International Trade: USTR Would Benefit from Greater Use of Strategic Human Capital Management Principles
Published: 2005-12-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Office of the U.S. Trade Representative (USTR) has a unique role in coordinating trade policy, resolving disagreements, and framing issues for presidential decision through an interagency trade policy process. In recent years, USTR's increased workload from numerous new regional and bilateral free trade agreement negotiations and a new round of multilateral negotiations at the World Trade Organization has raised concerns about its human capital strategy. GAO examined whether USTR is pursuing an effective human capital strategy that supports the ability of its workforce to accomplish its mission. Specifically, GAO (1) reviewed USTR's commitment to strategic human capital leadership and planning and (2) analyzed to what extent USTR has used human capital tools to address its workforce challenges.
section_title: What GAO Found
paragraphs: USTR could benefit from greater use of strategic human capital management principles in leadership and planning, considering that its small size and interagency trade leadership and coordination role give it a unique responsibility to lead the trade agenda. First, USTR has not sustained the leadership resources for human capital; for example, the top human capital management post has not been filled for over 1 1/2 years. Second, USTR has not undertaken formal strategic human capital planning to mitigate the risks inherent in its dependency--as a "networked organization"--on interagency resources to achieve its mission. Therefore, it does not have a method to account for changes in other agencies' resources that might impact its ability to achieve its mission. Third, USTR has focused its human capital planning efforts primarily on short-term responses to trade negotiating needs identified in its 2-year budget planning process; it has not conducted ongoing parallel efforts to analyze longer-term workforce needs. USTR's efforts to address its specific workforce challenges could benefit from greater use of human capital tools. First, USTR could use more of the existing federal human capital flexibilities to better tailor its human capital approaches to organizational needs. Although the agency has used and benefited from some special hiring and pay authorities, such as the use of higher-than-minimum salary offers, it has yet to take advantage of others, such as retention bonuses. Second, while USTR prides itself on being a results-oriented agency, most USTR staff are not subject to agencywide performance expectations linked to organizational goals. While managers have stressed the importance of certain individual skills needed to advance USTR's mission, most staff are held accountable to a range of expectations that vary among offices.

section_title: Letter
paragraphs: The Office of the U.S. Trade Representative (USTR) plays the lead role in  developing U.S. trade policy, negotiating trade agreements, and monitoring  and enforcing those agreements. It leads and coordinates the development  and implementation of U.S. trade policy through an interagency trade  policy process, comprised of 19 federal agencies and offices. As such,  USTR has a unique role within the trade policy arena in terms of providing  the leadership and coordination to build the consensus and marshal the  resources to move the interagency process forward to achieve the U.S.  trade agenda.
As a small, cabinet-level office within the Executive Office of the President  (EOP), USTR has about 200 full-time employees and uses temporary  detailees from other agencies to supplement its core staff. In recent years,  USTR’s workload has grown as the number and complexity of trade  agreements has increased, with both ambitious negotiations of numerous  new regional and bilateral free trade agreements and a new round of  multilateral negotiations in the World Trade Organization (WTO). USTR’s  extensive interagency leadership responsibilities and increasing workload  have increased the importance of having a sound human capital strategy.
Similarly, human capital planning has taken on increased importance in the  public sector in recent years. We have established strategic human capital  principles and standards in recent years in our Model of Strategic Human  Capital Management and a large body of work addressing specific human  capital issues, such as strategic workforce planning. The Office of  Personnel Management (OPM) has also established its Human Capital  Assessment and Accountability Framework, which is consistent with our  model, to provide the basis for executive branch agencies to meet the  human capital goals set out as the first element in the President’s  Management Agenda. All of this guidance stresses the importance of  tailoring the approaches to the characteristics of each organization, such as  size and function.
To examine whether USTR is pursuing an effective human capital strategy  that supports the ability of its workforce to accomplish its mission, we  reviewed its human capital planning and implementation efforts.  Specifically, we (1) reviewed USTR’s commitment to strategic human  capital leadership and planning and (2) analyzed to what extent USTR has  used human capital tools to address its workforce challenges.
To determine USTR’s commitment to strategic human capital leadership  and planning, we reviewed internal planning documents and interviewed  USTR human resources staff, office managers, and senior management. We  used GAO’s Model of Strategic Human Capital Management as our  framework to assess USTR’s human capital efforts. We also discussed  interagency resource planning with four trade agencies: the Departments  of State, Commerce, and Agriculture, as well as the U.S. International Trade  Commission. To determine how USTR has addressed its human capital  challenges, we interviewed officials at USTR and the four trade agencies, as  well as trade association representatives and former USTR officials. We  reviewed USTR human capital data for key human capital trends in areas  such as staff profile, retirement eligibility, and retention challenges. We  tested USTR data for reliability by comparing them with OPM data and with  other USTR human capital documents. We determined that these data were  sufficiently reliable for the purposes of this report. We conducted our work  from January 2005 to September 2005 in accordance with generally  accepted government auditing standards.
subsections: section_title: Background
subsections: section_title: USTR Mission and Organizational Structure
paragraphs: USTR is responsible for developing and coordinating U.S. international  trade, commodity, and direct investment policy and for overseeing trade  negotiations with other countries. The head of USTR is the U.S. Trade  Representative, a Cabinet member who serves as the president’s principal  trade advisor, negotiator, and spokesperson on trade issues. Through an  interagency structure, USTR coordinates trade policy, resolves  disagreements, and frames issues for presidential decision.
