FEDERAL WORKFORCE

Human Capital 

Management Challenges 

and the Path to Reform

Statement of Robert Goldenkoff, Director, 

Strategic Issues

Testimony 

Before the Subcommittee on Federal Workforce, 

U.S. Postal Service and the Census, Committee 

on Oversight and Government Reform,

House of Representatives

For Release on Delivery 

Expected at 10:00 a.m. ET

Tuesday, July 15, 2014

GAO-14-723T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-723T, a testimony 

before the Subcommittee on the Federal 

Workforce, U.S. Postal Service and the 

Census, Committee on Oversight and 

Government Reform, House of 

Representatives 

July 15, 2014

FEDERAL WORKFORCE

Human Capital Management Challenges and the Path 

to Reform

Why GAO Did This Study

Strategic human capital management 

plays a critical role in maximizing the 

government’s performance and 

assuring its accountability to Congress 

and to the nation as a whole.

GAO designated strategic human 

capital management as a governmentwide high-risk area in 2001 because of 

a long-standing lack of leadership. 

Since then, important progress has 

been made. However, retirements and 

the potential loss of leadership and 

institutional knowledge, coupled with 

fiscal pressures underscore, the 

importance of a strategic and efficient

approach to acquiring and retaining 

individuals with needed critical skills.

As a result, strategic human capital 

management remains a high-risk area.

This testimony is based on preliminary 

findings of GAO’s ongoing work on the 

classification system and a body of 

GAO work primarily from 2012 to 2014

and focuses on the progress made by 

OPM and executive branch agencies in 

key areas of human capital 

management, including: (1) how the 

GS classification system compares to 

the attributes of a modern, effective 

classification system, (2) the status of 

performance management and efforts 

to address poor performance, (3) 

progress addressing critical skills gaps, 

and (4) strategies to address human 

capital challenges in an era of highly 

constrained resources. 

What GAO Recommends

Over the years, GAO has made 

numerous recommendations to 

agencies and OPM to improve their 

strategic human capital management 

efforts. This testimony discusses some 

actions taken to implement key 

recommendations. 

What GAO Found

Serious human capital shortfalls can erode the capacity of federal agencies and 

threaten their ability to cost-effectively carry out their missions. While progress 

has been made, continued attention is needed to ensure agencies have the 

human resources to drive performance and achieve the results the nation 

demands. Specifically, additional areas needing to be addressed include:

Classification 

GAO’s preliminary work has found eight key attributes of a modern, effective 

classification system, such as: internal and external equity, transparency, and

simplicity. The attributes require trade-offs and policy choices to implement. In 

concept, the General Schedule’s (GS) design reflects some of the eight

attributes, but falls short of achieving them in implementation. For example, the 

GS system’s grade levels provide internal equity by making it easy to compare

employees in the same occupation and grade level across different agencies. 

However, the number of grade levels can reduce transparency because making 

clear distinctions between the levels may be nuanced, as the basis for them 

hinges on, for example, how officials determine the complexity of the work. 

Performance management 

Effective performance management systems enable managers to make 

meaningful distinctions in performance in order to reward top performers and 

deal with poor performers. In 2011, five agencies piloted the Goals-EngagementAccountability-Results (GEAR) framework to help improve performance 

management. GEAR addressed important performance management practices, 

such as aligning individual performance with organizational goals. However, 

while Office of Personnel Management (OPM) officials said they are working with 

the Chief Human Capital Officer’s Council to promote GEAR, it is unclear if any 

additional agencies have adopted the GEAR framework.

Critical skills gaps

Since GAO included identifying and addressing government-wide critical skills 

gaps as a high-risk area in 2011, a working group led by OPM identified skills 

gaps in six government-wide mission critical occupations including cybersecurity 

and acquisition, and is taking steps to address each one. To date, officials 

reported meeting their planned level of progress for three of the six occupations. 

Additional progress will depend on the extent to which OPM and agencies 

develop the infrastructure needed to sustain their planning, implementation, and 

monitoring efforts for skills gaps, and develop a predictive capacity to identify 

newly emerging skills gaps. 

Strategies for an era of highly constrained resources

Agency officials have said that declining budgets have created the impetus to act 

on management challenges and a willingness to consider creative and 

nontraditional strategies for addressing human capital issues. GAO identified

strategies related to (1) strengthening coordination of the federal human capital 

community, (2) using enterprise solutions to address shared challenges, and (3) 

creating more agile talent management that can address these challenges.

View GAO-14-723T. For more information, 

contact Robert Goldenkoff at (202) 512-6806 

or goldenkoffr@gao.gov.
Page 1 GAO-14-723T

Chairman Farenthold, Ranking Member Lynch, and Members of the 

Subcommittee:

I am pleased to be here today to discuss some of the key human capital 

management challenges facing the federal workforce and what can be 

done going forward to ensure a top-notch civil service. As we have long 

reported, strategic human capital management plays a critical role in 

maximizing the government’s performance and assuring its accountability 

to Congress and to the nation as a whole. Addressing challenges in areas 

such as disaster response, homeland security, economic stability, and 

numerous other complex and evolving issues requires a skilled federal 

workforce able to work seamlessly with other agencies, levels of 

government, and across sectors.

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

capital management activities—including workforce planning, recruitment, 

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

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

some noteworthy improvements in the federal government’s management 

of its personnel in recent years, strategic human capital management 

continues to be a pervasive challenge that needs to be addressed.

The direct link between personnel management and organizational 

performance can be seen, for example, in a number of our recent studies 

that identified operational and other problems at various federal agencies. 

