Office of Personnel Management: OPM Is Taking Steps to Strengthen Its Internal Capacity for Leading Human Capital Reform
Published: 2006-06-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: General recognition exists of a need to continue to develop a governmentwide framework for human capital reform to enhance performance, ensure accountability and position the nation for the future. Potential governmentwide human capital reform and likely requirements that the Office of Personnel Management (OPM) assist, guide, and ultimately certify agencies' readiness to implement reforms, raise important questions about OPM's capacity to successfully fulfill its central role. This testimony addresses management challenges that could affect OPM's ability to lead governmentwide human capital reform efforts. To assess these challenges, GAO analyzed OPM's 2002 and 2004 Federal Human Capital Survey (FHCS) results, data from its 2005 follow-up focus group discussions, OPM's May 2006 action plans to address employee concerns, and OPM's associate directors' fiscal year 2006 executive performance contracts. GAO also conducted interviews with OPM senior officials and Chief Human Capital Officers (CHCO) and human resource directors from CHCO Council agencies. In commenting on a draft of this statement, the OPM Director said that OPM has addressed many of the challenges highlighted from the 2004 FHCS and achieved many meaningful and important results. GAO agrees and believes OPM should continue to build upon its progress to date.
section_title: What GAO Found
paragraphs: OPM has made commendable efforts towards transforming itself to being a more effective leader of governmentwide human capital reform. It can build upon that progress by addressing challenges that remain in the following areas: Leadership. OPM Federal Human Capital Survey responses and the fall 2005 follow-up focus group discussions suggests that information from OPM leadership does not cascade effectively throughout the organization and that many employees do not feel senior leaders generate a high level of motivation and commitment in the workforce. Agreement with leaders ability was lowest in one of OPM's key divisions--a unit vital to successful human capital reform. OPM is working to address employee concerns and improve perceptions of senior leaders. Talent and resources. To align talent and resources to support its reform role, OPM has made progress in assessing current workforce needs and developing leadership succession plans. However, OPM's workforce planning has not sufficiently identified future skills and competencies that may be necessary to fulfill its role in human capital reform. Customer focus, communication, and collaboration. OPM can improve its customer service to agencies and create more opportunities for dialogue. According to key officials in executive agencies, OPM guidance to agencies is not always clear and timely, OPM's human capital officer structure is often a barrier to efficient customer response, and greater opportunities exist to collaborate with agency leaders. OPM recognizes these shortcomings and has identified improvement actions to address. However, more can be done such as strategically using partnerships it has available to it, like the CHCO Council. Performance culture and accountability. OPM has made progress in creating a "line of sight" or alignment and accountability across Senior Executive Service (SES) expectations and organizational goals. It needs to build on this progress and effectively implement new performance standards for all employees to support the recently issued agency strategic and operational plan and ensure all employees receive the necessary training. To meet OPM's current and future challenge to lead governmentwide human capital reform, Director Springer has shown leadership commitment to OPM's transformation by initiating a number of action plans to address employee concerns. While the steps taken by OPM demonstrate progress in achieving its transformation, it must continue on this path by closely monitoring and communicating with its employees and customers, expanding its workforce and succession planning efforts, and continuing to create a "line of sight" throughout the organization.

section_title: Letter
paragraphs: I appreciate the opportunity to be here today to discuss the capacity of the  U.S. Office of Personnel Management (OPM) to lead and implement  governmentwide human capital reform.  Potential governmentwide human  capital reform, and likely requirements that OPM assist, guide, and  ultimately certify agencies’ readiness to implement reforms, raise  important questions about its capacity to successfully fulfill its central  role.  Director Springer and her leadership team clearly recognize that  strategic human capital management is a pervasive challenge facing  agencies across the federal government, and overcoming this challenge  will require vigorous and sustained leadership from multiple parties— OPM as well as other key human capital players, such as the President; the  Office of Management and Budget (OMB); Congress; and department and  agency leaders.  Since designating strategic human capital management as  a high-risk area in January 2001, our work and the work of others  continue to show that agencies need and want greater leadership from  OPM in helping them to address their human capital challenges.
As we have noted in our 21st Century Challenges report, people are critical  to any agency’s successful transformation.  Transformations have  enormous implications for the federal government’s “people” policies and  procedures, as well as cultures of government organizations.  Strategic  human capital management is at the centerpiece of this transformation  and last fall I testified that OPM should play a key leadership and oversight  role in helping individual agencies work towards overcoming a broad  range of human capital challenges.
I have testified previously that a governmentwide framework for  advancing human capital reform is needed to avoid further fragmentation  within the civil service, ensure management flexibility as appropriate,  allow a reasonable degree of consistency, provide adequate safeguards  within the overall civilian workforce, and help maintain a level playing  field among federal agencies competing for talent.  Within the human  capital community, there is general recognition of a need to continue to  develop a governmentwide framework for human capital reform that  Congress and the administration can implement to enhance performance,  ensure accountability, and position the nation for the future.   Nevertheless, how it is done, when it is done, and on what basis it is done  can make all the difference.
I know from my conversations with Director Springer that she agrees that  OPM needs to continue and even augment the internal transformation  effort underway, and she is putting in place a concerted effort to make that  happen.  In 2003, we reported that OPM was undergoing its own  transformation—from less of a rulemaker, enforcer, and independent  agent to more of a consultant, toolmaker, and strategic partner in leading  and supporting executive agencies’ human capital management systems.   At that time, OPM had taken a number of important steps and had several  initiatives underway or planned to improve its overall mission and  management performance.  For example, OPM has exerted greater human  capital leadership through its Human Capital Scorecard of the President’s  Management Agenda to assist agencies in improving strategic management  of their human capital.  OPM also developed the governmentwide Federal  Human Capital Survey (FHCS) to assist agencies and OPM in better  understanding specific and governmentwide agency workforce  management conditions and practices in the areas of leadership,  performance culture, and talent.  Most recently, Director Springer  announced OPM’s television campaign to promote federal employment  and has undertaken a greater focus on succession planning to respond to  the forthcoming federal retirement wave and undertaken steps to further  reduce the length of time for the federal hiring process.
Under Director Springer’s leadership this past year, OPM has continued to  transform itself by undertaking a number of internal management  initiatives to build a results-oriented culture.  The results of OPM’s 2004  FHCS showed that OPM employees expressed a number of concerns  regarding perceptions of agency leadership; talent and resources;  customer focus, communication and collaboration; and performance  culture and accountability.  The FHCS was administered before Director  Springer began her term.  Also, according to OPM, about half of the senior  leadership started after the survey was administered.  However, we used  these results, among other things, to assess some of the issues that could  impede OPM’s capacity to lead federal human capital reform.  I call  attention to some of these relevant questions throughout my testimony.   We found that OPM is taking actions to address these concerns in a  number of areas.  For example, in fall 2005, OPM conducted a series of  employee focus groups in response to its FHCS results to further  understand specific issues underlying the decline and identify actions it  could take to help improve the overall agency work environment.  In May  2006, OPM issued a series of federal human capital action plans to address  employee concerns raised during those focus group discussions.  In  addition, in March of this year, OPM issued its Strategic and Operational  Plan, 2006–2010, and identified a number of activities that OPM plans to  implement to improve employee satisfaction.