USTR provides trade policy leadership and negotiating expertise in its  major areas of responsibility, including the following:   Bilateral, regional, and multilateral trade and investment issues;   Expansion of market access for U.S. goods and services;   Negotiations affecting U.S. import policies;   Oversight of the Generalized System of Preferences and Section 301  complaints concerning foreign unfair trade practices;   Trade, commodity, and direct investment matters managed by  international institutions such as the Organization for Economic  Cooperation and Development and the United Nations Conference on  Trade and Development;   Trade-related intellectual property protection issues; and  WTO issues.
USTR has offices in Washington, D.C., and Geneva, Switzerland, where the  WTO is located. The Geneva Deputy USTR is the U.S. Ambassador to the  WTO and to the United Nations Conference on Trade and Development on  commodity matters. Figure 1 shows USTR’s organizational structure as of  July 5, 2005.
section_title: Interagency Trade Policy Process
paragraphs: USTR leads and coordinates the development and implementation of U.S.  trade policy through an interagency process. It consults with other  government agencies on trade policy matters through the Trade Policy  Review Group (TPRG) and the Trade Policy Staff Committee (TPSC).  USTR administers and chairs these groups, which are composed of 19  federal agencies and offices. TPSC is the primary operating group, with  representation at the senior civil service level. If agreement is not reached  in TPSC, or if significant policy questions are being considered, then issues  are taken up by TPRG (Deputy USTR/Under Secretary level). The final tier  of the interagency trade policy mechanism is the National Economic  Council, chaired by the President. The National Economic Council  Deputies’ committee considers memorandums from TPRG, as well as  important or controversial trade-related issues. The current administration  operates the National Economic Council jointly with the National Security  Council, according to a senior USTR official.
section_title: Strategic Human Capital Management Principles
paragraphs: We have developed a Model of Strategic Human Capital Management to  help agency leaders effectively use their people, or human capital, and  determine how well they integrate human capital considerations into daily  decision making and planning for the program results they seek to achieve.  It highlights the importance of a sustained commitment by agency leaders  to maximize the value of their agencies’ human capital and manage related  risks.
As shown in figure 2, the model has four human capital cornerstones: (1)  leadership; (2) strategic human capital planning; (3) acquiring, developing,  and retaining talent; and (4) results-oriented organizational cultures. Each  of these cornerstones, in turn, is characterized by two critical success  factors.
Our human capital model is consistent with similar efforts by the Office of  Management and Budget (OMB) and OPM to develop federal human capital  standards. In the summer of 2001, OMB announced the President’s  Management Agenda, designed to address management weakness across  the government. To this end, the agenda highlighted five governmentwide  initiatives for management reform. The first of these was the Strategic  Management of Human Capital Initiative, which is being led by OPM. As  part of this initiative, in October 2002, OPM released a Human Capital  Assessment and Accountability Framework that built on its prior guidance  for workforce planning. OPM has also developed Human Capital Standards  for Success, which incorporates the GAO model’s critical success factors.
section_title: USTR Could Benefit from Greater Commitment to Strategic Human Capital Principles in Its Human Capital Leadership and Planning
paragraphs: USTR does not follow key strategic human capital principles in its human  capital leadership and planning. While USTR officials state that their  human capital efforts are sufficient to accomplish USTR’s immediate  mission, USTR does not demonstrate a commitment to strategic human  capital management. First, the commitment of USTR to providing the  leadership resources of human capital has not been sustained. Second,  while USTR performs an interagency leadership and coordination mission  that it cannot achieve without the participation and support of other trade  agencies, it has not undertaken formal strategic human capital planning to  mitigate the risks inherent in its dependency on interagency resources.  Third, USTR’s human capital planning efforts have been primarily focused  on short-term responses to trade negotiating needs identified in its 2-year  budget planning process; it has not conducted ongoing parallel efforts to  analyze the organization’s longer term workforce needs to ensure its  continued capacity to achieve its mission.
subsections: section_title: USTR Does Not Address Human Capital Leadership Strategically Despite the Importance of Each Position
paragraphs: Despite being the lead U.S. trade agency and having the responsibility to  coordinate the U.S. government trade agenda, which places a significant  responsibility on each individual, USTR does not manage human capital  strategically. USTR’s commitment to provide leadership resources for  human capital has not been sustained. For example, USTR does not have  the human capital management resources in place to ensure that critical  human capital management tasks—such as succession planning—are  carried out, which places its interagency leadership role at risk when key  vacancies occur within a short period of time. In fact, the senior human  capital management post has not been filled for over 1½ years. USTR has  relied on one person to act as senior manager for administration, thus  assuming all senior human capital and administrative duties.
Although a key element of strategic human capital leadership principles is  the use of succession planning to ensure a smooth transition of knowledge  from incumbents to successors to strengthen organizational capacity,  USTR does not conduct formal succession planning. Federal agencies that  manage succession well do so with active leadership support for  identifying critical talent throughout the organization and linking  succession efforts to the agency’s overall long-term goals. Our analysis of  USTR’s human capital data found substantial risk of future leadership and  knowledge loss due to retirement. Five of 22 senior executive service (SES)  staff are currently eligible to retire, representing 23 percent of USTR’s SES  staff. Another 4 SES staff are eligible to retire in five years or less, for a  total of 41 percent either currently eligible to retire or eligible in 5 years or  less. Along with the SES posts, USTR also faces the potential retirement of  several experienced trade experts and attorneys who also have roles  coordinating U.S. trade policy. Just over 10 percent of GS-15 trade analysts,  attorneys, or economists are eligible to retire in 5 years or less. USTR has  not undertaken formal succession planning to fill these eventual vacancies,  even though the staff USTR risks losing to retirement are critical to  managing the interagency process. Instead, senior managers reexamine the  staffing balance as vacancies occur, and office managers may look for good  candidates as replacements from other agencies in the interagency process  or from the private sector. According to a senior manager, USTR receives  an occasional list of staff eligible to retire in the next year or two from the  EOP. However, USTR senior management staffing discussions are limited  to short-term contingency plans for particular posts and are not part of any  systematic agencywide succession planning effort. Likewise, when office  managers look outside the agency to find potential USTR staff, their efforts  also are not part of any formal succession strategy. As we have previously  reported, without careful planning, an organization’s retirement eligibility  rate can suggest that it will experience an eventual loss in institutional  knowledge, expertise, and leadership continuity. Moreover, leading  organizations go beyond a succession approach that simply replaces  individuals. Rather, they instead identify and develop successors for  leadership and other key positions.