These problems include wait times at Department of Veterans Affairs 

medical facilities; management of oil and gas operations by the 

Department of the Interior; information technology management at the 

Social Security Administration; rail safety inspections by the Federal 

Railroad Administration; and acquisition management at the Departments 

of Defense and Homeland Security. All of these examples share a 

common problem: a breakdown of one or more human capital activities 

such as robust workforce planning or performance management.

Strategic human capital management has been a GAO high-risk area

since 2001.1

 1

GAO, High-Risk Series: An Update, 

Since then, Congress, the Office of Personnel Management 

(OPM), and some individual agencies have made substantial progress 

GAO-01-263 (Washington, D.C.: January 2001).
Page 2 GAO-14-723T

toward addressing the government’s human capital challenges. For 

example, in 2002 Congress created the chief human capital officer 

(CHCO) position in 24 agencies to advise and assist the heads of the 

agencies with human capital efforts.2 The same law created the CHCO 

Council to advise and coordinate the human capital activities of member 

agencies.3 As we reported in February 2013, although progress has been 

made toward improving the government’s human capital efforts, the area 

remains high risk because more work is needed to address governmentwide mission critical skills gaps.4

Today’s hearing is particularly timely as the General Schedule (GS) 

classification system—the government’s primary method of defining and 

organizing federal positions and the foundation of the federal personnel 

system—approaches its 65th anniversary in October.5

My remarks today will focus on the General Schedule and the extent to 

which it has the attributes of a modern and effective classification system. 

I will also discuss some of the other key issues facing federal strategic 

human capital management including compensation, the status of 

performance management and efforts to address poor performance, the 

need to close government-wide mission critical skills gaps, and strategies 

to help agencies meet their missions in an era of highly constrained 

resources.

Almost since its 

inception in 1949, questions have been raised about the GS system’s 

ability to keep pace with the evolving complexity and nature of federal 

work, and this hearing provides an important opportunity for Congress to 

review the GS system and consider how well it is aging.

 2

Chief Human Capital Officers Act of 2002, Title XIII of the Homeland Security Act of 

2002. Pub. L. No. 107-296, 116 Stat. 2135, 2287 (Nov. 25, 2002). 

3

The CHCO Council now has 27 members who represent executive departments or 

multiple agencies (such as agencies within the intelligence community) or are designated 

by the Director of OPM, who chairs the council.

4

GAO, High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: February 2013).

5

The GS classification system was established by the Classification Act of 1949 (Pub. L. 

No. 81-429, 63 Stat. 954 (Oct. 28, 1949)). Federal employees who are not white-collar 

workers are not covered by the GS system, but are instead covered by the Federal Wage 

System, which is a uniform pay-setting system covering federal blue-collar employees. 

These employees are paid a prevailing wage comparable to private sector rates in each 

local wage area.
Page 3 GAO-14-723T

Significantly, the results of our work on these topics point to one simple 

fact: Serious human capital shortfalls are eroding agencies’ capacity and 

threatening their ability to cost-effectively carry out their missions. While 

some progress has been made in addressing these shortfalls, continued 

action is needed to ensure federal agencies have the human resource 

tools, flexibilities, and guidance required to drive performance and 

achieve the programmatic results the nation demands.

My observations on the classification system represent the preliminary 

findings from our ongoing work that we are doing at the request of this 

Subcommittee and the House Committee on Oversight and Government 

Reform. For that study we interviewed more than 25 subject matter 

specialists from think tanks, academia, government employee unions, 

and current and former high-level officials at OPM and agencies that have 

implemented alternative classification systems. The rest of this statement 

is based on our large body of work on federal human capital management 

issued primarily between June 2012 and May 2014, and is updated with 

more recent information as appropriate. Detailed descriptions of scope 

and methodologies can be found in the original reports. Both our ongoing 

work and completed work that this statement is based on are either being 

conducted or were conducted in accordance with generally accepted 

government auditing standards. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide 

a reasonable basis for our findings and conclusions based on our 

objectives. We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our audit objectives.
Page 4 GAO-14-723T

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

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

GS system—which is administered by OPM—influences other human 

capital practices such as training, since training opportunities link position 

competencies with the employee’s performance. In 2013, the GS system 

covered about 80 percent of the civilian white-collar workforce, or about 

1.6 million employees.6

Several public policy groups and some OPM reports have questioned the 

ability of the GS system to meet agencies’ needs for flexible talent 

management tools that enable them to align employees with mission 

requirements. In our ongoing work, among other things, we are assessing 

(1) the attributes of a modern, effective classification system and the 

extent to which the current GS system balances those attributes, and (2) 

OPM’s administration and oversight of the GS system. Our preliminary 

findings from this work are as follows:

• While there is no one right way to design a classification system, 

based on our analysis of subject matter specialists’ comments, related 

literature, and interviews with OPM officials, there are eight key 

attributes that are important for a modern, effective classification 

system. Collectively these attributes provide a useful framework for 

 6

To conduct our analysis of federal workforce trends, we used OPM’s Enterprise Human 

Resources Integration (EHRI) Statistical Data Mart. EHRI (formerly Central Personnel 

Data File–CPDF) is the primary government-wide source for information on federal 

employees. The EHRI data we analyzed cover executive branch civilian employees, and 

do not cover the U.S. Postal Service, legislative or judicial branch employees, or 

intelligence agencies. OPM transitioned from CPDF to EHRI as of fiscal year 2010. 