As you know, the Senate Committee on Homeland Security and  Governmental Affairs and your Oversight of Government Management, the  Federal Workforce, and the District of Columbia Subcommittee requested  that we conduct a review of OPM to identify management challenges that  could affect its ability to lead human capital reform efforts.  In March 2006,  we briefed your staff on our preliminary observations.  My remarks today  are based on that briefing.  Our forthcoming report will provide additional  information and recommendations to OPM on opportunities to improve its  internal management capacity.  We analyzed OPM’s 2006-2010 Strategic  and Operational Plan to identify activities related to internal  transformation.  We analyzed OPM’s associate directors’ fiscal year 2006  Senior Executive Service (SES) performance contracts to identify  alignment of strategic goals and individual executive performance.  We  also reviewed OPM’s most currently available workforce and succession  plans to examine issues related to talent and resources.  We analyzed  OPM’s 2002 and 2004 FHCS agency results, the most recently available  data that OPM is using to identify employee concerns.  In addition, we  reviewed OPM’s analysis of its 2004 FHCS results. (For more information  regarding the methodology related to OPM’s administration of the FHCS  and our analysis of OPM’s survey results, see app. I).  We also reviewed  the results from a series of employee focus groups conducted by OPM in  fall 2005 to follow up on its agency 2004 FHCS results, as well as analyzed  OPM’s May 2006 action plans to address issues raised by the 2004 FHCS  and employee focus groups.
We interviewed OPM’s five associate directors and other senior-level staff  to obtain their views of agency management.  We interviewed 21 of the 23  members of the Chief Human Capital Officers Council and their  corresponding agency human resource (HR) directors to gain a customer  perspective of OPM’s products and services and their views of OPM  management challenges.  Finally, we reviewed our ongoing work and  previous recommendations to OPM on a range of issues related to human  capital and other management challenges.  We conducted our work from  June 2005 to June 2006 in accordance with generally accepted government  auditing standards.
We provided a draft of this statement to Director Springer for her  comment.  The Director expressed concern that the basis for GAO’s  observations relied heavily on outdated information, specifically from the  results of the FHCS administered in 2004.  She noted that in many  instances, OPM has addressed the challenges highlighted from the 2004  FHCS and achieved many meaningful and important results.  We wish to  point out that OPM has also relied heavily on the results of the 2004 FHCS  and conducted focus groups in fall 2005 to understand the factors  contributing to employees’ responses on selected items on the 2004 FHCS  and to obtain employees’ ideas for addressing top priority improvement  areas.  Further, OPM used the results from 2004 FHCS and 2005 focus  group discussions—the most recent data available—and this information  was used to form the basis for its recently released (May 2006) action  plans to address these issues.
Today, I would like to highlight that OPM has made commendable efforts  towards transforming itself to being a more effective leader of  governmentwide human capital reform.  OPM’s recently issued “Strategic  and Operational Plan” is a significant accomplishment.  While the plan’s  strength is in its definition of clear, tangible goals and deliverables, it is not  clear if the plan adheres to the goals for a strategic plan as contained in  the Government Performance and Results Act of 1993.  We will analyze  compliance of the plan with GPRA and present the results of our analysis  in our forthcoming report.  We will examine the extent to which the plan's  operational steps are consistently linked to a larger strategic vision and set  of clearly articulated outcomes.  Importantly, in the future, OPM should  revisit its organizational structure to ensure it is aligned with the goals and  objectives in its plan and make any necessary changes.  Doing so will help  OPM to improve economy, efficiency, effectiveness, and responsiveness  while enhancing flexibility and improving accountability.  My statement  today addresses how OPM can build upon the progress it has made with  its strategic and operational plan by addressing challenges that remain in  four key areas: Leadership.  OPM 2004 employee survey responses and the more recent  OPM employee focus group discussions suggest that information from  OPM top leadership does not cascade effectively throughout the  organization.  Survey and focus group data also suggest that many  employees do not feel their senior leaders generate a high level of  motivation and commitment in the workforce.  Agreement with leaders’  ability to generate motivation and commitment were lowest in the Human  Capital Leadership and Merit System Accountability (HCLMSA) division,  one of OPM’s key divisions—a unit responsible for partnering with  agencies and vital to successful human capital reform efforts.
Talent and resources.  In an effort to align talent and resources to  support its reform role, OPM has made progress in its assessment of  current workforce needs and developing leadership succession plans.   However, if OPM is to lead governmentwide human capital reform it  should identify the skills and competencies of the new OPM, determine  any skill and competency gaps, and develop specific steps to fill such gaps.
Customer focus, communication, and collaboration.   Agency views,  survey results, and our previous work show that OPM can improve its  customer service and communication with agencies.  Our recent work  shows that guidance to agencies is not always clear and timely, the human  capital officer structure is often a barrier to efficient customer response,  and there are greater opportunities to dialogue and collaborate with Chief  Human Capital Officers (CHCO) and human resource directors.   Communication and collaboration are key aspects of OPM’s ability to  support agency efforts at human capital reform and establish a consistent  reform message.  OPM has recognized these shortcomings and has  identified improvement actions to address some of them.  However, more  can be done such as strategically using the partnerships it has available to  it, like the CHCO Council and others, as well as developing a culture of  collaboration, information sharing, and working with customers to  understand what they will need from the agency.
Performance culture and accountability.  OPM has made progress in  creating a “line of sight” or alignment and accountability across leader  expectations and organizational goals.  Performance expectations of  senior leaders are clearly aligned with the goals of OPM's strategic and  operational plan.  Success in achieving reform objectives will rest, in part,  on OPM’s ability to align performance and consistently support mission  accomplishment for all employees of the organization.
subsections: section_title: Leadership
paragraphs: The OPM 2004 FHCS results and OPM’s 2005 follow-up focus group  discussions suggest that information is not cascading effectively from top  leadership throughout the organization.  Further, according to the  summary reports of OPM’s follow-up focus group discussions, overall  communication was selected by employees as one of the most important  areas to address.  Some focus group participants said that managers and  employees were unaware of what is going on in the organization due to a  lack of internal and cross-divisional communication.  Focus group  participants also described not knowing where the agency is heading and  not having a clear understanding of how their activities aligned with the  overall vision and mission of the agency.
As figure 1 shows, fewer employees below the SES level at OPM as well as  the rest of government reported being satisfied with the information they  receive.  Further there were significantly fewer employees at OPM,  especially in the GS-1 to GS-12 range, reporting “satisfaction with the  information they receive from management on what’s going on in the  organization” when compared with the rest of the government.  On the  other hand, significantly more SES employees at OPM indicated  satisfaction with the “information they were receiving from management”  than SES employees at all the other government agencies participating in  the 2004 FHCS.
A similar gap between OPM SES and GS-level employees, as well as for  their relative counterparts from the rest of government, is evident when  employees were asked if they agreed that “managers promote  communication among different work units.”
