Veterans Benefits Administration: Better Staff Attrition Data and Analysis Needed
Published: 2003-02-11T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: By the year 2006, the Veterans Benefits Administration (VBA) projects it will lose a significant portion of its mission-critical workforce to retirement. Since fiscal year 1998, VBA has hired over 2,000 new employees to begin to fill this expected gap. GAO was asked to review, with particular attention for new employees, (1) the attrition rate at VBA and the soundness of its methods for calculating attrition and (2) whether VBA has adequate data to effectively analyze the reasons for attrition. To answer these questions, we obtained and analyzed attrition data from VBA's Office of Human Resources, calculated attrition rates for VBA and other federal agencies using a government-wide database on federal employment, and interviewed VBA officials about their efforts to measure attrition and determine why new employees leave.
section_title: What GAO Found
paragraphs: About 15 percent of new examiners hired in fiscal year 2000 left VBA within 12 months of their hiring date, more than double the 6 percent rate of all VBA employees who left in fiscal year 2000. In general, new hire attrition tends to exceed the rate for all other employees, and VBA's 15 percent rate is similar to the attrition rate for all new federal employees hired between fiscal years 1998 and 2000, when as many as 17 percent left within 12 months of being hired. VBA does not have adequate data on the reasons why employees, particularly new employees, choose to leave the agency. VBA has descriptive data on how employees leave the agency (whether through resignation, retirement, or transfer), but VBA does not have comprehensive data on the reasons employees resign. While VBA collects some data on the reasons for attrition in exit interviews, these data are limited because exit interviews are not conducted consistently, and the data from these interviews are not compiled and analyzed. Without such data, VBA cannot determine ways to address the reasons employees are leaving. Furthermore, VBA has not performed analysis to determine whether it can reduce its staff attrition. Improved collection and analysis of attrition data, including data on the reasons for attrition, could help the agency minimize the lost investment in training, particularly when new employees resign. A forthcoming report will explore options for improving VBA's collection and analysis of attrition data.

section_title: Letter
paragraphs: We are pleased to have the opportunity to comment on efforts undertaken  by the Veterans Benefits Administration (VBA) to ensure it has a sufficient  workforce to process veterans’ claims for disability compensation and  pension benefits. About 40 percent of VBA’s employees work as  examiners, who review and process veterans’ disability claims at 57  regional offices throughout the country. VBA projects that, of its  examiners who are eligible to retire, 21 percent will do so by the year 2006.  Acknowledging the implications of these retirements for the quality of  services provided to veterans, VBA hired over 2,000 new examiners  between fiscal years 1998 and 2001. While VBA recognizes the importance  of retaining its new employees, until 2001 it was not regularly calculating  an attrition rate for its newly hired employees.
In response to a request from Representative Lane Evans, Ranking  Democratic Member, we examined (1) the attrition rate at VBA, and the  soundness of its methods for calculating attrition and (2) the adequacy of  data VBA has on the reasons for attrition. We focused our analysis on new  employees because of the investment in training they need to reach full  productivity. To do our work, we obtained and analyzed attrition data  from VBA’s Office of Human Resources and interviewed VBA officials. We  performed calculations of VBA’s attrition rates and compared them to  those for other federal claims examiners, using a governmentwide  database on federal civilian employment. We also interviewed Office of  Personnel Management (OPM) and GAO human capital officials to identify  generally accepted methods of calculating attrition and to determine how  federal agencies develop and analyze data on attrition and the reasons for  attrition. We conducted our work between October 2002 and January 2003  in accordance with generally accepted government auditing standards.  This statement for the record is an interim product that summarizes the  results to date based on our ongoing review of staff attrition at VBA.
