Human Capital: Status of Efforts to Improve Federal Hiring
Published: 2004-06-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The executive branch hired nearly 95,000 new employees during fiscal year 2003. Improving the federal hiring process is critical given the increasing number of new hires expected in the next few years. In May 2003, GAO issued a report highlighting several key problems in the federal hiring process. That report concluded that the process needed improvement and included several recommendations to address the problems. Today, GAO is releasing a followup report requested by the subcommittee that discusses (1) the status of recent efforts to help improve the federal hiring process and (2) the extent to which federal agencies are using two new hiring flexibilities--category rating and direct-hire authority. Category rating permits an agency manager to select any job candidate placed in a best-qualified category. Direct-hire authority allows an agency to appoint individuals to positions without adherence to certain competitive examination requirements when there is a severe shortage of qualified candidates or a critical hiring need.
section_title: What GAO Found
paragraphs: Congress, the Office of Personnel Management (OPM), and agencies have all taken steps to improve the federal hiring process. In particular, Congress has provided agencies with additional hiring flexibilities, OPM has taken significant steps to modernize job vacancy announcements and develop the government's recruiting Web site, and most agencies are continuing to automate parts of their hiring processes. Nonetheless, problems remain with a job classification process and standards that many view as antiquated, and there is a need for improved tools to assess the qualifications of job candidates. Specifically, the report being released today discusses significant issues and actions being taken to (1) reform the classification system, (2) improve job announcements and Web postings, (3) automate hiring processes, and (4) improve candidate assessment tools. In addition, agencies appear to be making limited use of the two new hiring flexibilities contained in the Homeland Security Act of 2002--category rating and direct-hire authority--that could help agencies in expediting and controlling their hiring processes. GAO surveyed members of the interagency Chief Human Capital Officers Council who reported several barriers to greater use of these new flexibilities. Frequently cited barriers included (1) the lack of OPM guidance for using the flexibilities, (2) the lack of agency policies and procedures for using the flexibilities, (3) the lack of flexibility in OPM rules and regulations, and (4) concern about possible inconsistencies in the implementation of the flexibilities within the department or agency. The federal government is now facing one of the most transformational changes to the civil service in half a century, which is reflected in the new personnel systems for Department of Homeland Security and the Department of Defense and in new hiring flexibilities provided to all agencies. Today's challenge is to define the appropriate roles and day-to-day working relationships for OPM and individual agencies as they collaborate on developing innovative and more effective hiring systems. Moreover, human capital expertise within the agencies must be up to the challenge for this transformation to be successful and enduring.

section_title: Letter
paragraphs: I appreciate the opportunity to be here today to discuss efforts to improve  the federal hiring process.  As you are keenly aware, federal agencies must  have effective hiring processes to compete for talented people in a highly  competitive job market.  Given the number of new federal hires expected in  the next few years, improving the government’s hiring process is critical.  In  fact, the executive branch hired nearly 95,000 new employees in fiscal year  2003.  Still, there has been widespread recognition that the federal hiring  process all too often does not meet the needs of agencies in achieving their  missions, the needs of managers in filling positions with the right talent,  nor the needs of applicants for a timely, efficient, transparent, and merit- based process.  Clearly, things needed to change.
In May 2003, we issued a report highlighting several key problems in the  federal hiring process.  That report concluded that the federal hiring  process needed improvements, and we made several recommendations to  address problems with key parts of the hiring process.  Specifically, we  recommended that the Office of Personnel Management (OPM) take  additional actions to assist agencies in strengthening the hiring process.   Also, we reported that agencies must take greater responsibility for  maximizing the efficiency and effectiveness of their individual hiring  processes within the current statutory and regulatory framework that  Congress and OPM have provided.
Today, we are issuing a follow-up report, done at the request of the  Chairwoman and Mr. Davis, that focuses on recent governmentwide efforts  to improve the federal hiring process.  My testimony today summarizes the  work we have done for this report.  Specifically, you asked us to (1) provide  information on the status of recent efforts to help improve the federal  hiring process and (2) determine the extent to which federal agencies are  using new hiring flexibilities authorized by the Homeland Security Act of  2002.  Our work to address these objectives was based on interviews with officials from OPM and the interagency Chief Human Capital Officers  (CHCO) Council, the results of our survey of 22 of the 23 agency members  serving on the CHCO Council, and our review of OPM documents as well  as data from OPM’s central database of governmentwide personnel  information.  We conducted our work in accordance with generally  accepted government auditing standards, during March through May of this  year.
In summary, we found the following:  Congress, OPM, and agencies have recognized that federal hiring has  needed reform, and they have all undertaken efforts to do so.  In  particular, Congress has provided agencies with additional hiring  flexibilities, OPM has taken significant steps to modernize job vacancy  announcements and develop the government’s recruiting Web site, and  most agencies are continuing to automate parts of their hiring  processes.  Nonetheless, problems remain with a job classification  process and standards that many view as antiquated, and there is a need  for improved tools to assess the qualifications of job candidates.