OPM employees also expressed concerns regarding their views of senior  leaders.  As shown in figure 1, roughly two-thirds of OPM employees, as  well as employees in the rest of government, indicated that their  immediate supervisors or team leaders are doing a good or very good job.    Employee perceptions of senior level leadership were not as positive,  however.  When survey respondents were asked if they agreed with the  statement “I have a high level of respect for my organization’s senior  leaders,” nearly twice as many OPM SES employees agreed with this  statement as compared with OPM GS-level employees.  Survey  respondents were also asked if they were “satisfied with the policies and  practices of your senior leaders” and OPM SES employees also agreed  with this statement more than twice the level of OPM GS-level employees.   For both items, the percent of OPM GS-level respondents agreeing with  these statements tends to be lower than for their counterparts in the rest  of government.  A similar pattern of OPM SES and OPM GS-level response  can be seen in Figure 1 for the percent of employees agreeing with the  statement “leaders generate high levels of motivation and commitment in  the workforce.”   OPM’s analysis of responses to this question by its  divisions and offices show that the Human Capital Leadership and Merit  System Accountability (HCLMSA) division had the lowest positive and  largest negative response of any division at about 28 percent and 51  percent respectively.  This issue of leaders generating motivation and  commitment was selected by all six of the HCLMSA focus groups as one of  the most important issues that OPM needs to address.  Because the  HCLMSA division is OPM’s frontline organization that partners with  agencies to achieve human capital success by providing oversight and  leadership to agencies, it will play a key role in OPM initiatives to  implement human capital reform—so it will need effective leadership to  guide its transformation.
OPM is clearly aware of the most critical issues for its agency leaders to  address, such as the lack of overall and cross-divisional communication,  issues related to employee views of senior management, and obtaining  employee input to individual work plans linked to the agency strategic  plan.  Based on OPM’s May 2006 action plans, the agency is planning to  improve communication through such means as “visits to OPM field  locations, brown bag lunches with the Director, an email box where  employees can make suggestions on more efficient and effective ways of  doing business, Web Casts, and employee meetings.”  According to the  May 11, 2006 memo from OPM’s CHCO to Director Springer, OPM has  released several messages to employees regarding steps that it will be  taking to improve communications agencywide and to address each of the  specific critical issues within individual organizations of the agency.  OPM  officials told us that many of these actions have already occurred, such as  senior executives visiting field locations.  To improve its cross-divisional  communication, OPM has developed and posted a functional organization  directory on its internal website, which it has accomplished almost a  month ahead of schedule.  To address employee concerns regarding views  of senior leaders, OPM is establishing a process in all divisions to solicit  employee input on various initiatives and setting aside “open door” time  for employees to speak with their managers.  Furthermore, OPM has  created an action plan to help employees better understand how their  work fits into the overall mission of the agency by providing a mechanism  to increase employee input to work plans related to its strategic plan.
As I have testified on many occasions, in recent years GAO has learned a  great deal about the challenges and opportunities that characterize  organizational transformation.  Several such lessons are of particular  relevance to today's discussion.  For example, GAO has recognized that  soliciting and acting on internal feedback such as that obtained through  employee surveys, provides a key source of information on how well an  organization is developing, supporting, using and leading staff, as well as  how internal operations are functioning and meeting employee needs as  they carry out their mission. OPM's practices in this area are based in part  on GAO’s experience and include efforts to gain insight into employee  perceptions of leadership and explicit follow-up activities to address  identified concerns.  OPM’s planned actions are important steps in the  right direction.  Moving forward, as OPM implements its action plans to  address issues of communication and motivation, it is important that it  frequently communicate with employees on the progress of each of its  planned actions and how these changes will affect them.  OPM should also  communicate any challenges or delays faced in its planned actions as soon  as possible and the reasons why any changes to plans might be made.  The  2006 FHCS deployed just last month, will provide an initial indication of  the extent to which the new initiatives are responding to employee  concerns.
section_title: Talent and Resources
paragraphs: A high-performance organization needs a dynamic, results-oriented  workforce with the requisite talents, multidisciplinary knowledge, and up- to-date skills to ensure that it is equipped to accomplish its mission and  achieve its goals.  We have reported that acquiring and retaining a  workforce with the appropriate knowledge and skills demands that  agencies improve their recruiting, hiring, development, and retention  approaches so that they can compete for and retain talented people.    Similar to other agencies, OPM faces challenges in recruiting and retaining  a high-quality, diverse workforce and these challenges could limit OPM’s  capacity to accomplish its current mission, which includes in part leading  other agencies in addressing their own recruitment and retention  challenges.  Further, if OPM is to lead governmentwide human capital  reform and transition from less of a rulemaker, enforcer, and independent  agent to more of a consultant, toolmaker, and strategic partner, it should  identify the skills and competencies of the new OPM, determine any skill  and competency gap, and develop specific steps to fill that gap.
The FHCS shows that OPM employees identified several issues related to  its current workforce:
Workforce skills. Some OPM employees were concerned about a  lack of skills among OPM’s current workforce.  Our analysis of the  2004 FHCS shows that 67 percent of OPM employees agreed that “the  workforce has the job relevant knowledge and skills necessary to  accomplish organizational goals” compared with 74 percent of  employees from the rest of government.  Among OPM’s divisions,  HCLMSA had the lowest rate of agreement and highest rate of  disagreement with the above statement at, respectively, 25 percent and  59 percent.  This division provides leadership to agencies in their  human capital transformation efforts.  If HCLMSA lacks the knowledge  and skills necessary to accomplish OPM’s current organizational goals,  the division may have difficulty managing the additional  responsibilities of leading and implementing future governmentwide  human capital reform.
Agencies are also concerned with OPM’s current workforce capacity.   We spoke with agency CHCOs, HR directors, and their staffs about  OPM’s current capacity, and they expressed concern about whether  OPM has the technical expertise needed to provide timely and  accurate human capital guidance and advice.  For example, agency  officials said that the perceived lack of federal human resource  expertise among some OPM Human Capital Officers (HCO) makes it  difficult for them to assist agencies when communicating policy  questions to appropriate OPM employees.  For example, an HR  director told us that their agency contacted the responsible HCO about  the Outstanding Scholars Program and did not get a response from  OPM for two to three weeks.  When OPM finally responded, they said  each agency was deciding how to administer the program.  In the end,  the agency’s General Counsel Office had to contact another agency to  learn how they administered the program.
Many CHCOs and human resource directors told us they believed that  OPM’s expertise has declined over the last decade, while noting that  OPM is facing many of the same personnel issues as all federal  agencies regarding the loss of federal human capital talent and  institutional knowledge.
OPM’s ability to lead and oversee human capital management policy  changes that result from potential human capital reform legislation  could be affected by its internal capacity and ability to maintain an  effective leadership team, as well as, an effective workforce.  CHCOs  and human resource directors expressed concern about the loss of  OPM employees with technical expertise that will be needed to  effectively assist agencies with future human capital efforts.  One  CHCO believed OPM’s capacity is dependent upon a few key  employees, in particular in the area of innovative pay and  compensation approaches, adding that the potential loss of these  employees could create a tipping point that severely damages OPM’s  capacity.  Moreover, agencies believed that the Departments of  Defense (DOD) and Homeland Security human capital reform efforts  severely taxed OPM technical resources, specifically pay and  compensation employees.