In summary, for fiscal years 2000 and 2001, the attrition rate at VBA for all  employees was about 6 percent. The rate for newly hired examiners was  more than twice as high in fiscal year 2000, the most recent year for which  comparable data were available. Specifically, about 15 percent of new  examiners hired in fiscal year 2000 left the agency within 12 months of  being hired. This is similar to the attrition rate for all new federal  employees hired between fiscal years 1998 and 2000, when as many as 17  percent left within 12 months of being hired. It is typical for new hire  attrition to exceed overall attrition, but the new hire attrition rate was  much higher in certain VBA regional offices located in major urban areas  than it was in other regional offices. While VBA has descriptive data on  how employees leave the agency (whether through resignation,  retirement, or transfer), it does not have analytic data on the reasons why  employees, particularly new employees, leave the agency. Without such  data, VBA cannot determine ways to address why employees are leaving.  Furthermore, VBA has not performed the types of analysis on its data that  would help the agency determine whether it can reduce attrition. Such  analyses can help an agency determine the extent to which an attrition  problem may exist and provide needed information for effective  workforce planning. We will be reporting in more detail in a forthcoming  report on these issues and options for improving VBA’s collection and  analysis of attrition data.
subsections: section_title: Background
paragraphs: VBA provides benefits to about 2.7 million veterans and about 579,000  surviving spouses, children, and parents. Some of these benefits and  services include disability compensation and pension, education, loan  guaranty, and insurance. VBA employs about 5,000 examiners, and they  represent about 40 percent of the agency’s entire workforce. Most  examiners are located at 57 regional offices and are responsible for  reviewing and processing veterans’ disability claims. Typically, they begin  service at GS-5 or GS-7, grades that have starting salaries for 2003 of about  $23,400 to $29,000. Examiners can be promoted to GS-10.
Between 1998 and 2001, VBA hired about 2,000 new examiners (see figure  1). According to VBA officials, this was the first time VBA had the  authority to hire significant numbers of examiners. These examiners were  hired in anticipation of a large number of future retirements. For example,  in 2000, VBA was expecting the retirement of 1,100 experienced examiners  in the next 5 years. In addition, the hiring of these new examiners  coincided with a growth in the backlog of claims awaiting decisions.  Between 1998 and 2001, the backlog increased by 74 percent from about  241,000 to about 420,000. VBA has since implemented an initiative to  reduce this backlog.
According to VBA, it takes 2 to 3 years for a newly hired examiner to  become fully productive. After being hired, new examiners receive a  combination of formal training in a central location and on-the-job training  in one of VBA’s regional offices. Once on the job, these workers perform a  variety of critical tasks, including compiling medical evidence, assessing  the extent of the disability, determining the level of benefit, handling  payment, and considering appeals.
Workforce planning is a key component to maintaining a workforce that  can carry out the tasks critical to an agency’s mission. Strategic workforce  planning focuses on developing and implementing long-term strategies— clearly linked to an agency’s mission and programmatic goals—for  acquiring, developing, and retaining employees. Collecting data on  attrition rates and the reasons for attrition are one part of conducting  workforce planning. Other types of data that can be used in workforce  planning include size and composition of the workforce, skills inventory,  projected retirement rates and eligibility, and feedback from exit  interviews. This data can be analyzed to identify gaps between an  agency’s current and future workforce needs, which can in turn become  the basis for developing strategies to build a workforce that  accommodates future needs.
section_title: Attrition At VBA Is Higher For Newly Hired Examiners Than For The Agency Overall
paragraphs: In fiscal year 2000, the attrition rate for new examiners at VBA was about  15 percent, more than twice as high as the 6 percent rate for all employees  who left that year. About 15 percent of the new examiners hired in fiscal  year 2000 left the agency within 1 year of being hired. VBA calculates  attrition by counting employees who leave the agency and comparing that  number to either total employees or a sub-group of total employees. The  methods VBA uses to calculate attrition are consistent with those used by  OPM and other federal agencies.
subsections: section_title: Attrition for New Employees at VBA Is More Than Twice as High as the Agency’s Overall Rate of About Six Percent
paragraphs: Attrition rates for new VBA examiners were generally higher than those  for all VBA examiners and other employees. As shown in table 1, in fiscal  years 2000 and 2001, overall attrition rates for VBA examiners and other  VBA employees ranged from about 4 percent to about 6 percent. However,  among all new examiners hired in fiscal year 2000, about 15 percent left  the agency within 12 months, as shown in figure 2. These attrition rates  reflect all types of attrition—including resignation, retirement, and  termination. However, for new hires, attrition consists predominantly of  resignations.