OPM Needs to 

Improve the Design, 

Management, and 

Oversight of the 

Federal Classification 

System

The GS System Could 

Better Balance Attributes 

of a Modern, Effective 

Classification System
Page 5 GAO-14-723T

considering refinements or reforms to the current system. These key 

attributes are described in table 1.

Table 1: Attributes of a Modern, Effective Classification System

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

same grade level.

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

ranges comparable to the nonfederal sector. 

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

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

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

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

system to evolve as the workforce and workplace change.

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

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

managed.

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

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

Source: GAO analysis of interviews with subject matter specialists and OPM officials, and literature reviews. | GAO-14-723T

• While each attribute is individually important, there are inherent 

tensions between some attributes, and the challenge is finding the 

optimal balance among them. The weight that policymakers and 

stakeholders assign to each attribute could have large implications for 

pay, the ability to recruit and retain mission critical employees, and 

other aspects of personnel management. This is one reason why—

despite past proposals—changes to the current system have been 

few, as it is difficult to find the optimal mix of attributes that is 

acceptable to all stakeholders.

In comparing the GS system to these key attributes, during our ongoing 

work we found a number of examples of how the current system’s design 

reflects some of these key attributes but falls short of achieving them in 

implementation. As one example, the GS system includes 15 statutorilydefined grade levels intended to distinguish the degrees of difficulty within 

an occupation. Standard grade levels can simplify the system and provide 

internal equity.7

 7

5 U.S.C. § 5104.

Agency officials assign a grade level to a position after 

analyzing the duties and responsibilities according to the factor evaluation 
Page 6 GAO-14-723T

system.8

However, having 15 grades requires officials to make meaningful 

distinctions between things like the extent of the skills necessary for the 

work at each level, which may be more difficult to determine in some 

occupations than others. For example, officials must be able to determine 

how the work of a GS-12 accountant is different from a GS-13 

accountant. Making clear distinctions between these occupations may be 

nuanced, as the basis for them hinges on, for example, how agency 

officials determine the degree of complexity of the work. As a result, 

having 15 grade levels may make the system seem less transparent, as 

distinguishing between the levels may not be precisely measured by the 

elements of the factor evaluation criteria.

This allows for easy comparisons of employees in the same 

occupation and grade level across different agencies, providing simplicity 

and internal equity to the system, and may help employees move across 

agencies.

9

We believe that, going forward, these eight attributes of a more modern, 

effective classification system can help provide criteria for policymakers 

and other stakeholders to use in determining whether refinements to the 

current GS system or wholesale reforms are needed.

Otherwise agencies risk having 

two employees performing substantially equal work but receiving unequal 

pay, which decreases the degree to which the system can ensure internal 

equity.

OPM is required by law to review “from time to time” a number of 

positions in each federal agency to determine whether the agency is 

correctly placing positions in classes and grades according to OPMpublished standards.10

 8

Most occupational series (which include descriptions, benchmarks and illustrations to 

inform grade level distinctions) use the factor evaluation system. However, some 

standards are written in a narrative that describes the nature of work and level of 

responsibility for each grade covered by the standard. This requires users or classifiers to 

look at work as a whole and select the most appropriate overall grade.

During our ongoing work, OPM officials told us 

that the agency stopped conducting oversight reviews in the 1980s 

9

Not all occupations comprise all 15 grade levels. The occupational category determines 

the grade levels covered by an occupational series.

105 U.S.C. § 5110. Agencies are also responsible for classifying their own positions 

consistent with OPM guidance. 5 U.S.C. § 5107.

OPM Has Not Conducted 

Oversight of Agency 

Classification Programs
Page 7 GAO-14-723T

because it determined that the reviews were ineffective at overseeing 

agency compliance with the occupational standards. Specifically, officials 

said the reviews were time consuming and agencies did not agree with 

how OPM selected the position descriptions to review. OPM officials said 

agencies frequently contested the results of the reviews leading to 

another time- and resource-intensive review process for both OPM and 

the agencies. OPM officials said they rely on agencies’ internal oversight 

programs to ensure proper application of the classification policies. 

However, OPM officials told us they do not review agency oversight 

efforts, nor do they know which agencies, if any, have robust internal 

oversight mechanisms.

OPM officials told us that in 2014 they had 6 full-time classification policy 

specialists tasked with maintaining the classification standards, compared 

to 16 that they had in 2001, and many more in the 1980s. OPM officials 

said that lower staffing levels limit the agency’s ability to perform 

oversight. Based on our ongoing work, we believe that OPM, like all 

agencies, will have to make difficult tradeoffs between competing 

demands in this era of limited resources.

A key federal human capital management challenge is how best to 

balance the size and composition of the federal workforce so that it is 

able to deliver the high quality services that taxpayers demand, within the 

budgetary realities of what the nation can afford. Recognizing that the 

federal government’s pay system does not align well with modern 

compensation principles (where pay decisions are based on the skills, 

knowledge, and performance of employees as well as the local labor 

market), Congress has provided various agencies with exemptions from 

the current system to give them more flexibility in setting pay. Thus, a 

long-standing federal human capital management question is how to 

update the entire federal compensation system to be more market based 

and performance oriented. This type of system is a critical component of 

a larger effort to improve organizational performance.