Building the skills and knowledge of its workforce provides OPM with  an opportunity to streamline decision making to appropriate  organization levels.  The FHCS includes one question on employee  empowerment.  The 40 percent of OPM employees who had a “feeling  of personal empowerment with respect to work processes” was close  to the response of 43 percent from the rest of government.  Although  these results do not differ markedly from those in the rest of  government, this item was selected by a majority of participants in the  focus groups as one of the most important issues that OPM needs to  address.  Some participants said decision making is too centralized at  the top without delegating authority to managers, supervisors, and  employees.  Taken together, these survey and focus group results  suggest that the majority of OPM employees do not feel empowered to  accomplish their tasks.  Having delegated authorities gives employees  the opportunity to look at customer needs in an integrated way and  effectively respond to those needs and can also benefit agency  operations by streamlining processes.  Furthermore, such delegation  to frontline employees gives managers greater opportunities to  concentrate on systematic, cross-cutting, problems or policy-level  issues.  In April 2006, OPM began taking steps to delegate more  authority to lower-level employees, and Associate Directors are now  currently reviewing redelegations within their organizations.
Recruiting.  Similar to most federal agencies, OPM may have  difficulty recruiting new talent. For example, 47 percent of OPM  employees who perform supervisory functions agreed with the  statement that their “work unit is able to recruit people with the right  skills,” which is similar to the 45 percent of supervisors from the rest  of government.  The OPM CHCO told us that HR specialist positions  are difficult to fill now.  The work of HR specialists ranges across  policy development, consultation and agency outreach, and  operational recruitment and staffing activities.  This is noteworthy  because we identified HR specialist as a mission-critical occupation  among the 24 Chief Financial Officer Act agencies in our 2001 report.   HR specialist was also listed as a mission-critical occupation in OPM’s  2003 human capital plan.
Mr. Chairman, as you know, longstanding concerns exist regarding  DOD’s personnel security clearance program. In fact, we declared  DOD’s program a high-risk area in January 2005. We testified last  month before this subcommittee on concerns that slow the process of  personnel clearances.  OPM continues to experience problems with  its investigative workforce, a problem we first identified in February  2004 when we found that OPM and DOD together needed  approximately 3,800 additional full-time-equivalent investigators to  reach their goal of 8,000.  Although OPM reports that it has reached its  goal, it still faces performance problems due to the inexperience of its  domestic investigative workforce. While OPM reports that it is making  progress in hiring and training new investigators, the agency notes it  will take a couple of years for the investigative workforce to reach  desired performance levels.
Training.  OPM employees cited strengths as well as concerns with  employee development and training, as well as not feeling empowered  to accomplish their tasks.  As we have reported, agencies must develop  talent through education, training, and opportunities for growth, such  as delegating authorities to the lowest appropriate level. In the 2004  FHCS, 62 percent of OPM employees agreed that “supervisors/team  leaders in  work unit support employee development” which is  close to the agreement level of employees from the rest of government  at 65 percent.  OPM employees were not as close to the employees in  the rest of government in agreeing that “I receive the training I need to  perform my job.”  Fifty-three percent of OPM employees agreed with  this statement as compared with 60 percent of employees from the rest  of government.  In the follow-up employee focus groups, some  participants selected this item as one of the most important issues for  OPM to address.  Some focus group participants said OPM’s culture  does not support training and employees do not have time to attend  training classes.  Further, an OPM executive told us that it can be a  struggle to convince managers that people should attend training.   Some focus group participants also said that managers are not given  sufficient and timely training budgets.  OPM officials believe that  limited funding for training is an issue at OPM, and added that OPM is  also working to provide managers with more timely training budgets.   In 2003, we reported that OPM was using rotational assignments,  special projects, and details to broaden the skills of employees.  OPM  officials also told us the agency is taking steps to address training  concerns by offering more online training courses.  In 2004, 57 percent  of employees agreed with the statement that they have electronic  access to learning and training programs readily available at their desk.   Although still below the 71 percent agreement level for the rest of  government, this was an 8 percentage point increase from the 49  percent of employees who agreed with this statement on the 2002  FHCS. OPM can build upon its current training initiatives, such as  online courses and rotational assignments, to leverage the available  training resources.
Critical resources. OPM employees have indicated concerns  regarding the availability of critical resources.  Although responses  from OPM employees overall are similar to employees from the rest of  government, we noted one group of OPM employees whose responses  are not as close to their counterparts in the rest of government.   Among all OPM employees, 51 percent agreed with the statement that  they have “sufficient resources (for example, people, materials,  budget) to get my job done” as did 49 percent of employees from the  rest of government.  For employees performing supervisory functions,  however, the agreement rate was 35 percent at OPM and 42 percent for  the rest of government.  Participants in the follow-up focus groups  selected this item as one of the most important issues OPM needs to  address to make the agency a better place to work.  Focus group  participants said the lack of administrative staff and essential  equipment causes specialized employees to waste time performing  administrative functions.  This suggests that OPM needs to take  additional steps to ensure that it has aligned its available resources  with its mission needs.
subsections: section_title: OPM Has Engaged in Workforce and Succession Planning, but Different Workforce Skills May Be Needed to Meet Future Needs
paragraphs: OPM’s workforce and succession planning efforts may be sufficient for  maintaining the organization’s current capacity, but OPM may need more  collaborative workforce skills to lead and implement human capital  reform.  We have reported that strategic workforce planning addresses  two critical needs: (1) aligning an organization’s human capital program  with its current and emerging mission and programmatic goals, and (2)  developing long-term strategies for acquiring, developing, and retaining  staff to achieve programmatic goals.
Almost half (about 46 percent) of OPM’s workforce will be eligible to  retire as of September 30, 2010, as compared with 33 percent  governmentwide, according to information in the Central Personnel Data  File (CPDF).  Further, about two-thirds (66 percent) of the OPM SES  employees will be eligible to retire at the same time—about the same as  the governmentwide eligibility of 68 percent.  We have reported that  without careful planning, SES separations pose the threat of an eventual  loss in institutional knowledge, expertise, and leadership continuity. In  light of the impending retirements among its SES workforce, OPM has  engaged in succession planning to ensure that it has the leadership talent  in place to effectively manage OPM’s transformation, as well as ensure  that the workforce skill mix is appropriate to meet its future challenges  and transition to more of a strategic consultant role.  This effort is  important because leading organizations engage in broad, integrated  succession planning efforts that focus on strengthening both current and  future organizational capacity.  OPM officials told us that the agency has  identified 142 key leadership positions within the SES and GS-15 grade  levels that are classified for succession planning in the near future.   Currently, OPM’s succession planning efforts are only focused on SES and  GS-15 positions.  I understand that OPM is now planning to expand the  scope of its succession management program to include all supervisory,  managerial, and executive positions throughout the agency— approximately 240 additional positions.  I would encourage them to  undertake this broader succession planning effort, given the importance of  maintaining, and in many cases augmenting, critical skills throughout the  organization, as well as the consideration of the future skills it may need to  achieve its own transformation to lead the executive branch’s overall  human capital reform effort.