USTR also faces periodic management transitions, which illustrates the  risk to its interagency leadership role of facing multiple senior vacancies  within a short period of time. The turnover in key positions that can result  from such management transitions is particularly critical for a small agency  such as USTR, at which each position is vitally important and staff are not  easily replaced. For instance, a recent transition in early 2005 resulted in  vacancies of five key posts within a 2-month period, including the offices of  China Affairs, Europe and Mediterranean, and Labor. While USTR  generally managed to fill these positions in a timely manner, the risks  inherent in suddenly having large gaps to fill in the government trade  leadership underscore the importance of USTR having the human capital  leadership in place to prepare the agency for transitional vacancies with  minimal disruption to the interagency trade process.
section_title: USTR Operates as a Networked Organization Performing an Interagency Leadership and Coordination Mission, but Without Formal Interagency Resource Planning
paragraphs: USTR’s lack of commitment to strategic human capital principles in its  human capital leadership and planning also has implications for the  interagency trade process. USTR is a highly networked organization that  performs an interagency leadership and coordination mission. It  administers and chairs TPRG and TPSC, which make up the subcabinet- level mechanism for developing and coordinating U.S. government  positions on international trade and trade-related investment issues.  Supporting TPSC are more than 90 subcommittees responsible for  specialized areas and several task forces that work on particular issues.  USTR works with other agencies to carry out its mission, including  obtaining approval for initiatives in the interagency process. Through  interviews with current and former USTR officials, other trade agency  officials, and trade association representatives, we found that USTR, a  small trade agency that receives support from other larger agencies (e.g.,  Commerce, State, and Agriculture) in doing its work, operates more like an  elite core staff that provides leadership and coordination in working in  concert with others in the interagency trade policy process. USTR’s  networked operational mode is a defining characteristic.
In developing trade policy and conducting trade negotiations, the USTR  office directors (Assistant USTRs) whom we spoke with described working  with an extended interagency group comprised of other subject experts at  USTR and at a range of agencies. One Assistant USTR for a geographic  office described working with a “virtual team” that crossed agency  boundaries but was instantaneously connected by e-mail. Another  Assistant USTR stressed that she had also developed a close working  relationship with embassy staff in her primary countries of interest, whom  she described as a critical resource. An Assistant USTR for a functional  office added that USTR was not only interacting with the major trade  agencies in the interagency process but also on many issues with the  relevant regulatory agencies in order to gain their perspective. One  example would be USTR’s Agricultural Affairs office working not just with  the Foreign Agricultural Service at the Department of Agriculture but also  with the Animal and Plant Health Inspection Service for scientific  assessment and analysis on sanitary/phytosanitary issues such as mad cow  disease.
In explaining how USTR works to marshal interagency support, the  Assistant USTR for the Americas gave the example of the recently  concluded Central American Free Trade Agreement (CAFTA), for which  she had the negotiating lead. She said her negotiating team included  members of her office staff working with Central American desk officers at  a range of agencies, such as State and Commerce. However, it also included  subject experts from other USTR offices, for issues such as financial  services, agriculture, intellectual property, pharmaceuticals, market access,  and labor; and they all worked with their counterparts at a range of  agencies, such as Treasury, Agriculture, the Patent and Trademark Office,  the Food and Drug Administration, Commerce, and Labor, respectively. In  addition to their interagency interactions, the Office of the Americas also  coordinated and received input from USTR’s private sector advisory  committees as well as trade associations.
USTR can operate as a small elite agency precisely because of the  extensive support it receives from the other trade agencies. This support  can be characterized as falling into three main categories of assistance:   Participation in the interagency process—As other trade agencies  participate in the interagency trade process, their staff contribute to the  work of the Trade Policy Staff Committee and its approximately 90  subcommittees. These staff assist in trade policy development in their  areas of expertise. When USTR forms trade negotiating teams, the USTR  negotiating lead generally draws the team largely from this core group  of experts and supplements with others, as necessary. Generally, even  though USTR has the lead, its staff are a small minority, averaging about  24 percent of the total delegation staff.
Technical assistance—USTR receives extensive technical assistance  from subject experts at the other agencies through formal and informal  requests for information. For instance, U.S. International Trade  Commission staff may provide data analyses on the impact of tariff  reductions or eliminations in prospective free trade agreements. USDA  Foreign Agricultural Service staff may provide commodity expertise on  issues related to Brazilian cotton or Japanese beef, or Health and  Human Services staff may provide information on pharmaceutical  pricing.
Detailees – USTR also benefits from temporary staff on detail from  other agencies that continue to pay their salaries; USTR provides office  space and travel expenses. This is an important avenue for  supplementing USTR’s core staff with specific subject expertise on a  temporary basis. For example, as of July 5, 2005, USTR supplemented its  core staff of 206 permanent employees with 26 detailees in its  Washington, D.C., office and 9 in its Geneva, Switzerland, office.