According to human capital experts, in general, new employees tend to  leave at higher rates than all other employees. This has been the  experience for federal agencies historically and, according to our analysis  of OPM’s data, is generally the case governmentwide. Attrition rates for all  federal employees, both new hires and senior staff, were about 7 percent  in fiscal year 2000.  However, for all new federal employees—those hired  in fiscal year 1998, 1999, and 2000—as many as 17 percent left within 12  months of being hired.
VBA officials  acknowledge that, in certain regional offices, attrition has been high for  newly hired examiners. For example, VBA found attrition rates of 38  percent to 49 percent for new examiners hired over a 3-year period at four  regional offices—Baltimore (38 percent), Chicago (39 percent), Newark  (41 percent), New York (49 percent). By contrast, some offices—such as  Phoenix, Arizona; Louisville, Kentucky; Huntington, West Virginia; and  Wichita, Kansas—experienced no attrition among new examiners hired  during this period.
section_title: VBA Uses Accepted Methods to Calculate Attrition
paragraphs: The two basic methods VBA uses to calculate attrition are consistent with  methods used by OPM and other federal agencies. Both methods, the  “annual calculation” and the “cohort calculation,” compare employees who  leave the agency to either total employees or a sub-group of total  employees. They provide different ways of looking at attrition trends. The  annual calculation indicates broad attrition patterns from year to year. In  contrast, the cohort calculation tracks attrition over a period of time for a  specific group, and the timeframe and group can vary to suit the needs of  the analysis. Using this method, VBA reported attrition rates similar to  those found by GAO. The following are the two methods VBA uses:    Annual calculation. This method calculates attrition by dividing all  employees who left in a given year by an average of employees working at  the agency at the beginning of the year and at the end of the year.
These attrition rates represent employees at all federal agencies except VA.
Cohort calculation. This method calculates attrition by tracking a  specified group or “cohort” of employees. The cohort can be defined as all  those hired (new hires only) during a specific timeframe. These new hires  are tracked for selected intervals (3 months, 6 months, etc.). This method  can be adapted by defining the cohort differently (for example, to track  attrition among a subgroup of new hires) and by using different  timeframes for the tracking (e.g., 12 months, 18 months, etc.). This  calculation differs from the annual calculation in that it does not take an  average of the total workforce. VBA used this method to determine the  attrition rate of certain newly hired examiners for a presentation in 2001  and for additional, more comprehensive calculations in 2002. VBA plans to  use this method to calculate attrition rate for new examiners at least  annually starting in 2003.
According to OPM officials, the annual method is a generally accepted  method used to calculate attrition by federal agencies. OPM officials also  recognized the value of the cohort method for calculations that require  specific time frames or groups of employees, and added that tracking the  attrition of new employees is an important practice. OPM does not  mandate the use of a particular method for the calculation of attrition, but  officials stated that any method used should be clearly explained.
section_title: VBA Lacks Adequate Data On Reasons Employees Leave And Analysis Of Staff Attrition
paragraphs: While VBA has descriptive data on how employees separate from the  agency (whether through resignation, termination, retirement, or transfer),  it does not have adequate analytic data on the reasons why employees,  particularly new employees, leave the agency. VBA collects some data on  the reasons for attrition in exit interviews. However, these data are not  systematically collected in a consistent manner and not compiled or  analyzed. Furthermore, VBA has not performed the types of analysis on its  data that would help the agency determine whether it can reduce its  attrition rate. VBA is taking steps to ensure that attrition data will be  available to guide its workforce planning.
subsections: section_title: VBA Collects Some Data on Types of Separations, but Data on Reasons Are Limited
paragraphs: While VBA systematically collects descriptive data on how employees  leave the agency, the data on the reasons employees leave is not  systematically collected or analyzed. As at other federal agencies, when  employees leave VBA, a standard federal “Form 52” is filled out. This form  records whether the employee is leaving due to a resignation, termination,  retirement, or transfer. Because this information appears on the form in  discrete fields, VBA human resources staff can easily enter it into the  agency’s computer system to aggregate information on the types of  separations.
