Human Capital: Continued Monitoring of Internal Safeguards and an Action Plan to Address Employee Concerns Could Improve Implementation of the National Security Personnel System
Published: 2009-06-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOD is in the process of implementing this human capital system, and according to DOD, about 212,000 civilian employees are currently under the system. On February 11, 2009, however, the House Armed Services Committee and its Subcommittee on Readiness asked DOD to halt conversions of any additional employees to NSPS until the administration and Congress could properly address the future of DOD's personnel management system. On March 16, 2009, DOD and the Office of Personnel Management (OPM) announced an upcoming review of NSPS policies, regulations, and practices. According to DOD, the department has delayed any further transitions of employees into NSPS until at least October 2009--pending the outcome of its review. Furthermore, on May 14, 2009, the Deputy Secretary of Defense asked the Defense Business Board to form what has become this task group to review NSPS to help the department determine, among others things, whether NSPS is operating in a fair, transparent, and effective manner. This statement focuses on the performance management aspect of NSPS specifically (1) the extent to which DOD has implemented internal safeguards to ensure the fairness, effectiveness, and credibility of NSPS and (2) how DOD civilian personnel perceive NSPS and what actions DOD has taken to address these perceptions. It is based on the work we reported on in our September 2008 report, which was conducted in response to a mandate in the National Defense Authorization Act for Fiscal Year 2008. This mandate also directed us to continue examining DOD efforts in these areas for the next 2 years. We currently have ongoing work reviewing the implementation of NSPS for the second year, and we also will perform another review next year.
section_title: What GAO Found
paragraphs: DOD has taken some steps to implement internal safeguards to help ensure that the NSPS performance management system is fair, effective, and credible; however, we believe continued monitoring of safeguards is needed to help ensure that DOD's actions are effective as implementation proceeds. Specifically, we reported in September 2008 that DOD had taken some steps to (1) involve employees in the system's design and implementation; (2) link employee objectives and the agency's strategic goals and mission; (3) train and retrain employees in the system's operation; (4) provide ongoing performance feedback between supervisors and employees; (5) better link individual pay to performance in an equitable manner; (6) allocate agency resources for the system's design, implementation, and administration; (7) provide reasonable transparency of the system and its operation; (8) impart meaningful distinctions in individual employee performance; and (9) include predecisional internal safeguards to determine whether rating results are fair, consistent, and equitable. For example, all 12 sites we visited trained employees on NSPS, and the DOD-wide tool used to compose self-assessments links employees' objectives to the commands' or agencies' strategic goals and mission. However, we determined that DOD could immediately improve its implementation of three safeguards. Although DOD civilian employees under NSPS responded positively regarding some aspects of the NSPS performance management system, DOD does not have an action plan to address the generally negative employee perceptions of NSPS identified in both the department's Status of Forces Survey of civilian employees and discussion groups we held at 12 select installations. According to our analysis of DOD's survey from May 2007, NSPS employees expressed slightly more positive attitudes than their DOD colleagues who remain under the General Schedule system about some goals of performance management, such as connecting pay to performance and receiving feedback regularly. For example, an estimated 43 percent of NSPS employees compared to an estimated 25 percent of all other DOD employees said that pay raises depend on how well employees perform their jobs.

section_title: Letter
paragraphs: Mr. Rudy deLeon and Members of the Task Group:   Thank you for the opportunity to discuss the first of our three  congressionally directed reports on the implementation of the Department  of Defense’s (DOD) National Security Personnel System (NSPS). As you  know, DOD is in the process of implementing this human capital system,  and according to DOD, about 212,000 civilian employees are currently  under the system. On February 11, 2009, however, the House Armed  Services Committee and its Subcommittee on Readiness asked DOD to  halt conversions of any additional employees to NSPS until the  administration and Congress could properly address the future of DOD’s  personnel management system. On March 16, 2009, DOD and the Office of  Personnel Management (OPM) announced an upcoming review of NSPS  policies, regulations, and practices. According to DOD, the department has  delayed any further transitions of employees into NSPS until at least  October 2009—pending the outcome of its review. Furthermore, on May  14, 2009, the Deputy Secretary of Defense asked the Defense Business  Board to form what has become this task group to review NSPS to help  the department determine, among others things, whether NSPS is  operating in a fair, transparent, and effective manner. Today, my statement  will focus on the work we conducted in 2008 reviewing DOD’s  implementation of NSPS.
As we have previously reported, the implementation of NSPS could have  far-reaching implications for civil service reform across the federal  government, because NSPS could serve as a baseline for governmentwide  transformation in human capital. Key components of NSPS include  compensation, classification, and performance management. Our review  focused on the performance management aspect of NSPS. We have  previously reported that effective performance management systems are  not merely used for once or twice-yearly individual expectation setting  and rating processes, but are tools to help the organization manage on a  day-to-day basis. These systems are used to achieve results, accelerate  change, and facilitate two-way communication throughout the year so that  discussions about individual and organizational performance are  integrated and ongoing. OPM recognizes that performance management  systems are to extend beyond rating individual performance. According  to OPM, performance management is the systematic process by which a organization involves its employees—as individuals and members of a  group—in improving organizational effectiveness in the accomplishment  of the mission and goals.