Creating a ResultsOriented Approach

to Federal Pay

Compensation Has 

Remained Relatively 

Constant as a Proportion 

of Total Discretionary 

Spending
Page 8 GAO-14-723T

As we reported in January 2014,11 between 2004 and 2012 spending on 

total government-wide compensation for each full-time equivalent (FTE)12

 11GAO, Federal Workforce: Recent Trends in Federal Civilian Employment and 

Compensation,

position grew by an average of 1.2 percent per year, from $106,097 in 

2004 to $116,828 in 2012 (see figure 1). Much of this growth was driven 

by increased personnel benefits costs, which rose at a rate of 1.9 percent 

per year. Other factors included locality pay adjustments, as well as a 

change in the composition of the federal workforce (with a larger share of 

employees working in professional or administrative positions, requiring 

advanced skills and degrees). In terms of employee pay per FTE, 

spending rose at an average annual rate of 1 percent per year (a 7.9 

percent increase overall).

GAO-14-215 (Washington, D.C.: Jan. 29, 2014).

12FTEs reflect the total number of regular straight-time hours (i.e., not including overtime 

or holiday hours) worked by employees, divided by the number of compensable hours 

applicable to each fiscal year. As an example, two employees working half time would be 

the equivalent of one FTE. Annual leave, sick leave, compensatory time off, and other 

approved leave categories are considered to be hours worked for purposes of defining 

FTE employment.
Page 9 GAO-14-723T

Figure 1: Overall Government-wide Spending on Pay and Benefits, 2004-2012

As we reported earlier this year, while spending on compensation 

increased from 2004 to 2012, it remained relatively constant as a 

proportion of the federal discretionary budget at about 14 percent from 

2004 to 2010, with slight increases in 2011 and 2012.

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

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

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

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

than in years past. Additionally, federal jobs, on average, require more 

advanced skills and degrees than private sector jobs. This is because a 

higher proportion of federal jobs than nonfederal are in skilled 

occupations such as science, engineering, and program management, 

while a lower proportion of federal jobs than nonfederal are in 

occupations such as manufacturing, construction, and service work. The 
Page 10 GAO-14-723T

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

than the private sector workforce.

As we reported in 2012, the policy of Congress is for federal workers’ pay 

under the GS system to be in line with comparable nonfederal workers’

pay.13 Annual pay adjustments for GS employees are either determined 

through the process specified in the Federal Employees Pay 

Comparability Act of 1990 (FEPCA)14 or set based on percent increases 

authorized directly by Congress. GS employees receive an across-theboard increase (ranging from 0 to 3.8 percent since FEPCA was 

implemented) that has usually been made in accordance with a FEPCA 

formula linking increases to national private sector salary growth. This 

increase is the same for each covered employee. Most GS employees 

also receive a locality payment that varies based on their location. While 

FEPCA specifies a process designed to reduce federal-nonfederal pay 

gaps in each locality, in practice locality increases have usually been far 

less than the recommended amount, which has been between 15 and 20 

percent in recent years. The President’s Pay Agent, the entity responsible 

for recommending federal locality pay adjustments to the President, has 

recommended that the underlying model and methodology for estimating 

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

pay comparisons are as accurate as possible.15

However, other organizations have compared federal and non-federal 

pay. The findings of the six studies published between 2009 and 2012 

that we reviewed came to different conclusions on which sector had the 

To date, no such 

reexamination has taken place.

 13GAO, Federal Workers: Results of Studies on Federal Pay Varied Due to Differing 

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

14Pub. L. No. 101-509, title V, § 529, 104 Stat. 1389, 1427-1469 (Nov. 5, 1990). GS 

employees permanently stationed in foreign countries do not receive locality pay. GS 

employees in Alaska, Hawaii, and U.S. territories and possessions began receiving 

locality pay in 2010. Locality pay may be extended to certain categories of non-GS 

employees by the President’s Pay Agent.

15The President’s Pay Agent is made up of the Directors of OPM and OMB and the 

Secretary of Labor, as established by executive order. The Pay Agent establishes and 

modifies locality pay areas for the General Schedule, determines salary survey coverage 

in coordination with the Bureau of Labor Statistics, calculates pay gaps, and recommends 

locality adjustments in its annual report to the President.

Studies Comparing 

Federal and Nonfederal 

Pay Came to Different 

Conclusions Because of 

Different Methodologies
Page 11 GAO-14-723T

higher pay and the size of the pay disparities because they used different 

approaches, methods, and data.16

The across-the-board and locality pay increases discussed above are 

given to all covered employees nearly every year and are not linked to 

performance.

With that in mind, when looking within 

and across these or other studies, it is important to understand the 

studies’ methodologies because they affect how the studies can be 

interpreted.

17

Based on our past work, we believe that implementing a more marketbased and more performance-oriented pay system is both doable and 

desirable.

Pay increases and monetary awards available to GS 

employees that are linked to performance ratings as determined by 

agencies’ performance appraisal systems include within-grade increases, 

ratings-based cash awards, and quality step increases. Within-grade 

increases are the least strongly linked to performance, ratings-based 

cash awards are more strongly linked to performance depending on the 

rating system the agency uses, and quality step increases are also more 

strongly linked to performance.

18

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

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

However, experience has shown it certainly is not easy. For 

one thing, agencies must have effective performance management 

systems that link individual expectations to organizational results.

Moreover, representatives of public, private, and nonprofit organizations, 

in discussing the successes and challenges they have experienced in 

designing and implementing their own results-oriented pay systems, told 

us they had to shift from a culture where compensation is based on 

position and longevity to one that is performance oriented, affordable, and 

sustainable.

 16See GAO-12-564. The studies we reviewed included four published by 

nongovernmental organizations (the American Enterprise Institute for Public Policy 

Research, the Cato Institute, the Heritage Foundation, and the Project on Government 

Oversight) and two published by the government (the President’s Pay Agent and the 

Congressional Budget Office).