The Form 52 also includes a blank space for narrative comments on the  reasons for leaving. This space is primarily intended to be used in the case  of resignation and its use is optional on the part of the employee.  However, according to VBA officials, this area is frequently left blank.  When this area is filled out, it is up to a human resources employee to  decide how to label an employee’s reason for leaving in the computer  system. Several “quit codes” exist to help in this labeling process. For  example, reasons for leaving can be coded as relating to pay and benefits,  supervisory relationship, opportunity for advancement, or personal  reasons, including family responsibilities, illness, or household relocation.  All forms are sent to one of four human resource centers to be entered  into the agency’s computer system. Human resources employees in these  centers are instructed to code the reasons for leaving to the best of their  ability. However, these staff members cannot clarify reasons when the  information is blank or ambiguous because they do not have access to  either the separated employee or the regional human resources staff who  actually processed the employee’s separation. Therefore, VBA officials do  not consider the Form 52 to be a complete or reliable source of  information on the reasons employees resign from VBA.
While VBA conducts exit interviews to collect information on the reasons  employees resign, it does not have a standard process for these interviews,  nor are they conducted consistently for all separating employees,  according to VBA officials. Exit interviews with separating employees are  conducted at regional offices. However, no standard process exists for  such interviews, according to the results of an internal VA assessment.  VBA officials state that the downsizing of human resources staff in  regional offices is at least partly responsible for the inconsistency with  which exit interviews are conducted. In addition, the data from the  interviews that are conducted are not forwarded to national headquarters  to be aggregated and analyzed. Despite VBA’s inconsistent use of exit  interviews, VA policy recognizes the importance of exit interviews for  determining the reasons an employee leaves.
Some offices and staff members within VBA have made special efforts to  compile or collect information on the reasons examiners leave the agency  by producing special studies or reports. These include the following:    High-Performing Young Promotable Employees (HYPE). In  September 2002, a group of employees, representing six regional offices,  prepared a report based on 72 exit interviews conducted at seven regional  offices. The exit interviews had been conducted over 3 fiscal years: 1999,  2000, and 2001.
Loss of New Hires in Veterans Service Centers. At the request of the  head of VBA, the newly organized Office of Performance Analysis and  Integrity (OPAI) issued a report in September 2002 that examined new hire  attrition rates for regional offices individually. The report also looked at  reasons for leaving, based on interviews with the directors of two regional  offices.
Review of attrition data at certain regional offices. At least two  regional offices have investigated the reasons for attrition on their own  initiative. For example, in October 2002, senior management at the  Newark regional office compiled information on the attrition of examiners  over a 3-year period and the reasons given for why these examiners left.  This study was prompted by concern about high attrition rates at the  Newark office. Portland did a similar review in September 2001.
These special efforts had several common findings. For example, three  reported that inadequate opportunity for training was one of the reasons  examiners left VBA. Two reported workload as a reason for leaving. Two  also identified instances in which examiners resigned as a result of  pending termination for poor performance or conduct. Reports associated  with these efforts touched on other reasons for resignation, including  inadequate opportunity for full utilization of skills, insufficient pay, and  various personal reasons.
The other source of information on reasons examiners left VBA was  anecdotal information provided by regional and other senior human  resources officials. For example, senior human resources officials stated  that reasons for leaving included factors such as inadequate work space  and computer equipment as well as insufficient pay. In addition, these  officials reported that some newly hired examiners left when they  discovered that the job tasks were not what they had expected. According  to a VBA official, certain regional offices are aware of the types of  employers with whom they are competing. For example, some regional  offices report losing employees to a range of employers in both the public  sector, including other federal agencies (such as SSA and DOL), and the  private sector, including firms in the information technology sector.
VBA has begun to address some of the findings from these special studies  or reports. For example, the HYPE report included several  recommendations. The report recommended that the agency develop a  comprehensive strategic plan that addresses attrition and retention; the  report also recommended that the agency improve and centralize its exit  interview process. Both of these recommendations are in the process of  being implemented at VBA. In addition, according to a VBA official, certain  regional offices have taken steps to offer job candidates opportunities to  observe the work place before being hired. This effort was undertaken  partly in response to information about employees’ expectations of their  duties and work environment.
section_title: VBA Has Not Fully Analyzed Data to Determine Whether Attrition Can Be Reduced
paragraphs: VBA has not performed the types of analysis on its data that would help  the agency determine whether it could reduce attrition or identify the  extent to which an attrition problem may exist. To better understand its  own attrition, an agency can take advantage of a range of analyses. These  include the following:    Comparisons. To understand the degree to which its attrition is a  problem, an agency can compare its own attrition to the attrition of other  federal agencies, especially to the attrition of agencies with employees  who do similar work. While one of VBA’s special reports did some broad  comparisons of VBA’s attrition to the attrition at other federal agencies,  VBA has not compared, as we have done, the attrition of newly hired  examiners to the attrition of employees in other parts of the federal  government with comparable job series.