Prior to the enactment of the NSPS legislation, in a series of testimonies in  2003, we raised a number of critical issues about the proposed regulations  for NSPS. Since then, we have provided congressional committees with  information and analyses on DOD’s process to design NSPS, the extent to  which DOD’s process reflects key practices for successful transformation,  the need for internal controls and transparency of funding, and the most  significant challenges facing DOD in implementing NSPS. In addition, we  have previously reported that in general, successful transformations of  large organizations can take from 5 to 7 years to achieve in a sustainable  manner. Similarly, reports published by OPM have shown that  organizational transformations, such as the adoption of a new  performance management system, often entail fundamental and radical  changes to an organization that require an adjustment period to gain  employee acceptance and trust. While GAO supports human capital  reform in the federal government, how such reform is done, when it is  done, and the basis upon which it is done can make all the difference in  whether such efforts are successful. Specifically, we have noted in  testimonies and reports that DOD and other federal agencies must ensure  that performance management systems contain appropriate internal  safeguards. Implementing internal safeguards is a way to help ensure that  pay-for-performance systems in the government are fair, effective, and  credible. We developed an initial list of safeguards based on our extensive  body of work looking at the performance management practices used by  leading public sector organizations both in the United States and other  countries.
Additionally, the National Defense Authorization Act for Fiscal Year 2008  required us to determine the extent to which DOD had effectively  incorporated certain specific accountability mechanisms and internal  safeguards (both of which I refer to as safeguards) in NSPS and to assess  employee attitudes toward NSPS. The safeguards we used in our review  are as follows:  involve employees, their representatives, and other stakeholders in the  design of the system, to include employees directly involved in validating  any related implementation of the system;    assure that the agency’s performance management system links employee  objectives to the agency’s strategic plan, related goals, and desired  outcomes;  implement a pay-for-performance evaluation system to better link  individual pay to organizational performance, and provide an equitable  method for appraising and compensating employees;    provide adequate training and retraining for supervisors, managers, and  employees in the implementation and operation of the performance  management system;  institute a process for ensuring ongoing performance feedback and  dialogue between supervisors, managers, and employees throughout the  appraisal period, and setting timetables for review;    provide a means for ensuring that adequate agency resources are allocated  for the design, implementation, and administration of the performance  management system;    assure that there are reasonable transparency and appropriate  accountability mechanisms in connection with the results of the  performance management process, including periodic reports on internal  assessments and employee survey results relating to performance  management and individual pay decisions while protecting individual  confidentiality;    assure that the agency’s performance management system results in  meaningful distinctions in individual employee performance; and    assure that certain predecisional internal safeguards exist to help achieve  consistency, equity, and nonpoliticization of the performance management  process (e.g., independent reasonableness reviews by a third party or  reviews of performance rating decisions, pay determinations, and  promotions before they are finalized to ensure that they are merit-based,  as well as pay panels that consider the results of the performance  appraisal process and other information in connection with final pay  decisions).
My statement focuses on the performance management aspect of NSPS  specifically (1) the extent to which DOD has implemented internal  safeguards to ensure the fairness, effectiveness, and credibility of NSPS  and (2) how DOD civilian personnel perceive NSPS and what actions DOD  has taken to address these perceptions. It is based on the work we  reported on in our September 2008 report, which was conducted in  response to a mandate in the National Defense Authorization Act for  Fiscal Year 2008. This mandate also directed us to continue examining  DOD efforts in these areas for the next 2 years. We currently have ongoing  work reviewing the implementation of NSPS for the second year, and we  also will perform another review next year.
To determine the extent to which DOD had implemented safeguards to  ensure the fairness, effectiveness, and credibility of NSPS, we identified,  as mentioned before, safeguards specified in the National Defense  Authorization Act for Fiscal Year 2008, as well as other key internal  safeguards that GAO had previously identified, and analyzed regulations  and other guidance provided by officials in DOD and the headquarters of  the four components—the Army, the Navy, the Air Force, and the Fourth  Estate. We also reviewed documents, such as pay pool business rules and  regulations, that we obtained during 12 site visits—3 for each  component—to military installations. The sites were selected because they  contained a large number or concentrated group of civilian employees  who had been placed under NSPS and were geographically distributed  throughout the United States. Further, we interviewed appropriate agency  officials at various levels within DOD and conducted interviews with  officials of various management levels at each site we visited. In addition,  to determine how DOD civilian employees perceive NSPS, we analyzed the  results of DOD’s May 2006, November 2006, and May 2007 Status of Forces  Survey of civilian employees—the most recent surveys available at the  time of our review. These surveys gauged initial employee attitudes  toward NSPS. We also conducted small group discussions with employees  and supervisors at each of the 12 sites we visited. While the information  from our discussion groups is not generalizable to the entire population of  DOD civilians, it provides valuable insight into civilians’ perceptions about  the implementation of NSPS. We conducted our work in accordance with  generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on our  audit objectives.
subsections: section_title: DOD Has Taken Some Steps to Implement Internal Safeguards, but Additional Monitoring Is Needed to Ensure the Fairness of NSPS
paragraphs: DOD has taken some steps to implement internal safeguards to help  ensure that the NSPS performance management system is fair, effective,  and credible; however, we believe continued monitoring of safeguards is  needed to help ensure that DOD’s actions are effective as implementation  proceeds. Specifically, we reported in September 2008 that DOD had  taken some steps to (1) involve employees in the system’s design and  implementation; (2) link employee objectives and the agency’s strategic  goals and mission; (3) train and retrain employees in the system’s  operation; (4) provide ongoing performance feedback between  supervisors and employees; (5) better link individual pay to performance  in an equitable manner; (6) allocate agency resources for the system’s  design, implementation, and administration; (7) provide reasonable  transparency of the system and its operation; (8) impart meaningful  distinctions in individual employee performance; and (9) include  predecisional internal safeguards to determine whether rating results are  fair, consistent, and equitable. For example, all 12 sites we visited trained  employees on NSPS, and the DOD-wide tool used to compose self- assessments links employees’ objectives to the commands’ or agencies’  strategic goals and mission. However, we determined that DOD could  immediately improve its implementation of three safeguards.
