Human Capital: Diversity in the Federal SES and Senior Levels of the U.S. Postal Service and Processes for Selecting New Executives
Published: 2008-04-03T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: A diverse Senior Executive Service (SES), which generally represents the most experienced segment of the federal workforce, can be an organizational strength by bringing a wider variety of perspectives and approaches to policy development and decision making. In January 2003, GAO provided data on the diversity of career SES members as of October 2000 (GAO-03-34). In March 2000, GAO reported similar data for the Postal Career Executive Service (PCES) as of September 1999 (GAO/GGD-00-76). In its 2003 report, GAO also projected what the profile of the SES would be in October 2007 if appointment and separation trends did not change. In response to a request for updated information on diversity in the SES and the senior ranks of the U.S. Postal Service, GAO is providing data on race, ethnicity, and gender obtained from the Office of Personnel Management's (OPM) Central Personnel Data File and the Postal Service for (1) career SES positions as of the end of fiscal year 2007 and the SES developmental pool (i.e., GS-15 and GS-14 positions) as well as a comparison of actual fiscal year 2007 data to projections for fiscal year 2007 that GAO made in its 2003 report, and (2) the PCES, the Executive Administrative Schedule (EAS), and EAS participants in the Corporate Succession Planning (CSP) program. GAO also describes the process that executive agencies and the Postal Service use to select members into their senior ranks.
section_title: What GAO Found
paragraphs: Data in the Central Personnel Data File and provided by the U.S. Postal Service show that as of the end of fiscal year 2007, the overall percentages of women and minorities have increased in the federal career SES and its developmental pool for potential successors since 2000 as well as in the PCES and EAS levels 22 and above, from which PCES potential successors could come, since 1999. Actual fiscal year 2007 SES data show that representation increased from October 2000 among minorities and women and that those increases generally exceed the increases we projected in our 2003 report. The only decrease among minorities occurred in African American men, whose fiscal year 2007 actual representation (5.0 percent) was less than the October 2000 baseline (5.5 percent). For the developmental pool (GS-15s and GS-14s), fiscal year 2007 data show that increases also occurred generally among minorities and women since October 2000. Both executive branch agencies and the Postal Service have processes for selecting members into their senior ranks. Executive agencies use Executive Resources Boards to review the executive and technical qualifications of eligible candidates for initial SES career appointments and make recommendations on the best qualified. An OPM-administered board reviews candidates' qualifications before appointment to the SES. The Postal Service does not fall under the jurisdiction of OPM's board for promoting employees to the PCES. Instead, it promotes EAS and other employees to the PCES when they are selected to fill PCES vacancies. Most employees promoted to the PCES have been CSP program participants, consistent with Postal Service policy encouraging this practice. The CSP program is intended to identify and develop employees so that they can promptly and successfully assume PCES positions as these positions become available.

section_title: Letter
paragraphs: We are pleased to be here today to provide the Subcommittees with  information on the representation of women and minorities in the senior  ranks of the federal government and the U.S. Postal Service. In January  2003, we released a comprehensive review of career senior executives by  race, ethnicity, and gender governmentwide and by major executive  agencies as of October 2000, and we also projected what the profile of the  Senior Executive Service (SES) would be in October 2007 if appointment  and separation trends did not change.
Most recently, in May 2007, we testified before the House Subcommittee  on Federal Workforce, Postal Service, and the District of Columbia,  Committee on Oversight and Government Reform on the fiscal year 2006  levels of representation of women and minorities in the federal  government’s career SES and the levels that serve as the developmental  pools from which the vast majority of potential successors for career SES  positions will come. We also provided data for the Postal Service’s Postal  Career Executive Service (PCES), which includes postal officers and  executives and certain levels of the Service’s Executive and Administrative  Schedule (EAS), from which potential successors could come.
