Human Capital: Update on Strategic Management Challenges for the 21st Century
Published: 2015-05-20T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Strategic human capital management plays a critical role in maximizing the government's performance and assuring its accountability to Congress and to the nation as a whole.
GAO designated strategic human capital management as a government-wide, high-risk area in 2001. Since then, important progress has been made. However, retirements and the potential loss of leadership and institutional knowledge, coupled with fiscal pressures, underscore the importance of a strategic and efficient approach to acquiring and retaining individuals with needed critical skills. As a result, strategic human capital management remains a high-risk area.
This testimony is based on a large body of GAO work issued from January 2014 through February 2015; and ongoing work related to employee engagement. This testimony, among other things, focuses on key human capital areas where some actions have been taken but attention is still needed by OPM and federal agencies on issues such as: (1) the GS classification system; (2) mission-critical skills gaps; (3) performance management; and (4) employee engagement.
section_title: What GAO Found
paragraphs: Serious human capital shortfalls can erode the capacity of federal agencies and threaten their ability to cost-effectively carry out their missions. GAO's prior work has shown that continued attention is needed to ensure agencies have the human resources to drive performance and achieve the results the nation demands. Key areas where the federal government has taken some actions but additional attention is still needed include the following:
General Schedule (GS) Classification System: In 2014, GAO identified eight key attributes of a modern, effective classification system, such as, flexibility, transparency, and simplicity. The GS system's design reflects some of these eight attributes, but when the Office of Personnel Management (OPM) implemented the system, the attributes of transparency, internal equity, simplicity, flexibility, and adaptability were reduced. This occurred, in part, because some attributes are at odds with others so fully achieving one comes at the expense of another. GAO recommended and OPM partially concurred with the need to examine ways to make the GS system consistent with the eight attributes of an effective classification system.
Mission-Critical Skills Gaps: The challenges that agencies face were not fully captured by the Chief Human Capital Officers Council Working Group's efforts that identified skills gaps in six government-wide, mission-critical occupations. In 2015, GAO identified skills gaps in nearly two dozen occupations with significant program implementation impacts. As a result, GAO recommended OPM take a number of steps to address this issue. OPM concurred and in response has established an interagency working group, which is expected to identify a new set of government-wide skills gaps by June 2015.
Improving Performance Management: OPM makes a range of tools and guidance available to help agencies address poor performance. In 2015, GAO concluded that improved supervision and better use of probationary periods are needed to address substandard employee performance. In response, OPM agreed to consult with stakeholders regarding the need for longer probationary periods for some complex positions. In 2015, GAO also found that OPM needed to do more to ensure meaningful distinctions are made in senior executive ratings and performance awards. OPM disagreed with the recommendation. GAO maintains that additional action should be considered to ensure equity in ratings and performance awards across departments.
Strengthening Employee Engagement: GAO's ongoing work indicates that the recent government-wide decline in engagement, as measured by OPM's Employee Engagement Index, masks the fact that the majority of agencies either have sustained or increased their employee engagement levels. Government-wide, engagement has declined 4 percentage points from an estimated 67 percent in 2011 to an estimated 63 percent in 2014. However, this decline is primarily attributable to 13 agencies where employee engagement declined from 2013 to 2014. In contrast, 31 of 47 agencies have sustained and 3 agencies have increased their employee engagement levels from 2013 to 2014.
section_title: What GAO Recommends
paragraphs: Over the years, GAO has made numerous recommendations to agencies and OPM to improve their strategic human capital management efforts. While OPM and the agencies have implemented some of GAO's recommendations, actions are still needed on others to continue to make progress in these areas in the future.

section_title: Letter
paragraphs: Thank you for the opportunity to be here today to discuss the state of the  21st century federal civil service, and what can be done going forward to  ensure a top-notch federal workforce, the importance of which cannot be  overstated. As we have long reported, strategic human capital  management plays a critical role in maximizing the government’s  performance and assuring its accountability to Congress and to the nation  as a whole. However, the federal government is facing workforce-related  challenges that could affect the ability of agencies to cost-effectively carry  out their missions. These challenges include a retirement wave that could  cause a loss of leadership and institutional knowledge at all levels. In the  current economic situation, projections of how many federal workers will  actually retire upon becoming eligible remain unclear. However, when  these workers do retire, the federal government needs to have the right  people in the right jobs at the right time to meet the challenges it faces.  Other challenges include filling mission-critical skills gaps, improving  performance management, and strengthening employee engagement  during difficult times.
Strategic human capital management has been one of our high-risk areas  since 2001. Since then, Congress, the Office of Personnel Management  (OPM), and some individual agencies have taken a number of actions  toward addressing the government’s human capital challenges. For  example, in 2002, Congress created the chief human capital officer  (CHCO) position in 24 agencies to advise and assist the heads of the  agencies with human capital efforts. The same law created the CHCO  Council to advise and coordinate the human capital activities of member  agencies. Congress has also provided agencies—individually and across  the federal government—with various authorities and flexibilities to  manage the federal workforce and make the federal government a more  attractive employer. Further, congressional hearings that have focused on  federal human capital management challenges have been important for  ensuring that OPM and agencies continue to make progress in acquiring,  developing, and retaining employees with the skills needed to carry out  the government’s vital work. Continued congressional attention to  improving the government’s human capital policies and procedures will be  essential to further progress in this area.
While many actions to further progress have been taken in the last few  years, ample opportunities continue to exist for agencies to improve their  strategic human capital management, and for OPM to continue its  leadership in these areas. For example, we reported in February 2015  that strategic human capital management remains high risk because  more work is needed to address government-wide, mission-critical skills  gaps. A direct link between personnel management and organizational  performance can be seen in a number of our studies that identified  operational and other problems at various federal agencies. These  problems include wait times at Department of Veterans Affairs medical  facilities; management of oil and gas operations by the Department of the  Interior; information technology management at the Social Security  Administration; rail safety inspections by the Federal Railroad  Administration; and acquisition management at the Departments of  Defense and Homeland Security. All of these examples share a common  problem: a breakdown of one or more human capital activities, such as  robust workforce planning or performance management.
To address these and similar challenges, federal agencies will need to  change their cultures and create the institutional capacity to become high- performing organizations. This includes recruiting and retaining  employees able to create, sustain, and thrive in organizations that are  flatter, results-oriented, and externally focused, and that collaborate with  other government entities as well as with the private and nonprofit sectors  to achieve desired outcomes. As federal agencies seek to improve their  operations within budget constraints and to compete for talent with the  private sector, federal agencies will need to focus attention on  management practices that both increase the level of employee  engagement, and also enable managers to make meaningful distinctions  in performance to reward top performers and deal with poor performers.
My remarks today will focus on describing recent trends in federal civilian  employment and also on some of the key strategic human capital  management issues facing executive branch agencies and OPM. These  issues include: (1) improving management and oversight of the federal  classification system, (2) closing mission-critical skills gaps, (3)  developing strategies to help agencies meet their missions in an era of  highly constrained resources, (4) improving performance management,  and (5) strengthening employee engagement during challenging times.  (For a list of open human capital recommendations to agencies and OPM,  see appendix I.)
My observations on employee engagement represent the preliminary  observations from our ongoing work that we are doing at the request of  the House Committee on Oversight and Government Reform, the House  Subcommittee on Government Operations, and the House Subcommittee  on Federal Workforce, U.S. Postal Service, and the Census. For that  study we analyzed responses to questions from the OPM Federal  Employee Viewpoint Survey for the years 2010 through 2014, from which  the Employee Engagement Index is derived. We obtained agency  officials’s views on the information presented from our ongoing work and  have incorporated their comments as appropriate. The rest of this  statement is based on our large body of work on federal human capital  management, issued primarily between January 2014 and February  2015, and is updated with more recent information as appropriate. For  example, to update federal civilian employment trend information, we  analyzed more recent data from OPM’s Enterprise Human Resources  Integration database. Detailed descriptions of the scope and  methodologies for our completed work can be found in the original reports  cited throughout this statement. The work that this statement is based on  is either being conducted or was conducted 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  objectives. We believe that the evidence obtained provides a reasonable  basis for our findings and conclusions based on our audit objectives.
subsections: section_title: Recent Trends in Federal Civilian Employment
subsections: section_title: Federal Civilian Workforce Grew by 10.3 Percent from 2005 through 2014
paragraphs: From 2005 to 2014, the civilian workforce (excluding the U.S. Postal  Service) grew from 1.88 million to 2.07 million, an increase of 10.3  percent, or 192,951 individuals. Most of this growth (76 percent)  occurred between 2009 and 2014. The number of permanent career  executive branch employees grew by 221,672, from about 1.7 million in  2005 to 1.92 million in 2014 (an increase of 13 percent). Of the 24 Chief  Financial Officers (CFO) Act agencies, 13 had a higher percentage of  permanent career employees in 2014 than they did in 2005, and 11 had a  lower percentage (see figure 1).
section_title: Fourteen Percent of On Board Employees Were Eligible to Retire in 2014
paragraphs: The retirement rate of federal civilian employees rose from 3.2 percent in  2004 to a high of 3.6 percent in 2007 when, according to data from the  National Bureau of Economic Research, the recession began. During the  recession, the total attrition rate dropped to a low of 2.5 percent in 2009  before rebounding to pre-recession levels in 2011 and 2012. Beginning at  the end of 2007, the recession saw retirement rates decline to 3.3 percent  in 2008, 2.5 percent in 2009, and 2.7 percent in 2010, before increasing  again to 3.5 percent in 2014.