First, DOD’s implementation of NSPS does not provide employees with  adequate transparency over their rating results because it does not require  commands or pay pools to publish their respective ratings and share  distributions to employees. According to DOD, distributing aggregate data  to employees is an effective means for providing transparency, and NSPS  program officials at all four components’ headquarters told us that  publishing overall results is considered a best practice. In addition, 3 of  the 12 sites we visited decided not to publish the overall final rating and  share distribution results. Without transparency over rating and share  distributions, employees may believe they are not being rated fairly, which  ultimately can undermine their confidence in the system. To address this  finding, we recommended that DOD require overall final rating results to  be published. DOD concurred with this recommendation and, in 2008,  revised its NSPS regulations and guidance to require commands to publish  the final overall rating results.
Second, NSPS guidance may discourage rating officials from making  meaningful distinctions in employee performance because this guidance  emphasized that most employees should be evaluated at “3” (or “valued  performer”) on a scale of 1 to 5. According to NSPS implementing  issuance, rating results should be based on how well employees complete  their job objectives using the performance indicators. Although DOD and  most of the installations we visited emphasized that there was not a forced  distribution of ratings, some pay pool panel members acknowledged that  there was a hesitancy to award employee ratings in categories other than  “3.” Unless NSPS is implemented in a manner that encourages meaningful  distinctions in employee ratings in accordance with employees’  performance, there will be an unspoken forced distribution of ratings, and  employees’ confidence in the system may be undermined. As a result, we  recommended that DOD encourage pay pools and supervisors to use all  categories of ratings as appropriate. DOD partially concurred with this  recommendation, and in April 2009, DOD issued additional guidance  prohibiting the forced distribution of ratings under NSPS.
Third, DOD does not require a third party to analyze rating results for  anomalies prior to finalizing ratings. To address this finding, GAO  recommended that DOD require predecisional demographic and other  analysis; however, DOD did not concur, stating that a postdecisional  analysis is more useful. Specifically, in commenting on our prior report,  DOD stated that its postdecisional analysis of final rating results by  demographics was sufficient to identify barriers and corrective actions.  We are currently assessing DOD’s postdecisional analysis approach as part  of our ongoing review of the implementation of NSPS.
section_title: Although DOD Civilian Employees under NSPS View Some Aspects of the System Positively, DOD Does Not Have a Plan to Address the Generally Negative Employee Perceptions of the System
paragraphs: Although DOD civilian employees under NSPS responded positively  regarding some aspects of the NSPS performance management system,  DOD does not have an action plan to address the generally negative  employee perceptions of NSPS identified in both the department’s Status  of Forces Survey of civilian employees and discussion groups we held at  12 select installations. According to our analysis of DOD’s survey from  May 2007, NSPS employees expressed slightly more positive attitudes than  their DOD colleagues who remain under the General Schedule system  about some goals of performance management, such as connecting pay to  performance and receiving feedback regularly. For example, an estimated  43 percent of NSPS employees compared to an estimated 25 percent of all  other DOD employees said that pay raises depend on how well employees  perform their jobs.
However, in some instances, DOD’s survey results showed a decline in  employee attitudes among employees who have been under NSPS the  longest. Employees who were among the first employees converted to  NSPS (designated spiral 1.1) were steadily more negative about NSPS from  the May 2006 to the May 2007 DOD survey. At the time of the May 2006  administration of the Status of Forces Survey for civilians, spiral 1.1  employees had received training on the system and had begun the  conversion process, but had not yet gone through a rating cycle and  payout under the new system. As part of this training, employees were  exposed to the intent of the new system and the goals of performance  management and NSPS, which include annual rewards for high  performance and increased feedback on employee performance. As DOD  and the components proceeded with implementation of the system, survey  results showed a decrease in employees’ optimism about the system’s  ability to fulfill its intent and reward employees for performance. The  changes in attitude reflected in DOD’s employee survey are slight but  indicate a movement in employee perceptions. Most of the movement in  responses was negative. Specifically, in response to a question about the  impact NSPS will have on personnel practices at DOD, the number of  positive responses decreased from an estimated 40 percent of spiral 1.1  employees in May 2006 to an estimated 23 percent in May 2007. Further,  when asked how NSPS compared to previous personnel systems, an  estimated 44 percent said it was worse in November 2006, compared to an  estimated 50 percent in May 2007. Similarly, employee responses to  questions about performance management in general were also more  negative from May 2006 to May 2007. Specifically, the results of the May  2006 survey estimated that about 67 percent of spiral 1.1 employees agreed  that the performance appraisal is a fair reflection of performance,  compared to 52 percent in May 2007. Further, the number of spiral 1.1  employees who agreed that the NSPS performance appraisal system  improves organizational performance decreased from an estimated 35  percent to 23 percent.