This extensive assistance underlies USTR’s ability to operate as a  networked organization. USTR officials stressed that it would not make  sense to try to duplicate this expertise within USTR and is unnecessary  because they can tap governmentwide expertise, when needed, without  bringing on staff they might not need permanently. USTR only adds core  staff for the most critical, long-term issues. For example, USTR added  intellectual property rights staff when it became clear it was a long-term  issue important to U.S. industry, according to a senior USTR official. In  addition, USTR also added staff with expertise on labor issues in recent  years.
However, USTR does not formally discuss or plan human capital resources  at the interagency level, even though it must depend on the availability of  these critical resources to achieve its mission, according to USTR officials.  Interagency discussions focus on the substance of trade policy; USTR does  not formally discuss or plan the resources needed to implement policies. In  two recent reports, we have addressed the need for USTR to conduct  interagency resource planning related to specific trade issues, making  specific recommendations for improvements. Such interagency resource  planning would also facilitate human capital planning by the other agencies  that work with USTR. For example, USTR undertakes resource planning  when forming actual trade negotiating teams rather than at times when this  would contribute to agency resource planning. USTR officials told us that  their view is that when agencies reach formal TPRG agreement on a trade  policy or trade agreement, it carries a commitment by the agencies to  provide resources. In addition, they said that assisting USTR is a part of the  other trade agencies’ missions to support the U.S. government trade  agenda. While officials we interviewed at other agencies generally agreed  with this perspective, some of them also said that potential budget cuts  could result in fewer resources being available for USTR. For example,  officials at the Foreign Agricultural Service expressed concern that the  expanding trade agenda has been a strain on its resources, and it was  facing serious budget cuts. As a result, since USTR does not provide the  other agencies with specific resource requirements when the agencies are  performing their planning, it is shifting the risk to the agencies of having to  later ensure the availability of staff in support of the trade agenda,  potentially straining their ability to achieve other agency missions.
A fundamental principle of strategic human capital management is that  high-performing organizations manage risk based on strategic planning  supported by reliable and current information. One result of USTR’s lack of  strategic planning for these critical interagency resources is that it does not  have a systematic method to account for potential changes in other  agencies’ resources that might impact its ability to achieve its mission. The  absence of this method also affects the other agencies’ ability to account  for changes that could affect their ability to provide resources to support  the trade agenda.
section_title: USTR Is Not Conducting Ongoing Strategic Human Capital Planning
paragraphs: USTR’s human capital planning efforts have been focused primarily on  short-term responses to trade negotiating needs; it has not conducted  ongoing long-term analyses of its workforce needs. USTR conducts human  capital planning primarily in its centrally administered annual budget  process that looks forward 2 fiscal years. For instance, in the summer of  2005, USTR planned needed adjustments for the fiscal year 2006 budget  and made projections for fiscal year 2007. The organization plans the  resources—including staff or funding for travel—it will need for specific  trade activities in that time frame, whether free trade agreement  negotiations, WTO meetings, or trade conferences.
subsections: section_title: USTR Conducts Short-Term Planning through Its Budget Process
paragraphs: Each summer the USTR budget office sends a budget call to the negotiation  offices and requests a time table of expected expenditures, such as  negotiations rounds. Support offices review negotiation office estimates  and complete their own estimates, accordingly. The USTR budget office  uses the office-level information to compile a total budget estimate and set  the level of staffing and other budgetary allowances across the agency. For  instance, when the CAFTA negotiations were launched, the Assistant USTR  for the Americas—whose office had the lead responsibility for the  negotiations—estimated what additional staff might be needed, how many  rounds of negotiations might take place over the next 2 fiscal years, and  how much money would be needed for travel, translations, conferences, or  other needed expenses. She also indicated the assistance her office would  likely need from other functional offices (such as Agricultural Affairs or  Services, Investment, and Intellectual Property) and from staff offices  (such as General Counsel or Economic Affairs). In turn, these functional  and staff offices could then also factor this information, as well as the  requests for assistance from the other geographic offices, into their own  office planning. In addition, the budget office also monitors the need for  resources throughout the year through its mid-year adjustment reviews,  generally in the form of monthly resource checks and quarterly revised  budget calls.
section_title: USTR Does Not Conduct Ongoing Strategic Workforce Planning
paragraphs: While USTR uses its annual budget planning process to meet its short-term  human capital needs, it has not conducted ongoing parallel efforts to  analyze the organization’s longer term workforce needs. Although USTR’s  human capital planning is directly linked to the organization’s mission and  objectives in the budget process, this is essentially a short-term tactical  process to meet immediate needs. USTR does not conduct ongoing  strategic planning or routinely analyze the organization’s longer term  workforce needs, for example, such as routinely reviewing eligibility for  retirement of senior staff and conducting formal succession planning, as  discussed above, so that it ensures the organization’s continued capacity to  achieve its mission. USTR also does not conduct ongoing analysis of  workforce composition and skills. (For information related to USTR’s staff  profile, see app. II.) While USTR conducted a workforce analysis required  by OMB of all executive branch agencies in mid-2001, which incorporated  many of these elements, it has not followed up on this analysis in a  systematic, ongoing manner, or used it as the basis for strategic workforce  planning.
In addition, USTR management does not maintain the kind of up-to-date  information on available staff and future human capital needs that would  be necessary in conducting effective strategic workforce planning. USTR’s  personnel data files are maintained in EOP’s Office of Administration;  USTR itself maintains little human capital data. USTR’s Office of  Administration did not have the internal human capital information  available that would be required for workforce analyses. For instance, it  did not have a personnel roster associated with information such as  employees’ retirement eligibility or their specific knowledge and skills,  such as language ability.