Agencies appear to be making limited use of the two new hiring  flexibilities contained in the Homeland Security Act of 2002.  One of  these hiring flexibilities, known as category rating, permits an agency to  select any job candidate placed in a best-qualified category rather than  being limited to three candidates under the “rule of three.”  The other  hiring flexibility, often referred to as direct hire, allows an agency to  appoint people to positions without adherence to certain competitive  examination requirements when there is a severe shortage of qualified  candidates or a critical hiring need.
The report we are issuing today includes no new recommendations, but it  does underscore our prior recommendations to which we believe  additional attention is needed.  In response to a draft of the report we are  issuing today, OPM said that it has done much to assist agencies to improve  hiring and increase agency officials’ knowledge about the hiring flexibilities  available to them.  OPM stressed that agencies themselves must rise to the  challenge, provide consistent leadership at the senior level, take advantage  of the training opportunities offered by OPM, and make fixing the hiring  process a priority.
subsections: section_title: OPM and Agencies Are Taking Steps to Improve the Hiring Process
paragraphs: OPM and agencies are continuing to address the problems with the key  parts of the hiring process we identified in our May 2003 report.  Significant  issues and actions being taken include the following.
Reforming the classification system.  In our May 2003 report on hiring,  we noted that many regard the standards and process for defining a job and  determining pay in the federal government as a key hiring problem because  they are inflexible, outdated, and not applicable to the jobs of today.  The  process of job classification is important because it helps to categorize jobs  or positions according to the kind of work done, the level of difficulty and  responsibility, and the qualifications required for the position, and serves as  a building block to determine the pay for the position.  As you know,  defining a job and setting pay in the federal government has generally been  based on the standards in the Classification Act of 1949, which sets out the  15 grade levels of the General Schedule system.
To aid agencies in dealing with the rigidity of the federal classification  system, OPM has revised the classification standards of several job series  to make them clearer and more relevant to current job duties and  responsibilities.  In addition, as part of the effort to create a new personnel  system for the Department of Homeland Security (DHS), OPM is working  with DHS to create broad pay bands for the department in place of the 15- grade job classification system that is required for much of the federal civil  service.  Still, OPM told us that its ability to more effectively reform the  classification process is limited under current law and that legislation is  needed to modify the current restrictive classification process for the  majority of federal agencies.  As we note in the report we are issuing today,  15 of the 22 CHCO Council members responding to our recent survey  reported that either OPM (10 respondents) or Congress (5 respondents)  should take the lead on reforming the classification process, rather than  the agencies themselves.
Improving job announcements and Web postings.  We pointed out in  our May 2003 report that the lack of clear and appealing content in federal  job announcements could hamper or delay the hiring process.  Our  previous report provided information about how some federal job  announcements were lengthy and difficult to read, contained jargon and  acronyms, and appeared to be written for people already employed by the  government.  Clearly, making vacancy announcements more visually  appealing, informative, and easy to access and navigate could make them  more effective as recruiting tools.
To give support to this effort, OPM has continued to move forward on its  interagency project to modernize federal job vacancy announcements,  including providing guidance to agencies to improve the announcements.   OPM continues to collaborate with agencies in implementing Recruitment  One-Stop, an electronic government initiative that includes the USAJOBS  Web site (www.usajobs.opm.gov) to assist applicants in finding  employment with the federal government.  As we show in the report we are  issuing today, all 22 of the CHCO Council members responding to our  recent survey indicated that their agencies had made efforts to improve  their job announcements and Web postings.  In the narrative responses to  our survey, a CHCO Council member representing a major department said,  for example, that the USAJOBS Web site is an excellent source for posting  vacancies and attracting candidates.  Another Council member said that  the Recruitment One-Stop initiative was very timely in developing a single  automated application for job candidates.
Automating hiring processes.  Our May 2003 report also emphasized that  manual processes for rating and ranking job candidates are time  consuming and can delay the hiring process.  As we mentioned in our  previous report, the use of automation for agency hiring processes has  various potential benefits, including eliminating the need for volumes of  paper records, allowing fewer individuals to review and process job  applications, and reducing the overall time-to-hire.  In addition, automated  systems typically create records of actions taken so that managers and  human capital staff can easily document their decisions related to hiring.
To help in these efforts, OPM provides to agencies on a contract or fee-for- service basis an automated hiring system, called USA Staffing, which is a  Web-enabled software program that automates the steps of the hiring  process.  These automated steps would include efforts to recruit  candidates, use of automated tools to assess candidates, automatic referral  of high-quality candidates to selecting officials, and electronic notification  of applicants on their status in the hiring process.  According to OPM, over  40 federal organizations have contracted with OPM to use USA Staffing.   OPM told us that it has developed and will soon implement a new Web- based version of USA Staffing that could further link and automate agency  hiring processes.  As we mention in the report we are issuing today, 21 of  the 22 CHCO Council members responding to our recent survey reported  that their agencies had made efforts to automate significant parts of their  hiring processes.