Our discussion group meetings gave rise to views consistent with DOD’s  survey results. Although the results of our discussion groups are not  generalizable to the entire population of DOD civilians, the themes that  emerged from our discussions provide valuable insight into civilian  employees’ perceptions about the implementation of NSPS and augment  DOD’s survey findings. Some civilian employees and supervisors under  NSPS seemed optimistic about the intent of the system however, most of  the DOD employees and supervisors we spoke with expressed a consistent  set of wide-ranging concerns. Specifically, employees noted (1) NSPS’s  negative effect on employee motivation and morale, (2) the excessive  amount of time and effort required to navigate the performance  management process, (3) the potential influence that employees’ and  supervisors’ writing skills have on panels’ assessments of employee  ratings, (4) the lack of transparency and understanding of the pay pool  panel process, and (5) the rapid pace at which the system was  implemented, which often resulted in employees feeling unprepared and  unable to find answers to their questions. These negative attitudes are not  surprising given that organizational transformations often entail  fundamental and radical change that requires an adjustment period to gain  employee acceptance and trust.
To address employee attitudes and acceptance, OPM issued guidance that  recommends—and we believe it is a best practice—that agencies use  employee survey results to provide feedback to employees and develop  and implement an action plan that guides their efforts to address the  results of employee assessments. However, according to Program  Executive Office officials, DOD has not developed a specific action plan to  address critical issues identified by employee perceptions, because the  department wants employees to have more time under the system before  making changes. Without such a plan, DOD is unable to make changes that  address employee perceptions that could result in greater employee  acceptance of NSPS. We therefore recommended, in our September 2008  report, that DOD develop and implement a specific action plan to address  employee perceptions of NSPS ascertained from DOD’s surveys and  employee focus groups. The plan should include actions to mitigate  employee concerns about, for example, the potential influence that  employees’ and supervisors’ writing skills have on the panels’ assessment  of employee ratings or other issues consistently identified by employees or  supervisors. DOD partially concurred with our recommendation, noting  that it will address areas of weakness identified in its comprehensive, in- progress evaluation of NSPS and that it is institutionalizing a continuous  improvement strategy. Since our 2008 review, NSPS officials at DOD have  told us that they are working on an action plan; however, to date the  department has not provided us a plan for review.
section_title: Concluding Observations
paragraphs: DOD’s implementation of a more performance- and results-based  personnel system has positioned the agency at the forefront of a  significant transition facing the federal government. We recognize that  DOD faces many challenges in implementing NSPS, as any organization  would in implementing a large-scale organizational change. NSPS is a new  program, and organizational change requires time for employees to accept.  Continued monitoring of internal safeguards is needed to help ensure that  DOD’s actions are effective as implementation proceeds. Moreover, until  DOD develops an action plan and takes specific steps to mitigate negative  employee perceptions of NSPS, DOD civilian employees will likely  continue to question the fairness of their ratings and lack confidence in  the system. The degree of ultimate success of NSPS largely depends on the  extent to which DOD incorporates internal safeguards and addresses  employee perceptions. Moving forward, we hope that the Defense  Business Board considers our previous work on NSPS as it assesses how  NSPS operates and its underlying policies.
This concludes my prepared statement. I would be happy to respond to  any questions that you or members of the subcommittee may have at this  time.
section_title: Contact and Acknowledgments
paragraphs: For further information about this statement, please contact Brenda S.  Farrell, Director, Defense Capabilities and Management, at (202) 512-3604,  or farrellb@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this  statement. Key contributors to this statement include Marion Gatling  (Assistant Director), Lori Atkinson, Renee Brown, and Lonnie McAllister.
section_title: Appendix I: “Highlights” from Selected GAO Reports on NSPS and Performance Management
paragraphs: The Departmet of Defense (DOD)  i the rocess of imlemeting  it ew hanapitsystem for  managng civilian ernnel—the  NtionaSecrit Pernnel  System (NSPS).  Ke com  of NSPSclde comnsatio,  classifictio, anerformance  managemet. Imlemetio of  NSPS cold hve fr-reching  imlictions, ot just for DOD, but  for civil ervice reform cross the  federovermet. A of Feua  2009, abt 20,000 civilian  emloee were under NSPS.  Based o GAO’s rior work  reviewing erformance  managemet i the public ector,  GAO develoed anitil lit of  safeguard tht NSPS hold  iclde to ensure it iir,  effective, and credile. I 2008,  Cngress directed GAO to evuate,  mong other things, the etet  DOD imlemeted ccounabilit  mechan, iclding thoe i   U.S.C. ectio 9902()(7) and other  iternasafeguard NSPS.
While DOD haske ome teps to imlemet iternasafeguard to ensure  tht NSPSir, effective, and credile, ite 2008, GAO found tht the  imlemetio of three safeguard cold e imroved. Firt, DOD doe ot  reqire  third part to anaze rting result for anomlie rior to finalizingtings, and thus it doe ot hve  rocess to determie whether rtings re  dicriminator efore the re finalized. Witho redeciionaanays,  emloeeayck cofidece i the firss and crediilit of NSPS. To  ddress thi fiding, GAO recommeded tht DOD reqire redeciional  demoaphic and other anays; however, DOD did ot cor, ting th  tdeciionaanays more usefl. GAO cotinu to elieve thi  recommetioas merit. Secod, the rocessck transpare ecause  DOD doe ot reqire comman to publih final rting ditributions, though  doing o i recognized as  ctice by DOD. Withot transpare over  rting ditributions, emloeeay ot elieve the re eingted firl. To  ddress thi fiding, GAO recommeded tht DOD reqire publictio of  overll final rting result. DOD corred with thi recommetio and i  2008 revied it guidance to reqire such publictio.  Third, NSPS guidance  may dicoage rting offici from mking meanngl ditictions  emloee rtings ecause it idicted tht the mjorit of emloee hold  e rted t the “” level, o  le of 1 to , resulting  heitan to rd  rtings other cteorie. Uless imlemetio of NSPScoag  meanngl ditictions emloee erformance, emloeeay elieve  there i an unspoke forced ditributio of rtings, and their cofidece i the  system will undermied. To ddress thi fiding, GAO recommeded tht  DOD ecoagpay ool ansupervior to usll cteorie of rtings as  approrite. DOD partill corred with thi recommetio, but has ot  et tke any ctio to imlemet it.