The federal government continues to face new and more complex  challenges in the 21st century resulting from long-term fiscal constraints,  changing demographics, and other factors. Leadership in agencies across  the federal government, especially at senior executive levels, is essential to  providing accountable, committed, consistent, and sustained attention to  human capital and related organizational transformation issues. Having a  diverse SES corps, which generally represents the most experienced  segment of the federal workforce, can be an organizational strength that  can bring a wider variety of perspectives and approaches to bear on policy  development and implementation, strategic planning, problem solving, and  decision making.
Today, as requested, we are providing updated information as of the end  of fiscal year 2007 on the representation of women and minorities in  career SES positions and the SES developmental pool (i.e., GS-15 and GS- 14 positions) as well as baseline data from October 2000, which we  previously reported for those same positions in 2003. As requested, we  also will compare the fiscal year 2007 data to statistically estimated  projections for fiscal year 2007 that we made in our 2003 report. We also  are providing updated information from the Postal Service on the  representation of women and minorities in the PCES and EAS as of the  end of fiscal year 2007 as well as baseline data from 1999, which we  previously reported for those same positions. We did not make  projections for the profile of Postal Service positions based on retirement  trends. In addition, we are providing representation data for the Postal  Service’s Corporate Succession Planning (CSP) program as of the end of  fiscal year 2007 and the end of fiscal year 2004—the fiscal year that the  CSP program first accepted participants. This program is intended to  identify and develop employees so that they can promptly and successfully  assume PCES positions as these positions become available. Finally, we  will describe the overall processes used in executive branch agencies and  the Postal Service for selecting members into their senior ranks.
We extracted representation data for the SES from the Office of Personnel  Management’s (OPM) Central Personnel Data File (CPDF). We believe the  CPDF is sufficiently reliable for the informational purpose of this  testimony. We previously reported that governmentwide data from the  CPDF for the key variables reported in this testimony—agency, gender,  race or national origin, and pay plan or grade—were 96 percent or more  accurate. Representation data for the PCES, EAS, and CSP program were  provided by the Postal Service. The Postal Service data on employees in  different levels by gender and race as well as the number in the CSP  program are of undetermined reliability. During our review, the Postal  Service was transitioning from one electronic data system to another,  which prevented us from performing our normal reliability assessment.  However, because the Postal Service representation data were generally  consistent with prior years, we do not believe there are any material  limitations in using these data for the purposes of this testimony. The  information on selection processes was obtained from OPM and the Postal  Service. We conducted this performance audit from January 2008 to March  2008 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Representation of Women and Minorities in the SES and Its Developmental Pool as of Fiscal Year 2007
paragraphs: The data that we are reporting today provide a demographic snapshot of  the career SES as well as the levels that serve as the SES developmental  pool for October 2000 and September 2007. Table 1 shows the number of  career SES as well as those in the developmental pool, including the  percentages of women and minorities. For more information on  demographic data governmentwide, see appendix I.
Table 2 shows a further breakdown of the number of SES members,  including the percentages of women and minorities, by Chief Financial  Officers (CFO) Act agency. For more information on demographic data  by CFO Act agency, see appendix I.
As we reported in 2003, the gender, racial, and ethnic profiles of the career  SES at the 24 CFO Act agencies varied significantly in October 2000. The  representation of women ranged from 13.7 percent to 41.7 percent, with  half of the agencies having 27 percent or fewer women. For minority  representation, rates varied even more and ranged from 3.1 percent to 35.6  percent, with half of the agencies having less than 15 percent minorities in  the SES. In 2007, the representation of women and minorities, both overall  and for most individual agencies, was higher than it was in October 2000.  The representation of women ranged from 19.9 percent to 45.5, percent  with more than half of the agencies having 30 percent or more women. For  minority representation, rates ranged from 6.1 percent to 43.8 percent,  with more than half of the agencies having over 16 percent minority  representation, and more than 90 percent of the agencies having more  than 13 percent minority representation in the SES.