17In fiscal years 2011, 2012, and 2013, there was neither an across-the-board or locality 

pay increase due to a government-wide pay freeze. 

18GAO, Human Capital: Symposium on Designing and Managing Market-Based and More 

Performance-Oriented Pay Systems, GAO-05-832SP (Washington, D.C.: July 27, 2005). 
Page 12 GAO-14-723T

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

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

Lessons learned include the following:19

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

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

competitive in the labor market.

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

fairness of pay decisions.

4. Devolve decision making on pay to appropriate levels.

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

levels can understand how compensation reforms are implemented.

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

to facilitate effective communications.

7. Build consensus to gain ownership and acceptance of pay reforms.

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

Our past work has shown that a long-standing challenge for federal 

agencies has been developing credible and effective performance 

management systems that can serve as a strategic tool to drive internal 

change and achieve results. In 2011, various federal agencies, labor 

unions, and other organizations developed the Goals-Engagement-

 19GAO-05-832SP.

Opportunities Exist

to Strengthen 

Performance 

Management and 

Deal with Poor 

Performers

Efforts to Improve 

Performance Management
Page 13 GAO-14-723T

Accountability-Results (GEAR) framework to help improve performance 

management by

• articulating a high-performance culture;

• aligning employee and organizational performance management;

• implementing accountability at all levels;

• creating a culture of engagement; and

• improving supervisor assessment, selection, development, and

training.

Five federal agencies volunteered to pilot GEAR, either agency-wide or in 

specific components, including the Departments of Energy, Homeland 

Security/Coast Guard, Housing and Urban Development, Veterans 

Affairs/National Cemetery Administration, and OPM—with the intention to 

expand GEAR government-wide.

In our September 2013 report we found that the GEAR framework 

generally addressed key practices for effective performance management 

that we had previously identified, such as aligning individual performance 

expectations with organizational goals.20

To improve the dissemination of the GEAR framework, our 2013 report 

included recommendations for OPM to, among other actions, better 

define the roles and responsibilities of OPM, the CHCO Council, and 

participating federal agencies, including how to identify future promising 

practices and how to update and disseminate information on the 

government-wide implementation of GEAR. We concluded that clearly 

defined roles and responsibilities are important for capitalizing on the 

improvements made at the five pilot agencies, as well as for sustaining 

and achieving the current administration’s goal of implementing GEAR 

more broadly.

Additionally, we concluded that 

the GEAR framework presented an opportunity for federal agencies to 

increase employee engagement and improve performance management. 

Even though the GEAR pilot had only been in place for a short time, 

agency officials described benefits such as improved engagement and 

communication between employees and supervisors.

 20GAO, Federal Employees: Opportunities Exist to Strengthen Performance Management 

Pilot, GAO-13-755 (Washington, D.C.: Sept. 12, 2013).
Page 14 GAO-14-723T

OPM agreed with our recommendations and, working with the CHCO 

Council, has taken some initial steps to implement them. For example, 

the CHCO Council recently released a “toolkit” describing the next steps 

for implementing the GEAR principles, and the Executive Director of the 

CHCO Council described efforts in 2014 to improve employee 

engagement. Moreover, in June 2014, OPM officials said that OPM will 

be responsible for facilitating the collaboration and information-sharing 

between agencies on their approaches to implement GEAR, and OPM 

will continue to provide technical support and expertise on GEAR and 

successful practices for performance management. However, OPM 

officials said that while they will continue working with the CHCO Council 

to promote GEAR and to encourage other agencies to adopt the 

framework, it is unclear if any additional agencies have formally adopted 

GEAR to date. OPM said it will also work with the CHCO Council and 

implementing agencies to determine effective and appropriate evaluation 

tools and metrics to assess the progress of the implementation of GEAR.

As our past work has demonstrated, effective performance management 

systems can help create results-oriented organizational cultures by 

providing objective information to allow managers to make meaningful 

distinctions in performance in order to reward top performers and deal 

with poor performers.21 Although poor performance is not defined by 

statute, title 5 of the United States Code defines “unacceptable 

performance” as “performance of an employee which fails to meet 

established performance standards in one or more critical elements of 

such employee’s position.”22 Even a small number of poor performers can 

have negative effects on employee morale and agencies’ capacity to 

meet their missions. The 2013 Federal Employee Viewpoint Survey found 

that only 28 percent of federal employees agreed that their work unit 

takes steps to deal with a poor performer who cannot or will not 

improve.23

 21GAO, Employment: Issues Related to Poor Performers in the Federal Workplace, 

GAO-05-812R (Washington, D.C.: June 29, 2005). 

225 U.S.C. § 4301(3). See also 5 C.F.R. § 432.103(h).

23The Federal Employee Viewpoint Survey is a tool offered by OPM that measures 

employees’ perceptions of whether, and to what extent, conditions characterizing 

successful organizations are present in their agencies.

Efforts to Address

Poor Performers
Page 15 GAO-14-723T

Although the exact number of poor performers in the federal government 

is unknown, it is generally agreed that poor performance should be 

addressed earlier rather than later, with the objective of improving 

performance. Various studies, reports, and surveys of federal supervisors 

and employees we reviewed have identified impediments to dealing with 

poor performance, including issues related to (1) time and complexity of 

the processes; (2) lack of training in performance management; and (3) 

communication, including the dislike of confrontation. It will be important 

for agencies to hold managers accountable for using probationary periods 

and other tools for addressing poor performers as well as to ensure that 

supervisors have adequate support from upper-level management and 

human capital staff in dealing with poor performance subject to applicable 

safeguards.

