Securities And Exchange Commission: Human Capital Challenges Require Management Attention
Published: 2001-09-17T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The U.S. Securities and Exchange Commission's (SEC) human capital management practices have been shaped largely by a growing staffing crisis that threatens to undermine the agency's ability to carry out its mission. GAO surveyed current and former SEC attorneys, accountants, and examiners to determine what factors influenced turnover, satisfaction, and morale among SEC staff.
section_title: What GAO Found
paragraphs: GAO found that inadequate compensation is the primary reason that employees leave the agency. But staff raised other issues that warrant attention, including limited opportunities for advancement, the amount of uncompensated overtime, and the quality of administrative support services. In response to the high turnover rates, SEC has placed greater emphasis on compensation-based human capital programs, including compensation-based flexibilities and performance awards. Although SEC uses compensation-based flexibilities to a greater extent than do other government agencies, the Office of Personnel Management believes it could do more. SEC has taken several steps to focus more attention on strategic human capital management but faces continuing challenges. In April 2001, SEC integrated its human capital strategies with it's core business practices by adding a human capital goal to its 2002 Annual Performance Plan. SEC has also developed an extensive recruiting program for attorneys.

section_title: Letter
paragraphs: Over 1,000 employees, or about one-third of the staff, left the U.S Securities  and Exchange Commission (SEC) from 1998 to 2000. Of these, more than  500 were attorneys. Overall, SEC’s turnover rates for attorneys,  accountants, and examiners averaged 15 percent in 2000, more than twice  the rates for comparable positions governmentwide.  Furthermore, 280  available positions remained unfilled in 2001.  According to the former  acting SEC Chairman, SEC has been experiencing a staffing crisis that is  adversely affecting its ability to protect investors and promote the integrity  and efficiency of U.S. securities markets.
SEC officials attributed this staffing crisis largely to SEC’s compensation  levels, which are lower than those in the private sector and at other federal  financial regulators.  However, pay may not be the only factor affecting  staff decisions to leave SEC; SEC’s organizational culture and human  capital policies and practices may also have influenced employee retention.   As you requested, we focused our study on SEC’s management of its human  capital.  Specifically, our objectives were to (1) determine the factors that  influence employee turnover and morale; (2) assess the extent of SEC’s use  of human capital policies and practices to recruit, motivate, and retain  staff; and (3) assess SEC’s strategic management of its human capital.
To determine the factors that influenced turnover, satisfaction, and morale  among SEC staff, we conducted a survey of current and former SEC  attorneys, accountants, and examiners.  We received a total of 1, 380  responses from current staff, for a response rate of 72 percent, and 336  from former staff, for a response rate of 69 percent.  Our survey results can  be generalized to all current and former SEC staff populations.  We also  reviewed SEC’s policies, interviewed relevant SEC officials in various  divisions and offices, and compared SEC’s practices with those of other federal financial regulators.  In addition, we met with officials from the  Office of Management and Budget (OMB) and the Office of Personnel  Management (OPM).  Finally, we reviewed SEC’s strategic human capital  management initiatives and compared them with strategies at other high- performing organizations.  For more information on our scope and  methodology, see appendix I.
subsections: section_title: Background
paragraphs: SEC’s primary mission is to protect investors and maintain the integrity of  the securities markets.  To meet its goals, SEC requires public companies to  disclose meaningful financial and other information to the public.  SEC is  also responsible for conducting investigations of potential securities law  violations and overseeing self-regulatory organizations such as securities  exchanges, as well as broker-dealers, mutual funds, investment advisors,  and public utility holding companies.  SEC’s mission has become  increasingly important as retail investors have become more directly  involved in the securities markets—through on-line trading, for example—  and as the markets themselves have begun to change, because of the  increased use of alternative trading systems and the potential privatization  of securities exchanges.  According to SEC officials, such changes and  innovations have resulted in an increasingly heavy and complex workload  for SEC staff.
To carry out its mission, as of December 31, 2000, SEC had 3,235 staff  working in 4 divisions and 18 offices in Washington, D.C. and in 11 regional  and district offices.  Of these, approximately 39 percent were attorneys, 17  percent were accountants or financial analysts, and 6 percent were  compliance examiners or investigators.