With respect to retirement eligibility, of the 1.92 million permanent career  employees on board in 2014, approximately 270,000 (14 percent) were  eligible to retire. By September 2019, approximately 590,000 (31 percent)  of on board staff will be eligible to retire. Not all agencies will be equally  affected. Also by September 2019, 18 of the 24 CFO Act agencies will  have a higher percentage of staff eligible to retire than the current overall  average of 31 percent. About 23 percent of Department of Homeland  Security staff on board as of September 2014 will be eligible to retire in  2019, while more than 43 percent will be eligible to retire at both the  Department of Housing and Urban Development and the Small Business  Administration (see figure 2). Certain occupations—such as air traffic  controllers, customs and border protection agents, and those involved in  implementing government programs—will also have particularly high  retirement-eligibility rates by 2019. About 63 percent of career executives  may be eligible to retire by 2016.
section_title: OPM Needs to Improve the Design, Management, and Oversight of the Federal Classification System
paragraphs: As we reported in 2014, the General Schedule (GS) classification system  is a mechanism for organizing federal white-collar work, notably for the  purpose of determining pay, based on a position’s duties, responsibilities,  and difficulty, among other things. The GS system, which is administered  by OPM and includes a standardized set of 420 occupations, grouped in  23 occupational families and 15 statutorily-defined grade levels,  influences other human capital practices such as training, since training  opportunities link position competencies with the employee’s  performance. In 2013, the GS system covered about 80 percent of the  civilian white-collar workforce (about 1.6 million employees).
The GS system was designed to uphold the key merit system principle of  equal pay for work of substantially equal value and other important goals.  However, some OPM reports and several public policy groups have  questioned the GS system’s ability to meet agencies’ needs for flexible  talent management tools that enable them to align employees with  mission requirements. For example, in 2002, OPM outlined the  advantages and disadvantages of the GS classification system and  concluded that agencies should be allowed to tailor their pay practices to  better recruit, manage, and retain employees to accomplish their  mission. In 2014, the Partnership for Public Service reported that by  treating all occupations equally and linking them to the current pay scales,  the GS system is unable to distinguish between meaningful differences in  complexity and skill across occupations. Also, as federal agencies have  taken on additional roles and responsibilities, their missions have become  increasingly complex, and their employees need to possess a range of  expertise and skills that may not be adequately captured by the GS  system.
We reported in July 2014 on the attributes of a modern, effective  classification system and the extent to which the current GS system  balances those attributes. Our analysis of subject matter specialists’s  comments, related literature, and interviews with OPM officials identified a  number of important characteristics for a modern, effective classification  system, which we consolidated in eight key attributes (see table 1).
In 2014 we found that, in concept, the current GS classification system’s  design incorporates several key attributes including internal and external  equity, transparency, simplicity, and rank in position. However, as OPM  implemented the system, the attributes of transparency, internal equity,  simplicity, flexibility, and adaptability were reduced. This occurred, in part,  because some attributes are at odds with one another. So, fully achieving  one attribute comes at the expense of another. Thus, OPM, working with  its stakeholders, is challenged to determine how best to optimize each  attribute.
We also reported that the GS system’s standardized set of 420  occupations incorporates several key attributes, but falls short in  implementation. For example, the occupational standard for an  information technology specialist clearly describes the routine duties,  tasks, and experience required for the position. This kind of information is  published for the 420 occupations so all agencies are using the same,  consistent standards when classifying positions—embodying the  attributes of transparency and internal equity. However, in  implementation, having numerous, narrowly defined occupational  standards inhibits the system’s ability to optimize these attributes.  Specifically, classifying occupations and developing position descriptions  in the GS system requires officials to maintain an understanding of the  individual position and the nuances between similar occupations. We  concluded that without this understanding, the transparency and internal  equity of the system may be inhibited as agency officials may not be  classifying positions consistently, comparable employees may not be  treated equitably, and the system may seem unpredictable.
We believe that, going forward, these eight attributes of a more modern,  effective classification system can help provide criteria for policymakers  and other stakeholders to use in determining whether refinements to the  current GS system or wholesale reforms are needed. In our July 2014  report, we recommended that OPM, working through the Chief Human  Capital Officer (CHCO) Council and in conjunction with key stakeholders  such as the Office of Management and Budget, unions, and others,  examine ways to make the GS system’s design and implementation more  consistent with the attributes of a modern, effective classification  system. OPM partially concurred with our recommendation to work with  key stakeholders to use prior studies and lessons learned to examine  ways to make the GS system more consistent with the attributes of a  modern, effective classification system. But it also noted several efforts to  assist agencies with classification issues, including its interagency  classification policy forum and partnering with agencies to address  challenges related to specific occupational areas. While these examples  of assisting agencies to better implement the GS system on a case-by- case basis are helpful, they do not fully address the fundamental  challenges facing the GS system, which we and others have said is not  meeting the needs of federal agencies.
subsections: section_title: OPM Has Not Conducted Oversight of Agency Classification Programs
paragraphs: In 2014, we also reported that OPM is responsible for establishing new— and revising existing—occupational standards after consulting with  agencies. From 2003 to 2014, OPM revised almost 20 percent of the  occupational standards and established 14 new ones. However, there  was no published review or update of 124 occupations since 1990. OPM  officials said they first review occupations identified in presidential  memorandums as needing review; however, they do not systemically  track and prioritize the remaining occupational standards for review.  Therefore, we concluded that OPM had limited assurance that it is  updating the highest priority occupations.
OPM is required by law to oversee agencies’ implementation of the GS  system. However, OPM officials said OPM has not reviewed any  agency’s classification program since the 1980s because OPM leadership  at the time concluded that the reviews were ineffective and time  consuming. As a result, we also concluded that OPM has limited  assurance that agencies are correctly classifying positions according to  standards.
In 2014, we determined that, going forward, OPM could improve its  management and oversight of the GS system, and like all agencies, must  consider cost-effective ways to fulfill its responsibilities in an era of  constrained resources. Using a more strategic approach to track and  prioritize reviews of occupational standards—that perhaps better reflects  evolving occupations—could help OPM better meet agencies’s needs and  the changing nature of government work. We therefore recommended  that OPM develop a strategy to systematically track and prioritize updates  to occupational standards. However, OPM did not concur with our  recommendation and noted that occupational standards are updated in  response to a systematic, prioritized process informed by working with  agencies and other stakeholders and analysis of occupational trends.  OPM officials were unable to provide us with the documentation of such  efforts. As we noted in our 2014 report, OPM had not published a review  or update of roughly 30 percent of the total number of occupations on the  GS system since 1990. Further, OPM officials could not provide the near-  or long-term prioritization of occupations scheduled for review. As a  result, we concluded that OPM cannot demonstrate whether it is keeping  pace with agencies’ needs nor does it have reasonable assurance that it  is fulfilling its responsibilities to establish new or revise existing  occupational standards based on the highest priorities. We continue to  believe that OPM should take action to fully address our  recommendation.