Our prior work on this topic identified various tools and approaches for 

addressing performance “upstream” in the process within a merit-based 

system that contains appropriate safeguards.24

• An effective performance management system that (1) creates a clear 

“line of sight” between individual performance and organizational 

success; (2) provides adequate training on the performance 

management system; (3) uses core competencies to reinforce 

organizational objectives; (4) addresses performance on an ongoing 

basis; and (5) contains transparent processes.

These approaches include 

the following:

• A probationary period that provides managers with a provisional 

period to rigorously review employee performance.

Since we first narrowed the strategic human capital high-risk area to 

focus on identifying and addressing government-wide mission critical 

skills gaps in February 2011, executive agencies and Congress have 

continued their efforts to ensure the government takes a more strategic 

and efficient approach to recruiting, hiring, developing, and retaining 

individuals with the skills needed to cost-effectively carry out the nation’s 

business.25

 24

At the same time, we have recommended numerous actions 

individual agencies should take to address their specific human capital 

GAO-05-812R.

25GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February 2011).

Sustained Attention

Is Needed to

Address Current

and Emerging

Critical Skills Gaps
Page 16 GAO-14-723T

challenges, and we have also made recommendations to OPM to 

address government-wide human capital issues.

For example, in September 2011 OPM and the CHCOs—as part of 

ongoing discussions between OPM, the Office of Management and 

Budget (OMB), and GAO on the steps needed to address the federal 

government’s human capital challenges—established the Chief Human 

Capital Officers Council Working Group (Working Group) to identify and 

mitigate critical skills gaps. Further, the Working Group’s efforts were 

designated an interim Cross-Agency Priority (CAP) goal within the 

administration’s fiscal year 2013 federal budget.

Using a multi-faceted approach including a literature review and an 

analysis of various staffing gap indicators, the Working Group identified 

the following government-wide mission critical occupations:

• information technology management/cybersecurity;

• auditor;

• human resources specialist;

• contract specialist;

• economist; and

• science, technology, engineering, and mathematics occupational 

group.

The Director of OPM—as leader of the cross-agency priority goal to close 

critical skills gaps—identified key federal officials from each of the six 

government-wide mission critical occupations to serve as “sub-goal 

leaders.” For example, the sub-goal co-leaders for the cybersecurity 

workforce are from the White House Office of Science and Technology 

Policy and the Department of Commerce’s National Institute of Standards 

and Technology. OPM noted that in working with their occupational 

communities, the sub-goal leaders have selected specific strategies to 

decrease skills gaps in the occupations they represent. OPM also noted 

that the OPM Director is to meet quarterly with these officials to monitor 

their progress, address their challenges, and identify support needed from 

OPM.

The Working Group also identified seven mission critical competencies, 

including data analysis, strategic thinking, influencing and negotiating, 

and problem solving, as well as agency-specific mission critical 

occupations such as nurses at the Department of Veterans Affairs. For 
Page 17 GAO-14-723T

both the occupations and competencies, high-risk skills gaps were 

defined as those where staffing shortfalls could jeopardize the ability of 

government or specific agencies to accomplish their mission.

Under the skills gap CAP goal, OPM reported that “by September 30, 

2013, skills gaps will be reduced by 50 percent for three to five critical 

federal government occupations or competencies, and additional agencyspecific high-risk occupations and competency gaps will be closed.”

However, OPM’s progress against this metric cannot be determined 

because as of June 2014 OPM has not provided any data on it.

Nonetheless, in November 2013, sub-goal leaders reported to OPM on

the activity and progress made toward targets for each of the missioncritical occupations in fiscal year 2013. Specifically, leaders for three of 

the six sub-goals (cybersecurity, acquisition, and economist) reported that 

they had met their planned level of performance for fiscal year 2013, 

while the other three sub-goal leaders (human resources, auditor and 

STEM) reported that they did not make their target or were developing 

action plans for fiscal year 2014. For example, we found in June 2014 

that the acquisitions sub-goal group established a target for increasing 

the certification rate of GS-1102 contract specialists to 80 percent. The 

final quarterly status update to the closing skill gaps CAP reported that 

the target was met and the certification rate increased to 81 percent. 

Conversely, the auditor sub-goal group reported that it was still gathering 

information on the extent of the skill gaps in the government-wide auditor 

workforce.26

The interim CAP goal for closing skills gaps was active through the end of 

fiscal year 2013 and has since been replaced by a new CAP goal 

focusing on people and culture including (1) creating a culture of 

excellence and engagement, (2) building a world-class federal 

management team starting with the Senior Executive Service, and (3) 

enabling agencies to hire the best talent from all segments of society.27

 26GAO, Managing for Results: OMB Should Strengthen Reviews of Cross-Agency Goals, 

The administration maintains that the original skills gap CAP goal is to 

GAO-14-526 (Washington, D.C.: June 10, 2014).