For this testimony, we did not analyze the factors that contributed to the  changes from October 2000 through September 2007 in representation.  OPM and the Equal Employment Opportunity Commission (EEOC), in  their oversight roles, require federal agencies to analyze their workforces,  and both agencies also report on governmentwide representation levels.  Under OPM’s regulations implementing the Federal Equal Opportunity  Recruitment Program (FEORP), agencies are required to determine  where representation levels for covered groups are lower than the civilian  labor force and take steps to address those differences. Agencies are also  required to submit annual FEORP reports to OPM in the form prescribed  by OPM. EEOC’s Management Directive 715 (MD-715) provides guidance  and standards to federal agencies for establishing and maintaining  effective equal employment opportunity programs, including a framework  for executive branch agencies to help ensure effective management,  accountability, and self-analysis to determine whether barriers to equal  employment opportunity exist and to identify and develop strategies to  mitigate or eliminate the barriers to participation. Specifically EEOC’s  MD-715 states that agency personnel programs and policies should be  evaluated regularly to ascertain whether such programs have any barriers  that tend to limit or restrict equitable opportunities for open competition  in the workplace. The initial step is for agencies to analyze their workforce  data with designated benchmarks, including the civilian labor force. If  analysis of their workforce profiles identifies potential barriers, agencies  are to examine all related policies, procedures, and practices to determine  whether an actual barrier exists. EEOC requires agencies to report the  results of their analyses annually.
In our 2003 report, we (1) reviewed actual appointment trends from fiscal  years 1995 to 2000 and actual separation experience from fiscal years 1996  to 2000; (2) estimated by race, ethnicity, and gender the number of career  SES who would leave government service from October 2000 through  October 2007; and (3) projected what the profile of the SES would be if  appointment and separation trends did not change. We estimated that  more than half of the career SES members employed in October 2000 will  have left service by October 2007. Assuming then-current career SES  appointment trends, we projected that (1) the only significant changes in  diversity would be an increase in the number of white women with an  essentially equal decrease in white men and (2) the proportions of  minority women and men would remain virtually unchanged in the SES  corps, although we projected slight increases among most racial and  ethnic minorities.
Table 3 shows SES representation as of October 2000, our 2003  projections of what representation would be at the end of fiscal year 2007,  and actual fiscal year 2007 data. We projected increases in representation  among both minorities and women. Fiscal year 2007 data show that  increases did take place among those groups and that those increases  generally exceed the increases we projected. The only decrease among  minorities occurred in African American men, whose representation  declined from 5.5 percent in 2000 to 5.0 percent at the end of fiscal year  2007. For more information on our projections, see appendix II.
Table 4 shows developmental pool representation as of October 2000, our  2003 projections of what representation would be at the end of fiscal year  2007, and actual fiscal year 2007 data. We projected increases in  representation among both minorities and women. Fiscal year 2007 data  show that increases did generally take place among those groups. For  more information on our projections, see appendix II.
As stated earlier, we have not analyzed the factors contributing to changes  in representation; therefore care must be taken when comparing changes  in demographic data since fiscal year 2000 to the projections we made in  2003, as we do in tables 3 and 4. For example, we have not determined  whether estimated retirement trends materialized or appointment and  separation trends used in our projections continued and the impact these  factors may have had on the diversity of the SES and its developmental  pool.
Considering retirement eligibility and actual retirement rates of the SES is  important because individuals normally do not enter the SES until well  into their careers; thus SES retirement eligibility is much higher than for  the workforce in general. As we have said before, as part of a strategic  human capital planning approach, agencies need to develop long-term  strategies for acquiring, developing, motivating, and retaining staff. An  agency’s human capital plan should address the demographic trends that  the agency faces with its workforce, especially retirements. In 2006, OPM  reported that approximately 60 percent of the executive branch’s 1.6  million white-collar employees and 90 percent of about 6,000 federal  executives will be eligible for retirement over the next 10 years. If a  significant number of SES members were to retire, it could result in a loss  of leadership continuity, institutional knowledge, and expertise among the  SES corps, with the degree of loss varying among agencies and  occupations. This has important implications for government management  and emphasizes the need for good succession planning for this leadership  group. Rather than simply recreating the existing organization, effective  succession planning and management, linked to the strategic human  capital plan, can help an organization become what it needs to be. Leading  organizations go beyond a “replacement” approach that focuses on  identifying particular individuals as possible successors for specific top- ranking positions. Rather, they typically engage in broad, integrated  succession planning and management efforts that focus on strengthening  both current and future capacity, anticipating the need for leaders and  other key employees with the necessary competencies to successfully  meet the complex challenges of the 21st century.
