IRS TELEPHONE

ASSISTANCE

Opportunities to

Improve Human

Capital Management

Report to the Chairman,

Subcommittee on Oversight,

Committee on Ways and Means,

House of Representatives

United States General Accounting Office

GAO

January 2001

GAO-01-144
Page i GAO-01-144. IRS Human Capital Management

Letter 1

Results in Brief 2

Background 5

Scope and Methodology 7

IRS Plans to Base Staffing on Strategic Goals Rather Than Annual

Funding 10

Call Sites Faced Challenges in Implementing Human Capital

Practices 13

Evaluations Do Not Consider How Human Capital Practices Affect

Achieving Level-of-Service Goals 22

Conclusions 23

Recommendations for Executive Action 24

Agency Comments and Our Evaluation 24

Appendix I Organizations Contacted in Our August 2000 Report 28

Appendix II Comments From the Internal Revenue Service 32

Appendix III GAO Contacts and Staff Acknowledgments 37

GAO Contacts 37

Acknowledgments 37

Tables

Table 1: Characteristics of the Six IRS Call Sites We Visited 9

Table 2: Telephone Customer Service Operations in Organizations

We Visited or Telephoned 28

Figures

Figure 1: How IRS’ Call-Routing System Operates 5

Figure 2: IRS Employees Monitoring Network Operations and

Handling a Taxpayer’s Call 7

Contents
Page 1 GAO-01-144. IRS Human Capital Management

January 30, 2001

The Honorable Amo Houghton

Chairman, Subcommittee on Oversight

Committee on Ways and Means

House of Representatives

Dear Mr. Chairman:

Each year, the Internal Revenue Service (IRS) receives tens of millions of

telephone calls from taxpayers seeking help on a variety of topics—from

simple inquiries about the status of their refund to highly complex

questions about tax law. The approximately 10,000 full- and part-time

customer service representatives1

 who answer these calls are part of IRS’

human capital. Sound management—to ensure that an adequate number of

customer service representatives with the right skills are available when

needed—can serve as a powerful tool to help IRS achieve its goal of better

serving American taxpayers.

Because of your interest in the quality of IRS’ toll-free telephone service,

you asked us to prepare three reports on telephone customer service

operations. The first report, issued in August,2

 presented information on

the human capital management practices of selected public and private

call centers. Another report, discussing the telephone customer service

IRS provided during the 2000 filing season, will be issued later this year.

Our objectives for this report were to identify whether IRS faced

challenges, and, if so, any potential improvement opportunities, relating to

• identifying staffing levels needed to meet its telephone customer

service goals;

 1

In October 2000, IRS had 9,865 customer service representatives. About 40 percent of them

were seasonal employees who generally worked between 6 and 12 months per year. These

9,865 representatives are equivalent to about 8,000 full-time employees.

2

Customer Service: Human Capital Management at Selected Public and Private Call Centers

(GAO/GGD-00-161, Aug. 22, 2000).

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-144. IRS Human Capital Management

• recruiting, training, retaining, and scheduling customer service

representatives; and

• evaluating its call center human capital management practices.

To address these objectives, we interviewed officials and examined

documents at IRS’ National Office in Washington, D.C., Office of Chief

Customer Service Field Operations and Customer Service Operations

Center (hereafter referred to as the Operations Center). We also visited 6

of IRS’ 25 call sites because the individual sites were responsible for

administering many aspects of human capital management, including

recruiting, training, retaining, and scheduling customer service

representatives. The six call sites, located in Atlanta, Baltimore,

Cincinnati, Denver, Fresno, and Indianapolis, were selected to include

different characteristics, such as staffing levels, hours of operation, and

geographic location. We also reviewed literature on human capital

management in call centers at other organizations. Our objectives, scope,

and methodology are discussed in greater detail in a separate section of

this report.

IRS faces an annual challenge in determining the staffing level for its tollfree telephone customer service operations. IRS does not establish a longterm telephone customer service goal reflecting the needs of taxpayers

and the costs and benefits of meeting that goal and annual goals aimed at

making progress toward reaching that long-term goal. Rather, IRS annually

determines the level of funding it will seek for its customer service

workforce, based on its judgement of how to best balance service and

compliance activities, and then calculates the level of service that funding

level will provide. This approach to setting goals is inconsistent with

Government Performance and Results Act and the practices of selected

public and private call center operations that deal with tax questions or

specific subjects that are comparable in complexity to tax questions

addressed by IRS customer service representatives. Without a long-term,

desired level-of-service goal, and plans to reach the goal over time, IRS

lacks meaningful targets for managing call center performance and

measuring improvement. IRS recognizes the need to establish long-term

goals, and the Commissioner says that IRS’ final fiscal year 2002 Strategic

Plan and Budget will include a 74-percent level-of-service goal, with a goal

of reaching 85 percent to 90 percent by fiscal year 2003. In addition, IRS is

considering adopting some of the measures used by other organizations

and establishing goals for those measures.

Results in Brief
Page 3 GAO-01-144. IRS Human Capital Management

According to site officials, the six IRS call sites we visited faced challenges

in successfully recruiting, training, retaining, and scheduling customer

service representatives:

• Five sites had difficulty hiring representatives due to job

characteristics such as the seasonal nature of the work;

• All sites had difficulty getting representatives trained and keeping

them proficient through refresher training, due in part to the scope and

complexity of the topics they were expected to know;

• Four sites had double-digit attrition—estimated as high as 19 percent

at one site; and

• All sites had difficulty effectively scheduling their staff, due to

inaccurate demand forecasting and complicated staff scheduling

methods.

Recognizing its recruiting difficulties, IRS is developing a strategy to focus

its recruiting to those sites where it is better able to compete in the local

job market. IRS is also modifying a commercial system to improve demand

forecasting and staff scheduling. Regarding training, in fiscal year 2000,

IRS began to reduce the topics assigned to customer service

representatives and to provide just-in-time training on those topics.

However, these efforts do not include identifying specific competency

gaps nor ensuring that these gaps are filled through refresher training.

Moreover, IRS is not monitoring customer service representative attrition

to determine what, if any, steps should be taken to address it.

IRS also faces challenges in evaluating its human capital management

practices for its telephone customer service operations. According to our

self-assessment checklist for agency leaders, all human capital policies

and practices should be designed, implemented, and assessed by the

standard of how well they help an organization pursue its mission, goals

and objectives, and strategies.3

 IRS’ evaluations do not assess how

individual or collective human capital policies and practices affect its

ability to achieve long- and short-term desired level-of-service goals,

because, as previously discussed, IRS has not yet established such goals.

Additionally, while IRS evaluates human capital management practices in

areas such as recruiting or training, in an ongoing effort to improve those

 3

Human Capital: A Self-Assessment Checklist for Agency Leaders, Version 1 (GAO/OGC-00-

14G, Sept. 2000), p. 2.
Page 4 GAO-01-144. IRS Human Capital Management

practices, its evaluations generally do not consider potential

interrelationships between or among human capital management

practices. Unless IRS evaluates how its human capital management

practices affect its ability to meet strategic and annual toll-free service

goals and considers the interrelationships among its human capital

management practices, IRS is not likely to optimize its progress toward

reaching its customer service goals.

We are recommending that the Commissioner

• set long- and short-term customer service goals that are based on

taxpayers’ needs and working with congressional and other

stakeholders to obtain support and resources needed to reach those

goals;

• establish a system for identifying and meeting the refresher training

needs of customer service representatives;

• develop a strategy for monitoring and dealing, as appropriate, with the

attrition of customer service representatives; and

• ensure that IRS’ evaluation of human capital management practices

consider their effects on achieving the toll-free operation’s long- and

short-term goals as well as the interrelationships among human capital

management practices.