27Government Efficiency and Effectiveness: Views on the Progress and Plans for 

Addressing Government-wide Management Challenges, GAO-14-436T (Washington, 

D.C.: Mar. 12, 2014).
Page 18 GAO-14-723T

remain a priority and efforts related to it will continue to be implemented 

using various approaches led by the Director of OPM and the team of 

sub-goal leaders. Metrics that will be tracked include increasing the 

certification rates for contract specialists to 84 percent in the acquisition 

area, and for the cybersecurity area, increasing manager satisfaction with 

the quality of applicants from 65 percent to 67 percent.28

As we reported in February 2013,29

• identifying ways to document and assemble lessons learned, leading 

practices, and other useful information for addressing skill gaps into a 

clearinghouse or database so agencies can draw on one another’s 

experiences and avoid duplicating efforts;

further progress will depend on the 

extent to which OPM and agencies develop the infrastructure to sustain 

their planning, implementation, and monitoring efforts. It will be important 

for OPM and agencies to implement refinements to the approaches the 

Working Group used to identify and address critical skills gaps in order to 

enhance their effectiveness. These refinements can include

• examining the cost-effectiveness of delivering tools and shared 

services such as online training for workforce planning to address 

issues affecting multiple agencies;

• reviewing the extent to which new capabilities are needed to give 

OPM and other agencies greater visibility over skills gaps 

government-wide to better identify which agencies may have 

surpluses of personnel in those positions and which agencies have 

gaps, as well as the adequacy of current mechanisms for facilitating 

the transfer of personnel from one agency to another to address those 

gaps as appropriate; and

• determining whether existing workforce planning and other tools can 

be used to help streamline the processes developed by the Working 

Group.

OPM will also need to develop a predictive capacity to identify newly 

emerging skills gaps beyond those areas already identified. OPM agreed 

 28Office of Personnel Management, Cross-Agency Priority Goal: Closing Skills Gaps: FY 

2013 Q4 Final Update, accessed July 3, 2014, http://archivegoals.performance.gov/sites/default/files/images/Closing_Skills_Gaps_FY13_Q4_Final_C

AP_Goal_Update.pdf.

29GAO-13-283.
Page 19 GAO-14-723T

that these were important areas for consideration and is taking steps to 

implement them. We will continue to monitor OPM and agencies’ efforts 

in closing mission-critical skills gaps.

In addition to mission critical skills gaps, our recent work has identified 

other management challenges that, collectively, are creating fundamental 

capacity problems that could undermine the ability of agencies to 

effectively carry out their missions.30

The Balanced Budget and Emergency Deficit Control Act of 1985, as 

amended, establishes discretionary spending limits for fiscal years 2012

through 2021, but many agencies had experienced flat or declining 

budgets for several years prior.

Although the way forward will not be 

easy, agency officials said these same challenges have created the 

impetus to act and a willingness to consider creative and nontraditional 

strategies for addressing issues in ways that previously may not have 

been organizationally or culturally feasible.

31

As we reported in May 2014, many agencies will need to do more with the 

same or lower number of people.

In the face of limited budgets, some 

agencies are reducing hiring, limiting training, offering employee buyouts 

and providing early retirement packages. As we concluded in our report, 

without careful attention to strategic and workforce planning and other 

approaches to managing and engaging personnel, the reduced 

investments in human capital can have lasting, detrimental effects on the 

capacity of an agency’s workforce to meet its mission.

32

 30See for example, GAO, Human Capital: Strategies to Help Agencies Meet Their 

Missions in an Era of Highly Constrained Resources,

Although the government has taken 

on additional roles and responsibilities in recent years, the size of the 

federal workforce has changed little since 1981. There have been some 

fluctuations, but the number of federal employees has remained relatively 

steady at around 2 million people over this time, with 2.13 million workers 

in 2012. More specifically, as shown in figure 2, of the 24 Chief Financial 

GAO-14-168 (Washington, D.C.: 

May 7, 2014), and GAO-14-215. 

312 U.S.C. § 901(c).

32GAO-14-168.

Management 

Challenges and 

Strategies to Help 

Agencies Meet Their 

Missions in an Era of 

Highly Constrained 

Resources
Page 20 GAO-14-723T

Officer (CFO) Act agencies we reviewed,3310 had a lower number of 

career permanent employees in 2012 than they did in 2004, 13 had a 

greater number, and 1, the Department of Transportation, was 

unchanged.

34,35

Figure 2: Average Annual Percent Change in the Number of Permanent Career Employees by Agency, 2004-2012

 33The CFO Act agencies are those covered by the Chief Financial Officers Act of 1990, as 

amended. 31 U.S.C. § 901(b).

34Career permanent employees are employees with appointments that do not have an 

ending date or maximum length of service.

35GAO-14-215.
Page 21 GAO-14-723T

Earlier this year we reported that 31 percent of all career permanent 

employees who were on board in September 2012 will become eligible to 

retire in September 2017.36 As shown in figure 3 below, not all agencies 

will be equally affected by this trend. By 2017, 20 of the 24 CFO Act 

agencies will have a higher percentage of staff eligible to retire than the 

current 31 percent government-wide.37

Various factors affect when individuals actually retire, and some amount 

of retirement and other forms of attrition can be beneficial because it 

creates opportunities to bring fresh skills on board and allows 

organizations to restructure themselves in order to better meet program 

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

managed, gaps can develop in an organization’s institutional knowledge 

and leadership. The high projected retirement eligibility rates across 

government underscore the importance of effective succession planning.

For example, about 21 percent of 

DHS staff on board as of September 2012 will be eligible to retire in 2017, 

while over 42 percent will be eligible to retire at both the Department of 

Housing and Urban Development and the Small Business Administration. 

Certain occupations—such as air traffic controllers and those involved in 

program management—will also have particularly high retirement 

eligibility rates by 2017.

 36GAO-14-215.