Thi temet i based o GAO’s  Stemer 2008 reort, which  determied (1) the etet to which  DOD has imlemeted iternasafeguard to ensure NSPSasir, effective, and credile; and (2)  how DOD civilians erceive NSPS  and whctions DOD haske to  ddress theercetions. For tht  reort, GAO anazed relevant  docme and emloee surve  result; iterviewed approrite  offici; and cocted diussio  roups t 12 elected inslltions.  GAO recommeded ways to etter  ddress the safeguard and  emloee ercetions.
View GAO-09-464T or key components. For more information, contact Brenda S.  Farrell at (202) 512-3604 or farrellb@gao.gov.
Although DOD emloee under NSPS respded itivel regarding ome  aspect of erformance managemet, DOD doe ot hve an ctio an to  ddress the erll gative emloee ercetions of NSPS. According to  DOD’s surve of civilian emloee, erll emloee under NSPS re  itive abome aspect of erformance managemet, such as connecting  pay to erformance. However, emloee who hd the mot experiece under  NSPS howed  gative movemet i their ercetions. For exale, the  ercet of NSPS emloee who elieve tht NSPS will hve  itive effect  o DOD’s ernnel ctice declied from antimted 40 ercet i 2006  to 23 ercet i 2007. Some gative ercetions o emered dring  diussio roups tht GAO held. For exale, emloee ansupervior  were cocered abt the ecessive mount of time reqired to navigate the  rocess. While it i reasnable for DOD to llow emloee ome time to  ccet NSPS, ot ddressng ertegative emloee ercetions cold  jeopardize emloee cceance ansuccessl imlemetio of NSPS. A   result, GAO recommeded tht DOD develo and imlemean ctio an to  ddress emloee cocerns abt NSPS. DOD partill corred with GAO’s  recommetio, but has ot et develoed an ctio an.
subsections: section_title: Highlights
subsections: section_title: What GAO Recommends
paragraphs: GAO i recommeding tht DOD  imrove the imlemetio of  ome safeguard and develo and  imlemean ctio an to  ddress emloee cocerns abt  NSPS. DOD erll corred  with or recommetions, with  the ecetio of oe reqiring  redeciional review of rtings.
To view the full product, including the scope  and methodology, click on GAO-08-773.  For more information, contact Brenda S.  Farrell at (202) 512-3604 or farrellb@gao.gov.
Although DOD emloee under NSPS re itive regarding ome aspect of  erformance managemet, DOD doe ot hve an ctio an to ddress the  erll gative emloee ercetions of NSPS. According to DOD’s surve  of civilian emloee, emloee under NSPS re itive abome aspect  of erformance managemet, such as connecting pay to erformance.  However, emloee who hd the mot experiece under NSPS howed   gative movemet i their ercetions. For exale, the ercet of NSPS  emloee who elieve tht NSPS will hve  itive effect o DOD’s  ernnel ctice declied from 40 ercet i 2006 to 23 ercet i 2007.  Negative ercetions o emered dring diussio roups tht GAO held.  For exale, emloee ansupervior were cocered abt the ecessive  mount of time reqired to navigate the rocess. Although the Office of  Pernnel Managemet issued guidance recommeding thagcie use  emloee surve result to rovide feedback to emloee and imlemean  ctio an to guide their effort to ddress emloee assssme, DOD has  ot develoed an ctio an to ddress emloee ercetions. While it i  reasnable for DOD to llow emloee ome time to ccet NSPS ecause  organiztional chang ofte reqire time to djust, it i det to ddress  ertegative emloee ercetions. Withosuch  an, DOD i unable  to mke chang tht cold result i reter emloee cceance of NSPS.
section_title: Highlights
subsections: section_title: Highlights of GAO-07-851, a report to congressional committees
paragraphs: Give e-le organiztional  change iititive, such as the  Departmet of Defens’s (DOD)  NtionaSecrit Pernnel  System (NSPS), i  subsantil  commitmet tht will tke  to  comlete, it i imortant tht DOD  anCngress e ket iformed of  the fll cot of imlemeting NSPS.   Uder the Comtroller Geer’s  authorit to coct evuations  hi owititive, GAO anazed  the etet to which DOD has (1)  flltimted totl co  associted with the imlemetio  of NSPS and (2) expded or  oligated fun to degn and  imlemet NSPS through fir 2006.  GAO iterviewed  departmet offici ananazed  the NSPS Prom Eective  Office’s (PEO), and the milit  ervices’ and the Washingto  Hedquarter Services’ (herefter  referred to as the com)  cot etimte and reort of  expded and oligated fun.