The Commissioner of Internal Revenue agreed with our recommendations

and offered additional information on IRS’ efforts related to our

recommendations. We have incorporated his comments and modified our

report where appropriate.
Page 5 GAO-01-144. IRS Human Capital Management

IRS’ 10,000 customer service representatives are located at 25 call sites

around the country. In 1999, IRS began operating this network as a single

call center providing round-the-clock service. Managing the network in

this way enabled IRS to route calls from three separate toll-free lines—one

each for questions about tax law, account services, and refund status—to

the sites with the shortest hold times among those customer service

representatives assigned to answer questions concerning those issues.

(Fig. 1 illustrates call routing within IRS’ toll-free network.)

Figure 1: How IRS’ Call-Routing System Operates

Source: GAO analysis of IRS call-routing information.

Before IRS began operating the network as a single call center, taxpayer

calls were routed by area codes or by the percentage of staff the site had

scheduled to work. Calls routed in this manner could not be easily

Background
Page 6 GAO-01-144. IRS Human Capital Management

rerouted when a site was experiencing frequent busy signals or lengthy

hold times. Although individual call site operating hours and call handling

responsibilities varied, IRS expanded its overall toll-free network coverage

in January 1999—from 16 hours a day, 6 days a week, to 24 hours a day, 7

days a week.

IRS’ call center network is controlled by the Operations Center. In general,

the Operations Center is responsible for

• forecasting call demand—the numbers, types, and timing of calls IRS is

expected to receive throughout the planning year on each of its three

toll-free lines (tax law, accounts, and refunds);

• planning the routing of calls among call sites, based on each call site’s

assigned toll-free line and subject coverage responsibilities;

• developing staffing requirements for each call site and monitoring site

adherence to those requirements; and

• monitoring network call traffic status and, when necessary, rerouting

calls among the sites to optimize service.

The Operations Center develops call site staffing requirements weekly,

with call site input and agreement. These requirements prescribe the

numbers of trained customer service representatives that are to be

available and ready each half-hour to take calls on each assigned subject

category and toll-free line. The call sites, in turn, are expected to adhere to

the staffing requirements prescribed by the Operations Center. They are

generally responsible for recruiting, training, and assigning customer

service representatives in sufficient numbers and skills to enable them to

meet prescribed staffing requirements.4

 Collectively, IRS call centers

employed nearly 10,000 customer service representatives in October 2000.

The top picture in figure 2 shows Operations Center officials monitoring

network operations, while the picture on the right shows a representative

handling a call at IRS’ call center in Atlanta.

 4

To ensure the availability of the prescribed numbers of customer service representatives,

the call sites generally must schedule more than the required numbers of representatives to

allow for breaks, reading time, and other factors that make the representatives unavailable

to take calls.
Page 7 GAO-01-144. IRS Human Capital Management

Figure 2: IRS Employees Monitoring Network Operations and Handling a Taxpayer’s

Call

Source: GAO.

To address our objectives, we interviewed IRS officials involved in

managing toll-free telephone operations, obtained supporting

documentation, and reviewed related reports by the Treasury Inspector

General for Tax Administration (TIGTA). Although we did not

independently verify IRS officials’ responses to our questions, we

Scope and

Methodology

Above:

Customer Service

Operations

Center staff monitor the

toll-free network

operations.

Right:

A Customer Service

Representative handles

a call at IRS' Atlanta

Call Center.
Page 8 GAO-01-144. IRS Human Capital Management

reviewed them and related documentation for consistency. IRS’ use of

other resources will be discussed in a forthcoming report on toll-free

performance during the 2000 filing season.

We used our human capital self-assessment checklist5

 to obtain an

understanding of human capital management, its importance in achieving

federal agency operational goals, and the framework that we developed to

assist agency leaders in evaluating their human capital management

practices. Because people are a key resource for carrying out agencies’

missions, we also reviewed the Government Performance and Results

Act’s requirements for agency strategic planning, goal-setting, and

performance measurement. To identify human capital management

practices used by other organizations in telephone customer service, we

obtained information from several sources, including

• our August 2000 report on human capital management practices of

public and private organizations;6

• the 1995 National Performance Review report on best practices in

telephone service;7

 and

• literature on call center management, including Incoming Calls

Management Institute8

 information and reports.

We did our work at

• IRS’ National Office in Washington, D.C.;

• the Office of the Chief Customer Service Field Operations in Atlanta;

• the Customer Service Operations Center in Atlanta; and

• six of IRS’ 25 call sites.

As agreed with your office, we judgmentally selected the six sites to

ensure geographic coverage and other characteristics and, therefore,

cannot project our results to all 25 call sites.

 5

GAO/OGC-00-14G, Sept. 2000.

6

See appendix I for a description of the organizations included in our August report.

7

Putting Customers First–Serving the American Public: Best Practices in Telephone Service

(Federal Consortium Benchmark Study Report, Feb. 1995).

8

The Institute is located in Annapolis, MD, and offers training programs and educational

resources to call center management professionals.
Page 9 GAO-01-144. IRS Human Capital Management

Because IRS began providing 24-hour coverage in 1999, we included the

two call sites that operated 24 hours a day, 7 days a week and four sites

operating fewer than 24 hours a day. Because some call sites were

colocated with IRS service centers that had large labor pools from which

the sites might recruit staff, the six sites included three that were

colocated with service centers and three that were not. To understand

human capital management practices within the context of IRS’ new

organizational and operational structure,9

 our sample includes three sites

that were designated to serve taxpayers with incomes from wages and

investments and three sites that were designated to serve small business

and self-employed taxpayers. Since differences in site staffing levels could

lead to differences in their human capital management practices, we

selected two sites each from the low, middle, and high ranges of staffing

levels among the 25 call sites—less than 200 staff, between 200 and 400,

and more than 400, respectively. The characteristics of the six sites are

shown in table 1.

Table 1: Characteristics of the Six IRS Call Sites We Visited

Call site

location

24-hour, 7 daya-week serviceColocated with a

service center

Site

designationa

Toll-free

staffing levelb

Atlanta Yes Yes W&I 602

Baltimore No No W&I 285

Cincinnati No Yes SB/SE 166

Denver No No SB/SE 288

Fresno Yes Yes W&I 473

Indianapolis No No SB/SE 197

a

Site designation as either Wage and Investment Income (W&I) or Small Business and Self

Employed(SB/SE) refers to the site’s organizational alignment with one of the new IRS divisions

named for the taxpayer groups they were designed to serve.

b

Staffing levels are based on IRS’ planned full-time equivalent staffing as of August 1999.

Source: GAO.

We performed our work between May 1999 and October 2000 in

accordance with generally accepted government auditing standards. We

obtained written comments on a draft of this report from the

 9

IRS is restructuring its operation into four divisions: Wage and Investment Income (W&I),

Small Business and Self Employed (SB/SE), Large and Mid-size Business, and Tax-Exempt

and Government Entities. Toll-free service will be provided to taxpayers categorized as

W&I or SB/SE.
Page 10 GAO-01-144. IRS Human Capital Management

Commissioner of Internal Revenue. The comments are discussed near the

end of this report and are reprinted in appendix II.

IRS faces an annual challenge in determining the staffing level for its tollfree telephone customer service operations. IRS has not established a

long-term, desired level-of-telephone-service goal based on the needs of

taxpayers and the costs and benefits of meeting them, and then

determined what staffing level is needed to achieve that service level.