37These projected retirement eligibility rates do not take into account hiring and 

separations that may occur over the next 5 years.
Page 22 GAO-14-723T

Figure 3: Percentage of Career Permanent Employees On Board in 2012 Eligible to Retire by 2017 by Agency

According to OPM, factors such as a 3-year pay freeze, automatic 

reductions from sequestration that included furloughs for hundreds of 

thousands of employees, and reductions in training and other areas have 

taken their toll on the federal workforce. In the 2013 Employee Viewpoint 

Survey results, the “global satisfaction index” showed an 8-percentagepoint decline since 2010. Each of the four factors that make up the global 

satisfaction index showed downward trends from last year’s results:

• job satisfaction dropped 3 points to 65 percent,

• pay satisfaction was down 5 points to 54 percent,

• organization satisfaction fell 3 points to 65 percent, and
Page 23 GAO-14-723T

• respondents that said they would recommend their organization 

declined by 4 points to 63 percent.38

As we reported earlier this year, to identify strategies for managing the 

federal workforce and plan for future needs in an era of constrained 

resources, we used several approaches including convening a full-day 

forum that included 25 of the 27 members of the CHCO Council. Our 

analysis and recommendations based on this effort provide an important 

framework for prioritizing and modernizing current human capital 

management practices to meet agencies’ current and future missions. 

The strategies included the following:39

Strengthening collaboration to address a fragmented human capital 

community. Our analysis found that the federal human capital 

community is highly fragmented with multiple actors inside government 

informing and executing personnel policies and initiatives in ways that are 

not always aligned with broader, government-wide human capital efforts. 

The CHCO Council was established to improve coordination across 

federal agencies on personnel issues, but according to CHCOs, the 

council is not carrying out this responsibility as well as it could. This 

challenge manifests itself in two ways: across organizations, with many 

actors making human capital decisions in an uncoordinated manner, and 

within agencies, excluding CHCOs and the human capital staff from key 

agency decisions.

Using enterprise solutions to address shared challenges. Our 

analysis found that agencies have many common human capital 

challenges, but they tend to address these issues independently without 

looking to enterprise solutions that could resolve them more effectively. 

Across government, there are examples of agencies and OPM initiating 

enterprise solutions to address crosscutting issues, including the 

consolidation of federal payroll systems into shared-services centers. 

CHCOs highlighted human resource information technology and strategic 

workforce planning as two areas that are ripe for government-wide 

collaboration.

 38Office of Personnel Management, Federal Employee Viewpoint Survey Results: 

Employees Influencing Change, 2013 Government-wide Management Report, 

(Washington, D.C.: 2013).

39GAO-14-168.
Page 24 GAO-14-723T

Creating more agile talent management to address inflexibilities in 

the current system. Our analysis found talent management tools lack 

two key ingredients for developing an agile workforce, namely the ability 

to (1) identify the skills available in existing workforces, and (2) move 

people with specific skills to address emerging, temporary, or permanent 

needs within and across agencies.

As we reported earlier this year, the CHCOs said OPM needs to do more 

to raise awareness and assess the utility of the tools and guidance it 

provides to agencies to address key human capital challenges. CHCOs 

said they were either unfamiliar with OPM’s tools and guidance or they 

fell short of their agency’s needs. OPM officials said they had not 

evaluated the tools and guidance they provide to the agencies. As a 

result, a key resource for helping agencies improve the capacity of their 

personnel offices is likely being underutilized.

Among other things, in our May 2014 report we recommended that the 

Director of OPM, in conjunction with the CHCO Council, strengthen 

OPM’s coordination and leadership of government-wide human capital 

issues to ensure government-wide initiatives are coordinated, decision 

makers have all relevant information, and there is greater continuity in the 

human capital community for key reforms. Specific steps could include, 

for example, developing a government-wide human capital strategic plan 

that, among other things, would establish strategic priorities, time frames, 

responsibilities, and metrics to better align the efforts of members of the 

federal human capital community with government-wide human capital 

goals and issues. OPM and the CHCO Council concurred with these 

recommendations and identified actions they plan to take to address 

them.

In conclusion, strategic human capital management must be the 

centerpiece of any serious effort to ensure federal agencies operate as 

high-performing organizations. A high-quality federal workforce is 

especially critical now given the complex and cross-cutting issues facing 

the nation.

Through a variety of initiatives, Congress, OPM, and individual agencies 

have strengthened the government’s human capital efforts since we first 

identified strategic human capital management as a high-risk area in 

2001. Still, while much progress has been made over the last 13 years in 

modernizing federal human capital management, the job is far from over. 

Indeed, the focus areas discussed today are not an exhaustive list of 

challenges facing federal agencies and are long-standing in nature.

Conclusions
Page 25 GAO-14-723T

Greater progress will require continued collaborative efforts between 

OPM, the CHCO Council, and individual agencies, as well as the 

continued attention of top-level leadership. Progress will also require 

effective planning, responsive implementation, robust measurement and 

evaluation, and continued congressional oversight to hold agencies 

accountable for results.

In short, while the core human capital processes and functions—such as 

workforce planning and talent management—may sound somewhat 

bureaucratic and transactional, our prior work has consistently shown the 

direct link between effective strategic human capital management, and 

successful organizational performance. At the end of the day, strategic 

human capital management is about mission accomplishment, 

accountability, and responsive, cost-effective government.

Chairman Farenthold, Ranking Member Lynch, and Members of the 

Subcommittee, this completes my prepared statement. I would be 

pleased to respond to any questions you may have at this time.

For further information regarding this statement, please contact Robert 

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

goldenkoffr@gao.gov.

Individuals making key contributions to this statement include Chelsa 

Gurkin, Assistant Director; Robyn Trotter, Analyst-in-Charge; Jeffrey 

Schmerling; Devin Braun; Tom Gilbert; Donald Kiggins; and Steven 

Lozano. Key contributors for the earlier work that supports this testimony 

are listed in each product.

Contacts and 

Acknowledgments

(451113)

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