High turnover among attorneys, accountants, and compliance examiners is  a concern because these employees carry out tasks that are essential to  accomplishing SEC’s mission.  Attorneys at SEC perform a variety of duties  in most of the divisions and offices, ranging from litigation to rule writing,  and deal with securities laws as well as international and administrative  issues.  For example, attorneys in SEC’s regulatory divisions provide  guidance to self-regulatory organizations and the mutual fund industry,  while attorneys in SEC’s enforcement and oversight divisions identify and  prosecute violations of securities laws.  Accountants at SEC work primarily  in the Division of Corporation Finance, the Division of Enforcement, and  the Office of the Chief Accountant, reviewing and commenting on financial  statements, providing guidance on accounting standards and practices, and  participating in investigations.  Compliance examiners at SEC work in the  Office of Compliance Inspections and Examinations as well as in regional  and district offices, reviewing the financial records and activities of entities  such as broker-dealers and mutual fund operators to determine compliance  with securities laws and other requirements.
SEC officials believe that the high turnover rate is due largely to salary  restrictions that have resulted in increasing pay disparity between SEC and  other federal financial regulators and the private sector.  Currently, SEC  employees are paid according to the civil service pay scale used at most  other government agencies, known as general schedule (GS) pay scales.   SEC officials said that while SEC cannot hope to approach private sector  salaries, the disparity in pay between SEC and other federal financial  regulators that are exempted from federal pay restrictions is significant.   SEC studies indicate that certain staff positions at SEC pay significantly  less than similar positions at other federal financial regulators.  SEC  officials said that this disparity will become increasingly problematic as the  Gramm-Leach-Bliley Act of 1999 (GLBA) brings SEC staff together with  staff from other financial regulators in the coordinated regulatory activities  GBLA mandates.  SEC therefore believes that pay parity with other  financial regulators is critically needed to respond to its current staffing  crisis and has sought legislation that would allow it to narrow the pay gap  between it and other federal financial regulators.
In March 2001, the U.S. Senate approved S. 143, the Competitive Market  Supervision Act of 2001, and in June 2001, the U.S. House of  Representatives approved H.R. 1088, the Investor and Capital Markets Fee  Relief Act.  Along with reducing the fees SEC collects, these bills would  exempt SEC from federal pay restrictions and provide it with the authority  necessary to bring salaries in line with those of other federal financial  regulators.  As of September 10, 2001, no further action had been taken on  this legislation.
In July 2000, SEC employees voted to join the National Treasury Employees  Union (NTEU).  NTEU officials said that the primary grievances were  unpaid overtime, low pay, and lack of flexible work arrangements.   Although NTEU currently cannot negotiate pay with SEC, it can negotiate  virtually all other human capital policies, including benefits, work  arrangements, awards, and promotions.  As of September 10, 2001, SEC  and NTEU were negotiating their collective bargaining agreement.   According to SEC officials, until this agreement is negotiated and agreed to  by both parties, SEC management cannot implement any new human  capital programs without NTEU’s agreement and approval.  Once the  collective bargaining agreement is approved, SEC will have to negotiate  any subsequent additions or changes.
section_title: Compensation Was the Primary Factor in Employee Turnover, but Other Issues Were Also Important
paragraphs: By an overwhelming majority, the current and former SEC attorneys,  accountants, and examiners we surveyed cited compensation as their  primary reason for leaving SEC.  Respondents also identified other issues,  such as opportunities for advancement, the amount of uncompensated  overtime, and the quality of administrative support services, that had or  would affect their decision to leave.  Certain groups and offices were also  more dissatisfied with some aspects of SEC than others.  Although the  survey revealed a number of areas that had a negative impact on staff  morale, a high percentage of staff indicated that they were satisfied with  their overall job, the extent to which they were treated with respect, and  their ability to balance their work and personal lives.
subsections: section_title: Compensation Was the Primary Reason Staff Had Left or Were Considering Leaving SEC
paragraphs: Current and former staff indicated that compensation was the most  important reason to leave or consider leaving SEC, followed by  opportunities for advancement, the amount of uncompensated overtime,  and the quality of administrative support, that are discussed later in this  report.  Some 70 percent of current staff and 78 percent of former staff  indicated that their level of compensation was a somewhat or very  important reason to leave SEC. Current staff were also more dissatisfied  with compensation than with any other aspect of their job. As shown in  figure 1, some 64 percent of current and 56 percent of former staff were  dissatisfied with total pay, and an even higher percentage of current staff  were dissatisfied with their pay relative to pay at other federal financial  regulators and in the private sector.