Rather, IRS annually determines the level of funding it will seek for its

customer service workforce, based on its judgment of how to best balance

its efforts to assist taxpayers and to ensure their compliance with tax laws,

and then calculates the expected level of service10 that funding level will

provide. IRS’ approach to setting this goal is inconsistent with federal

guidance on strategic planning, which calls for agencies to develop

strategic goals covering at least a 5-year period and to determine the

staffing and other resources needed to achieve the goals. IRS’ approach is

also inconsistent with industry practices, which base their goals and

staffing on customer needs. Without a long-term level-of-service goal, as

well as annual goals aimed at achieving the long-term goal over time, IRS

lacks meaningful targets for strategically planning and managing call

center performance and measuring improvement. In commenting on a

draft of this report, the Commissioner stated that IRS planned to set

strategic goals and staff to meet those goals.

In the absence of a long-term goal, and multiyear plans for reaching it, IRS

has estimated the service it could provide based on different staffing

levels. For example, when formulating its fiscal year 2000 budget, IRS

estimated that it would receive over 100 million calls on its three toll-free

lines throughout the fiscal year and that its customer service

representatives could handle an average of 5.6 calls per hour11 that they

were available to take calls.12 These workload and productivity

 10For fiscal year 2000, IRS calculated its level of service as the number of call attempts,

minus busy signals and calls abandoned, divided by call attempts.

11Other planning assumptions included the use of automation and fiscal year 1999 demand

(the first year IRS attempted to provide round-the-clock service), with a 2 percent growth

factor.

12According to an Operations Center official, the calculation considers the time customer

service representatives are not available to take calls, such as when they are on leave, or

attending training, meetings, or other authorized events.

IRS Plans to Base

Staffing on Strategic

Goals Rather Than

Annual Funding
Page 11 GAO-01-144. IRS Human Capital Management

assumptions were the basis for calculating the expected levels of service

IRS could provide with different staffing levels. Specifically, with customer

service representative levels ranging from 8,291 to 10,800 full-timeequivalent staff, IRS estimated that it could achieve levels of service

ranging from 58 to 80 percent, respectively. Because of the need to balance

service and compliance activities within overall staffing budget limitations,

IRS decided to request funding at the lower level, establishing a 58-percent

level-of-service goal for fiscal year 2000 and a 60-percent level for fiscal

year 2001.

A long-term, results-oriented goal is important because its provides a

meaningful sense of direction as well as a yardstick for measuring the

results of operations and evaluating the extent of improvements resulting

from changes in resources, new technology, or management of human

capital. The Government Performance and Results Act of 1993 required

executive branch agencies to

• develop multiyear, strategic plans covering at least a 5-year period;

• set long-term, output- or results-oriented goals in these strategic plans;

• describe the human and other resources needed to achieve goals;

• update these plans at least every 3 years;

• prepare annual performance plans with annual performance goals; and

• measure and report annually on its progress toward meeting those

goals.

Under the act, strategic plans are the starting point for agencies to set

annual performance goals aimed at achieving their strategic goals over

time. As part of the strategic planning process, agencies are required to

consult with Congress and to solicit the views of other stakeholders who

might be affected by the agencies’ activities.

Unlike IRS, officials at all seven public and private call center operations

we visited as part of our August 2000 report said that they determined

staffing requirements based on their customers’ needs and clearly

articulated service-level goals—that is, the percentage of calls to be

answered within a given time frame. For example, the Social Security

Administration (SSA)—an agency that is also subject to federal budget

constraints, had a goal of 95 percent of its callers getting through on its

toll-free line within 5 minutes of their first attempt. This goal was

established with input and support from Congress and top SSA leadership

as part of a government wide effort to improve customer service.

According to an SSA associate deputy commissioner, the focus on
Page 12 GAO-01-144. IRS Human Capital Management

improving telephone customer service followed a period of very poor

service in the early and mid-1990s, when as many as 49 percent of callers

got busy signals when they called the toll-free number. The associate

deputy said that congressional stakeholders continue to monitor SSA’s

toll-free telephone operations, resulting in continued support by SSA

management to allocate the resources needed to meet established goals.

Other studies have also documented the importance of setting servicelevel goals based on customers’ needs. One guide to call center

management for practitioners that we reviewed underscored the

importance of service-level goals.13 It described service level as “the core

value” at the heart of effective call center management, without which,

answers to many important questions, including “How many staff do you

need?” would be left to chance. It said service-level goals should be

realistic, understood by everyone in the organization, taken seriously, and

funded adequately. While the guide also recommended benchmarking,

formally or informally, with competitors or similar organizations, it stated

each organization should determine an appropriate service level for its call

centers, considering its unique circumstances. These considerations

should include the labor and telephone equipment costs of answering the

call, the value of the call to the organization, and how long callers are

willing to hold for service.

IRS recognizes the need to establish long-term goals and is considering

adopting some of the measures used by other organizations and

establishing goals for those measures. For fiscal year 2001, for example,

IRS plans to measure the percentage of callers who reach IRS within 30

seconds. While IRS has not established a long-term goal for this measure,

it has set an interim goal of 49 percent for fiscal year 2001.

In commenting on a draft of this report, the Commissioner stated that IRS

had instituted an agencywide strategic planning process in March 2000

that links the budget and available resources to its strategies and

improvement projects. According to the Commissioner, IRS’ fiscal year

2002 Strategic Plan and Budget will include a 74 percent level-of-service

goal, with a goal of reaching 85 to 90 percent by fiscal year 2003. Also, IRS

had an initiative under way to improve workload planning to ensure that

 13Brad Cleveland and Julia Mayben, Call Center Management on Fast Forward: Succeeding

in Today’s Dynamic Inbound Environment (Annapolis, MD, 1997).
Page 13 GAO-01-144. IRS Human Capital Management

customer needs are considered during the planning and budgeting

process.

The six call sites we visited faced challenges in successfully recruiting,

training, retaining, and scheduling customer service representatives.

According to site officials, these challenges included difficulties

• recruiting representatives due to job characteristics,

• training representatives and keeping them proficient,

• retaining skilled representatives, and

• scheduling representatives to meet forecasted staffing requirements.

Officials at five sites said they experienced some degree of difficulty in

recruiting representatives because of job characteristics such as the

seasonal nature of the positions, undesirable work hours, or the

stressfulness of the work. Nevertheless, five of the sites were able to fill

their vacant positions. One site was unable to fill its needs and had

concerns about the suitability of the persons hired. According to officials

at this latter site, due to the limited time between the date they were

provided the number of positions to fill and the time that the new

employees had to report for work, the officials did not have sufficient time

to interview all applicants before hiring them.

Officials at each IRS call site were responsible for hiring representatives

for their location, including deciding what recruiting methods and

applicant screening tools to use. All six sites used some combination of

conventional recruiting methods, such as newspaper advertisements and

college campus recruiting. To determine the suitability of applicants,

beyond the basic qualifications for the position,14 officials at four sites

interviewed applicants before hiring them, and most used interview

techniques to determine how applicants might behave in typical work

 14Basic qualifications were 1 year of customer-service-related experience or a 4-year college

degree.

Call Sites Faced

Challenges in

Implementing Human

Capital Practices

Job Characteristics

Affected Efforts to Recruit

Suitable Representatives
Page 14 GAO-01-144. IRS Human Capital Management

situations.15 Two of these four sites also administered a five-question, taxrelated math test to assess a candidate’s basic math and analytical skills.