USTR officials said that USTR is such a small organization that managers  know the professional and skill backgrounds of the staff, therefore such a  data system would not be needed. This means that, rather than establishing  information systems, institutional knowledge at USTR depends on  individuals. However, as we have previously reported, it is crucial that  human capital leadership and planning be based on a data-driven decision- making process. The absence of such data can seriously undermine efforts  to identify and respond to current and emerging human capital challenges,  particularly in a small organization where turnover or unfilled positions  could quickly deplete the institutional memory.
section_title: USTR Makes Limited Use of Human Capital Tools to Mitigate Risk of Workforce Challenges
paragraphs: USTR does not make full use of available human capital tools, despite  facing recruitment and retention challenges; and it does not link most  employees’ performance standards with organizational needs. While USTR  can generally recruit staff with requisite skills, competitive pressures and  postemployment restrictions on foreign representation could place  limitations on USTR’s ability to hire from the private sector. More use of  available human capital flexibilities could help to better ensure consistent  success in recruitment and retention. In addition, USTR risks inconsistent  attainment of its strategic goals if it does not link individual performance  expectations to its needs.
subsections: section_title: USTR Uses Some Human Capital Tools but Could Benefit from Adding Others
paragraphs: USTR faces risks from recruitment and retention challenges, which in turn  could hamper its interagency leadership role. USTR addresses these risks  in part through limited use of human capital flexibilities, and USTR office  managers said they do not have difficulties recruiting needed staff.  However, senior managers said that the recruitment environment for staff  with critical skills needed for USTR’s interagency leadership role, such as  trade attorneys, is becoming more competitive. Not only can people with  these skills find higher-paying positions outside the federal government,  they also face restrictions on representing foreign clients after service with  USTR, according to senior managers. USTR often seeks interagency trade  experts for recruitment, according to USTR and other trade agency  management. Other trade agency officials have confirmed that USTR  targets their high-performing staff and that several current USTR  employees were hired from their agencies. However, USTR has benefited  from the hiring flexibility to hire private sector attorneys at a “higher-than-  minimum step,” which, according to a senior manager in USTR’s Office of  General Counsel, helps attract experienced private sector attorneys who  may be reluctant to start federal service at the minimum pay step. USTR  also uses its authority to hire and pay administratively determined  positions without regard to the civil service laws, but this authority  restricts the agency to 20 such positions.
USTR does not take advantage of other available human capital  flexibilities, most of which are expanded and more targeted versions of  those it now uses. As we have previously reported, hiring flexibilities could  help agencies in expediting and controlling their hiring processes.  Moreover, insufficient and ineffective use of flexibilities can significantly  hinder the ability of federal agencies to recruit, hire, retain, and manage  their human capital. Examples of expanded human capital flexibilities for  which USTR has authority, but does not use, include the following:  Expanded direct hire authority, which would streamline hiring for  critical needs, such as trade experts;  Recruitment and retention authorities, both of which would allow USTR  to offer bonuses of 25 to 50 percent for new hires and highly qualified  employees; and   Enhanced annual leave authority, which would allow nonfederal staff,  such as private sector attorneys, to enter federal service with higher- than-minimum annual leave rates.
See appendix III for a more detailed description of federal human capital  flexibilities available to USTR.
Closely aligned with USTR’s recruiting efforts is how well it can retain staff,  but USTR’s efforts to minimize its retention risks have also been limited.  Retention concerns are especially relevant given that, according to senior  officials, USTR employees have highly marketable skills. In addition, USTR  staff have an important role in leading and coordinating the interagency  trade policy process. To illustrate the potential for retention risks, from  March 2000 through March 2005, 158 USTR employees separated from the  agency, according to our calculations of EOP data. USTR has also  experienced turnover among its recently hired staff during this time period.  For instance, 25 professional staff (defined in this report as GS-13 through  SES staff) hired in the last 5 years have already left USTR. While USTR is in  the process of taking steps to increase compensation for senior executives  to help keep pay competitive, which would allow for bonuses of 5 to 20  percent, officials could not provide a specific time frame for  implementation. In addition, a senior USTR official told us that the loss of  senior GS-level trade experts can create a loss of institutional knowledge.  According to a Commerce official, familiarity with the details of negotiated  agreements is critical for subsequent enforcement of trade agreements.
Finally, USTR has had challenges retaining security administrators (e.g.,  three of five hired in the past 5 years have left).
section_title: USTR Does Not Link All Staff Performance Appraisals to Agency Goals
paragraphs: USTR does not link the performance of most of its staff to agencywide  goals, risking the loss of consistency in its implementation of agency goals,  even though USTR’s small size and leadership role mean that all employees  have a critical role in maintaining the agency’s trade policy coordination  mission. Only SES staff, making up just over 10 percent of USTR  employees, are subject to agencywide performance competencies. In  addition, attorneys in the Office of General Counsel and its Monitoring and  Enforcement Unit have performance competencies that are linked to  agency goals, accounting for another 12 percent of staff. USTR managers  have stressed the importance of certain individual skills needed to advance  USTR’s mission, such as the ability to effectively interact within the  interagency trade policy framework. However, USTR employees not  subject to agencywide standards are instead held accountable for a range  of expectations that vary among USTR offices according to specific  assignments. As we have previously reported, linking performance  expectations to organizational goals is important because strategic goals  should guide job responsibilities. In this way, an agency can ensure that  staff performance supports agency goals. Moreover, high-performing  organizations use their performance management systems to help provide  continuity during transition by maintaining a consistent focus on a broad  set of mission priorities. In USTR’s case, without a performance  management system that ties individual performance to USTR’s goals, it  does not have a mechanism to translate its strategic goals into individual  performance. Without agencywide goals, USTR is at risk of having its  mission guided by office-level goals, which would not be conducive to  meeting agency goals, given that USTR has over 15 separate mission- related offices. In addition, USTR could help mitigate the potentially  disruptive effects of periodic management transitions, such as it  experienced this year, with a concrete set of performance expectations that  guide staff performance throughout such periods and ensure consistency in  mission priorities.