Survey results further revealed that dissatisfaction with compensation  varied among attorneys, accountants, and examiners.  Specifically, among  current employees, compensation levels appeared to influence attorneys  more negatively than it did accountants and examiners.  As shown in figure  2, some 70 percent of current attorneys said that they were dissatisfied  with their total pay, compared with 53 percent of accountants and 57  percent of examiners.  Similarly, some 79 percent of attorneys said that  compensation was an important reason to leave SEC, compared with 56  percent of accountants and 59 percent of examiners.
Comments by current and former staff show both the dissatisfaction with  compensation and the influence compensation levels have on decisions to  stay at or leave SEC.  One current staff member wrote, “I love my job here.   The only reason I am going to have to leave one day is because I can only  forbear on my law school student loans for so long.  Once I have to begin  repayment, I will need more money.  If salaries are increased at SEC, I  would probably stay.”  A former staff member wrote, “The SEC simply does  not pay enough to allow a professional with a family to make ends meet in  New York.  I had no choice but to leave the SEC.” Another former staff  member wrote, “The SEC needs to pay its attorneys no less than the highest  paid government attorneys.”
According to the former acting SEC chairperson, the agency’s  comparatively low compensation levels have made it difficult to recruit and  retain attorneys and accountants.  She said that first-year associates at top  law firms can make twice the salary of staff attorneys in comparable  positions at SEC and that accountants with the experience SEC requires  are highly prized in the private sector and thus difficult to recruit.  She  added that pay disparity is particularly troubling because GLBA requires  SEC staff to work closely with staff at other federal financial regulators  who are paid significantly more.
section_title: Staff Also Cited Nonpay Factors as Important Reasons for Leaving SEC
paragraphs: Current and former staff also cited several nonpay factors as reasons to  leave or consider leaving SEC.  As shown in figure 3, these factors include  opportunities for advancement, uncompensated overtime, quality of  administrative support services, quality of communication, and quality of  supervision.  Additional factors are included in appendixes II and III.
Current and former staff cited opportunities for advancement within SEC  as the second most important reason for leaving SEC.  As shown in figure 3,  some 43 percent of current staff and 57 percent of former staff indicated  that opportunities for advancement were somewhat or very important  reasons for leaving SEC.  In addition, a high percentage of staff also cited  opportunities for advancement as an area with which they were  dissatisfied, that had a negative effect on their morale, and in which  improvement would increase satisfaction to a great extent.
Almost 31 percent of permanent positions at SEC are at the GS-14 level;  only 12 percent are GS-15 positions.  Therefore, once a staff member has  been promoted to a GS-14, opportunities for advancement to the GS-15  level are limited, which restricts pay.  This situation makes it difficult for  staff to separate opportunities for advancement from pay, as illustrated by  the following survey comments. A current staff member wrote, “Many of  the raises and promotions are given automatically within the first few years  of employment and after that, longer term employees have few if any  opportunities.” A former staff member wrote, “A flatter management  structure with more non-supervisory GS-15 slots would help a lot.”
SEC officials acknowledge that the need for greater opportunities for  advancement is an issue.  For example, officials in the Division of  Enforcement said that they would like to promote more attorneys who do  investigations to the GS-15 level but they cannot because GS-15 positions  are reserved primarily for trial and supervisory attorneys.  Similarly,  officials in the Office of General Counsel commented that they have an  insufficient number of nonsupervisory GS-15 positions for attorneys and  that they did not expect to receive any more in the near future. SEC  officials also view this problem as a compensation issue that they could  better address if they had more flexibility in setting pay scales—that is, if  they could provide higher compensation without having to promote staff.
subsections: section_title: Uncompensated Overtime
paragraphs: After compensation and opportunities for advancement, the amount of  uncompensated overtime SEC requires was most often cited as an  important reason for leaving SEC.  As shown in figure 3, some 40 percent  of current staff and 34 percent of former staff indicated that it was an  important reason to leave SEC, and 57 percent of current staff and 51  percent of former staff indicated that it had a negative effect on morale.