In an effort to improve its recruiting for customer service representatives,

IRS is in the early stages of developing a national recruiting strategy. As

part of this plan, IRS is determining where it should target its recruiting

efforts. IRS is identifying sites where IRS’ salary and benefits make it a

competitive employer in the local job market and sites that have trouble

recruiting and retaining suitable applicants. Officials believe this will help

IRS determine which sites should be growth sites for hiring telephone

customer service representatives.

According to officials at the call sites we visited, the many obstacles that

affected their ability to train customer service representatives and keep

them proficient included

• the broad range of complex topics representatives must address,

• inadequate resources,

• the cyclical nature of taxpayer demand,

• reassignment of tax topics among representatives, and

• the lack of a formal mechanism to identify individual refresher training

needs.

Each year, IRS must train thousands of customer service representatives

in a broad range of topics, and according to officials at the six sites we

visited, they sometimes had to do so without adequate resources. Topics

range from the status of refunds to more complicated issues such as

capital gains or losses. In fiscal year 1999, the standard training curriculum

provided by all sites generally included periods of classroom instruction,

followed by periods of on-the-job training that were roughly half the length

of the classroom instruction. This training was delivered incrementally

over a 3-year period,16 between the busy filing seasons, during which IRS

 15One site that did not interview applicants hired primarily from within IRS. Officials did

not think interviews were necessary because they had access to IRS-prepared performance

assessments, and they could talk to the applicants’ supervisors. Officials at the other site

did not interview because, based on previous site experience, only a few of the applicants

hired without interviews were unable to do customer service work.

16The classroom instruction totaled over 300 hours—132 hours in the first year; 87 in the

second year; and 92 in the third year.

All Sites Experienced

Challenges in Training

Representatives and

Keeping Them Proficient
Page 15 GAO-01-144. IRS Human Capital Management

receives the bulk of its toll-free calls. The training program also included

annual tax law/procedural update training. However, after customer

service representatives received their initial training, they generally did

not receive subsequent refresher training despite the cyclical nature of the

work.

Officials also cited a shortage of instructors, limited training time, and

outdated training materials as other factors that affected their ability to

effectively train customer service representatives. For example, officials at

the one site that did not hire the number of representatives authorized said

they did not have enough instructors to provide the necessary training.

Officials at three sites said that they did not have sufficient time to fully

train representatives before their peak season because they did not receive

timely notice of when, and how many, they could hire. Officials at four

sites also said that training materials provided by the National Office were

frequently outdated.

Keeping customer service representatives proficient was also a challenge

for the sites due to the cyclical nature of taxpayer demand and changes to

the topics representatives were expected to know. The frequency of the

calls and the topics covered varied throughout the year. The bulk of the

calls are generally received during the busy filing season. For example,

more than 57.6 of the 79.6 million toll-free calls made to IRS in fiscal year

2000, or 72 percent were made from January through June. In addition,

calls received from January through April predominantly involved tax law

topics, while calls received after April mainly involved account- and

refund-related topics. Consequently, customer service representatives

could go long periods, such as months between filing seasons or even

years since topic training was completed, without receiving calls to

reinforce their experience on some of the topics for which they were

trained. Moreover, this situation was compounded when IRS implemented

centralized call routing in 1999. In conjunction with this change, IRS

consolidated the number of subject categories, which ranged from 40 to

125 depending on the site, and reassigned representatives to a broader

group of 31 categories. This was done without ensuring that they had

adequate training or experience.17 According to a site official, inadequate

training is one factor reducing the accuracy of IRS responses to tax law

 17Our report about telephone customer service during the 2000 filing season will discuss

skill gaps in greater detail. We expect that report to be issued later this year.
Page 16 GAO-01-144. IRS Human Capital Management

and account calls. From 1998 to 1999, for example, network accuracy for

account calls decreased from 87.9 to 81.7 percent, according to IRS’

weekly customer service snapshot report dated September 30, 1999.

Officials at the sites we visited also said that the lack of a formal

mechanism to identify which representatives needed refresher training

hindered their ability to keep their representatives proficient. Officials

have records of specific training each representative has received, but they

do not have a method for assessing individual competency gaps—i.e.,

between knowledge and skills needed to respond to calls and current

proficiency—to quantify each representative’s refresher training needs.

Although IRS had developed such a system and began using it in

December 1998, a customer service training official said testing was not

done consistently among the call sites, and refresher training was not

provided to meet identified needs. The official also said a lack of funding

and uncertainty of future organizational developments led IRS to

discontinue the system in 1999.

Because IRS does not have a system for assessing competency gaps to

identify the specific refresher training needs of individual representatives,

call sites waste scarce training resources trying to improve the

performance of customer service representatives. For example, officials

said they sometimes send groups of representatives to refresher training,

knowing that some representatives will probably receive training they do

not need. This happens because the course covers several subjects and

each representative probably needs some of the training but most

representatives probably do not need all of the training. Providing

unnecessary training wastes resources that would otherwise be available

for representatives who need additional training.

Other studies identified similar IRS training issues. According to a March

1999 TIGTA report on its survey of IRS call sites, the managers at 15 of 20

call sites surveyed expressed moderate-to-high levels of dissatisfaction

with the timing, duration, and quality of customer service representative

training.18 Similarly, the representatives ranked training as their highest

concern among 12 issues covered by IRS’ 1999 employee satisfaction

survey. Moreover, in his May 2000 comments on a recently completed

customer service employee feedback report, the Commissioner of Internal

 18Survey of Internal Revenue Service Call Sites (TIGTA, Mar. 1999).
Page 17 GAO-01-144. IRS Human Capital Management

Revenue recognized the training challenges call site managers and

employees faced, stating that

“Fundamentally, we are attempting the impossible. We are expecting employees

and our managers to be trained in areas that are far too broad to ever succeed,

and our manuals and training courses are, therefore, unmanageable in scope and

complexity.... The next step is to rethink what we should do at each site in order

to achieve greater site specialization.”

19

Because of the problems involved in attempting to provide the full range

of training to all customer service representatives, in fiscal year 2000, IRS

began refocusing its program to provide just-in-time training, targeted

more to the specific types of questions taxpayers call about at different

times throughout the year. In addition, as part of restructuring, IRS

intends to further specialize training to serve specific taxpayer groups–

those who receive income from wages and investments and those who

receive income from small businesses or self-employment. IRS’ training

related plans do not, however, address the need for identifying

competency gaps to determine refresher training needs and target training

accordingly. A National Office official informed us that IRS was working

with the Office of Personnel Management to “develop competency models,

document career paths, and develop assessment instruments for use in

training, development, selection, etc., for all of the occupations within the

IRS.” Due to the broad scope of this endeavor, however, the official could

not say when IRS could expect to establish and implement a mechanism

for assessing the refresher training needs of customer service

representatives and ensuring that the training is provided.

Despite its substantial investment in recruiting and training its network of

10,000 customer service representatives, and concern by National Office

and some site officials that attrition was higher than it should be, IRS was

not actively monitoring attrition and determining what steps, if any, were

needed to address it. Officials do not track how many representatives

leave, why they leave, or where they go—data that would be key to a

strategy for decreasing attrition. A recent study of experiences at 186 call

centers indicates that attrition is a major problem for the industry that is

expected to worsen. Some of the organizations we contacted as part of our

 19Charles O. Rossotti, “Comments on Customer Service Employee Feedback Report”

(memorandum dated May 25, 2000).

IRS Did Not Monitor

Reasons for Call Center

Attrition to Determine

How to Address It
Page 18 GAO-01-144. IRS Human Capital Management

August 2000 report, however, were not as concerned about their attrition.