section_title: Conclusions
paragraphs: USTR needs to place more emphasis on strategic human capital principles,  otherwise it leaves itself open to human capital risks that could otherwise  be mitigated. While USTR often cites its small size as a reason it can afford  to sidestep requirements that are often applied to larger bureaucracies, in  the case of human capital management, it is precisely because every  individual is important that effective human capital leadership is critical.  Yet our review has found that USTR is focused on achieving trade results  but has overlooked the substantial additional value it could gain from  strategic human capital management. For example, without a senior  manager acting as its chief human capital officer, USTR cannot ensure that  critical human capital leadership tasks, such as succession planning, are  accomplished in a way that maximizes USTR’s ability to achieve its mission  with minimal risk of interagency disruption due to management transitions.  Given the number of SES staff who will be eligible to retire within the next  5 years, it is important that USTR address these issues strategically rather  than reactively. Further, although USTR seems to be making effective use  of its networked structure to marshal the relevant expertise across the  government in support of the trade agenda, it has not taken additional steps  to mitigate the risk inherent in its dependency on interagency resources.  Without a method to plan interagency resources devoted to the trade  agenda, USTR has no way to account for potential changes in other  agencies’ resources. Given the prospect of a tightening federal budget  environment, lack of a formal interagency resource planning method  means USTR is in no position to evaluate how budget reductions could  impact USTR’s ability to achieve its mission. In addition, USTR has not  conducted ongoing strategic human capital planning for its own longer- term organizational workforce needs and does not maintain the  information systems required for such analysis. While USTR primarily uses  its 2-year budget planning process to focus its human capital planning  efforts, this approach limits it to planning how it can best achieve its trade  mission with the resources available to it in the short term. USTR has not  taken steps to strategically identify and respond to current and emerging  human capital risks in its workforce. As a result, by not conducting ongoing  strategic workforce planning, USTR is opening itself up to human capital  risks that it could be taking steps to mitigate.
USTR could also better meet some of its key workforce challenges by  making better use of available human capital tools. In an increasingly  competitive recruitment environment, USTR could benefit from using the  additional hiring and pay flexibilities available to it. In addition, USTR has  not ensured that its performance standards support its organizational goals  by extending agencywide performance criteria to its entire staff. As a  result, USTR is missing an opportunity to translate its strategic goals into  individual performance.
section_title: Recommendations for Executive Action
paragraphs: To improve USTR’s human capital management, we recommend that the  U.S. Trade Representative develop a strategic human capital management  system. The system should include the following elements, tailored to its  small size and unique role:  filling its senior human capital management positions with human  capital professionals who will significantly contribute to strategic  planning and decision making,   developing an interagency resource planning method with appropriate  participation from key agency stakeholders,   undertaking strategic workforce planning in order to optimize its  workforce’s continued capacity to achieve its mission,  improving its ability to utilize data for measuring the effectiveness of  human capital approaches in support of its mission and goals,  determining if additional use of available pay and hiring flexibilities  would better position USTR to hire and retain experts, and   developing agencywide performance criteria for staff to align  management expectations with critical organizational goals.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to USTR; the Departments of Agriculture,  Commerce, and State; and the U.S. International Trade Commission. USTR  provided written comments, which are reproduced in appendix IV. The  other agencies did not provide comments.
USTR stated that the insights provided by our study were a valuable  contribution to its ongoing internal efforts to effectively manage its human  capital. USTR said it shared our general observations and  recommendations regarding the critical role of human capital planning.  USTR also noted that it (1) has recently hired a new Assistant U.S. Trade  Representative for Administration, (2) will examine the additional human  capital flexibilities available to it, and (3) is committed to linking  performance evaluations to its strategic planning.
USTR stated that it believed we had not adequately factored into our  analysis how it had tailored its human capital planning to its size and  networked organizational structure. While we have modified our report  language in several places to clarify our discussion of USTR’s human  capital planning, we do not agree, however, that USTR’s human capital  planning activities, which primarily focus on meeting short-term  negotiating needs, have to this point demonstrated a commitment to long- term strategic human capital planning.
USTR also stated that our report suggests that it should extend its  interagency coordinating role to formally overseeing the human capital  planning activities of these agencies. Our recommendation that USTR  develop an interagency resource planning method with appropriate  participation from key agency stakeholders is not intended to suggest that  USTR should formally oversee the human capital planning activities of the  agencies involved, but rather envisions an extension of USTR’s interagency  coordination role to better anticipate and plan resource needs devoted to  the U.S. trade agenda. This recommendation is consistent with several of  our recent reports.
USTR also provided technical comments, which we have incorporated  where appropriate.