We also recommended in 2014 that OPM develop a strategy that would  enable it to more effectively and routinely monitor agencies’s  implementation of classification standards. OPM partially concurred with  our recommendation and stated that it will continue to leverage the  classification appeals program to provide interpretative guidance to  agencies to assist them in classifying positions. OPM also stated it will  direct consistency reviews as appropriate, however as we noted in the  report, OPM does not review agencies’ internal oversight efforts. We  continue to believe that OPM should develop a strategy to fully address  the recommendation, and we will continue to monitor OPM’s efforts in that  regard.
section_title: OPM and Agencies Need to Strengthen Efforts to Identify and Close Mission-Critical Skills Gaps
paragraphs: Our past work has shown that mission-critical skills gaps in such  occupations as cybersecurity and acquisition pose a high-risk to the  nation. Whether these gaps are within specific federal agencies or  across the federal government, they impede federal agencies from cost- effectively serving the public and achieving results. To address complex  challenges such as disaster response, national and homeland security,  and rapidly evolving technology and privacy security issues, the federal  government requires a high-quality federal workforce able to work  seamlessly with other agencies and levels of government, and across  sectors. However, efforts are threatened by trends that include current  budget and long-term fiscal pressures, declining levels of federal  employee satisfaction, the changing nature of federal work, and a  potential wave of employee retirements that could produce gaps in  leadership and institutional knowledge.
subsections: section_title: OPM Plans to Strengthen the Methodology Used to Identify Emerging Skills Gaps
paragraphs: In our 2011 High Risk report we stated that OPM, agencies, and the  CHCO Council need to address critical skills gaps that cut across several  agencies. As we reported earlier this year, OPM and agencies have  taken promising steps, but additional efforts are needed to coordinate and  sustain their efforts. Additionally, agencies and OPM need to make better  use of workforce analytics which can be used to predict newly emerging  skills gaps. An important government-wide effort we identified in this  area was the CHCO Council’s Working Group (Working Group). The  Working Group has identified skills gaps in six government-wide, mission- critical occupations: cybersecurity specialist, auditor, human resources  specialist, contract specialist, economist, and the science, technology,  engineering, and mathematics (STEM) professions. Although this effort  was an important step forward, our 2015 work identified skills gaps in  nearly two dozen occupations with significant programmatic impact. We  also determined that the Working Group did not develop a more  comprehensive list because of various methodological shortcomings.  Going forward, we concluded that OPM and the CHCO Council will need  to use lessons learned to inform a new round of work expected in this  year. Specifically, the Working Group’s experience underscored the  importance of (1) using a robust, data-driven approach to identify  potential mission-critical occupations early in the process; (2) prioritizing  occupations using criteria that consider programmatic impact; and (3)  consulting with subject matter experts and other stakeholders prior to  identifying mission-critical occupations.
Our January 2015 report also noted that, to make further progress on this  issue, the federal government needs to build a predictive capacity for  identifying emerging mission-critical skills gaps. Realizing this, OPM has  established an interagency working group known as the Federal Agency  Skills Team (FAST), which is composed of agency officials with workforce  planning and data analysis skills. OPM has tasked the group with  implementing a standard and repeatable methodology for identifying and  addressing government-wide skills gaps, as well as mission-critical  competencies, over a 4-year cycle. OPM officials said that, in its first year,  FAST intends to meet regularly until it identifies a new set of government- wide skills gaps. OPM officials expect this to occur by June 2015.
Because we identified a number of shortcomings in the implementation of  FAST, our January 2015 report recommended that the Director of OPM,  in conjunction with the CHCO Council, take the following actions:
Assist FAST in developing goals for closing skills gaps with targets  that are both clear and measurable.
Work with FAST to design outcome-oriented performance metrics that  align with overall targets for closing skills gaps and link to the activities  for addressing skills gaps.  Incorporate greater input from subject matter experts, as planned.
OPM concurred with these recommendations and has reported that it will  implement all of these actions. However, not all actions will be  implemented through FAST but instead will rely on subject matter experts  from across the federal workforce. In the same report, we recommended  that the Director of OPM work with agency CHCOs to bolster the ability of  agencies to assess workforce competencies by sharing competency  surveys, lessons learned, and other tools and resources. These actions  will help ensure that OPM builds the predictive capacity to identify  emerging skills gaps across the government—including the ability to  collect and use reliable information on the competencies of the federal  workforce for government-wide workforce analysis. OPM also agreed with  this recommendation.
Finally, in January 2015 we also reported on OPM’s efforts to assist in  addressing skills gaps at the agency level. OPM created HRstat, a  process of holding regularly scheduled, data-driven review meetings led  by an agency’s CHCO to review performance metrics for driving progress  on the agency’s human capital management priorities and goals, such as  closing mission-critical skills gaps. OPM launched HRstat as a 3-year  pilot program in May 2012, with an initial group of eight agencies.  However, our work determined that OPM should take a greater leadership  role in helping agencies include a core set of metrics in their HRstat  reviews so that OPM and agency leaders can have a clear view of  progress made closing skills gaps. While it is important for agencies to  have ownership over their HRstat reviews, OPM should also maximize its  opportunity to use HRstat to gain greater visibility over the federal  workforce. Therefore, in our January 2015 report we recommended that  the Director of OPM take the following actions:
Work with the CHCO Council to develop a core set of metrics that all  agencies should use as part of their HRstat data-driven reviews.
Coordinate with FAST personnel and explore the feasibility of  collecting information needed by FAST as part of agencies’s HRstat  reviews.
OPM agreed with our recommendation to develop a core set of metrics  and plans to convene agency officials responsible for conducting HRstat  reviews within their agencies, and have them identify a useful set of core  metrics. OPM expects to complete this by the end of 2015. In regards to  coordinating the efforts of FAST and agencies’ HRstat reviews, OPM  stated that integrating these efforts would not be appropriate because of  differing data requirements and goals of the two processes. We continue  to believe that OPM should explore coordinating these efforts to gain  greater visibility over the federal workforce and to monitor progress  toward closing skills gaps.
Efforts to close mission-critical skills gaps are often couched in  discussions about interagency initiatives and working groups, as well as  technical terms, such as staffing numbers, competencies, and metrics.  Yet, the ultimate goal is a higher-performing, cost-effective government.
With a continual focus on implementing the recommendations we have  made in these areas, we believe that OPM, the CHCO Council, and  agencies should begin to make progress on addressing current and  emerging skills gaps.
section_title: Management Challenges and Strategies to Help Agencies Meet Their Missions in an Era of Highly Constrained Resources
paragraphs: In May 2014, we reported on strategies for managing the federal  workforce and planning for future needs in an era of constrained  resources. The strategies we identified included the following:
Strengthening collaboration to address a fragmented human  capital community. Our analysis found that the federal human  capital community is highly fragmented with multiple actors inside  government informing and executing personnel policies and initiatives  in ways that are not always aligned with broader, government-wide  human capital efforts. The CHCO Council was established to improve  coordination across federal agencies on personnel issues. But,  according to CHCOs we spoke to, the council is not carrying out this  responsibility as well as it could. This challenge manifests itself in two  ways. First, across organizations, many actors are making human  capital decisions in an uncoordinated manner. Second, within  agencies, CHCOs and the human capital staff are excluded from key  agency decisions.
Using enterprise solutions to address shared challenges. Our  analysis found that agencies have many common human capital  challenges. But, they tend to address these issues independently  without looking to enterprise solutions (i.e., government-wide) that  could resolve them more effectively. Across government, there are  examples of agencies and OPM initiating enterprise solutions to  address crosscutting issues, including the consolidation of federal  payroll systems into shared-services centers. CHCOs we spoke to  highlighted human resource information technology and strategic  workforce planning as two areas that are ripe for government-wide  collaboration.
Creating more agile talent management to address inflexibilities  in the current system. Our analysis found talent management tools  lack two key ingredients for developing an agile workforce, namely the  ability to (1) identify the skills available in their existing workforces,  and (2) move people with specific skills to address emerging,  temporary, or permanent needs within and across agencies.
In our May 2014 report, we stated that the CHCOs said OPM needs to do  more to raise awareness and assess the utility of the tools and guidance  they provide to agencies to address key human capital challenges. The  CHCOs said they were either unfamiliar with OPM’s tools and guidance,  or they fell short of their agency’s needs. OPM officials said they had not  evaluated the tools and guidance they provide to the agencies. As a  result, a key resource for helping agencies improve the capacity of their  personnel offices is likely being underutilized.
Therefore, we recommended that OPM, in conjunction with the CHCO  Council, (1) strengthen coordination and leadership on government-wide  human capital issues, (2) explore expanded use of enterprise solutions to  more efficiently and effectively address shared challenges, (3) review the  extent to which new capabilities are needed to promote agile talent  management, and (4) evaluate the communication strategy for and  effectiveness of tools, guidance, or leading practices OPM or agencies  provide for addressing human capital challenges. OPM and the CHCO  Council concurred with our recommendations.
section_title: Opportunities Exist to Deal with Poor Performance and Strengthen Performance Management
paragraphs: Managing employee performance has been a long-standing government- wide issue and the subject of numerous reforms since the beginning of  the modern civil service. Without effective performance management,  agencies risk losing (or failing to utilize) the skills of top talent. They also  may miss the opportunity to observe and correct poor performance. Our  past work has shown that a long-standing challenge for federal agencies  has been developing credible and effective performance management  systems that can serve as a strategic tool to drive internal change and  achieve results.
More than a decade ago, we reported that day-to-day performance  management activities benefit from performance management systems  that, among other things, (1) create a clear “line of sight” between  individual performance and organizational success; (2) provide adequate  training on the performance management system; (3) use core  competencies to reinforce organizational objectives; (4) address  performance regularly; and (5) contain transparent processes that help  agencies address performance “upstream” in the process within a merit- based system that contains appropriate safeguards. Implementing such  a system requires supervisors to communicate clear performance  standards and expectations, to provide regular feedback, and to  document instances of poor performance.
subsections: section_title: Agencies Have Multiple Avenues Available to Address Employee Poor Performance
paragraphs: Managers’ ability to deal with poor performers is also a concern of federal  employees. OPM’s Federal Employee Viewpoint Survey (FEVS) data  from 2011 to 2014 show that around 30 percent of respondents provided  positive responses to whether managers took steps to deal with poor  performers. In 2014, over 40 percent of respondents disagreed that  managers consistently take steps to deal with poor performers. Almost 30  percent neither agreed nor disagreed.