As I noted earlier, in 2003, we reported that OPM’s overarching challenge  today is to lead agencies in shaping their human capital management  systems while also undergoing its own transformation.  Given its  governmentwide leadership responsibilities, it is particularly important  that OPM seeks to “lead by example” with its own human capital practices.   Leading organizations go beyond simply backfilling vacancies, and instead  focus on strengthening both current and future organizational capacity.   Thus, it is critical that OPM assesses its mission-critical workforce skills  relative to the human capital reform competencies and needs of the future.   OPM officials said they will be issuing the agency’s updated strategic  human capital plan later this summer to include such items as its human  capital focus, workforce plan, leadership and knowledge management,  workforce analysis, and performance goals, among other things.  Director  Springer has noted that she envisioned the OPM of the future as having a  greater emphasis on collaboration and consulting capabilities.  Given the  greater emphasis on collaboration and consulting skills, I believe that  OPM’s forthcoming strategic human capital plan should include thoughtful  strategies for how the agency plans to recruit, train, develop, incentivize,  and reward employees with this important skill set.
section_title: Customer Focus, Communication, and Collaboration
paragraphs: During a transformation, we have reported that a communication strategy  is especially crucial in the public sector where policy making and program  management demand transparency and a full range of stakeholders and  interested parties are concerned not only with what results are to be  achieved, but also which processes are to be used to achieve those  results.  Our work on high-performing organizations and successful  transformations has shown that communication with customers and  stakeholders should be a top priority and is central to forming the  partnerships needed to develop and implement an organization’s  transformation strategies.  Specifically, an appropriate customer  communication strategy would include consistency of message and  encourage two-way communication.
A majority of CHCOs and human resource (HR) directors told us that OPM  could improve the clarity, consistency, and timeliness of its guidance to  agencies.  Several agency officials commented that OPM conveyed a “we’ll  know it, when we see it” method of communicating expectations.  This  method of communicating expectations and lack of clear and timely  communications and guidance was clearly illustrated as agencies  conveyed their experiences with the SES performance management  system certification process.  In November 2003, Congress authorized a  new performance-based pay system for members of the SES.  Under this  authority, SES members are to no longer receive automatic annual across- the-board or locality pay adjustments with the new pay system.  Agencies  are to base pay adjustments for SES members on individual performance  and contributions to the agency’s performance by considering such things  as the unique skills, qualifications, or competencies of the individual and  their significance to the agency’s mission and performance, as well as the  individual’s current responsibilities.  Congress also authorized agencies to  raise the maximum rate of pay for senior executives if their SES  performance appraisal system is certified by OPM and OMB as making  meaningful distinctions in relative performance.
We asked agency CHCOs and HR directors to provide us with their  experiences with OPM’s administration of the SES pay-for-performance  process to identify parallel successes and challenges that OPM could face  in a certification role for the implementation of human capital reforms.   We heard a number of concerns from agencies regarding OPM’s ability to  communicate expectations, guidance, and deadlines to agencies in a clear  and consistent manner.  For example, one official said, while OPM tries to  point agencies in the right direction, it will not give agencies discrete  requirements.  This leads to uncertainty about what agencies must and  should demonstrate to OPM.  Some CHCOs and HR directors also told us  that, in some cases, OPM changed expectations and requirements  midstream with little notice or explanation.
The late issuance of certification submission guidance to agencies was  especially problematic for agencies and they appeared to have responded  to this circumstance in two different ways. Because OPM did not issue  guidance for calendar year 2006 submissions until January 5, 2006, some  agencies were unable to deliver their submissions to OPM before the  beginning of the calendar year.  Further, OPM clarified this guidance in a  January 30, 2006, memorandum to agencies, telling agencies that SES  performance appraisal systems would not be certified for calendar year  2006 if the performance plans did not hold executives accountable for  achieving measurable business outcomes.  As a result, agencies had to  revise their submissions, where necessary, to meet OPM’s additional  requirements.  Some agencies indicated that OPM’s late issuance of  guidance also creates an uneven playing field among agencies, as those  that choose to wait until OPM issues guidance before applying for  certification are unable to give their SES members higher pay, while their  counterparts who did not wait for OPM’s guidance, could get certified  sooner.  Some human resource directors we spoke with expressed  concern that OPM is not certain about their expectations of agencies’  submissions and said they would like more clarity from OPM on the  certification process. For example, one agency director of executive  resources said agencies ended up relying on each other rather than OPM  during the 2004 SES certification process.  They said OPM provided  agencies with mixed messages on what would be required for SES  certification.  One human resource director requested that, at the very  least, agencies should be given the certification process guidelines before  the end of the calendar year, so they can plan adequately.  OPM officials  we spoke with about this agreed that they need to be able to provide clear  and consistent guidance to agencies and said they are working to improve  this.  Further, they said their evaluation of agencies’ submissions is  evolving as their understanding of the SES certification criteria is  increasing.
In the past, we have reported concerns with OPM’s communications  pertaining to their leadership in implementing governmentwide human  capital initiatives and have recommended ways in which OPM could  improve its guidance to federal agencies.  For example, in 2003 we  reported that an initial lack of clarity in telework guidance for federal  agencies from OPM led to misleading data being reported on agencies’  telework programs.  As one of the lead agencies, along with the General  Service Administration (GSA), for the federal government’s telework  initiative, OPM issued telework guidance to agencies in 2001 that did not  define a statement that was included in their guidance that told agencies  that eligible employees who wanted to participate in telework must be  allowed that opportunity.  As a result, we found that agencies interpreted  this statement differently and subsequently reported incomparable data to  OPM.  After discussing this issue with OPM officials, OPM reacted  promptly by issuing new telework guidelines within weeks that addressed  our initial concerns.  We concluded that the steps taken by OPM in  response to our findings showed a ready willingness to address issues that  were hindering implementation of this important human capital initiative.    We also recommended to OPM and GSA that they should use their lead  roles in the federal telework initiative to identify where more information  and additional guidance, guidelines, and technical support could assist  agencies in their implementation of telework.
In May 2006, we reported that communications problems between OPM  and DOD may be limiting governmentwide efforts to improve the  personnel security clearance—an area of high-risk concern that I noted  earlier.  For example, DOD officials asserted—and OPM disagreed—that  OPM had not officially shared its investigator’s handbook with DOD until  recently.  DOD adjudicators had raised concerns that without knowing  what was required for an investigation by the investigator’s handbook,  they could not fully understand how investigations were conducted and  effectively use the investigative reports that form the basis for their  adjudicative decisions.  OPM indicated that it is revising the investigator’s  handbook and is obtaining comments from DOD and other customers.
More recently, our review of oversight of Equal Employment Opportunity  (EEO) related requirements and guidance, found little evidence of OPM  coordination with Equal Employment Opportunity Commission (EEOC)  because an insufficient understanding of their mutual roles, authority, and  responsibilities resulting in lost opportunity to realize consistency,  efficiency, and public value in federal EEO and workplace diversity human  capital management practice.  Further, a majority of human capital and  EEO officials responding to a survey we did for that review, reported that  OPM’s feedback on their agencies’ programs and the guidance they  received from OPM was not useful.
Helping to achieve EEO and workplace diversity is another area where  opportunities exist for OPM to increase its coordination and collaboration  with EEOC.  Over 80 percent of the respondents to our survey of federal  human capital and EEO officials said that more coordination between  OPM and EEOC would benefit their agency, adding that the lack of such  coordination resulted in added requirements on them and detracted from  the efficiency of their won work.  Moreover, in 2005, OMB recommended  to OPM that it develop a regular/formal working relationship with EEOC  with respect to those programs where it shares oversight responsibility  with EEOC in order to improve overall government efficiency.