Improving candidate assessment tools.  We concluded in our May 2003  report that key candidate assessment tools used in the federal hiring  process can be ineffective.  Our previous report noted that using the right  assessment tool, or combination of tools, can assist the agency in  predicting the relative success of each applicant on the job and selecting  the relatively best person for the job.  These candidate assessment tools  can include written and performance tests, manual and automated  techniques to review each applicant’s training and experience, as well as  interviewing approaches and reference checks.
In our previous report, we noted some of the challenges of assessment  tools and special hiring programs used for occupations covered by the  Luevano consent decree.  Although OPM officials said they monitor the  use of assessment tools related to positions covered under the Luevano  consent decree, they have not reevaluated these assessment tools.  OPM  officials told us, however, that they have provided assessment tools or  helped develop new assessment tools related to various occupations for  several agencies on a fee-for-service basis.  Although OPM officials  acknowledged that candidate assessment tools in general need to be  reviewed, they also told us that it is each agency’s responsibility to  determine what tools it needs to assess job candidates.  The OPM officials  also said that if agencies do not want to develop their own assessment  tools, then they could request that OPM help develop such tools under the  reimbursable service program that OPM operates.  As we state in the report  we are issuing today, 21 of the 22 CHCO Council members responding to  our recent survey indicated that their agencies had made efforts to improve  their hiring assessment tools.
Although we agree that OPM has provided assistance to agencies in  improving their candidate assessment tools and has collected information  on agencies’ use of special hiring authorities, we believe that major  challenges remain in this area.  OPM can take further action to address our  prior recommendations related to assessment tools.  OPM could, for  example, actively work to link up agencies having similar occupations so  that they could potentially form consortia to develop more reliable and  valid tools to assess their job candidates.
section_title: Agencies Appear to Be Making Limited Use of New Hiring Flexibilities
paragraphs: Despite agency officials’ past calls for hiring reform, agencies appear to be  making limited use of category rating and direct-hire authority, two new  hiring flexibilities created by Congress in November 2002 and implemented  by OPM in June of last year.  Data on the actual use of these two new  flexibilities are not readily available, but most CHCO Council members  responding to our recent survey indicated that their agencies are making  little or no use of either flexibility (see fig. 1).  OPM officials also confirmed  with us that based on their contacts and communications with agencies, it  appeared that the agencies were making limited use of the new hiring  flexibilities.  The limited use of category rating is somewhat unexpected  given the views of human resources directors we interviewed 2 years ago.   As noted in our May 2003 report, many agency human resources directors  indicated that numerical rating and the rule of three were key obstacles in  the hiring process.  Category rating was authorized to address those  concerns.
The report we are issuing today also includes information about barriers  that the CHCO Council members believed have prevented or hindered their  agencies from using or making greater use of category rating and direct  hire.  Indeed, all but one of the 22 CHCO Council members responding to  our recent survey identified at least one barrier to using the new hiring  flexibilities.  Frequently cited barriers included   the lack of OPM guidance for using the flexibilities,   the lack of agency policies and procedures for using the flexibilities,   the lack of flexibility in OPM rules and regulations, and   concern about possible inconsistencies in the implementation of the  flexibilities within the department or agency.
section_title: Our Prior Recommendation Calls Attention to Additional Action Needed
paragraphs: In a separate report we issued in May 2003 on the use of human capital  flexibilities, we recommended that OPM work with and through the new  CHCO Council to more thoroughly research, compile, and analyze  information on the effective and innovative use of human capital  flexibilities.  We noted that sharing information about when, where, and  how the broad range of personnel flexibilities is being used, and should be  used, could help agencies meet their human capital management  challenges.  As we recently testified, OPM and agencies need to continue to  work together to improve the hiring process, and the CHCO Council should  be a key vehicle for this needed collaboration.  To accomplish this effort,  agencies need to provide OPM with timely and comprehensive information  about their experiences in using various approaches and flexibilities to  improve their hiring processes.  OPM—working through the CHCO  Council—can, in turn, help by serving as a facilitator in the collection and  exchange of information about agencies’ effective practices and successful  approaches to improved hiring.  Such additional collaboration between  OPM and agencies could go a long way to helping the government as a  whole and individual agencies in improving the processes for quickly hiring  highly qualified candidates to fill important federal jobs.
In conclusion, the federal government is now facing one of the most  transformational changes to the civil service in half a century, which is  reflected in the new personnel systems for DHS and the Department of  Defense and in new hiring flexibilities provided to all agencies.  Today’s  challenge is to define the appropriate roles and day-to-day working  relationships for OPM and individual agencies as they collaborate on  developing innovative and more effective hiring systems.  Moreover, for  this transformation to be successful and enduring, human capital expertise  within the agencies must be up to the challenge.
Madam Chairwoman and Mr. Davis, this completes my statement.  I would  be pleased to respond to any questions that you might have.
section_title: Contacts and Acknowledgments
paragraphs: For further information on this testimony, please contact J. Christopher  Mihm, Managing Director, Strategic Issues, (202) 512-6806 or at  mihmj@gao.gov.  Individuals making key contributions to this testimony  include K. Scott Derrick, Karin Fangman, Stephanie M. Herrold, Trina  Lewis, John Ripper, Edward Stephenson, and Monica L. Wolford.
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