In general, agencies have three means to address employees’ poor  performance: (1) day-to-day performance management activities (which  should be provided to all employees, regardless of their performance  levels), (2) dismissal during probationary periods, and (3) use of formal  procedures. Agencies’ choices will depend on the circumstances at hand.  Day-to-day performance management activities such as providing regular  performance feedback to employees can produce more desirable  outcomes for agencies and employees than dismissal options, which are  a last resort. As we reported in February 2015, supervisors do not always  have the skills to identify, communicate, and help address employee  performance issues. Given the critical role that supervisors play in  performance management, it is important for agencies to identify,  promote and continue to develop effective supervisors.
Probationary periods for new employees provide supervisors with an  opportunity to evaluate an individual’s performance to determine if an  appointment to the civil service should become final. However, CHCOs  we interviewed told us supervisors often do not use this time to make  decisions about an employee’s performance because they may not know  that the probationary period is ending or they have not had time to  observe performance in all critical areas. We agree with OPM that  notifying supervisors that a probationary period is coming to an end is an  agency’s responsibility. However, we maintain that more could be done to  educate agencies on the benefits of using automated notifications to  notify supervisors that an individual’s probationary period is ending and  that the supervisor needs to make an affirmative decision or otherwise  take appropriate action. OPM also needs to determine whether  occupations exist in which—because of the nature of work and  complexity—the probationary period should extend beyond 1-year and, if  so, take appropriate actions which may include developing legislative  proposals for congressional consideration. OPM agreed to consult with  stakeholders to determine whether longer probationary periods are  needed for certain complex positions.
In our February 2015 report, we noted that OPM provides guidance, tools,  and training to help agencies attain human capital management goals  that meet its strategic goal of enhancing the integrity of the federal  workforce. In addition to its regulations, OPM makes a range of different  tools and guidance available to help agencies address poor performance  through multiple formats, including through its website, webinars,  webcasts, in-person training, guidebooks, and through one-on-one  assistance and consultation with agencies, according to OPM officials.  We identified in our report promising practices that some agencies  employ to more effectively ensure that that they have a well-qualified  cadre of supervisors capable of effectively addressing poor performance.  The practices include: extending the employee’s supervisory probationary period beyond 1  year to include at least one full employee appraisal cycle; providing temporary duty opportunities outside the agency or  rotational assignments to supervisory candidates prior to promotion,  where the candidate can develop and demonstrate supervisory  competencies; and using a dual career ladder structure as a way to advance employees  who may have particular technical skills or education but who are not  interested in or inclined to pursue a management or supervisory track.
We recommended that OPM determine if these practices should be more  widely used government-wide. OPM partially concurred with our  recommendation, noting that agencies already have authority to take  these actions. We acknowledged OPM’s point, but maintain that OPM  can still take a leadership role and encourage agencies to take these  steps. Also in our February 2015 report, we found that OPM, in  conjunction with the CHCO Council and other key stakeholders, needs to  assess the adequacy of leadership training that agencies provide to  supervisors to help ensure supervisors obtain the skills needed to  effectively conduct performance management responsibilities. We  recommended that OPM assess the adequacy of leadership training and  OPM concurred.
section_title: OPM Needs to Do More to Ensure Meaningful Distinctions Are Made in Senior Executive Service (SES) Ratings and Performance Awards
paragraphs: In 2012, OPM facilitated development of an SES performance appraisal  system with a more uniform framework to communicate expectations and  evaluate the performance of executive branch agency SES members, the  government’s cadre of senior leaders. The system is expected to promote  consistency, clarity, and transferability of SES performance standards  and ratings across agencies. Career SES employees receive a base  salary and benefits. But, pay increases—as well as performance  awards—are to be performance driven, based on annual ratings of  executives’ performance following reviews within their agencies. To  obtain SES appraisal system certification for agencies seeking access to  higher levels of pay, agencies are required to make meaningful  distinctions based on the relative performance of their executives as  measured through performance and pay criteria. OPM stressed that a  major improvement of the system included dealing with the wide disparity  in distribution of ratings by agency through the provision of clear,  descriptive performance standards and rating score ranges that establish  mid-level ratings as the norm and top-level ratings as truly exceptional.
In our January 2015 report, we found that more than 85 percent of career  Chief Financial Officers Act agency SES were rated in the top two of five  categories for fiscal years 2010 through 2013, and career SES received  approximately $42 million in awards for fiscal year 2013. In a closer  examination of five departments (Departments of Defense, Energy,  Health and Human Services, Justice, and Treasury) for fiscal year 2013,  we found that, similar to the government-wide results, these five  departments rated SES primarily in the top two categories. In addition,  four of five departments awarded the same or higher performance awards  to some SES with lower ratings.
Effective performance management systems recognize that merit-based  pay increases should make meaningful distinctions in relative  performance. This principle is central to the SES performance  management system, where under the law, to be certified and thereby  able to access the higher levels of pay, the appraisal system must make  meaningful distinctions based on relative performance. OPM certification  guidelines state that the SES modal rating—the rating level assigned  most frequently among the actual ratings—should be below “outstanding”  and that multiple rating levels should be used. However, OPM’s  guidelines also state that if an agency’s modal rating level is  “outstanding,” the appraisal system can still be certified if accompanied  with a full, acceptable justification. Nonetheless, the continued  concentration of senior executives at the top two rating levels indicates  that meaningful distinctions in SES performance may not be being made  across government. OPM plans to convene a cross-agency working  group in 2015 to revisit the SES certification process.
In our January 2015 report, we recommended that the Director of OPM  consider various refinements to better ensure the SES performance  appraisal system certification guidelines promote making meaningful  distinctions in performance without using a forced distribution. Options  could include not certifying appraisal systems where the modal rating is  “outstanding” or increasing transparency in cases where the modal rating  is “outstanding.” OPM disagreed with the recommendation stating that,  among other things, it could result in forced distributions in ratings. We  maintain that additional action should be considered to ensure equity in  ratings and performance awards across departments.
section_title: Retaining Employees: Strengthening Employee Engagement during Challenging Times
paragraphs: A growing body of research on both private- and public-sector  organizations has found that increased levels of engagement—generally  defined as the sense of purpose and commitment employees feel towards  their employer and its mission—can lead to better organizational  performance. Engaged employees are more than simply satisfied with  their jobs. Rather, they take pride in their work, are passionate about what  they do, and are committed to the organization, the mission, and their job.  They are also more likely to put forth extra effort to get the job done.
Put another way, if a talented workforce is the engine of productivity and  mission accomplishment, then a workplace that fosters high levels of  employee engagement helps fuel that engine. Preliminary observations  from our ongoing work have found that government-wide levels of  employee engagement have recently declined 4 percentage points, from  an estimated 67 percent in 2011, to an estimated 63 percent in 2014, as  measured by the OPM FEVS, and a score derived by OPM from FEVS—  the Employee Engagement Index (EEI).
However, our ongoing work also indicates that the recent government- wide average decline in EEI masks the fact that the majority of federal  agencies either sustained or increased employee engagement levels  during the same period. The decline is the result of several large  agencies bringing down the government-wide average. Our preliminary  work indicates that 13 of 47 agencies saw a statistically significant decline  in their EEIs from 2013 to 2014. While this is only 28 percent of agencies,  nearly 69 percent of federal employees are at one of those agencies,  including the Departments of Defense, Homeland Security, and Veterans  Affairs. Meanwhile, the majority of agencies sustained or improved  engagement. Between 2013 and 2014, of 47 agencies included in our  analysis of the EEI, 3 increased their scores; 31 held steady; and 13  declined, as shown in figure 3.
Even one agency with a downward trending engagement score is not to  be taken lightly. There is room for improvement with all federal agencies.  Yet, the large number of agencies that sustained or increased their levels  of employee engagement during challenging times suggests that  agencies can influence employee engagement levels in the face of  difficult external circumstances. For example, the Federal Trade  Commission maintained a consistent estimate of 75 percent engagement  index score—well above the government-wide average—throughout the  period of general decline.
In conclusion, strategic human capital management must be the  centerpiece of any serious effort to ensure federal agencies operate as  high-performing organizations. A high-quality federal workforce is  especially critical now given the complex and cross-cutting issues facing  the nation. Through a variety of initiatives, Congress, OPM, and individual  agencies have strengthened the government’s human capital efforts since  we first identified strategic human capital management as a high-risk area  in 2001. Still, while many actions towards progress have been taken over  the last 13 years, the job is far from over. Indeed, the focus areas  discussed today are not an exhaustive list of challenges facing federal  agencies and are long-standing in nature.