They said most of their attrition was to other jobs within their organization

and thus benefited the overall organization.

None of the six sites we visited could provide attrition statistics for

customer service representatives for 1998 or 1999. Officials at four sites

provided estimates ranging from 13 to 19 percent per year; however, these

estimates were just their opinions—they were not based on data collected

by the site or the National Office.20 Although IRS did not monitor attrition,

National Office officials and officials at three sites said that attrition was a

problem. Only one of the six sites had collected data to determine the

reasons why representatives left; officials at the remaining five sites and

the National Office had opinions about why representatives left.21 In

addition, IRS did not monitor whether the representatives who left

obtained other jobs within or outside of IRS.

According to a call center industry retention study,22 staff turnover has

been a long-time problem that is expected to worsen as the responsibilities

of customer service representatives are expanded to include responding to

Web-based customer inquiries in addition to the more customary avenues,

such as by telephone or correspondence. The study reported that call

centers generally lose about 62 percent of their full-time representatives

within 2 years. The reasons for turnover included better employment

opportunities within the company, but outside the call center or outside

the company; better compensation; and better career opportunities. In

order to reduce their attrition rates, some companies were (1) providing

more opportunities for customer service representatives to develop and

learn new skills and (2) establishing strategies to avoid wasting time and

 20National Office officials provided lower nationwide attrition rates of 4.3 percent for 1998

and 3.6 percent projected for 1999, but these rates did not include all attrition. For

example, the official who calculated these rates advised us that they did not include any

attrition to other jobs within IRS.

21

Examples included the stressful nature of the work, seasonal employment, and better

opportunities elsewhere.

22Agent Staffing and Retention Study, Final Report (Call Center Management Review, May

2000). The Call Center Management Review, published monthly by the Incoming Calls

Management Institute, surveyed 771 U.S. call centers and received 186 responses (24-

percent response rate). Small, medium, and large call centers from more than 50 industries

responded to the survey, which was completed in April 2000.
Page 19 GAO-01-144. IRS Human Capital Management

resources recruiting, hiring, and training representatives, only to lose them

to other organizations.

Some of the organizations included in our August 2000 report had high

attrition, but officials said that attrition from their call centers was usually

to other positions within their organizations. For example, at one

company, officials noted that policies to promote from within and

encourage employee mobility, allowed customer service representatives to

move to more senior positions within the company.

IRS faces challenges in effectively scheduling staff—that is, having the

right number, with the right skills, at the right time, at each call site—due

to inaccurate demand forecasting and a complicated staff scheduling

process. During the first 6 months of fiscal year 2000, IRS data indicated

that for 60 percent of the time call sites were overstaffed or understaffed

compared to tolerances established by IRS. In addition, IRS’ method for

measuring call sites’ adherence to their schedules was incomplete.

Recognizing its problems with forecasting and scheduling, IRS was

adapting an automated system similar to those used by other

organizations.

Inaccurate forecasting of the expected fiscal year 2000 toll-free call

volume led to inefficient scheduling and use of staff at some sites. The

Operations Center estimated that IRS would receive 100 million calls in

fiscal year 2000, but IRS actually received about 80 million—20 percent

less than forecasted. Because individual site staffing requirements were

based on IRS’ forecasts of the expected numbers, types, and timing of

calls, network and individual site work plans were also overstated,

resulting in the underutilization of staff at some sites. For example,

according to TIGTA’s March 2000 report, for the period December 5, 1998,

through March 15, 1999, overstated call demand resulted in staff being

scheduled and ready to take calls, but getting no calls, an average of 10

percent of their time at six sites for which data were available.23

 23Toll-Free Telephone Service Levels Declined in 1999 Despite Costly Efforts to Achieve

World Class Performance (TIGTA, Mar. 2000). TIGTA reported that those staff also

averaged 49 percent of their time taking calls, 9 percent wrapping up after calls, and 33

percent idle (not available to take calls) due to reasons such as lunch, breaks, meetings,

and other events.

IRS Was Adapting a

Commercial System to

Address Inaccurate Call

Demand Forecasting and

Staff Scheduling

Difficulties
Page 20 GAO-01-144. IRS Human Capital Management

Operations Center officials stated that IRS’ increased use of new routing

technologies, combined with continuous organizational and procedural

changes, made accurate forecasting difficult. Moreover, they believed the

information that IRS had about historical demand was of limited value in

predicting future demand for two reasons. First, the historical information

was not based on operating 24 hours a day; and second, it was difficult to

take into account the constantly changing environment (i.e., tax law

changes and increased use of electronic filing and Web-based services).

However, the Directors of Customer Account Services, whose staffs have

responsibility for providing telephone customer service to wage and

investment and small business and self-employed taxpayers, stated that

demand forecasting should improve now that IRS has 2 years of

information based on operating 24 hours a day.

Managers at most of the sites we visited stated that the complicated

scheduling process made it difficult to ensure that the appropriate staff

were scheduled to work at the right times. They were also concerned

about the amount of time they spent scheduling and rescheduling staff in

attempting to ensure that they had scheduled the number of staff with the

skills the Operations Center prescribed for each half-hour increment of

service time. IRS management had not developed a standard system for

the sites to use in helping them to develop their site schedules. As a result,

each site we visited used its own system to track variables related to each

customer service representative, such as the specific work schedule

agreement, planned vacation and training, and skill level in answering

certain types of calls. Site managers then used these variables to develop

site schedules. Managers explained that the large number of variables to

consider when doing so (e.g., more than 160 different work schedules at

one site) complicated the scheduling process and made it difficult for

them to optimize their day-to-day efforts to meet the staffing requirements

prescribed by the Operations Center. IRS’ own statistics bear this out. At

the times IRS measured, call centers were either understaffed or

overstaffed, compared with the Operations Center’s prescribed staffing

schedule, 60 percent of the time—24 percent and 36 percent, respectively,

during the first 6 months of fiscal year 2000. In measuring site adherence

to its prescribed staffing requirements, the Operations Center considers

variances of more than 10 percent (of the total number required to be

ready for each half-hour period) as overstaffing or understaffing.

The Operations Center only partially measures each site’s ability to meet

the prescribed staffing requirements. The current measurement system

determines if each site had, on average, the required number of customer
Page 21 GAO-01-144. IRS Human Capital Management

service representatives available to answer the telephone for each halfhour period.24 However, the Operations Center did not measure the extent

to which sites provided representatives with the required skills.

IRS is working with a contractor to refine a commercially available

automated system to facilitate forecasting demand, scheduling staff, and

tracking adherence to the schedule.25 The system is expected to use

historical data to more accurately forecast call demand (volume, type, and

timing of calls) and to centrally compare information on site staff

resources (e.g., availability and skills) in relation to forecasted demand to

help ensure that network staffing schedules make optimum use of

available site staffing. This system is also expected to identify individual

site staffing options for meeting network requirements, thus reducing the

amount of time site managers spend on scheduling staff.

According to Operations Center officials, the contractor was still refining

the commercial version of the system because it was not designed to

handle the size and complexity of IRS’ toll-free operations (e.g., the

number of call sites and customer service representatives and the range of

topics). According to the project leader responsible for this system, both

system hardware and software were in place at all call centers prior to

October 2000, but the software is not yet fully operational. Even though

IRS now has 2 years of information based on operating 24 hours a day, it

did not gather that data in a consistent format. The system’s forecasting

and scheduling capability will not be usable until IRS has collected at least

1 year of call demand data in a consistent format. The project leader was

not sure when IRS would have these data because data collection efforts

were delayed in order to make changes that would allow IRS to capture

more data than originally planned and in a reconfigured format. Also, the

planned transfer of certain functions from the Philadelphia Service Center

to the Operations Center was more than a year behind schedule in October

2000. Moreover, the project leader said IRS’ restructuring could cause

further delays in achieving full system capability.