As changes in governmentwide human capital initiatives begin to address  the changing needs of the 21st century federal workforce, it will be  especially critical that OPM develops clear and timely guidance for  agencies that can be consistently and easily implemented.
subsections: section_title: OPM’s HCO Structure Is Viewed as a Barrier to Meeting Customer Needs
paragraphs: CHCOs and human resource directors informed us that, while OPM’s HCO  structure is good in theory, it is often a barrier to obtaining timely  technical guidance.  Within the HCMLSA division, OPM assigns one HCO  as the main point of contact to each agency of the President’s Management  Council and one to each cluster of small agencies.  HCOs act as liaisons  and consultants communicating with an agency’s human capital  leadership.  CHCOs and human resource directors commented that their  HCO has become an advocate for their agencies and has been helpful for  troubleshooting and resolving issues that did not require detailed technical  assistance.  However, problems arose for many agencies when technical  questions and issues had to be communicated via their HCO to the policy  experts at OPM.   For example, one human resource officer told us they  asked their HCO if they could talk directly to OPM experts on Voluntary  Separation Incentive Pack and Voluntary Early Retirement Authority, but  the HCO insisted on relaying the information to the agency.  The agency  official said their HCO was relatively new, so there were numerous policy  nuances that were lost during this process.
One CHCO stated that, while the HCOs at OPM have provided one-stop  shopping for agencies, having the HCO as the only point of contact can be  restrictive.  Several human resource directors conveyed instances where  technical nuances of a particular issue, such as the Voluntary Early  Retirement Authority, were lost in the translation between the HCOs and  policy experts at OPM, as the HCO often did not have federal HR  experience or expertise.  As one official described it, while the HCO is  helpful, time and context are lost in having to go through the HCO to  obtain technical assistance.  Human resource directors expressed a desire  to communicate directly with OPM’s policy experts for technical guidance  and some use their personal contacts at OPM for technical guidance and  assistance instead of going through their HCO.
Human resources directors also said that they sometimes received mixed  messages on the SES certification process from OPM, and it appeared that  answers would change depending on with whom an official was working.   From their perspective, agencies thought that OPM did not effectively  communicate among its internal divisions and that OPM could greatly  improve its customer service by clarifying its internal structure and  making it more customer-oriented.  Human resource directors commented  about the lack of a formal mechanism, such as a survey instrument, to  provide feedback to OPM on their guidance and assistance to agencies.   We asked an executive within the HCLMSA division about this and were  told that while OPM does not have a formal feedback mechanism, they  talk to agencies all the time, so OPM does not feel that a formal  mechanism is needed.
Employee responses to FHCS questions relating to OPM’s customer focus  show employees are also concerned about the service OPM provides to  agencies.  OPM’s results for the two FHCS questions relating to customer  focus show a decline from 2002 to 2004 in its employee’s satisfaction with  OPM’s focus on customer needs.  In 2002, 66 percent of OPM employees  agreed that “products and services in their work unit are improved based  on customer/public input.”  However in 2004, 53 percent of OPM  employees agreed with the same statement, a 13 percentage point decline.   A similar decline occurred in response to a FHCS question concerning  performance rewards.  In 2002, 51 percent of OPM employees agreed that  “employees are rewarded for providing high quality products and services  to customers,” whereas in 2004, 35 percent of OPM employees agreed with  the same statement, a decline of 16 percentage points.
While the employee focus group discussions did not directly address  customer focus, some participants raised concerns during their  discussions that could affect OPM’s client focus.  Focus group participants  from HCLMSA said OPM provides poor service to external customers due  to unnecessary delays and a lack of communication.  They said the HCO  structure makes it difficult to connect customers with OPM employees  who can provide them with accurate information and advice.  The HCO  structure was introduced in 2003, therefore it could have contributed to  the decline in positive responses to the customer focus questions in the  2004 FHCS.
In an OPM briefing to GAO, officials described OPM’s structure in support  of strategic human capital management, and part of that structure includes  “targeting capability to implement strategic management of human capital  on an agency-by-agency basis” through its HCLSMA division.  According to  OPM documents, each agency center in HCLMSA has staff to provide  human resources technical assistance to agencies.  OPM has a number of  goals and activities in its Strategic and Operational Plan intended to  improve its customer service and focus on customer needs.  For example,  OPM plans to develop performance standards for OPM common services  by July 2006, and implement them by October 2006.
As OPM works to address its customer issues, it should consider other  ways to more quickly respond to inquires from agencies for specific  technical expertise.  In addition, OPM should develop a customer  feedback survey to identify issues related to timeliness, customer needs,  satisfaction, and take action accordingly.
section_title: OPM Needs to Take Full Advantage of Opportunities to Collaborate and Facilitate Information Sharing with the CHCO Council and Agency Human Resource Directors
paragraphs: Our prior work has found that high-performing organizations strengthen  accountability for achieving crosscutting goals by placing greater  emphasis on collaboration, interaction, and teamwork, both within and  across organizational boundaries, to achieve results that often transcend  specific organizational boundaries.  In addition, we have found that high- performing organizations strategically use partnerships and that federal  agencies must effectively manage and influence relationships with  organizations outside of their direct control.  An effective strategy for  partnerships includes establishing knowledge-sharing networks to share  information and best practices.
To collaborate and share information, CHCOs said that OPM could make  better use of the CHCO Council.  Human resource directors said that OPM  could facilitate more communities of practice at the implementation level  among them.  We have reported often on the need to collaborate and share  information as a way to improve agency human capital approaches,  processes, and systems.  Specifically, we have made several  recommendations to OPM to work more closely with the CHCO Council to  (1) share information on the effective use of retirement flexibilities, (2) act  as a clearinghouse of information for the innovative use of alternative  service delivery for human capital services, and (3) more fully serve as a  clearinghouse in sharing and distributing information about when, where,  and how the broad range of human capital flexibilities are being used to  help agencies meet their human capital management needs.  Further, we  have recommended that OPM, in conjunction with the CHCO Council, help  facilitate the coordination and sharing of leading practices related to  efficient administration of the student loan repayment program by  conducting additional forums, sponsoring training sessions, or using other  methods.  For example, our work on the federal hiring process identified  areas where OPM could target its efforts.  OPM has since taken a number  of actions to help agencies improve their hiring processes.  With respect to  improving agency hiring processes and use of human capital flexibilities,  we reported that the CHCO Council should be a key vehicle for this  needed collaboration.  For example, OPM, working through the CHCO  Council, can serve as a facilitator in the collection and exchange of  information about agencies’ effective practices and successful approaches  to improved hiring.  To address the federal government’s crosscutting  strategic human capital challenges, we have testified that an effective and  strategic CHCO Council is vital.  We have also reported that using  interagency councils, such as the Chief Financial Officers’ and Chief  Information Officers’ Councils, has emerged as important leadership  strategy in both developing policies that are sensitive to information  concerns and gaining consensus and consistent follow-through within the  executive branch.
Agency officials overwhelmingly reinforced a need for OPM to do more to  collaborate and facilitate information sharing with the CHCO Council and  HR directors.  A former department-level CHCO described the CHCO  Council as “a lost opportunity with little opportunity for dialogue.”   Another CHCO stated that the Council has rarely been used to debate new  human capital policies and has been excluded from major policy debates.   Although, some CHCOs and HR directors pointed to OPM’s successful  collaborative efforts through the CHCO Council, such as its assistance to  agencies in the aftermath of Hurricane Katrina, they told us that OPM  misses opportunities to more effectively partner with agencies.  While  some human resource directors believed the CHCO Council did provide a  means of sharing information, which is especially useful for the CHCOs  who lack human resources backgrounds, several officials described ways  in which OPM could more effectively use the Council.