Succession planning also is tied to the federal government’s opportunity to  affect the diversity of the executive corps through new appointments. In  September 2003, we reported that agencies in other countries use  succession planning and management to achieve a more diverse  workforce, maintain their leadership capacity, and increase the retention  of high-potential staff. Racial, ethnic, and gender diversity in the SES is an  important component for the effective operation of the government.
section_title: Representation of Women and Minorities in the PCES, EAS, and CSP Program
paragraphs: As we have testified before the House Subcommittee on Federal  Workforce, Postal Service, and the District of Columbia, Committee on  Oversight and Government Reform, the Postal Service expects nearly half  of its executives to retire within the next 5 years, which has important  implications and underscores the need for effective succession planning.  This presents the Postal Service with substantial challenges for ensuring  an able cadre of postal executives and also presents opportunities for the  Postal Service to affect the composition of the PCES. Table 5 updates  information we provided last year for the PCES and EAS levels 22 and  above, from September 1999 to September 2007, showing increases in the  representation of women and minorities.
Since last year’s testimony, we have studied the pools of potential  successors that the Postal Service can draw from in selecting PCES  promotions. The Service’s policy encourages selecting employees from the  CSP program when it promotes employees to the PCES. The current CSP  program—which first accepted participants in 2004—is intended to  identify pools of potential successors for PCES positions and develop  these employees so that they can promptly and successfully assume PCES  positions as these positions become available. Nearly 87 percent of postal  employees promoted to the PCES in fiscal years 2004 through 2007 were  participating in the CSP program, and nearly 7 in 10 promotions were  drawn from CSP program participants in EAS levels 25 and above. Table 6  shows increases in the representation of women and minorities in the CSP  program from September 2004 to September 2007 among program  participants at EAS level 25 and above.
We also have not analyzed factors that contributed to changes in the  representation levels in the PCES, EAS, or CSP program. The Postal  Service, like executive branch agencies, has responsibility for analyzing its  workforce to determine (1) where representation levels for covered  groups are lower than the civilian labor force and take steps to address  those differences and (2) whether barriers to equal employment  opportunity exist and to identify and develop strategies to mitigate or  eliminate the barriers to participation.
The Postal Accountability and Enhancement Act, enacted in 2006,  expressed Congress’s interest in diversity in the Postal Service. It required  the Postal Service Board of Governors to report on the representation of  women and minorities in supervisory and management positions, which  is a different focus from this statement on the PCES, EAS, and CSP  program. This Board of Governors’ report provided trend data for  supervisory and management positions for fiscal years 2004 through 2007,  as well as for the career workforce as a whole. In this regard, the report  highlighted data for all career employees in the Service’s workforce,  noting that from fiscal years 2004 through 2007 the percentage of women  increased from 38.3 percent to 39.7 percent, while the percentage of  minorities increased from 36.8 percent to 38.3 percent over the same  period.
section_title: Processes Used for Selecting SES and PCES Members
paragraphs: Executive branch agencies have processes for selecting members into the  SES and developmental programs that are designed to create pools of  candidates for senior positions. The Postal Service also has processes for  selecting PCES members and participants in its CSP program from which  potential successors to the PCES could come.
subsections: section_title: Selecting Career SES Members
paragraphs: OPM regulations require federal executive agencies to follow competitive  merit staffing requirements for initial career appointments to the SES or  for appointment to formal SES candidate development programs, which  are competitive programs designed to create pools of candidates for SES  positions. Each agency head is to appoint one or more Executive  Resources Boards (ERB) to conduct the merit staffing process for initial  SES career appointments. ERBs review the executive and technical  qualifications of each eligible candidate and make written  recommendations to the appointing official concerning the candidates.  The appointing official selects from among those candidates identified by  the ERB as best qualified and certifies the executive and technical  qualifications of those candidates selected. Candidates who are selected  must have their executive qualifications certified by an OPM-administered  Qualifications Review Board (QRB) before being appointed to the SES.