DOD’s Novemer 200timte tht it will cot $18 millio to imlemet  NSPS doe ot iclde the fll cot tht the departmet expect to ias   result of imlemeting the ew system. Federl financiccounting  anrd te tht reliable iformtio the co of federro  anctivitie crcil for effective managemet of overmet oertions  and recommed tht fll co of ro and their opu rovided to  assCngress and eectivekingformed deciions rom  rerce and to ensure thro et expected and efficiet result.   The fll cot iclde oth thoe co specificll idetifiable to crrt  the rom, or direct co, and thoe co thre commo to mltile  ro but cannot specificll idetified with any particrom,  or idirect co. While the anrd emasize tht fll cot iformtiosstil for managng federro, their ctivitie, and opu, the  anrd rovide tht itemay e omitted from cot iformtio if  tht omissio wold ot change or iflce the jmet of  reasnable  er relng the cot iformtio. Based o GAO’s review of  docmetio rovided by DOD and diussions with departmet offici,  GAO found tht DOD’stimte iclde ome direct co, such as the  rt-up and oertio of the NSPS PEO and the develomeand deliver of  ew NSPS trng co, but it doe ot iclde other direct co such as  the fll sa co of ll civilian and milit ernnel who directl  support NSPS ctivitie departmetwide.  Before develong ittimte,  DOD hot fll defied ll the direct and idirect co eeded to manage  the rom. Witho etter etimte, deciioker—withi DOD anCngress—will ot hve comlete iformtio abt whether dequate  rerce re eing rovided for imlemeting NSPS.
GAO recomme tht DOD defill co eeded to manage NSPS,  repare  revied etimte of thoe  co for imlemeting the system  i ccordance with federl  financiccounting anrd, and  develo  comrehensive overht  frmework to ensure thll funxpded or oligated to degn  and imlemet NSPS re fllapred and reorted. I  reviewing  drft of thi reort,  DOD erll corred with  GAO’s recommetions. www.gao.gov/cgi-bin/getrpt?GAO-07-851.
The totmount of fun DOD hasxpded or oligated to degn and  imlemet NSPSring fi through 2006 cannot e determied  ecause DOD has ot eablihed an overht mechanm to ensure tht  thee co re fllapred. I May, the NSPS Sior Eective  eablihed guidance for trcking and reorting NSPS imlemetio co  tht reqire the com to develo mechan to capre thee co  and to reort quarterl their co to the NSPS PEO. However, thi guidance  doe ot defie the direct and idirect co DOD reqire tht the  comapre.  DOD’s ervasive financil managemet deficiecieve ee the bas for GAO’s degnatio of thi as  hih-rire ce  199.  GAO’s review of submitted reort from the com found tht  their officiccounting system do ot capre the totl funxpded or  oligated to degn and imlemet NSPS.  Withoan effective overht  mechanm to ensure tht the officiccounting systemapre ll  approrite co, DOD anCngress do ot hve viilit over the ctual  cot to degn and imlemet NSPS.
To view the full product, including the scope  and methodology, click on the link above.  For more information, contact Derek Stewart  at (202) 512-5559 or stewartd@gao.gov.
section_title: Highlights
subsections: section_title: Highlights of GAO-06-227T, a testimony to the Committee on Homeland Security and Governmental Affairs, U.S. Senate
paragraphs: Peole re criticl to any ag  transformtio ecause the defian agy’sltre, develo itowledbase, romote  innovtio, anre it mot  imortanasset.  Thus, trteic  hanapitl managemet the  Departmet of Defense (DOD) can  hel it ml, manage, and  m the eole ankill  eeded to meet it criticl missio.   I Novemer 2003, Cngress  rovided DOD with gnificant  fleilit to degn  moderan rerceanagemesystem.  O Novemer 1, 200,  DOD and the Office of Pernnel  Managemet (OPM) joitl  released the final regutions  DOD’s ew han rerceanagemesystem, kow as the  NtionaSecrit Pernnel  System (NSPS).
GAO elieve tht DOD’s final NSPS regutions coany of the basic  ricile thre constet with rove approche to trteic hanapitl managemet.  For insance, the final regutions rovide for (1)   flele, cotemor, mrket-based anerformance-orieted  comnsatio system—such as pay ban anpay for erformance;   (2) iving reter riorit to emloee erformance i it retetio deciions connectio with workforce rihtizing and redctions-i-force; and   (3) ivolvemet of emloee reretive throughot the imlemetio  rocess, such asvingpportunitie to participate i develong the  imlemetingssuance.  However, fre ctions will determie whether  such labor reltions effort will e meanngand credile.
Severl moth ago, with the  release of the roed  regutions, GAO observed thome part of the han rerceanagemesystem red  qtions for DOD, OPM, anCngress to consider i the reas  of pay anerformance  anagemet, dverctions anapp, and labor managemet  reltions.  GAO o idetified  mltile imlemetio chlleng  for DOD oce the final regutions  for the ew system were issued.
Despite theitive aspect of the regutions, GAO has everreas of  cocer.  Firt, DOD has considerable work hed to defie the imortant  detil for imlemeting it system—such as how emloee erformance  expecttions will ligned with the departme’s overll missio an  and other measure of erformance, and how DOD wold romote  conste anrovide erl overht of the erformance managemesystem to ensure it i dmitered i ir, credile, transparet manner.   Theand other criticll imortant detiluse defied i counctio  with applicable keholder.  Secod, the regutions merel llow, rther  than reqire, the use of core cometecie tht can hel to rovide  conste and clerl communicte to emloee wht ixpected of  them.  Third, lthough the regutions do rovide for cotinung  collabortio with emloee reretive, the do ot idetif  rocess  for the cotinungvolvemet of idividual emloee the  imlemetio of NSPS.