Greater progress will require continued collaborative efforts between  OPM, the CHCO Council, and individual agencies, as well as the  continued attention of top-level leadership. Progress will also require  effective planning, responsive implementation, robust measurement and  evaluation, and continued congressional oversight to hold agencies  accountable for results. In short, while the core human capital processes  and functions—such as workforce planning and talent management— may sound somewhat bureaucratic and transactional, our prior work has  consistently shown the direct link between effective strategic human  capital management and successful organizational performance. At the  end of the day, strategic human capital management is about mission  accomplishment, accountability, and responsive, cost-effective  government.
Chairman Lankford, Ranking Member Heitkamp, and Members of the  Subcommittee, this completes my prepared statement. I would be  pleased to respond to any questions you may have at this time.
section_title: Contacts and Acknowledgments
paragraphs: For further information regarding this statement, please contact Yvonne  D. Jones, Director, Strategic Issues, at (202) 512-2717 or  jonesy@gao.gov.
Individuals making key contributions to this statement include Clifton G.  Douglas Jr., Assistant Director; Dewi Djunaidy, Analyst-in-Charge;  Joseph Fread; Sara Daleski; and Robert Robinson. Key contributors for  the earlier work that supports this testimony are listed in each product.
section_title: Appendix I: Content and Status of Prior Human Capital GAO Recommendations
subsections: section_title: Product ISSUE AREA: IMPROVING MANAGEMENT AND OVERSIGHT OF THE FEDERAL CLASSIFICATION SYSTEM GAO-14-677
paragraphs: Human Capital: OPM Needs to Improve the Design, Management, and Oversight of the Federal  Classification System (July 2014)  To improve the classification system and to  strengthen OPM’s management and oversight,  the Director of OPM, working through the Chief  Human Capital Officer Council, and in  conjunction with key stakeholders such as the  Office of Management and Budget, unions, and  others, should use prior studies and lessons  learned from demonstration projects and  alternative systems to examine ways to make the  GS system’s design and implementation more  consistent with the attributes of a modern,  effective classification system. To the extent  warranted, develop a legislative proposal for  congressional consideration.
In July 2014, OPM stated that it partially concurred with  our recommendation to work with key stakeholders to use  prior studies and lessons learned to examine ways to  make the GS system more consistent with the attributes of  a modern, effective classification system. OPM agreed  that the system needs reform but OPM noted several  efforts to assist agencies with classification issues,  including its interagency classification policy forum and  partnering with agencies to address challenges related to  specific occupational areas. While these examples of  assisting agencies to better implement the GS system on  a case-by-case basis are helpful, they are not fully  addressing the fundamental challenges facing the GS  system, which we and others have said is not meeting the  needs of federal agencies.
To improve the classification system and to  strengthen OPM’s management and oversight,  the Director of OPM should develop cost- effective mechanisms to oversee agency  implementation of the classification system as  required by law, and develop a strategy to  systematically track and prioritize updates to  occupational standards.
In July 2014, OPM stated that it did not concur with our  recommendation to develop a strategy to systematically  track and prioritize updates to occupational standards.  Specifically, OPM noted that occupational standards are  updated in response to a systematic, prioritized process  informed by working with agencies and other stakeholders  and analysis of occupational trends. However, OPM  officials were unable to provide us with the documentation  of their efforts. As noted in our report, OPM has not  published a review or update of 124 occupations, roughly  30 percent of the total number of occupations on the GS  system, since 1990. Further, OPM officials could not  provide the near- or long-term prioritization of occupations  schedule for review. As a result, OPM cannot demonstrate  whether it is keeping pace with agencies’ needs nor does  it have reasonable assurance that it is fulfilling its  responsibilities to establish new, or revise existing  occupational standards based on the highest priorities.  We continue to believe that OPM should take action to  fully address our recommendation.
To improve the classification system and to  strengthen OPM’s management and oversight,  the Director of OPM should develop cost- effective mechanisms to oversee agency  implementation of the classification system as  required by law, and develop a strategy that will  enable OPM to more effectively and routinely  monitor agencies’ implementation of  classification standards.
In July 2014, OPM stated that it partially concurred with  our recommendation to develop a strategy to more  effectively and routinely monitor agencies’ implementation  of classification standards. OPM stated that it will continue  to leverage the classification appeals program to provide  interpretative guidance to agencies to assist them in  classifying positions. OPM also stated it will direct  consistency reviews as appropriate, however as we noted  in the report, OPM does not review agencies’ internal  oversight efforts.
section_title: Product ISSUE AREA: CLOSING MISSION CRITICAL SKILLS GAPS GAO-15-223
paragraphs: Federal Workforce: OPM and Agencies Need to Strengthen Efforts to Identify and Close Mission- Critical Skills Gaps (January 2015)   To assist the interagency working group, known  as the Federal Agency Skills Team (FAST), to  better identify government-wide skills gaps  having programmatic impacts and measure its  progress towards closing them, the Director of  OPM-in conjunction with the CHCO Council- should strengthen its approach and methodology  by (1) assisting FAST in developing goals for  closing skills gaps with targets that are both clear  and measurable; (2) working with FAST to  design outcome-oriented performance metrics  that align with overall targets for closing skills  gaps and link to the activities for addressing  skills gaps; (3) incorporating greater input from  subject matter experts, as planned; and (4)  ensuring FAST consistently follows key practices  for project planning.
In January 2015, OPM stated that it partially concurred  with our recommendation to strengthen the approach and  methodology used by the interagency working group,  known as FAST, to better identify skills gaps. OPM noted  it agreed with, and planned to implement, the principles of  each recommended action. However, OPM said it needed  to clarify how its terminology and planned process differs  from the description in our recommendation. In particular,  OPM stated its process will identify government-wide  rather than agency-specific skills gaps as it believes our  draft recommendation suggests. We recognize that FAST  was established to address government-wide skills gaps  and have clarified the language in our recommendation  accordingly.
To ensure that OPM builds the predictive  capacity to identify emerging skills gaps across  the government-including the ability to collect  and use reliable information on the competencies  of the federal workforce for government-wide  workforce analysis-the Director of OPM should  (1) establish a schedule specifying when OPM  will modify its Enterprise Human Resources  Integration (EHRI) database to capture staffing  data that it currently collects from agencies  through its annual workforce data reporting  process; and (2) work with agency CHCOs to  bolster the ability of agencies to assess  workforce competencies by sharing competency  surveys, lessons learned, and other tools and  resources.
In January 2015, OPM stated that it did not concur with  our recommendation. Regarding EHRI, OPM maintained  that it is impossible for the EHRI database to automatically  capture staffing data currently included in MCO Resource  Charts because some of these data includes specific  agency projections and targets, which are provided via a  manual data feed. OPM stated that it is assessing whether  EHRI can be modified to allow agencies to supply these  manual feed data into the database system. We have  modified our report to recognize that EHRI cannot  automatically capture the same agency staffing data that  are captured through the MCO Resource Charts. In  addition, OPM noted that there are funding implications  associated with its ability to anticipate whether and when  a modification schedule to the EHRI online database  could be established.
To help agencies and OPM better monitor  progress toward closing skills gaps within  agencies and government-wide, the Director of  OPM should (1) work with the CHCO Council to  develop a core set of metrics that all agencies  should use as part of their HRstat data-driven  reviews; and (2) coordinate with FAST personnel  and explore the feasibility of collecting  information needed by FAST as part of agencies’  HRstat reviews.
In January 2015, OPM concurred with our  recommendation to develop a core set of metrics that all  agencies should use as part of their HRstat data-driven  reviews, and explore the feasibility of collecting  information needed by FAST as part of agencies’ HRstat  reviews.
section_title: Product ISSUE AREA: DEVELOPING STRATEGIES TO HELP AGENCIES MEET THEIR MISSION IN AN ERA OF HIGHLY CONSTRAINED RESOURCES GAO-14-168
paragraphs: Human Capital: Strategies to Help Agencies Meet Their Missions in an Era of Highly Constrained  Resources (May 2014)  To create a more effective human capital system  that is more responsive to managing priorities  and future workforce needs, the Director of OPM,  in conjunction with the CHCO Council, should  strengthen OPM’s coordination and leadership of  government-wide human capital issues to ensure  government-wide initiatives are coordinated,  decision makers have all relevant information,  and there is greater continuity in the human  capital community for key reforms. Such actions  could include: (1) developing a government-wide  human capital strategic plan that, among other  things, would establish strategic priorities, time  frames, responsibilities, and metrics to better  align the efforts of members of the federal  human capital community with government-wide  human capital goals and issues; and (2)  coordinating communication on government-wide  human capital issues with other members of the  human capital community so that there is greater  consistency, transparency, and completeness in  exchanging and using information by  stakeholders and decision makers.