As agreed with your office, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days from the  date of its issuance. At that time, we will send copies of this report to  appropriate congressional committees. We will also send copies to the U.S.  Trade Representative, the Secretaries of Agriculture, Commerce, and State,  and the Chairman of the U.S. International Trade Commission. We will also  make copies available to others upon request. In addition, this report will  be available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-4347 or yagerl@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix V.
section_title: Objectives, Scope, and Methodology
paragraphs: To determine whether the Office of the U.S. Trade Representative (USTR)  is pursuing an effective human capital strategy that adequately supports the  ability of its workforce to accomplish its mission, we reviewed its human  capital planning and implementation efforts and compared them with U.S.  government best practices. We used our Model of Strategic Human Capital  Management as the framework in assessing USTR’s human capital efforts.  Specifically, we (1) reviewed USTR’s commitment to strategic human  capital leadership and planning and (2) analyzed to what extent USTR has  used human capital tools to address its workforce challenges.
To determine USTR’s commitment to strategic human capital leadership  and planning, we reviewed USTR’s available human capital planning  documents, including annual performance planning required by the  Government Performance Results Act for the past 5 years, the most recent  annual USTR budget call, and agency budget justifications for the past 5  years. We also reviewed Office of Personnel Management (OPM) and Office  of Management and Budget (OMB) human capital guidance and our  previous human capital reports to determine how government best  practices could be best applied to USTR. We augmented our  documentation review with interviews with USTR human resources staff,  office managers, and senior management at the Washington, D.C., and  Geneva, Switzerland, offices. We spoke with the Geneva senior manager by  telephone. We further discussed interagency planning and commitment of  resources with officials of four trade agencies: the Departments of State,  Commerce, and Agriculture, as well as the U.S. International Trade  Commission (ITC).
To determine to what extent USTR has used human capital tools to address  its workforce challenges, we obtained USTR human capital data from the  Executive Office of the President (EOP) for key human capital trends, such  as retirement eligibility, time in service, and dates of separation. We also  reviewed these data for certain routine human capital categories to better  understand the agency’s overall staff profile, such as office level and  aggregate staffing levels, grade levels, and occupation types. Finally, we  used these data to determine the extent to which USTR fills its job  announcements, as well as the number of staff who received training. We  tested USTR data for reliability by comparing them with OPM data from the  central personnel data file and with USTR organizational documents. We  determined that these data were sufficiently reliable for the purposes of  this report. We used USTR’s pending senior executive service (SES)  performance management guidance as part of our review of the agency’s  efforts to address performance management. Along with the data review,  we interviewed office managers and senior management officials at USTR  to determine the workforce challenges they faced and how they were  addressing those challenges. We also met with officials from the  Departments of State, Commerce, Agriculture, and ITC, as well as with  trade association representatives and former USTR officials, to get their  perspectives on USTR’s workforce challenges. Finally, to determine which  human capital flexibilities USTR was eligible for, and which could benefit  USTR, we reviewed existing human capital statutes. We compared these  statutory authorities with those that USTR currently uses, accounting for  workforce challenges identified through USTR human capital data  obtained from EOP and interviews. We conducted our work from January  2005 to September 2005 in accordance with generally accepted government  auditing standards.
section_title: USTR Staff Profile
paragraphs: EOP provided us with recent USTR human capital data. We analyzed data  in the following categories: (1) active staff, by office; (2) agencywide, full- time equivalent staff (FTE) over recent years; (3) grades; (4) retirement  eligibility; (5) length of service; (6) occupations; (7) active detailees; (8)  position announcement fill rates; and (9) training.
These data spanned 5 years, from January 2000 to April 2005, with the  exception of detailees, the reliability of which was limited to active  detailees; position announcements, available back to March 2003; and  training data, which USTR could only provide back to May 2001, but up to  June 2005.
subsections: section_title: Active USTR Staff by Office
paragraphs: As of April 2005, USTR had 212 active staff. USTR offices average about 8  staff, but some, such as Administration, have over 20 while others, such  South Asia, Labor, and Trade Capacity, have 2 staff each. SES or political  appointees head most offices. Exceptions include one office that is headed  by a staff member under special hiring authority and another office headed  by a staff member at the GS-15 level. The South Asia and the Europe and  Mediterranean offices are both currently headed by temporary detailees.
section_title: USTR Agencywide FTEs in Recent Years
paragraphs: USTR’s use of FTEs has been guided by the number Congress has  authorized. USTR’s FTE authorization has increased over the past 5 years,  from 185 in fiscal year 2000 to 225 in fiscal years 2004 and 2005. In those  years, USTR has actually used 171 FTEs in fiscal year 2000 and 212 FTEs by  fiscal year 2005, as shown in figure 3. While there was a slight decrease in  FTEs used between fiscal years 2001 and 2002, the number of FTEs USTR  has used has risen steadily, along with its authorization. However, as of the  middle of fiscal year 2005, the number of FTEs used has not changed  significantly from fiscal year 2004.
section_title: Grades
paragraphs: USTR’s interagency leadership role is evident in its high number of middle  and senior grade levels. About half of USTR career staff are at the GS-15  level, about one-sixth are GS-13 and GS-14 levels, and slightly over one- tenth are SES level. Another fifth of USTR personnel are GS-12 and below,  which are primarily support staff.
section_title: Retirement Eligibility
paragraphs: About 18 percent of all USTR staff are eligible for retirement within the  next 5 years. Within individual grades, political appointees and SES have  the highest percent of staff who are eligible for retirement. Among other  grades, the GS-15 level, made up mostly of trade analysts and attorneys,  make up the bulk of USTR staff and have one of the lowest percent of staff  eligible for retirement within the next 5 years or less. (See fig. 5.)
section_title: Length of Service
paragraphs: The median length of agency service at USTR for active staff is just under 4  years. About 30 percent of active staff have been at the agency for less than  2 years. However, given USTR’s interagency ties, some USTR staff have  longer experience within the interagency structure through service with  other trade agencies.