Thi tetimony rovide GAO’s  overll observtions elected  roviions of the final regutions.
Going forwrd, GAO elieve tht (1) DOD wold efit from develong   comrehensive communictions trtegy, (2) DOD must ensure tht it has  the ecessanstittional ifrastrctre i ce to mke effective use of it  ew authoritie, (3)  chief managemet officer or imilitiosstil to effectivel rovide sused and committed lederhi to the  departme’s overll busss transformtio effort, iclding NSPS, and (4)  DOD hold develo rocedre and method to iitite imlemetio  effort relting to NSPS. www.gao.gov/cgi-bin/getrpt?GAO-06-227T.
To view the full product, including the scope  and methodology, click on the link above.  For more information, contact Derek B.  Stewart at (202) 512-5559 or  stewartd@gao.gov.
While GAO trong supportanapitl reform i the federovermet, how it i doe, whe it i doe, and the bas which it i  doe canke ll the differece i whether such effort re successl.     DOD’s regutions re especill criticaneed to e imlemeted  roerl ecause of their otetil imlictions for relted overmetwide  reform.  I thi regard, ir view, classifictio, comnsatio, criticl  hiring, and workforce retrctring reform hold pusued o   overmetwide bas efore anpate from any rod-based labor- managemet or drocess reform.
section_title: Highlights
paragraphs: The Departmet of Defens’s  (DOD) ew ernnel systemthe  NtionaSecrit Pernnel  System (NSPS)will hve fr- reching imlictions ot just for  DOD, bt for civil ervice reform  cross the federovermet.   The Ntional Defense  Athoriztio Act for Fil Yer  2004 gave DOD gnificanauthoritie to redegn the rle,  regutions, anrocess thover the way tht more than  700,000 defense civilian emloee  re hired, comnsated, romoted,  and dicilied.  I dditio, NSPS  cold erve as  model for  overmetwide transformtioanapitl managemet.   However, if ot roerl degned  and effectivel imlemeted, it  cold everel imede roress  towrd  more erformance- and  result-based system for the federovermeas  whole.
DOD’srrerocess to degn it ew ernnel managemesystem  cons of foag:  (1) develomet of degntions, (2) assssmet of  degntions, (3) issuance of roed regutions, and (4)  tor  public commeeriod,  meet and cofer eriod with emloee  reretive, an congressionaotifictio eriod.  DOD’sitil  degn rocessas unrelitic and inapprorite.  However, fter  trteic  reassssmet, DOD djusted it approch to reflect  more cautious and  delibertive rocess tht ivolved more keholder.
Thi reort (1) decribe DOD’s  rocess to degn it ew ernnel  managemesystem, (2) anaze  the etet to which DOD’s rocess  reflect ke ctice for  successl transformtions, and (3)  idetifie the mognificant  chlleng DOD fce   imlemeting NSPS.
DOD’s NSPS degn rocess erll reflect for of  elected ke  ctice for successl organiztional transformtions.  Firt, DOD and  OPM hve develoed  rocess to degn the ew ernnel system tht i  supported b to lederhi both organiztions.  Secod, from the oet,   et of guiding ricile and ke erformance pameterve guided the  NSPS degn rocess.  Third, DOD has  dedicted tem i ce to degn  and imlemet NSPS and manage the transformtio rocess.  Forth, DOD  hasblihed  timelie, lbeit mbitious, and imlemetio .  The  degn rocess, however, icking two other ctice.  Firt, DOD  develoed and imlemeted  writte communictio trtegy docmet,  bt the trtegy ot comrehensive.  It doe ot idetif ll keternakeholder and their cocerns, and doe ot tilor ke messag to  specific keholder roups.  Filre to dequatel consider  wide vriet of  eole and cltl issuan led to unsuccessl transformtions.   Secod, while the rocessasvolved emloee through towll  meetings and other mechan, it has ot iclded emloee  reretive the working roups tht drfted the degntions.  It  hold be oted tht 10 federl lbor unionsve filed suit lleng tht DOD filed to bide b the tor reqireme to iclde emloee  reretive the develomet of DOD’s ew lbor reltions system  authorized as part of NSPS.  A successl transformtiousrovide for  meanngl ivolvemet b emloee and their reretive to ga their  input ito anunderanding of the chang tht will occr.
subsections: section_title: What GAO Recommends
paragraphs: GAO iking recommetions  to imrove the comrehensivess  of the NSPS communictio  trtegy and to evuate the impact  of NSPS.  DOD did ot cor with  oe recommetio anpartill  corred with two other.  www.gao.gov/cgi-bin/getrpt?GAO-05-730.
To view the full product, including the scope  and methodology, click on the link above.  For more information, contact Derek B.  Stewart at (202) 512-555 or  stewartd@gao.gov.
DOD will fce mltile imlemetio chlleng.  For exale, i dditio  to the chlleng of cotinung to ivolve emloee and other keholder  anroviding dequate rerce to imlemet the system, DOD fce the  chlleng of ensuring an effective, ongoing two-way communictio  trtegy and evuating the ew system.  I recet tetimony, GAO ted  tht DOD’s communictio trtegyust iclde the ctive and viible  ivolvemet of  number of ke ayer, iclding the Secret of Defense,  for successl imlemetio of the system.  Moreover, DOD must ensure  sused and committed lederhi fter the system ill imlemeted  and the NSPS Sior Eective and the Prom Eective Office transitiot of etece.  To rovide sused lederhi ttetio to ange of  busss transformtioititive, like NSPS, GAO recetl recommeded  the cretio of  chief managemet officit DOD.