 24Sites are considered to have met the prescribed total staffing requirement for the half

hour (i.e., for all subjects, combined), if the number of representatives available and ready

to take calls is within 90 to 110 percent of the requirement.

25The automated system is called the Tele-Center Workforce Management System.
Page 22 GAO-01-144. IRS Human Capital Management

Other organizations included in our August report used an automated

system similar to the one IRS is implementing. For example, one company

used an automated system to identify its short- and long-term staffing

requirements. The system assisted call center managers in forecasting call

demands and scheduling staff to meet the demands. Officials said the

system also enabled the company to significantly reduce the time needed

to perform these tasks. It forecasted call demand down to half-hour

intervals, based on historical data trends. Considering various

assumptions about call patterns and information such as the number of

customer service representatives available to take calls, on leave, or in

training, the system also generated a staffing schedule. The schedules

were reviewed daily and adjusted as needed.

IRS also faces challenges in evaluating its human capital management

practices. According to our self-assessment checklist, all human capital

policies should be designed, implemented, and assessed by the standard of

how well they help the organization pursue its mission, goals, and

objectives.26 While IRS evaluates its practices to make improvements in

some areas, such as recruiting or training, the evaluations do not assess

how individual or collective human capital policies and practices affect its

ability to achieve level-of-service goals. Its evaluations also generally did

not consider how improving practices in one area might affect other areas.

Unlike IRS, some organizations consider how their human capital

management practices affect their operational goals and how changing

one practice may affect another. Without expanding its evaluations to

include such analyses, IRS is unlikely to optimize the efficiency and

effectiveness of its toll-free operations.

Except for retention,27 IRS evaluated its human capital practices, to some

extent, in most areas, including recruiting, training, and scheduling to

improve those areas. These evaluations generally focused on how each

practice could be improved for the next year. While these evaluations are

useful for making short-term adjustments, they do not provide a basis for

 26“...an organization’s human capital policies must be aligned to support the organization’s

shared vision—that is the mission, vision for the future, core values, goals and objectives...

All human capital policies should be designed, implemented, and assessed by the standard

of how well they help the organization pursue its shared vision.” GAO/OGC-00-14G, Sept.

2000, p. 2.

27As discussed earlier, IRS was not monitoring attrition.

Evaluations Do Not

Consider How Human

Capital Practices

Affect Achieving

Level-of-Service Goals
Page 23 GAO-01-144. IRS Human Capital Management

strategic planning because they do not assess how human capital

management practices may need to be revised to support a long-term

level-of-service goal. Additionally, IRS evaluations generally do not

consider how making changes in one area affects other areas. For

example, IRS evaluations of recruiting did not consider how improving

retention practices might reduce attrition, decrease resources spent on

recruiting and training new employees, or increase the resources available

for improving the skills and productivity of existing employees.

Unlike IRS, other organizations have evaluated the effects of changes in

one human capital practice on other practices as well as on the overall

results of their telephone assistance operations. For example, one

company used training results to identify successful new hires. First,

officials determined the characteristics that recruits who did well during

training had in common. Then, the company changed its recruiting

practices to identify and hire similar people. The Incoming Calls

Management Institute recommended doing something similar—identify

the personality traits and skills of top performing customer service

representatives and use those traits to help assess persons applying for a

representative position.

IRS faces significant challenges in managing its human capital to provide

telephone customer service to taxpayers. IRS has made or planned

substantial improvements to help meet these challenges, but further

improvements are needed. IRS will have difficulty improving its telephone

service without setting a long-term, desired service-level goal that is based

on the needs of taxpayers, as well as annual goals aimed at making

progress toward reaching its long-term goal. As the Government

Performance and Results Act and SSA experience suggest, IRS will also

need support for its long- and short-term goals from congressional

stakeholders.

IRS’ telephone customer service workforce represents a substantial

human capital investment in providing assistance to taxpayers. To get the

most from this investment, IRS must be able to (1) target scarce training

resources where they are most needed to optimize call center and network

performance, (2) minimize turnover of trained and experienced customer

service representatives to avoid unnecessary recruiting and training

expenditures and enhance productivity, and (3) determine how its

individual or collective human capital policies and practices affect its

ability to achieve customer service goals and how changes in one or more

Conclusions
Page 24 GAO-01-144. IRS Human Capital Management

human capital management practices will affect other practices. However,

until IRS establishes a system for assessing competency gaps to identify

the refresher training needs of individual customer service

representatives, it cannot effectively target scarce training resources to

meet individual training needs. Without a system for monitoring attrition,

identifying its causes, and taking steps to address them, IRS cannot ensure

that its recruiting and training resources are used efficiently. And, unless

IRS considers its human capital management practices’ contribution to

achieving overall service goals and considers the interrelationships among

its toll-free service human capital practices, it lacks a good basis for

assessing the soundness of those human capital practices.

We are recommending that the Commissioner of Internal Revenue take

several steps to improve IRS’ human capital management practices related

to providing telephone customer service. Specifically, the Commissioner

should

• establish a long-term, desired service-level goal based on taxpayers’

needs, together with annual goals designed to make progress toward

reaching that long-term goal over time, and work with congressional

and other stakeholders to obtain their support and the resources

needed to reach those goals;

• establish a system for assessing customer service representatives’

competency gaps and meeting the refresher training needs identified

by the assessments;

• develop a system for monitoring call center attrition and identifying its

causes and use the information gathered from that system to develop,

as appropriate, strategies for dealing with the attrition of customer

service representatives; and

• ensure that IRS’ evaluations of human capital management practices

consider the effects of those practices on its ability to achieve longand short-term customer service goals and the interrelationships

among human capital practices.

The Commissioner of Internal Revenue provided written comments on a

draft of this report in a January 12, 2001, letter, which is reprinted in

appendix II. We also met with senior IRS officials on January 4, 2001, to

discuss our draft report and to obtain updated information on IRS’ new

toll-free measures and goals. The Commissioner agreed with our

recommendations, which he said should improve performance in this

critical area. In addition, he provided information summarizing IRS’ efforts

relating to each recommendation and commented that IRS’ efforts

Recommendations for

Executive Action

Agency Comments

and Our Evaluation
Page 25 GAO-01-144. IRS Human Capital Management

reflected the constructive dialog between IRS and our staff. We

incorporated the new information and modified the report, where

appropriate, to reflect IRS efforts.

The Commissioner’s letter stated that IRS had instituted an agencywide

strategic planning process in March 2000 that links the budget and

available resources to its strategies and improvement projects, but also

recognized the need to strengthen that new process. Toward this end, the

Commissioner stated that IRS’ fiscal year 2002 Strategic Plan and Budget

reflects a 74-percent level-of-service goal, with a goal of reaching 85 to 90

percent by fiscal year 2003. This plan was not yet available as we were

preparing this report. He also stated that an initiative was under way to

improve workload planning to ensure that customer needs are considered

during the planning and budgeting process. The Commissioner’s letter did

not say how the cited workload planning initiative would identify and

assess customer needs.

Based on the Commissioner’s comments, significant efforts were under

way or planned to help ensure that customer service representatives will

have the competencies and training needed to respond to taxpayer calls.

