

Field Office 17.0 15.7 8.8

Regional Office 15.0 17.3 10.6

30. Are you a bargaining unit employee? 

Circle response: Yes No

Yes No

Total 111 65

Managers 5 41

Employees 106 24

ATC 57 30

Non-ATC 54 35

Field Office 74 23

Regional

Office

37 42

(If the answer is yes) Which one? _________________

% of Total

Population

AFGE AFSCME NAGE NAATS NATCA PAACE PASS Don’t

Know

Total 1 22 1 3 55 2 20 7

Managers 0 2 1 0 0 0 2 0

Employees 1 20 0 3 55 2 18 7

ATC 0 4 1 1 47 0 3 1

Non-ATC 1 18 0 2 8 2 17 6

Field

Office

1 0 1 2 45 2 17 6

Regional

Office

0 22 0 1 10 0 3 1

Thank you very much for answering my questions today. We really appreciate your time, and

the feedback we get from you will help FAA and Congress make future decisions about

personnel reform.
Page 61 GAO-03-156 Human Capital Management

Appendix III

Elements for Effective Human Capital 

Management ApendxiI

In March 2002, we issued a model for strategic human capital management 

that incorporates lessons learned in our reviews of other agencies’ human 

capital management practices, as well as our own experiences.62 The 

model identifies eight critical success factors and highlights some of the 

steps agencies can take to make progress in managing human capital 

strategically. These eight factors, shown in figure 16, are organized in pairs 

to correspond with the four governmentwide high-risk human capital 

challenges that our work has shown are undermining agency effectiveness.

62U.S. General Accounting Office, A Model of Strategic Human Capital Management, GAO-02-

373SP (Washington, D.C.: March 15, 2002).
Appendix III

Elements for Effective Human Capital 

Management

Page 62 GAO-03-156 Human Capital Management

Figure 16: Eight Critical Success Factors Corresponding with the Four High-Risk 

Human Capital Challenges That Can Help Agencies Manage Human Capital 

Strategically 

In November 2002, we issued a report that identified six key practices for 

federal agencies’ effective use of human capital flexibilities that 

incorporate the concepts and critical factors of our model.63 Based on our 
Appendix III

Elements for Effective Human Capital 

Management

Page 63 GAO-03-156 Human Capital Management

interviews with human resource management directors from across the 

federal government, we identified the following key practices that agencies 

should implement to use human capital flexibilities effectively, as shown in 

Figure 17. 

Figure 17: Six Key Practices for Effective Use of Human Capital Flexibilities

63U.S. General Accounting Office, Human Capital: Effective Use of Flexibilities Can Assist 

Agencies in Managing Their Workforces, GAO-03-02, (Washington, D.C.: Nov. 2002).
Page 64 GAO-03-156 Human Capital Management

Appendix IV

Core Compensation Pay Bands and Grade 

Conversion for 2002 ApendxiIV
Appendix IV

Core Compensation Pay Bands and Grade 

Conversion for 2002

Page 65 GAO-03-156 Human Capital Management

Notes: Does not include locality pay.

Blank cells indicate no old grade equivalent to new pay band for manager levels.
Page 66 GAO-03-156 Human Capital Management

Appendix V

FAA Human Resource Management Office’s 

Balanced Scorecard Performance Measures ApendxiV

Source: FAA.

Measurement 

perspectives

Performance measures

Areas of measurement

 (proposed data sources)

Customer Human Resource Management 

Office service excellence

Customer perceptions regarding 

human resource management 

office service quality and 

timeliness

(employee surveys)

Human Resource Management Office 

consultation and expertise valued

Customer perceptions regarding 

human resource management office 

consultation & staff expertise

(employee surveys)

Human Resource Management Office 

innovation and leadership

Customer perceptions regarding 

personnel reform 

Human resource management office 

& line of business human capital 

management efforts

(employee surveys)

Performance Human Resource Management 

Office results meet goals 

Percentage of human resource 

management office projects 

completed on time

(human resources office 

reporting system)