In April 2014, OPM provided examples of working groups  and other efforts to address issues such as closing skills  gaps and developing HRStat, many of which are  described in our report. Further, although the CHCO  Council agreed that more could be done to coordinate,  share resources, and explore talent management  strategies, the CHCO Council disagreed with our finding  that the human capital community was highly fragmented.  Our analysis of the comments made by the CHCO Council  found that the human capital community is fragmented  and that our recommendation for a government-wide  human capital strategic plan could help to coordinate  these efforts to ensure initiatives were not duplicative and  were aligned with the most pressing human capital  challenges. A government-wide strategic plan should  include input from the many participants in the human  capital community—reflecting the different perspectives,  missions, and resources of these organizations.
To create a more effective human capital system  that is more responsive to managing priorities  and future workforce needs, the Director of OPM,  in conjunction with the CHCO Council, should  explore the feasibility of expanded use of  enterprise solutions to more efficiently and  effectively address shared or government-wide  human capital challenges. Such actions could  include: (1) seeking cost savings and improved  functionality through coordinated government- wide Human Resources Information Technology  planning and acquisition, (2) seeking agency  input to ensure OPM’s workforce planning tools  provide effective guidance for agencies, and (3)  sharing workforce planning lessons learned and  successful models across the government.
section_title: Product
paragraphs: Recommendation  inform agency recruitment, retention, and training  needs; and (2) mechanisms for increasing staff  mobility within an agency and government-wide  to assist agencies in aligning their workforces  with evolving needs.
To create a more effective human capital system  that is more responsive to managing priorities  and future workforce needs, the Director of OPM,  in conjunction with the CHCO Council, should  ensure agencies are getting the guidance and  tools that they need by evaluating the  communication strategy for and effectiveness of  relevant tools, guidance, or leading practices  created by OPM or the agencies to address  crosscutting human capital management  challenges.
In April 2014, OPM stated that it would expand its  collaboration with agencies to design and deliver the tools  agencies need through use of the LAB@OPM, OPM’s  innovation lab. We previously reported that OPM needs  clear and specific outcome measures to help meet its  goals of enhancing skills in innovation and supporting  project-based problem solving. Otherwise, OPM’s  innovation lab efforts may not be able to demonstrate the  types of results initially envisioned. It will be important for  OPM to understand how the tools and guidance it  develops through the innovation lab and other methods  are being used by agencies.
Federal Employees: Opportunities Exist to Strengthen Performance Management Pilot (September  2013)  Recognizing that moving toward a more  performance-oriented culture within federal  agencies is likely to be a continuous effort and to  ensure that the opportunity GEAR  recommendations offer to improve performance  management is not lost, the Acting Director of  OPM, in collaboration with the CHCO Council,  should define roles and responsibilities of OPM,  the CHCO Council, and participating federal  agencies going forward as the GEAR framework  is implemented government-wide. In doing so,  OPM, in collaboration with the CHCO Council,  could define roles and responsibilities such as  supplementing the GEAR report and updating  the diagnostic toolkit as needed to reflect  additional promising practices and lessons  learned (such as those GAO identified) and  guidance on using metrics. This should include  considering whether connecting performance  expectations to crosscutting goals should be part  of the GEAR framework.
As of June 2010, the Executive Director of the CHCO  Council told us that the implementation of GEAR needs to  be a community effort and individual agencies need take  ownership for implementing the parts of the GEAR  framework that best suit their needs. The CHCO Council  would like to avoid dictating roles and responsibilities to  agencies on what to do and how to do it. OPM and CHCO  Council officials did not indicate whether they planned to  connect performance expectations to cross-cutting goals.
To improve agencies’ GEAR implementation  plans, the Secretary of the Department of  Homeland Security (DHS) should direct the  Commandant of the Coast Guard to update the  agency’s GEAR implementation plan to include  (1) performance measures that permit  comparison between desired outcomes and  actual results and (2) additional information  schedules that are linked to specific actions.
As of September 2014, DHS had not provided updates on  the status of the Coast Guard’s effort to update its GEAR  implementation plan to include (1) performance measures  that permit comparison between desired outcomes and  actual results or (2) additional information schedules that  are linked to specific actions.
Recommendation  Results Oriented Management: OPM Needs to Do More to Ensure Meaningful Distinctions Are Made  in SES Ratings and Performance Awards (January 2015)  As OPM convenes the cross-agency working  group, the Director of OPM, as the head of the  agency that certifies-with OMB concurrence-SES  performance appraisal systems, should consider  the need for refinements to the performance  certification guidelines addressing distinctions in  performance and pay differentiation. Options  could include
Revisiting and perhaps eliminating the  guideline that allows OPM to certify  agencies’ performance management  systems with an SES modal rating of  “outstanding.  Strengthening the accountability and  transparency of this guideline by activities  such as
Reporting agencies’ justifications for  high ratings to OPM on its website.
Reporting agencies’ justifications for  high ratings to Congress.
Obtaining third party input on agencies’  justifications for high ratings, such as by  the Chief Human Capital Officers  Council.
In January 2015, OPM generally agreed with the  information in our report but did not agree with our  recommendation. OPM expressed concerns that imposing  such a criterion would lead to arbitrary manipulation of the  final ratings rather than an appropriate comparison of  performance to standards. OPM asserted that this  situation would be ripe for forced distribution of the  ratings, which is explicitly prohibited by regulation. OPM  also stated that the more appropriate action is to continue  emphasizing the importance of setting appropriate,  rigorous performance requirements and standards that  logically support meaningful distinctions in performance.  As recognized in our report, OPM’s regulations  contemplate that it is possible to apply standards that  make meaningful performance distinctions and to use a  range of ratings while avoiding the use of forced  distributions. As we also note, since our 2008 report on  SES performance management systems—continuing  through the career SES performance ratings for fiscal year  2013—questions persist about the extent to which  meaningful distinctions based on relative SES  performance are being made...  OPM stated that it did not support the second part of our  recommendation regarding three suggestions for  increasing transparency for those agencies that are  certified with a modal rating of “outstanding.” Although we  suggested that OPM report high rating justifications to  Congress through its Annual Performance Report, we  understand that this may not be the most appropriate  vehicle to use; another avenue of reporting to Congress  would certainly be acceptable, and we adjusted the text  accordingly.
Federal Workforce: Improved Supervision and Better Use of Probationary Periods Are Needed to  Address Substandard Employee Performance (February 2015)  To help strengthen the ability of agencies to deal  with poor performers and to help ensure  supervisors obtain the skills needed to effectively  conduct performance management  responsibilities, the Director of OPM, in  conjunction with the CHCO Council and, as  appropriate, with key stakeholders such as  federal employee labor unions, should assess  the adequacy of leadership training that agencies  provide to supervisors.
In January 2015, OPM said that it concurred with our  recommendation. OPM stated it would assess what and  how agencies are training new supervisors and provide  feedback for improving the curriculum. In addition, OPM  stated that it would continue to provide agencies guidance  on evaluating the effectiveness of leadership training.
section_title: Product
paragraphs: Status  employees to advance without taking on supervisory or  managerial duties. In each of these cases, OPM noted  that agencies already have authority to take these actions.  We acknowledged OPM’s point and clarified the report  accordingly. We maintain, however, that OPM can still  play a leadership role and encourage agencies to take  these steps. educate agencies on the benefits of using  automated notifications to notify supervisors  that an individual’s probationary period is  ending and that the supervisor needs to  make an affirmative decision or otherwise  take appropriate action, and encourage its  use to the extent it is appropriate and cost- effective for the agency; and  determine whether there are occupations in  which-because of the nature of work and  complexity-the probationary period should  extend beyond 1-year to provide supervisors  with sufficient time to assess an individual’s  performance. If determined to be warranted,  initiate the regulatory process to extend  existing probationary periods and, where  necessary, develop a legislative proposal for  congressional action to ensure that formal  procedures for taking action against an  employee for poor performance (and a right  to appeal such an action) are not afforded  until after the completion of any extended  probationary period.