section_title: Occupations
paragraphs: According to information from OPM’s central personnel data file, most  USTR FTEs are classified as miscellaneous administration and program  occupation. This particular occupation reflects the overall FTE gains at  USTR in the past 5 years. However, certain occupations, such as  economists, attorneys, and support staff, illustrate different trends. For  instance, in the past 10 years, the number of attorneys has increased  substantially, from 18 to 45, or 150 percent, as USTR has added attorneys to  address an increased litigation caseload (see fig. 6). However, during that  same time period, the number of economists decreased from 46 to 17, a  decrease of about 63 percent. From fiscal year 2000 through 2004, support  occupations such as clerks and secretaries also decreased. USTR officials  told us that as agency functions have become more automated, the need for  previous numbers of support staff decreased.
section_title: Active Detailees
paragraphs: USTR had 30 active temporary detailees from other trade agencies, as of  April 2005. USTR has a formal detailee program with the Department of  State, and less formal agreements with other trade agencies, such as the  U.S. International Trade Commission, Agriculture, and Commerce.  However, USTR also currently uses temporary detailees from a variety of  other agencies and entities, including the Congressional Research Service,  the Central Intelligence Agency, the Small Business Administration, and the  White House.
Out of the 30 temporary detailees assigned to USTR, most began service in  2004, as shown in figure 7. However, several current detailees were  assigned to USTR before 2003, and 1 active detailee, from USDA, has been  at the USTR Washington, D.C., office longer than 5 years, according to data  from EOP.
section_title: USTR Job Announcements
paragraphs: Most job announcements that USTR has advertised in recent years have  been filled, according to EOP data. Of 79 USTR announcements EOP  posted from October 2002 through March 2005, 45 announcements, or 57  percent, were filled. Of the job announcements USTR did not fill, most  were trade analysts or support staff and Information Technology positions,  but three unfilled positions were attorney slots, and four were budget or  human resources positions. USTR did not fill one senior human capital  position, Assistant USTR for Administration, in Spring 2004, and that  position remains unfilled as of October 1, 2005.
A USTR human resources official told us that the reason the agency does  not fill certain announcements may vary. For instance, the agency may  decide to pull announcements before they are filled, announcements may  not receive qualified applications, or job offers may not be accepted. If a  job announcement was not filled, USTR might post it again under a  separate announcement. As a result, according to the USTR human  resources official, USTR’s data did not allow us to identify that multiple  announcements had been made for a specific job and to link them to the  position being filled on a specific date.
section_title: Training
paragraphs: USTR employees do not receive very much formal training. In a 4-year  period from May 2001 to June 2005, 51 USTR staff took part in 76 training  courses, according to USTR human resource data. A little over 80 percent  of the courses USTR staff received were mission related; the rest were for  personal enrichment, such as retirement seminars. Most staff who received  training were GS-12 and under, and GS-15 levels. USTR staff from the  offices of Administration, Americas, Agriculture Affairs, and Environment  and Natural Resources received the most mission-related training over the  4-year period, while staff from other offices, such as Services, Investment,  and Intellectual Property, South East Asia and the Pacific, and Europe and  Mediterranean, received no mission-related training.
section_title: Human Capital Flexibilities Available to USTR
paragraphs: USTR is eligible to use a variety of human capital flexibilities to address its  risk of future workforce challenges. Tables 2 and 3 show specific  authorities that USTR is eligible to use that could address its recruitment  and retention challenges.
section_title: Comments from the Office of the U.S. Trade Representative
paragraphs: The following are GAO’s comments on USTR’s letter dated November 10,  2005.
subsections: section_title: GAO Comments
paragraphs: 1. We agree that human capital planning must be tailored to the mission  and characteristics of each agency and, in fact, had stressed this critical  idea at several points in the report, including the recommendations. We  acknowledge the steps USTR has taken in its human capital planning  and have added clarifications where appropriate to further reflect  USTR’s human capital planning activities and actions. However, we do  not believe that these steps demonstrate a commitment to long-term  strategic human capital planning. USTR’s human capital planning  focuses primarily on short-term responses to trade negotiating needs  identified through the budget process, such as shifting staff and  resources to meet the increased needs associated with particular trade  negotiations. This kind of planning, while valuable, is not the same as  strategic, ongoing analysis and planning for long-term agencywide  workforce needs, such as retirement eligibility of senior staff or  changing workforce composition and skills needs. Further, while at the  conclusion of our study USTR provided us with a 5-year workforce  analysis it had been required to conduct in 2001 by OMB, it was not able  to show us that it had used this analysis in an ongoing manner as the  basis of strategic workforce planning. 2. Our recommendation to USTR to conduct formal interagency resource  planning is consistent with several of our recent reports that came to  the same basic conclusion. We do not state that USTR should formally  oversee the human capital planning activities of the agencies involved.  Rather, we said that USTR should mitigate the risks inherent in its  dependency on interagency resources by developing an interagency  resource planning method with appropriate participation from key  agency stakeholders. This would envision an extension of USTR’s  coordination role, not increased oversight over agency human capital  planning activities.
section_title: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition, Anthony Moran, Assistant Director; as well as Leyla Kazaz;  Donald Morrison; and Paul Revesz made key contributions to this report.   Other contributors include Martin DeAlteriis, William Doherty, Etana  Finkler, Ernie Jackson, Jeffrey McDermott, Jamie McDonald, Lisa Shames,  Sarah Veale, Michael Volpe, and Gregory Wilmoth.