According to OPM, it convenes weekly QRBs to review the applications of  candidates for initial career appointment to the SES. QRBs are  independent boards of three senior executives that assess the executive  qualifications of all new SES candidates. Two criteria exist for  membership on a QRB: at least two of three members must be career  appointees, and each member must be from a different agency. In  addition, OPM guidance states that QRB members cannot review  candidates from their own agencies. An OPM official stated that an OPM  official acts as administrator, attending each QRB to answer questions,  moderate, and offer technical guidance but does not vote or influence  voting. OPM guidance states that the QRB does not rate, rank, or compare  a candidate’s qualifications against those of other candidates. Instead,  QRB members judge the overall scope, quality, and depth of a candidate’s  executive qualifications within the context of five executive core  qualifications—leading change, leading people, results driven, business  acumen, and building coalitions—to certify that the candidate’s  demonstrated experience meets the executive core qualifications.
To staff QRBs, an OPM official said that OPM sends a quarterly letter to  the heads of agencies’ human capital offices seeking volunteers for  specific QRBs and encourages agencies to identify women and minority  participants. Agencies then inform OPM of scheduled QRB participants,  without a stipulation as to the profession of the participants. OPM solicits  agencies once a year for an assigned quarter and requests QRB members  on a proportional basis. The OPM official said that OPM uses a rotating  schedule, so that the same agencies are not contacted each quarter.  Although QRBs generally meet on a weekly basis, an OPM official said that  QRBs can meet more than once a week, depending on caseload. The  official said that because of the caseload of recruitment for SES positions  recently, OPM had been convening a second “ad hoc” QRB. According to  another OPM official, after QRB certification, candidates are officially  approved and can be placed.
In addition to certification based on demonstrated executive experience  and another form of certification based on special or unique qualities,  OPM regulations permit the certification of the executive qualifications of  graduates of candidate development programs by a QRB and selection for  the SES without further competition. OPM regulations state that for  agency candidate development programs, agencies must have a written  policy describing how their programs will operate and must have OPM  approval before conducting them. According to OPM, candidate  development programs typically run from 18 to 24 months and are open to  GS-15s and GS-14s or employees at equivalent levels from within or  outside the federal government. Agencies are to use merit staffing  procedures to select participants for their programs, and most program  vacancies are announced governmentwide. OPM regulations provide that  candidates who compete governmentwide for participation in a candidate  development program, successfully complete the program, and obtain  QRB certification are eligible for noncompetitive appointment to the SES.  OPM guidance states that candidate development program graduates are  not guaranteed placement in the SES. Agencies’ ERB chairs must certify  that candidates have successfully completed all program activities, and  OPM staff and an ad hoc QRB review candidates’ training and  development experience to ensure that it provides the basis for  certification of executive qualifications.
OPM also periodically sponsors a centrally administered federal candidate  development program. According to an OPM official, the OPM-sponsored  federal candidate development program can be attractive to smaller  agencies that may not have their own candidate development program,  and OPM administers the federal program for them. According to OPM  officials, 12 candidates graduated from the first OPM-sponsored federal  candidate development program in September 2006. Of those, 8 individuals  have been placed; 1 is about to be placed, and 3 are awaiting placement. In  January 2008, OPM advertised the second OPM-sponsored federal  candidate development program, and selections for the second program  are pending.