Efficient use of Human Resource 

Management Office resources

Human resource management office 

spending 

(budget & accounting data)

Human resource management office 

labor distribution 

(cost accounting system)

Improved practices within Lines of 

Business

Knowledge transfer 

Improved line of business processes 

& practices

Meet unique needs 

(employee surveys)

Internal 

processes

Consistent human resource 

management policy interpretation

(Personnel management 

evaluations, human resource 

management office policy training 

evaluations) 

Effective Labor-Management 

Relationships

Consolidation in bargaining units 

Partnership Council meeting 

attendance

(data on grievances and 

unauthorized labor practices)

Attract and retain high caliber 

employees

Timeliness of 

automated/nonautomated selections

Percentage of voluntary & involuntary 

attrition 

(Selecting official interview data)

Human 

Resource 

Management 

Office employee

Empowered Human Resource 

Management Office employees

Human Resource Management 

Office employee perceptions of 

empowerment

(employee surveys)

Satisfied Human Resource Office 

Management employees

Human Resource Management 

Office employee perceptions of job 

satisfaction and perceptions 

regarding commitment to service 

 

(employee surveys)

Rewarding Human Resource 

Management Office work environment

Human Resource Management Office 

employee perceptions regarding 

communication 

Performance rewarded 

(employee surveys)

Learning and 

growth

Capitalize on Human Resource 

Management 

Office talent 

Identify and close skill gaps 

(skills/training assessment for 

human resources office)

Implement Human Resource 

Management Office workforce 

planning 

(human resource management 

office reporting system)

Increase Human Resource 

Management 

Office capacity to improve 

Increase in professional credentials

(skills/training assessment for 

Human Resource Management 

Office)

Percentage of personnel, 

compensation, and benefits funding 

spent on training

(budget & accounting data)

Leverage Human Resource 

Management Office data/information

Availability and quality of data 

(human resource management 

office information system audit) 

Timeliness and responsiveness to 

internal Human Resource 

Management Office requests

(employee survey)
Appendix V

FAA Human Resource Management Office’s 

Balanced Scorecard Performance Measures

Page 67 GAO-03-156 Human Capital Management

Note: Shaded areas indicate measures focused internally on the Office of Human Resource 

Management.
Page 68 GAO-03-156 Human Capital Management

Appendix VI

GAO Contacts and Staff Acknowledgments ApendxiVI

GAO Contacts Gerald L. Dillingham, Ph.D. (202) 512-3650

Christopher A. Keisling (404) 679-1917

Staff 

Acknowledgments

In addition to those individuals named above, William Doherty, Michele 

Fejfar, David Hooper, Jason Schwartz, E. Jerry Seigler, Margaret Skiba, 

Tina Smith, Alwynne Wilbur, and Kristy Williams made key contributions to 

this report.

(540006)
GAO’s Mission The General Accounting Office, the investigative arm of Congress, exists to 

support Congress in meeting its constitutional responsibilities and to help improve 

the performance and accountability of the federal government for the American 

people. GAO examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of accountability, 

integrity, and reliability.

Obtaining Copies of 

GAO Reports and 

Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost is 

through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and fulltext files of current reports and testimony and an expanding archive of older 

products. The Web site features a search engine to help you locate documents 

using key words and phrases. You can print these documents in their entirety, 

including charts and other graphics.

Each day, GAO issues a list of newly released reports, testimony, and 

correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site 

daily. The list contains links to the full-text document files. To have GAO e-mail this 

list to you every afternoon, go to www.gao.gov and select “Subscribe to GAO 

Mailing Lists” under “Order GAO Products” heading.

Order by Mail or Phone The first copy of each printed report is free. Additional copies are $2 each. A check 

or money order should be made out to the Superintendent of Documents. GAO 

also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a single 

address are discounted 25 percent. Orders should be sent to:

U.S. General Accounting Office

441 G Street NW, Room LM

Washington, D.C. 20548

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Public Affairs Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800

U.S. General Accounting Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Service Requested

Presorted Standard

Postage & Fees Paid

GAO

Permit No. GI00