In January 2015, OPM said that it partially concurred with  the part of our recommendation calling on OPM to  determine if certain occupations require a probationary  period longer than 1-year to allow supervisor sufficient  time to assess and individual’s performance. In particular  OPM agreed to consult with stakeholders to determine,  among other things, if an extension to the probationary  period for certain complex occupations is needed and, if  necessary, pursue the established Executive Branch  deliberation process for suggesting legislative proposals.  OPM noted that it has authority to provide for longer  probationary periods under certain circumstances and we  have modified the recommendation so that it also calls on  OPM to initiate the regulatory process to do so if  warranted. As stated in our report, however, extending the  probationary period and concurrently limiting appeal rights  during that time would require legislative action under  certain circumstances.  At the same time, OPM did not concur with the part of our  recommendation for OPM to determine the benefits and  costs of providing automated notifications to supervisors  that an individual’s probationary period is ending and that  the supervisor needs to make an affirmative decision.  OPM stated that choosing the best method to ensure that  supervisors are aware that the probationary period is  ending and appeal rights will accrue is an agency  responsibility. We agreed. OPM also wrote that HR  systems at all Shared Service Centers have the  functionality to notify supervisors when an employee’s  probationary period is ending. However, as our report  notes, even though OPM considers having a tool in place  to notify supervisors that a probationary period is ending  to be a leading practice, not all agencies have  implemented that practice. Accordingly, we clarified the  recommendation so that it calls on OPM to educate  agencies on the benefits and availability of automated  notifications to alert supervisors.
section_title: Product
paragraphs: Recommendation  To help strengthen the ability of agencies to deal  with poor performers, and to help ensure OPM’s  tools and guidance for dealing with poor  performers are cost-effectively meeting agencies’  and supervisors’ needs, the Director of OPM, in  conjunction with the CHCO Council and, as  appropriate, with key stakeholders such as  federal employee labor unions, should use  Strategic Human Capital Management survey  results (once available), Federal Employee  Viewpoint Survey results, Performance Appraisal  Assessment Tool responses, and other existing  information, as relevant, to inform decisions on  content and distribution methods. The  importance of effective performance  management and addressing poor performance  may need to be reinforced with agency  supervisors so that they more routinely seek out  tools and guidance.
Status  OPM partially concurred with our recommendation to use  the results of various surveys such as the FEVS and other  information sources to help determine the extent to which  its tools and guidance for dealing with poor performers are  cost-effectively meeting agencies’ needs. Specifically,  OPM said it would use relevant data from these resources  to inform decisions about content and distribution methods  for the material OPM makes available to agencies. At the  same time, OPM noted that the information contained in  these surveys and other data sources had certain  limitations and may not always be relevant. We agreed  and clarified the recommendation accordingly.
Federal Telework: Program Measurement Continues to Confront Data Reliability Issues (April 2012)  To improve OPM’s annual reporting of telework  to Congress, the OPM Director should continue  efforts to improve data collection and gather  information that allows for the appropriate  qualification of year-to-year comparisons and  informs users about the effects of data collection  changes going forward.
As of June 2012, OPM had revised its collection of  telework participation data from agencies to include full FY  participation data from FY12. This action should enable  OPM to report year-to-year comparisons of telework  participation in its 2014 Status of Telework in the Federal  Government Report to Congress. This report is expected  to be issued by OPM in late 2014/early 2015. Reporting  an accurate year to year comparison of telework  participation would complete the implementation of this  recommendation.
section_title: Product
paragraphs: Recommendation  include requesting that agencies consistently  utilize Standard Form (SF) 182 to document and  report training costs associated with the different  delivery mechanisms employed.
Status  sound training programs and financial plans for training.
To improve federal training investment decision- making processes, the Director of OPM should,  in line with statutory and regulatory provisions on  maintenance and reporting of training  information, work with the CHCO Council to  improve the reliability of agency training  investment information by: (1) ensuring that  agencies are familiar with and follow guidance  outlined in OPM’s Guide for the Collection and  Management of Training Information regarding  which training events should be documented as  training and reported to OPM; (2) developing  policies to strengthen the utilization of Standard  Form- 182 to document and report training costs;  (3) encouraging agencies through guidance and  technical assistance, to develop policies that  require consistent reporting of training data to  their learning management systems; and (4)  encouraging each agency to assess its existing  training information system(s) and identify  whether it is providing complete and reliable data  and, if not, to develop approaches to improve the  system(s), in order to do so.
In February 2015, OPM provided a document that  summarized efforts that are underway to address the  recommendation. According to the document, during FY  14, OPM & the Chief Learning Officers (CLO) Council co- chaired a working group to develop proposed  standardized data elements/metrics and data quality  scorecard. This task has been folded into the agenda of  the OPM-led working groups under the OMB/GSA  Category Management Initiative. OPM stated that by  September 30, 2015, it expects to develop and approve  proposed standardized data elements and metrics and a  quality scorecard. In the summer of 2014, OPM  administered a survey to the Training & Development List  Serv members on the utilization of OPM’s Training and  Development Wiki on opm.gov. Survey results revealed  that over 50 percent of the respondents Were not aware  of the Wiki. A plan to revitalize the Wiki in order to provide  improved guidance to agencies has been developed but  OPM’s Employee Services still needs to determine what  funding is available for the product.
To improve federal training investment decision- making processes, the Director of OPM should  provide regular report summaries to agencies on  Enterprise Human Resources Integration (EHRI)  training investment data and its reliability, in  order to improve the transparency and reliability  of federal training investment data.
In February 2015, OPM provided a document that  summarized efforts that are underway to address our  recommendation. According to the document, OPM stated  that by September 30, 2015, it expects to develop and  approve proposed standardized data elements and  metrics and a quality scorecard. In addition, OPM stated  that the agency will provide agencies their training data  reports from EHRI for FY 14 in FY 15.
To improve federal training investment decision- making processes, the Director of OPM should,  once federal training data reliability has been  sufficiently improved, consistent with Executive  Order No. 11348, use EHRI data to: a) counsel  heads of agencies and other agency officials on  the improvement of training, and b) assist  agencies in developing sound programs and  financial plans for training and provide advice,  information, and assistance to agencies on  planning and budgeting training programs.
section_title: Product
paragraphs: Status  in late 2015.
To improve federal training investment decision- making processes, the Director of OPM should,  in collaboration with the CHCO and Chief  Learning Officer (CLO) Councils, identify the best  existing courses that fulfill government-wide  training requirements, such as mandatory Equal  Employment Opportunity training, or training in  common federal occupations, such as basic  training in financial management, and offer them  to all agencies through HR University or other  appropriate platform to reduce costly and  duplicative federal training investments.
In February 2015, OPM officials provided a document that  summarized OPM’s continuing efforts to address our  recommendation. According to the document, OPM is  designing and building a Government-wide University  prototype known as Gov U. Through Gov U all federal  employees will access accredited training and education  through a centralized portal that links them to federally  mandated training, occupational and  management/leadership courses and degree programs,  so the government can reduce costs, increase quality and  assure access for all employees. According to OPM, the  CLO Council’s Mandatory Training Working Group drafted  the government-wide mandatory training curriculum and  also met to discuss the process for selecting federally  mandated training courses to share across agencies in  different modalities. The working group is currently  developing the Domestic Violence, Sexual Assault and  Stalking training. The course structure and interface have  been designed and the course storyboarding is expected  to be completed by the end of April 2015.
Federal Employees: Office of Personnel Management’s 2012 Telework Report Shows Opportunities  for Improvement (June 2013)  In preparation for the 2014 telework report, OPM  should provide goal setting assistance for  agencies not yet able to report telework goals,  including agencies which intend to establish  nonparticipation goals but are not yet able to  report on these goals. OPM should request in its  data call that each of these agencies report by  what year the agency will be able to report its  goals, including each agency’s timetable for  complete reporting and the status of action steps  and milestones they established to gauge  progress.
While OPM has taken several actions to implement our  recommendation, it is premature to assess the results of  these efforts. OPM has conducted several training  sessions with agencies and added an appendix to its 2013  data call to assist agencies establish standards for setting  and evaluating telework goals. Our analysis of OPM’s  2012 telework report did not indicate a high number of  agencies had set numeric goals, calling into question the  value of OPM’s techniques to assist agencies in setting  goals. Since the time of our report, the evidence OPM has  provided continues to emphasis similar training  techniques it has traditionally used with no evidence it has  yielded improvements. We will review the status of this  recommendation when OPM releases its 2014 telework  report.
OPM should include in its 2014 report to  Congress the amount of cost savings resulting  from the impacts of telework each agency may  have identified, and the method the agency used  to assess or verify the savings.
OPM added questions to its 2013 telework data call to  gather the amount of cost savings and the method the  agency used to assess the savings. When OPM issues its  2014 telework report to Congress in 2015, we will assess  the extent to which OPM has identified cost savings and  how agencies assess or verify the savings.
To improve the reliability of data collection, OPM  should work with the Chief Human Capital  Officers (CHCO) Council and its leadership to  develop documented agreements and a  timetable to complete an automated tracking  system or other reliable data gathering method  that can be validated by OPM.
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paragraphs: Status  payroll providers, or the CHCO Council, or (2) a timetable  to complete an automated tracking system or other  reliable data gathering methods that can be validated by  OPM. We followed-up with OPM in August and  September 2014, and OPM confirmed there was no new  information to report.
Human Capital: Agencies Should More Fully Evaluate the Costs and Benefits of Executive Training  (January 2014)  To help ensure that agencies track and report  comparable and reliable cost data and perform  evaluations that assess the impact of executive  training on agency performance or missions, the  Director of OPM, in coordination with the CHCO  Council, should establish interim milestones for  meeting with agencies in order to address  training data deficiencies and to establish well- defined timeframes for improving the reliability of  the data in its Enterprise Human Resources  Integration database.