The federovermet i   eriod of rofound transitio and  fce an rray of chlleng and  opportunitie to eance  erformance, ensure  ccounbilit, anitio the  natio for the fre.  Hih- erforming organiztionsve  found tht to successll  transform themelve, theust  ofteunmell change their  cltre o tht the re more  result-orieted, customer-focused,  and collbortive i nare.  To  foter such cltre, thee  organiztions recognize than  effective erformance managemesystem can be  trteic tool to  drive iternal changanchieve  deired result.
Pblic ector organiztions both i the Uited Ste anbrod hve  imlemeted  elected, erll consteet of ke ctice for  effective erformance managemet tht collectivel crete  cler liage— “lie of ht”—betweedividuaerformance and organiztionasuccess.   Thee ke cticeclde the following.    1. Align individual performance expectation with organizational  goal.  Axplicit lignmet helpsdividua ee the connectio betwee  their dil ctivitie and organiztiona.    2. Connect performance expectation to crosscutting goal.  Plcing  an emas collbortio, iterctio, and temwork cross  organiztional bounrie helps trengthe ccounbilit for result.  3. Provide and routinely ue performance information to track  organizational prioritie.  Idividua userformance iformtio to  manage dring the r, idetif erformance gaps, annpoit  imrovemet opportunitie.
Based o reviousssued reort public ector organiztions’  approche to reiforce idividuaccounbilit for result, GAO  idetified ke ctice tht federagciean consider as the  develo moder, effective, and  credible erformance managemesystem.
4. Require follow-up action to address organizational prioritie.  B  reqiring and trcking follow-up ctions erformance gaps, organiztions  undercore the imortance of holdingdividua ccounble for mking  roress their rioritie. 5. Ue competencie to provide a fuller assssment of performance.  Cometecie defie the kill ansupporting behvior tht idividua  eed to effectivel cotribte to organiztional result.    . Link pay to individual and organizational performance.  Pay,  cetive, and rewrd system tht lik emloee kowlede, kill, and  cotribtions to organiztional result re based olid, relible, and  transpareerformance managemesystem with dequate safeguard.   7. Make meaningful ditinction in performance.  Effective  erformance managemesystem trive to rovide candid and constrctive  feedbck and the ecessa objective iformtio and docmetio to  rewrd to erformer and del with oor erformer. www.gao.gov/cgi-bin/getrpt?GAO-03-488.
8. Involve employee and takeholder to gain ownerhip of  performance management tem.  Erl and direct ivolvemet helpscrease emloees’ ankeholders’ underanding and owerhi of the  system and belief i itirss.
To view the full report, including the scope  and methodology, click on the link above.  For more information, contact J. Christopher  Mihm at (202) 512-6806 or mihmj@gao.gov.
9. Maintain continuity during tranition.  Because cltl  transformtionske time, erformance managemesystem reiforce  ccounbilit for change managemeand other organiztiona.
section_title: Related GAO Products
paragraphs: Post-Hearing Questions for the Record Related to the Department of  Defense’s National Security Personnel System (NSPS). GAO-06-582R.  Washington, D.C.: March 24, 2006.
Human Capital: Designing and Managing Market-Based and More  Performance-Oriented Pay Systems. GAO-05-1048T. Washington, D.C.:  September 27, 2005.
Questions for the Record Related to the Department of Defense’s National  Security Personnel System. GAO-05-771R. Washington, D.C.: June 14,  2005.
Questions for the Record Regarding the Department of Defense’s  National Security Personnel System. GAO-05-770R. Washington, D.C.:  May 31, 2005.
Post-hearing Questions Related to the Department of Defense’s National  Security Personnel System. GAO-05-641R. Washington, D.C.: April 29,  2005.
Human Capital: Selected Agencies’ Statutory Authorities Could Offer  Options in Developing a Framework for Governmentwide Reform.  GAO-05-398R. Washington, D.C.: April 21, 2005.
Human Capital: Preliminary Observations on Proposed Regulations for  DOD’s National Security Personnel System. GAO-05-559T. Washington,  D.C.: April 14, 2005.
Human Capital: Preliminary Observations on Proposed Department of  Defense National Security Personnel System Regulations. GAO-05-517T.  Washington, D.C.: April 12, 2005.
Human Capital: Preliminary Observations on Proposed DOD National  Security Personnel System Regulations. GAO-05-432T. Washington, D.C.:  March 15, 2005.
Human Capital: Principles, Criteria, and Processes for Governmentwide  Federal Human Capital Reform. GAO-05-69SP. Washington, D.C.:  December 1, 2004.
Human Capital: Implementing Pay for Performance at Selected  Personnel Demonstration Projects. GAO-04-83. Washington, D.C.: January  23, 2004.
Human Capital: Building on DOD’s Reform Efforts to Foster  Governmentwide Improvements. GAO-03-851T. Washington, D.C.: June 4,  2003.
Human Capital: DOD’s Civilian Personnel Strategic Management and  the Proposed National Security Personnel System. GAO-03-493T.  Washington, D.C.: May 12, 2003.
Defense Transformation: DOD’s Proposed Civilian Personnel System  and Governmentwide Human Capital Reform. GAO-03-741T.  Washington, D.C.: May 1, 2003.
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