Attrition modeling. To understand the degree to which attrition is a  problem, an agency can estimate the attrition rates it expects in the future,  providing a baseline against which to measure the actual attrition it  experiences. This allows officials to determine if attrition rates are higher  or lower than expected. While VBA has projected retirement rates for  planning purposes, according to VBA officials, there was no formal or  informal process to estimate the expected attrition rates of the examiners  who joined the agency since 1998. In 2002, VA projected future attrition  trends for examiners in a restructuring plan submitted to the Office of  Management and Budget, and officials expect to compare these  projections to actual attrition rates for examiners in the future.
Cost analysis. To understand the degree to which attrition is a problem,  an agency can estimate the cost of recruiting and training new employees  who leave and their replacements. While VBA’s human resources office  conducted a partial estimate of attrition costs in 2001, this estimate did not  include all associated costs (including one of the most important and  potentially expensive, the investment lost when a trained employee  leaves).
Labor market analysis. To understand the degree to which its attrition is  a problem, an agency can evaluate labor market conditions in locations  where it operates. Such an evaluation can provide context for  understanding if an attrition rate is higher than might be expected in those  locations. Using general labor market data, VBA has identified several  locations where it faces significant competition from other employers,  both public and private. This information could be used to better  understand its attrition rate in those locations in the future. However, this  information is not based on the actual employment plans of separating  employees, and VBA does not routinely collect or document this  information. According to a VBA official, collecting data on where VBA’s  separating employees find employment after VBA would be useful for  developing a more accurate understanding of the employers with whom  VBA is competing.
VBA is taking steps to ensure that attrition data will be available to guide  workforce planning. First, VBA intends to develop a workforce plan,  following a workforce policy approved by VA in January 2003. In a  related document, VA stated its expectation that, in the current economy,  attrition among examiners may stabilize. Continued monitoring of attrition  rates and improved data on reasons for attrition would allow VBA to test  that assumption. Second, VBA has recently designated an official to head  strategic planning efforts. While these efforts will include human capital  issues, and according to VBA officials, will address attrition, VBA’s human  resources office is expected to assume primary responsibility for human  capital issues and to coordinate with the strategic planning office.  Obtaining better attrition data and conducting adequate analysis of  attrition and the reasons for attrition could help VBA target future  recruitment efforts and minimize attrition. For example, VA’s new  automated exit survey, which VA officials expect to be available in spring  2003, has the potential to aid VBA in its attrition data gathering and  analysis. Separating employees will be able to answer a series of questions  about the reasons they decided to leave the agency. The survey will  provide confidentiality for the employee, potentially allowing for more  accurate responses. It will also facilitate electronic analysis that could be  broken down by type of job and region.
section_title: Concluding Observations
paragraphs: VBA’s ability to effectively serve veterans hinges on maintaining a  sufficient workforce through effective workforce planning. While attrition  data are just one part of workforce planning, the data are important  because they can be used to anticipate the number of employees and the  types of skills that need to be replaced. The agency currently lacks useful  information on the reasons new employees leave and adequate analysis of  its staff attrition. In addition, some offices experience much higher or  lower rates. Continuing monitoring of attrition data by region may point to  regions that need special attention. Sustained attention to both the reasons  for attrition and attrition rates, particularly for new employees, is needed  so VBA can conduct effective workforce planning. Understanding the  reasons for attrition could help the agency minimize the investment in  training lost when a new employee leaves. Furthermore, the new  workforce planning efforts under way at VBA offer an opportunity to  improve data collection on the reasons for attrition and attrition rates.
section_title: GAO Contacts and Staff Acknowledgments
paragraphs: For future contacts regarding this statement, please call Cynthia A.  Bascetta at (202) 512-7101. Others who made key contributions to this  statement are Irene Chu, Ronald Ito, Grant Mallie, Christopher Morehouse,  Corinna Nicolaou, and Gregory Wilmoth.