A majority of human resource directors we met with told us they would  like to see OPM facilitate the sharing of information and best practices  among HR professionals, as well as CHCOs.  Some officials said that OPM  frequently communicates with agencies via fax and e-mail, but does not  bring agencies together as often to share information.  Some CHCOs said  they would like to see the CHCO Council interact more with other  governmentwide interagency councils.  Also, most HR directors, as well  as, several CHCOs, responded positively to more involvement of agency  HR directors on the CHCO Council.  Director Springer said that  membership on the CHCO Council has been expanded to include a deputy  CHCO position.  The inclusion of deputies is an important step toward  building a collegial environment for sharing best practices.
Several agency officials used the SES performance management system  certification process to illustrate what they considered a missed  opportunity for OPM to facilitate agency sharing of information and best  practices, particularly during the certification application submission  process.   However, an OPM official told us that it does not provide  agencies with examples of “best practice” certification submissions  because OPM does not want to convey to agencies that there is only one  “right” way to become certified.  While OPM is certainly correct about no  one right way, several agencies nevertheless indicated having difficulty  understanding OPM’s expectations for agency certification submissions.   In response, one CHCO took the initiative to use one of the CHCO  Academy meetings to engender information sharing among agencies with  the application process.
Collaboration and information sharing will be critical as human capital  reforms begin to take hold across government.  If OPM is to successfully  lead reform, it will need to strategically use the partnerships it has  available to it, such as the CHCO Council and others, as well as develop a  culture of collaboration, information sharing, and working with customers  to understand what they will need from the agency.
section_title: OPM’s Strategic and Operational Plan Includes a Number of Efforts Intended to Improve Its Customer Focus
paragraphs: It is clear from the OPM Strategic and Operational Plan, 2006–2010 that  issues of customer satisfaction and timeliness in the provision of OPM  common services is an important and compelling customer need.  OPM  management has indicated that operational goals and activities are  organized as steps in its internal activities or processes to better support  external products and services for its customers and stakeholders.  For  instance, OPM intends to develop and implement a new common services  methodology, to employ performance standards for measuring the delivery  of common services to customers, and to operate under a fully  implemented set of internal delegated authorities and protocols by the end  of fiscal year 2006.  OPM management has pointed out that these activities  are also presented in a timeline tracking sheet that is used to make “real  time” changes through continual update of accomplishments.  It is OPM’s  intent to then inform customers of the agency’s success in meeting the  stated customer goals found in the plan within two weeks of each success,  thereby establishing a means of transparency and accountability.  OPM  officials told us that to date, the agency is meeting this intent.
Successful organizations establish a communication strategy that allows  for the creation of common expectations and reports on related progress.   Activities intended to provide for better means of communication and  collaboration are also clearly found in the OPM plan.  As noted earlier,  OPM is taking steps to improve its internal communication by recently  developing and posting a functional organization directory on its internal  website.  OPM also plans to redesign its public website to improve  communication and customer focus by the close of fiscal year 2006.  The  OPM plan further states, as a strategic objective, that OPM “will have  constructive and productive relationships with external stakeholders,”  such as Congress, veterans, unions, media and employee advocacy groups.
To better meet external client needs, OPM has an ongoing key related  effort to modernize its retirement systems program.  Through this  program, OPM expects to reengineer the various processes that provide  services to retirement program participants that include about 5 million  federal employees and annuitants.  One of OPM’s objectives is to  standardize applications for coverage and eligibility determinations and  benefits calculations, making them specific to customer needs and  accessible to federal agencies and program participants. OPM’s Strategic  and Operational Plan contains operational goals related to this  modernization effort.  We believe that such a modernization effort is  clearly needed.  At the same time, as we have noted in our prior work,  OPM has lacked needed processes for developing and managing  requirements and related risks, while providing sound information to  investment decision makers in order to effectively complete  modernization of this program.  We made recommendations to OPM  regarding establishment of management processes needed for effective  oversight of the program.  OPM agreed that the processes we identified  were essential and noted it is taking steps to address our  recommendations to strengthen these processes.
section_title: Performance Culture and Accountability
paragraphs: Leading organizations have recognized that a critical success factor in  fostering a results-oriented culture is an effective performance  management system that creates a “line of sight” showing how unit and  individual performance can contribute to overall organizational goals and  helping them understand the connection between their daily activities and  the organization’s success.  Effective performance management systems   can drive organizational transformation by encouraging individuals to  focus on their roles and responsibilities to help achieve organizational  outcomes.  Our analysis shows that OPM’s executive performance  management system aligns the performance expectations of OPM’s top  leaders with the organization’s goals.  OPM sets forth the organization’s  goals in its 2006–2010, Strategic and Operational Plan and directly  connects these goals to the performance expectations of top leaders using  performance contracts.  Clearly defined organizational goals are the first  step toward developing an effective performance management system.
OPM uses performance contracts to link organizational goals to  performance expectations for senior leaders and holds them accountable  for achieving results.  As we have reported, high performing organizations  understand that they need senior leaders who are held accountable for  results, drive continuous improvement, and stimulate and support efforts  to integrate human capital approaches with organizational goals and  related transformation issues.  These organizations can show how the  products and services they deliver contribute to results by aligning  performance expectations of top leadership with organizational goals and  then cascading those expectations down to lower levels.  We assessed how  well OPM is creating linkages between executive performance and  organizational success by reviewing the performance contracts (Fiscal  Year 2006 Executive Performance Agreements) of the five associate  directors of OPM’s major divisions.  We evaluated these performance  contracts by applying selected key practices we have previously identified  for effective performance management. We chose these practices  because they are especially relevant to OPM’s current strategic  management efforts.  These practices, collectively with others we have  identified in prior work, create a “line of sight” showing how unit and  individual performance can contribute to overall organizational goals.
We found that OPM has implemented several key practices to develop an  effective performance management system for its senior executives:
Align individual performance expectations with organizational  goals.  An explicit alignment of daily activities with broader results is  one of the defining features of effective performance management  systems in high-performing organizations.  OPM executive  performance contracts explicitly link individual performance  commitments with organizational goals.  Executives are evaluated on  their success toward achieving goals that are drawn directly from the  OPM Strategic and Operational Plan.  Measures of these achievements  account for 75 percent of executives’ annual performance ratings.  For  example, one associate director’s performance contract includes a  commitment to achieve OPM’s operational goal of having “80 percent  of initial clearance investigations completed within 90 days.”
Connect performance expectations to crosscutting goals.  High- performing organizations use their performance management systems  to strengthen accountability for results, specifically by placing greater  emphasis on collaboration to achieve results.  OPM’s executive  performance contracts achieve this objective by making executives  accountable for OPM-wide goals.  In addition to specific divisional  goals, each executive performance contract includes a common set of  “corporate commitments” that transcend specific organizational  boundaries and that executives must work together to achieve.  These  commitments are directly linked to the OPM Strategic and Operational  Plan.  For example, each executive contract includes a commitment to  “Implement an employee recognition program at OPM by July 1, 2006.”