In addition to the targeted training and planned specialization discussed in

this report, for example, IRS plans to establish competency-based

recruiting and retention methods to help ensure that IRS recruits and

retains individuals who are well-suited to telephone customer service

work. The Commissioner’s comments also stated that IRS’ competencybased management plans include the use of “assessment instruments to

identify training needs.” These initiatives seem to be promising and may

form a basis for identifying individual refresher training needs and

ensuring that these needs are met.

The Commissioner’s comments also recognized the importance of

retaining skilled representatives. His comments identified several efforts

that focused on identifying employees that may be more likely to remain

with IRS. He did not comment on monitoring why employees leave or on

using this information to strengthen IRS’ efforts to retain skilled

representatives.

Regarding IRS’ evaluations of its human capital practices, the

Commissioner’s comments did not respond directly to the primary point of

our recommendation—that IRS evaluations should consider the effects of

its practices on its ability to achieve its long- and short-term customer

service goals. However, the Commissioner did say that IRS has embraced
Page 26 GAO-01-144. IRS Human Capital Management

our Human Capital Self-Assessment Checklist for Agency Leaders. IRS had

used it as a diagnostic tool in its recent review of its mid- and top-level

management realignment process and planned to use it again in fiscal year

2001 to “conduct an overview of the status of human capital practices

throughout the Service.” Our checklist provides a framework by which

agency leaders can develop informed views of their agencies’ human

capital policies and practices. The Commissioner also objected to our

comparing IRS’ 1998 performance with performance in subsequent years,

because of the many changes to IRS’ operating environment, such as

enterprise call management and 24-hour operations. This report compared

IRS’ reported tax law and account accuracy in 1998 and 1999. As stated in

our evaluation of the Commissioner’s comments on our 2000 filing season

report,28 we believe it is appropriate to compare IRS’ performance before

and after the operational changes mentioned above. In reevaluating the

examples we used, however, we decided to eliminate our reference to IRS’

reported tax law accuracy because we learned that the methods used to

measure tax law accuracy changed in 1999, and thus, results may not be

comparable.

As agreed with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days from the

date of this letter. At that time, we will send copies to the Ranking

Minority Member of the Subcommittee on Oversight; the Chairman and

Ranking Minority Member, Committee on Ways and Means; the Secretary

of the Treasury; the Commissioner of Internal Revenue; and Director,

Office of Management and Budget. We will also send copies to others upon

request.

 28Tax Administration: Assessment of IRS’ 2000 Tax Filing Season (GAO-01-158, Dec. 22,

2000).
Page 27 GAO-01-144. IRS Human Capital Management

If you have any questions, please call me at (202) 512-9110 or Carl Harris at

(404) 679-1900. Key contributors to this report are acknowledged in

appendix III.

Sincerely yours,

Michael Brostek

Director, Tax Issues
Appendix I: Organizations Contacted in Our

August 2000 Report

Page 28 GAO-01-144. IRS Human Capital Management

Table 2 describes the organization, mission, and telephone center

operations of the private and public organizations that were included in

the scope of our August 2000 report.1

Table 2: Telephone Customer Service Operations in Organizations We Visited or Telephoned

Organization Mission Telephone customer service operation

Allstate Insurance Company Multinational public company selling

insurance products. It has a customer

base of more than 14 million

households in the United States and

Canada.

Three call centers in Roanoke, VA; LaBrea, CA; and

Jackson, MI, staffed by about 1,150 customer service

representatives, most of whom worked part-time. The call

centers provided after-hours support to insurance agents

nationwide. Toll-free telephone lines were open from 6

p.m. to 9 a.m. for general information and to leave

messages for agents. Allstate officials said that they plan

to expand call center operations to handle customer sales

and service in 2000.

California Franchise Tax Board Administrator of California’s personal

income and bank and corporation tax

law. Also responsible for nontax

programs, such as the homeowners

and renters assistance program and

political reform act audits.

One centralized call center in Rancho Cordova, CA, was

staffed by more than 300 telephone customer

representatives, including supervisors. They were assisted

during busy times by cross-trained employees from the

correspondence section of the center and by former

telephone customer service employees working overtime.

Toll-free telephone lines were open from 7 a.m. to 8 p.m.,

Monday through Friday, and from 7 a.m. to 4 p.m. on

Saturday. During filing season, the hours were extended

from 6 a.m. to midnight, Monday through Friday, and from

7 a.m. to 4 p.m. on Saturdays and holidays. The call

center provided taxpayers with information on return

preparation, filing requirements, forms, refund status, and

general tax law.

Canada Customs and Revenue

Agency

Canadian tax, customs, and trade

administrator. Also charged with

redistribution of income through the

delivery of social and economic

benefits.

Four call centers in Toronto, Montreal, and Vancouver,

and the national 1-800 Overflow Call Center in Ottawa,

that responded to about 40 percent of the general

inquiries. Telephones were also answered at 42 other sites

throughout Canada where agents handled both telephone

and walk-in inquiries. Officials estimated that about 2,600

full-time-equivalent positions were dedicated to telephone

client services, providing taxpayers with general and

account-specific information on the programs administered

by the Canada Customs and Revenue Agency. Toll-free

telephone lines were open from 8:15 a.m. to 5 p.m.,

Monday through Friday, for individual taxpayers and from

8:15 a.m. to 8 p.m. for business taxpayers. During the

2000 filing season, calls from all taxpayers were also taken

from 9 a.m. to 1 p.m. on Saturdays and Sundays, and lines

for individual taxpayers were open until 10 p.m.

 1

Customer Service: Human Capital Management at Selected Public and Private Call Centers

(GAO/GGD-00-161, Aug. 22, 2000).

Appendix I: Organizations Contacted in Our

August 2000 Report
Appendix I: Organizations Contacted in Our

August 2000 Report

Page 29 GAO-01-144. IRS Human Capital Management

Organization Mission Telephone customer service operation

General Electric Appliance

Companya

One of 11 core businesses of

General Electric. Manufactures

appliances, including refrigerators,

ranges, dishwashers, microwave

ovens, washing machines, dryers,

water filtration systems, and heating

systems. Also provides repair and

maintenance services on appliances,

operating a nationwide fleet of

service vans.

A telephone hotline that provided consumers with product

information and responded to questions about repairs. The

answer center, located in Louisville, KY, handled about 2

million calls each year. About 200 telephone customer

service representatives responded to inquiries 24 hours a

day, 7 days a week.

Hewlett-Packard Companya Designer, developer, and

manufacturer of computer products,

including personal computers,

printers, computer workstations, and

a range of hardware and software.

The Hewlett-Packard Company Executive Customer

Advocacy Group provided support for customers

contacting Corporate Headquarters regarding issues or

concerns with products and services. The hotline was

located in Palo Alto, CA. It operated from 8 a.m. to 5 p.m.,

Monday through Friday, with a staff of about 22 full-timeequivalent employees who were Hewlett-Packard

Company retirees in part-time positions.

Illinois Department of Revenue Collects taxes for the state and its

local governments, including income

and business taxes on individuals

and businesses, income and sales

taxes, taxes on public utilities,

tobacco and liquor, motor fuels and

vehicles. The department also

administers tax relief programs for

the elderly and disabled and provides

property assessments among the

state’s counties.

One call center in Springfield, IL, was staffed by 34 fulltime telephone customer service representatives, who

were assisted during busy times by cross-trained

employees from other areas within the taxpayer assistance

division. Toll-free telephone lines were open from 8 a.m. to

5 p.m., Monday through Friday, with extended weekday

hours and one Saturday opening during filing season.

Automated service was available 24 hours a day, 7 days a

week. The call center provided taxpayers with help in

completing their returns and answered questions about

taxes, returns, bills, and notices that had been filed.