In May 2014, OPM outlined its action plan to address our  recommendation. According to OPM, the agency will work  with agencies via the Chief Human Capital Officers  Council and Chief Learning Officers Council to poll  agencies to establish an “as is” state of training data  reliability and deficiencies. Based on evidence gathered,  OPM plans to develop proposed standardized data  elements, metrics and a data quality scorecard. Once both  Councils approve the proposal, OPM plans to make  changes to training data elements in the Enterprise  Human Resource Integration data warehouse and Guide  to Human Resources Reporting. OPM also has plans to  monitor agency progress for improving data.
To help ensure that agencies track and report  comparable and reliable cost data and perform  evaluations that assess the impact of executive  training on agency performance or missions, the  Director of OPM, in coordination with the CHCO  Council, should improve assistance to agencies  regarding evaluating the impact of executive  training on mission and goals, for example by  sharing information and examples of how  agencies could better conduct such evaluations.
In May 2014, OPM outlined its action plan to address our  recommendation. According to OPM, the agency will work  through the Chief Learning Officers Council to encourage  agencies to incorporate training evaluation in their  executive training in a more robust way. OPM plans to use  OPM-hosted roundtables and best practice sessions to  provide agencies assistance on evaluating the impact of  executive training. OPM will encourage agencies to adopt  an evaluation approach that considers individual agency  management practices while being consistent with OPM’s  Training Evaluation Field Guide.
To enhance the efficiency of executive training,  the Director of OPM, in coordination with the  CHCO Council, should assess potential  efficiencies identified by agencies for possible  government-wide implementation, and then take  the steps necessary to implement these, such as  updating the guidance governing executive  training programs.
In May 2014, OPM outlined its action plan to address our  recommendation. According to OPM, the agency plans to  survey agencies about the components and effectiveness  of their executive onboarding programs and use the  information, and other current research, to offer  Government-wide Best Practice sessions. OPM will also  use the results to update guidance governing executive  onboarding programs and the Federal Leadership  Development Program website.
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paragraphs: Recommendation  targets and measures should correspond to the  lab’s overarching goals to build organizational  capacity to innovate and achieve specific  innovations in concrete operational challenges.
Status  suite of measures also includes outcome related  measures for the lab, including the amount of estimated  tax dollars saved as a result of lab activities and the  satisfaction levels of participants in lab activities. OPM  indicated that draft targets for these measures Were in  review by the agency and that Lab officials had also  developed a retrospective document on the lab that  highlights key projects and the results of those projects.
To help substantiate the lab’s original goals of  enhancing skills in innovation and supporting  project-based problem solving, the Director of  OPM should direct lab staff to review and refine  the set of survey instruments to ensure that  taken as a whole, they will yield data of sufficient  credibility and relevance to indicate the nature  and extent to which the lab is achieving what it  intends to accomplish or is demonstrating its  value to those who use the lab space. For  example, lab staff should consider the following  actions: (1) Developing a standard set of  questions across all service offerings. (2)  Revising the format and wording of existing  questions related to skills development to  diminish the likelihood of social desirability bias  and use post-session questions that ask, in a  straight-forward way, about whether, or the  extent to which, new information was acquired.  (3) Replacing words or phrases that are  ambiguous or vague with defined or relevant  terminology (e.g., terms actually used in the  session) so that the respondent can easily  recognize a link between what is being asked  and the content of the session.
As of March 2015, OPM had revised its survey  instruments to include standard, understandable surveys  for (1) those receiving coaching skills in human centered  design, (2) Lab Fellows who will use human-centered  design techniques in their home agencies, and (3) human- centered design workshops. The surveys aim to measure  participant’s satisfaction with sessions in the lab, as well  as anticipated return on investment and other job-related  improvements from work conducted in OPM’s and  innovation lab.
To help substantiate the lab’s original goals of  enhancing skills in innovation and supporting  project-based problem solving, the Director of  OPM should direct lab staff to build on existing  efforts to share information and knowledge within  the federal innovation community. For example,  OPM lab staff could reach out to other agencies  with labs such as Census, the Department of  Housing and Urban Development, and the  National Aeronautics and Space Administration’s  Kennedy Space Center to share best practices  and develop a credible evaluation framework.
In March 2015, OPM stated that it participates regularly in  communities of practice with government innovation  professionals and experts in human-centered design.  OPM also stated that its lab staff members make  presentations about OPM’s lab and innovation practices to  multiple audiences, including members of the federal  innovation community. For example, in December 2014  the director of OPM’s lab provided subject matter  expertise to the Department of Health and Human  Services to try to help ignite its innovation program  curriculum. In addition, OPM noted that it engages  regularly with its innovation lab workshop alumni to  support their efforts to bring design-led innovation to their  agencies.
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paragraphs: Recommendation  other approaches to developing its cost estimate.  considering whether to continue using its current  methodology. OPM stated that its cost estimates have  been based on (1) official time and average salary data  provided to OPM through EHRI; (2) official time data  manually provided directly to OPM by certain agencies;  and (3) official time data manually updated by a number of  agencies. OPM said that the approach we used in the  report linking official time hours taken by specific  individuals to those individuals’ actual salaries is not  always possible using EHRI in all instances and is a labor  intensive, and thus more costly process to undertake for  the entire executive branch. The methodology we used  was intended as an example of an alternative method for  producing a cost estimate. OPM reported in October 2014  that 52 of the 62 agencies that reported fiscal year 2012  official time data to OPM did so using EHRI, thus OPM  would be able to link official time hours used by specific  individuals to the actual salaries for the overwhelming  majority of reporting agencies. Although our approach  may be slightly more labor intensive, it provides greater  assurance that the cost reported is more representative of  actual cost and, ultimately, more useful for oversight  purposes.
To help ensure that OPM and agencies collect,  track, and report reliable data on the use of  official time, the Director of OPM should work  with agencies to identify opportunities to increase  efficiency of data collection and reporting through  EHRI.
To help ensure that OPM and agencies collect,  track, and report reliable data on the use of  official time, the Director of OPM should consider  whether it would be useful to share agencies’  practices on monitoring use of official time  through existing forums such as the Employee  Labor Relations (ELR) network.
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paragraphs: Status  strengthen its assistance to agencies by sharing  techniques and approaches on monitoring official time in a  collaborative manner through its membership in the ELR  network.
Federal Paid Administrative Leave: Additional Guidance Needed to Improve OPM Data (October 2014)  To help ensure that agencies report comparable  and reliable data to Enterprise Human  Resources Integration (EHRI), the Director of  OPM, in coordination with agencies and payroll  service providers  Develop guidance for agencies on which  activities to enter, or not enter, as paid  administrative leave in agency time and  attendance systems  Provide updated and specific guidance to payroll  service providers on which activities to report, or  not report, to the paid administrative leave data  element in EHRI.
In October 2014, OPM partially agreed with our  recommendation. OPM agreed that (1) some reporting  requirements should be clarified, in particular, guidance  regarding reporting holiday time; (2) it would clarify that  the paid administrative leave category is a catch-all  category for paid leave that does not fall into another  EHRI category; and (3) it will collaborate with agencies  and payroll providers in developing changes in guidance  and EHRI payroll data elements.  OPM said that its role does not include directing guidance  to agencies on how to collect time and attendance data,  but it does including issuing guidance on EHRI data  requirements that agency systems should support. We  believe that in directing EHRI data requirements to all  responsible agency officials and payroll providers, OPM  can provide such guidance to agencies. We continue to  believe our recommendation is valid because we found  that payroll providers were reporting time for activities as  paid administrative leave that they should not, according  to OPM.
Human Capital: OPM Needs to Better Analyze and Manage Dual Compensation Waiver Data  (December 2014)  To improve OPM’s assistance to agencies and  management of its dual compensation waiver  program, the Director of OPM should analyze  dual compensation waivers to identify trends that  can inform OPM’s human capital management  tools.
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paragraphs: Status  analyze waivers and identify trends that could improve its  other tools.
To improve OPM’s assistance to agencies and  management of its dual compensation waiver  program, the Director of OPM should establish  policies and procedures for documenting the  dual compensation waiver review process.
In December 2014, OPM stated that it partially concurred  with our recommendation to establish policies and  procedures for documenting the dual compensation  waiver review process. OPM noted that it has policies and  procedures for adjudicating waivers and that it is in  compliance with the National Archives and Records  Administration policies. However, OPM was unable to  provide evidence of any such policies and procedures. In  fact, OPM could not demonstrate adherence to federal  internal control standards stating agencies should clearly  document significant transactions and events and the  documentation should be readily available for  examination. Further, while OPM was able to ultimately  produce 16 waiver decision letters, it was unable to  provide a single complete, agency waiver application  along with the supporting documentation and  corresponding OPM decision letter. OPM also could not  identify the total number of waivers for any given time  period, meaning that even if OPM individually reviewed  the thousands of documents in its document management  system, it would not know if all materials were maintained  appropriately. We continue to believe that OPM should  take action to fully address this recommendation and  comply with federal internal control standards.
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