With respect to oversight of and selection into the SES, we note that the  Chairmen of the two Subcommittees represented here today introduced  legislation in October 2007, which would create a Senior Executive  Service Resource Office within OPM to improve policy direction and  oversight of, among other things, the structure, management, and diversity  of the SES. In addition, this legislation would require agencies to establish  SES Evaluation Panels of diverse composition to review the qualifications  of candidates.
section_title: Selecting PCES Members
paragraphs: Because the Postal Service has specific statutory authority to establish  procedures for appointments and promotions, it does not fall under the  jurisdiction of the OPM QRB and its certification activities. Instead, the  Postal Service promotes EAS and other employees to the PCES when  these employees are selected to fill PCES vacancies. Promotions generally  involve EAS employees in levels 25 and above who are CSP program  participants and who were identified as potential PCES successors  through a nomination and evaluation process (either through self- nomination or nomination by a PCES “sponsor”). As previously noted, the  CSP program is intended to identify and develop these employees so that  they can promptly and successfully assume PCES positions as these  positions become available.
The selecting official for a PCES-I position (i.e., the relevant officer) is  required to obtain approval for the selection decision from the relevant  member of the Service’s Executive Committee. Postal Service policy  notes that employees promoted to the PCES should be CSP participants  except in rare cases. However, participation in the CSP program does not  trigger any promotion decision, and any employee can be promoted to the  PCES, regardless of whether that person is participating in CSP. Further,  there are no requirements for PCES vacancies to be advertised, nor are  selecting officials required to interview candidates for such vacancies.  According to postal officials, selecting officials use a variety of methods to  fill PCES-I vacancies, which may involve interviews and discussion  among officers regarding candidates or potential candidates, or which may  involve considering employees who have had developmental assignments.  Such discussions may happen when the vacancy is in one area of the  country and potential candidates are in other areas, or when potential  candidates are in CSP program position pools outside the jurisdiction of  the selecting official.
The Postal Service has implemented a structured process to select  nominees to participate in up to 5 of the approximately 400 CSP program  position pools. First, the Service conducts a range of preparatory activities  for the 2-year CSP program cycle, including a needs assessment for the  program, such as determining what PCES positions have been created or  eliminated and any CSP position pools where succession planning is  shallow. The Service’s Employee Development and Diversity Office, which  is responsible for the CSP program, coordinates activities with CSP  program liaisons throughout the Service, who provide administrative  support and information about the program.
Second, the Postal Service receives nominations for each 2-year CSP  program cycle, including self-nominations and other nominations from  PCES sponsors. Nominees complete applications that include self- assessments against the eight competencies in the Service’s Executive  Competency Model. PCES sponsors and the relevant PCES-I executives  also evaluate each nominee and make recommendations to the CSP  program committees to either support or not support each nominee.
Third, each of the Service’s 43 officers convenes a CSP program  committee of three or more executives to consider nominees for each  position pool under each officer’s jurisdiction. Each CSP program  committee reviews nominees for pools under its jurisdiction and makes  recommendations regarding each nominee. Officers then select  participants for their pools, subject to review and approval by the  responsible member of the Executive Committee. The Postmaster General  and Chief Human Resources Officer also review some selections for  “critical” position pools that are so designated by each officer.
Fourth, once selected, CSP participants develop an individual  development plan (IDP) that outlines planned developmental activities  and assignments for the 2-year CSP program cycle. IDPs are reviewed and  approved by the CSP program committees and by the relevant executives.
Chairman Davis, Chairman Akaka, and Members of the Subcommittees,  this concludes our prepared statement. We would be pleased to respond to  any questions that you may have.
section_title: Contacts and Acknowledgments
paragraphs: For further information regarding this statement, please contact Kate  Siggerud, Director, Physical Infrastructure Issues, on (202) 512-2834 or at  siggerudk@gao.gov; or George Stalcup, Director, Strategic Issues, on (202)  512-6806 or at stalcupg@gao.gov. Individuals making key contributions to  this statement included Gerald P. Barnes and Belva Martin, Assistant  Directors; Karin Fangman; Kenneth E. John; Kiki Theodoropoulos; and  Greg Wilmoth.
section_title: Appendix I