International Business Machines,

Inc.a

Designer, developer, and

manufacturer of information

technologies, including computer

systems, software, networking

systems, storage devices, and

microelectronics.

In the Product Sales and Service Division, about 6,900

telephone customer service employees provided

information on product sales and service. Call centers

operated 24 hours a day, 7 days a week.

Kaiser-Permanente America’s largest not-for-profit health

maintenance organization, serving

over 8 million members in 17 states

and the District of Columbia. An

integrated health delivery system,

Kaiser Permanente organizes and

provides or coordinates members’

care, including preventive care,

hospital and medical services, and

pharmacy services.

Kaiser Permanente had 17 call centers nationwide, with 12

centers located in California, the largest region. Regional

call centers operated independently. The California region,

where we visited, had 5.9 million members, while other

regions had fewer than 1 million members each. The two

largest call centers were located in Stockton and Corona,

CA. Together, they employed about 475 telephone

customer service representatives and about 80

management and support staff. Hours of operation were 7

a.m. to 7 p.m., 7 days a week. The member service call

centers provided answers to questions on health planrelated topics, including benefits, copayments, claims,

Medicare, eligibility, available services, and physician

information.
Appendix I: Organizations Contacted in Our

August 2000 Report

Page 30 GAO-01-144. IRS Human Capital Management

Organization Mission Telephone customer service operation

Social Security Administration Manages the nation’s social

insurance program, consisting of

retirement, survivors, and disability

insurance and supplemental security

income benefits for the aged, blind,

and disabled. Also assigns Social

Security Numbers to U.S. citizens

and maintains earnings records for

workers under these numbers.

Thirty-six call centers nationwide were staffed by 3,100

full-time, 700 part-time, and up to 60 percent of about

4,100 spike b employees who were available to assist at

busy times. Toll-free telephone lines were open from 7

a.m. to 7 p.m., Monday through Friday, to answer callers’

questions about Social Security benefits and programs.

United Parcel Service World’s largest package distribution

company, it transports more than 3

billion parcels and documents

annually.

Nine call centers nationwide were staffed by over 6,800

customer service representatives. Eight centers were open

from 7 a.m. to 9 p.m., Monday through Friday. One center

in San Antonio, TX, operated 24 hours a day, 7 days a

week. Seven of the nine call centers were staffed by

contract employees. The Newport News, VA, call center,

which was a contract facility we visited, had 230

representatives who handled calls related to pick-up,

tracking, and claims.

Utah State Tax Commissiona Coordinator of Utah taxes and fees,

including taxes on income, sales,

property, motor vehicles, fuel, beer,

and cigarettes.

Three call centers—a main call center, motor vehicle

center, and collection center—operated weekdays from 8

a.m. to 5 p.m. with about 35 telephone customer service

representatives. The call centers responded to about

15,000 to 20,000 inquiries a month dealing with a range of

questions on programs administered by the Commission.

a

For these organizations, we conducted a telephone interview in which we asked managers of

telephone customer service operations several key semistructured interview questions. However, we

did not have detailed discussions with officials and employees at various levels of the organizations.

b

”Spikes” are employees who work in program service centers on specific jobs, such as processing

benefit claims, but who are cross-trained to answer telephone inquiries and can be diverted from their

regular work to answer telephones when call volumes are high.

Source: GAO compilation of data provided by the organizations visited.

We judgmentally selected the organizations to visit and telephone by

reviewing literature on innovations in human capital management and by

obtaining opinions from experts on what organizations they thought

provided noteworthy or innovative human capital management in their call

center operations. We chose telephone customer service operations that

dealt with tax questions or specific subjects, such as benefits, investments,

and installation and operation of technical equipment, that were

comparable in complexity to tax issues addressed by IRS customer service

representatives.

Specifically, the director for Workplace Quality at the U.S. Office of

Personnel Management identified the SSA telephone customer service

operation as a public sector organization that is known for effective

human capital management. We visited the Illinois and California State tax

agencies and telephoned the Utah State Tax Commission on the basis of
Appendix I: Organizations Contacted in Our

August 2000 Report

Page 31 GAO-01-144. IRS Human Capital Management

recommendations of an official from the Federation of Tax

Administrators. The Canada Customs and Revenue Agency was cited in

literature as having an internationally recognized reputation for highquality taxpayer service and had participated—along with IRS and the tax

agencies of Australia and Japan, members of the Pacific Association of

Tax Administrators, in a benchmarking study of customer service best

practices.

Two private sector companies we visited—Kaiser Permanente and Allstate

Insurance—were selected in consultation with the executive director of

the Private Sector Council. The Council, with membership including about

50 major U.S. corporations, seeks to improve the productivity,

management, and efficiency of government through cooperation with the

private sector. Members volunteer expertise to government agencies by

participating with them in projects that are coordinated through the

Council. The other private organization we visited, the United Parcel

Service, was selected in follow-up to our participation in a congressional

delegation and IRS visit to its Atlanta, GA, headquarters to discuss human

capital and telephone customer service issues.

The private call centers we telephoned—General Electric (GE) Answer

Center, Hewlett-Packard Company Executive Customer Advocacy Group,

and International Business Machines (IBM) Business Product Division,

and/or their parent corporations—were cited in best practices literature

for their effective human capital management.
Appendix II: Comments From the Internal

Revenue Service

Page 32 GAO-01-144. IRS Human Capital Management

Appendix II: Comments From the Internal

Revenue Service
Appendix II: Comments From the Internal

Revenue Service

Page 33 GAO-01-144. IRS Human Capital Management
Appendix II: Comments From the Internal

Revenue Service

Page 34 GAO-01-144. IRS Human Capital Management
Appendix II: Comments From the Internal

Revenue Service

Page 35 GAO-01-144. IRS Human Capital Management
Appendix II: Comments From the Internal

Revenue Service

Page 36 GAO-01-144. IRS Human Capital Management
Appendix III: GAO Contacts and Staff

Acknowledgments

Page 37 GAO-01-144. IRS Human Capital Management

Michael Brostek (202) 512-9110

Alton C. Harris (404) 679-1900

In addition to those named above, Robert Arcenia, Ronald Heisterkamp,

Mary Jo Lewnard, and Shellee Soliday made key contributions to this

report.

Appendix III: GAO Contacts and Staff

Acknowledgments

GAO Contacts

Acknowledgments

(268886)

The first copy of each GAO report is free. Additional copies of reports are

$2 each. A check or money order should be made out to the

Superintendent of Documents. VISA and MasterCard credit cards are also

accepted.

Orders for 100 or more copies to be mailed to a single address are

discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

Orders by visiting:

Room 1100

700 4th St., NW (corner of 4th and G Sts. NW)

Washington, DC 20013

Orders by phone:

(202) 512-6000

fax: (202) 512-6061

TDD (202) 512-2537

Each day, GAO issues a list of newly available reports and testimony. To

receive facsimile copies of the daily list or any list from the past 30 days,

please call (202) 512-6000 using a touchtone phone. A recorded menu will

provide information on how to obtain these lists.

Orders by Internet

For information on how to access GAO reports on the Internet, send an email message with “info” in the body to:

Info@www.gao.gov

or visit GAO’s World Wide Web home page at:

http://www.gao.gov

Contact one:

• Web site: http://www.gao.gov/fraudnet/fraudnet.htm

• E-mail: fraudnet@gao.gov

• 1-800-424-5454 (automated answering system)

Ordering Information

To Report Fraud,

Waste, and Abuse in

Federal Programs