Provide and routinely use performance information to track  organizational priorities.  High-performing organizations provide  objective performance information to executives to show progress in  achieving organizational results and other priorities.  OPM is taking a  tactical approach to implementing its Strategic and Operational Plan.   Activities supporting the strategic objectives are listed on an  “Operational Timeline” or tracking sheet that OPM uses, and “real  time” changes are made through continual updates of  accomplishments.  According to Director Springer, each OPM division  has a tracking sheet for the specific goals for which they are  accountable.  She told us that OPM leadership meets monthly to  review the timeline and to determine if goals have been met or what  progress OPM is making toward achieving their objectives.
Require follow-up actions to address organizational priorities.
High-performing organizations require individuals to take follow-up  actions based on the performance information available to them.   OPM’s performance contracts include commitments for executives to  respond to results from the FHCS.  Each associate director is  committed to “Implement  action plan to ensure OPM is rated in  the top 50% of agencies surveyed in the 2006 FHCS and the top five  agencies in the 2008 FHCS.”  To achieve this goal, each associate  director developed a FHCS action plan for their division to address  employee concerns identified in the 2004 FHCS and the follow-up  focus group discussions.
Use competencies to provide a fuller assessment of  performance.  High-performing organizations use competencies,  which define the skills and supporting behaviors that individuals need  to effectively contribute to organizational results.  Each OPM  executive performance contract includes core competency  requirements for effective executive leadership, which account for 25  percent of annual performance ratings.  For example, executives are  responsible for building “trust and cooperative working relationships  both within and outside the organization.”
OPM’s executive performance contracts incorporate these key practices of  performance management, and the agency must build on this progress and  ensure that its SES performance management system is used to drive  organizational performance.
subsections: section_title: OPM Can Build upon Strong Accountability to Address Employee Concerns with its Performance Culture
paragraphs: OPM can build on its strong system of executive accountability to address  employee concerns with its overall performance culture, as well as  support its internal transformation.  OPM has plans to implement new  performance elements and standards for all OPM employees to support  the new agency Strategic and Operational Plan.  As we have reported,  high-performing organizations use their performance management systems  to strengthen accountability for results.  In the 2004 FHCS, the percent of  OPM employees who agreed that “I am held accountable for achieving  results” was 81 percent; essentially the same as the 80 percent of  employees in the rest of the government agreeing with this statement.   OPM employees’ positive view of “being held accountable for achieving  results” can be used to help address employee concerns regarding its  performance culture.  For example, a significant decrease occurred  between OPM’s 2002 and 2004 FHCS results on a question that measures  employee perceptions of management’s focus on organizational goals.  The  percentage of OPM employees who agreed that “managers review and  evaluate the organization's progress toward meeting its goals and  objectives,” declined by 17 percentage points from 2002 (69 percent) to  2004 (52 percent).  This question was only discussed in a few of the focus  groups, so it is unclear why fewer employees agreed with this statement in  2004.  Although limited, these discussions suggest that some employees do  not feel their performance appraisal is a fair reflection of their  performance due to inadequate goals and performance standards, and a  lack of alignment between employee goals and OPM’s mission.
OPM plans to address these employee performance concerns to ensure  there is a clear linkage between the OPM Strategic Operational Plan,  Division/Office Plans, and individual employee-level work plans.  By July  2006, OPM plans to implement new performance elements and standards  for all employees that support the OPM Strategic and Operational Plan.   Already underway, is an OPM beta site (the HCLMSA division) to test its  performance management system to link pay to performance.  OPM  officials informed us that as of June 1, 2006, all HCLMSA employees are  now working under new performance plans, consistent with the OPM beta  site requirements.
To maximize the effectiveness of a performance management system, high  performing organizations recognize that they must conduct frequent  training for staff members at all levels of the organization.  OPM plans to  develop and implement a core curriculum for supervisory training to  ensure all managers and supervisors are trained in performance  management.  Also, OPM is developing a proposal to enhance the  relationships between the human resources function and managers to  assist them in dealing with their human resource issues.  If effectively  implemented, these actions should address many of the concerns raised by  focus group participants.
section_title: Concluding Remarks
paragraphs: OPM faces many challenges as it seeks to achieve its organizational  transformation and become a high-performing organization.  To meet its  current and future challenge to lead human capital across government,  Director Springer has shown leadership commitment to its transformation  by initiating a number of action plans to address employee concerns.   While the steps taken by OPM demonstrate progress in achieving its  transformation, it must continue on this path by closely monitoring and  communicating with its employees and customers, expanding its  workforce and succession planning efforts, and continuing to improve its  performance culture and accountability for results.  As I have testified on  many occasions, in recent years GAO has learned a great deal about the  challenges and opportunities that characterize organizational  transformation.  From both our own experiences and from reviewing  others’ efforts, I look forward to working closely with Director Springer  and assisting Congress as it moves toward the implementation of  governmentwide human capital reform.
Chairman Voinovich, Senator Akaka, and Members of the subcommittee,  this completes my prepared statement. I would be pleased to respond to  any questions that you may have.
section_title: Contact and Acknowledgments
paragraphs: For further information regarding this statement, please contact Brenda S.  Farrell, Acting Director, Strategic Issues, at (202) 512-6806 or  farrellb@gao.gov.  Individuals making key contributions to this statement  include Julie Atkins, Thomas Beall, Carole Cimitile, William Colvin, S.  Mike Davis, Charlene Johnson, Trina Lewis, and Katherine H. Walker.
section_title: Appendix I
subsections: section_title: Federal Human Capital Survey, Focus Groups, and Action Plans
paragraphs: We used the Federal Human Capital Survey (FHCS) and summaries of the  Office of Personnel Management (OPM) focus groups to assess employee  views of OPM’s organizational capacity.  OPM conducted the FHCS during  fall 2004.  The survey sample included 276,000 employees and was  designed to be representative of the federal workforce.  OPM had 1,539  respondents to the survey.  The survey included 88 items that measured  federal employee perceptions about how effectively agencies are  managing their workforces.  For more information about the 2004 FHCS  survey see http://www.fhcs2004.opm.gov/.  We reviewed OPM’s analysis of  its 2004 FHCS results and conducted our own analyses of survey results  using 2002 and 2004 FHCS datasets provided to us by OPM.  On the basis  of our examination of the data and discussions with OPM officials  concerning survey design, administration and processing, we determined  that the data were sufficiently reliable for the purpose of our review.
In fall 2005, OPM contracted with Human Technology, Inc. to conduct  focus groups to understand factors contributing to employees’ responses  on selected items from the 2004 FHCS and to obtain employees’ ideas for  addressing top priority improvement areas.  Employees were randomly  selected to participate in 33 focus groups with participants from all major  divisions, headquarters and the field, employees and supervisors, and  major OPM installations.  The participants in each focus group decided  which topics to discuss by voting for the FHCS questions that “are most  important for OPM to address in order to make the agency a better place  to work.”  Questions were divided into three categories: leadership,  performance culture, and other dimensions.  Participants voted for three  questions in each category and the questions that received the most votes  were discussed by the group.  We analyzed summaries of these focus  groups and used the participant comments to illustrate employee  perspectives. We also analyzed recently issued action plans developed by  OPM to address issues identified in the focus groups. These action plans  were approved by OPM’s Director in May 2006 and they list specific  actions OPM and each internal division will take along with suggested due  dates for completion.
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