The following comments by current and former staff illustrate the level of  dissatisfaction with the amount of uncompensated overtime.  One current  staff member wrote, “Management has communicated that uncompensated  overtime is not expected and should not be necessary.  Yet the current  workload is such that uncompensated overtime is necessary to get the  work done within a reasonable time period . . . .”  A former staff member  wrote, “The SEC . . . should properly compensate for overtime, not have us  ‘donate’ it to the government.”
section_title: Quality of Administrative Support Services
paragraphs: Both current and former staff cited the quality of administrative support  services as the fourth most important reason for leaving SEC (fig. 3). Forty  percent of current staff and 51 percent of former staff indicated that the  quality of administrative support services within divisions and offices was a  somewhat or very important reason to leave SEC.  Like opportunities for  advancement, the quality of administrative support services was frequently  cited as a source of dissatisfaction. Respondents also indicated that it had a  negative effect on their morale and that improvements in this area would  increase satisfaction to a great extent.
The following comments by current and former staff illustrate the  dissatisfaction with the administrative support services at SEC.  One  current staff member noted, “The government is paying attorneys high  salaries to spend half their days xeroxing, typing, putting toner in the  printer, and chasing around for supplies.  These are duties that I would not  even be allowed to do in private practice because it would be a waste of my  billable hours to do menial tasks at $200/hour.”  A former staff member  wrote, “The administrative support was abysmal.  The staffing was  approximately 1 secretary to every 7 attorneys during most of my time at  the SEC, and I spent several months with no secretarial support. . . This  makes no sense for the Division of Enforcement, which has the job of doing  complex investigations and litigation that require the typing and filing of  extensive amounts of paperwork.”
SEC officials acknowledged that staff have previously brought this issue to  their attention. The officials said that each division has a set number of  total staff positions, and division managers decide whether to fill positions  with administrative or professional staff.  Faced with limited budgets,  division managers tend to fill vacancies with professional staff rather than  with administrative support staff.
section_title: Some Groups of Staff Expressed Higher Rates of Dissatisfaction than Others
paragraphs: Dissatisfaction with administrative support services varied among  attorneys, accountants, and examiners.  As shown in figure 4, among  current employees, more attorneys than accountants and examiners  indicated that they were dissatisfied with the quality of administrative  support services, that it was an important reason to leave SEC, and that it  had a negative effect on morale. More accountants than examiners  expressed similar dissatisfaction (fig. 4).
Supervision and intra-agency communication were also areas of  dissatisfaction, but more so for former than for current staff.  As figure 3  shows, 40 percent of former staff said that the quality of supervision was an  important reason to leave SEC, compared with 21 percent of current staff.    Among former staff, 39 percent said that the quality of communication was  an important reason to leave SEC, compared with 23 percent of current  staff.  Similarly, higher percentages of former staff indicated that the quality  of supervision and communication had a negative effect on morale.
Former staff members explained some of their dissatisfaction with these  aspects of their jobs.  Regarding supervision, one former staff member said,  “The major reason I left the SEC was the inadequate management and lack  of skilled professional supervisors.  Some of the supervisors were openly  hostile to employees and mean-spirited.”  With regard to communication,  another former staff member said, “The Chairman and division heads are  generally remote.  Moving to the private sector, I was amazed at the efforts  that senior management go to in order to communicate their message to all  levels of the company.”
A few groups of current employees were more dissatisfied than others,  regarding their ability to balance their work and personal lives. Although  only 8 percent of the current employees we surveyed indicated that they  were generally or very dissatisfied with their ability to balance their work  and personal lives, approximately 20 percent of respondents from two  regional offices indicated that they were generally or very dissatisfied.   While only 7 percent of the current employees indicated that their ability to  balance their work and personal lives had a generally or very negative  effect on morale, almost 30 percent of the respondents from the same two  regional offices felt that it had such an effect.  In addition, 25 percent of the  respondents from one of these two offices, compared with only 8 percent  of the total respondents, indicated that the ability to achieve balance was a  somewhat or very important reason to leave SEC.
section_title: Most Staff Were Satisfied With Their Overall Jobs
paragraphs: When it came to job satisfaction, most respondents were satisfied with  their overall jobs.  As shown in figure 5, three out of four current and  former staff were satisfied with the extent to which they were treated with  respect by their coworkers, their ability to balance their work and personal  lives, the meaningfulness of their work, the extent to which they were  treated with respect by their supervisors, and the overall job.  These issues  were also the most frequently cited as important reasons to stay or  consider staying at SEC and as having a positive effect on morale.  However, as discussed later in this report, a high percentage of current staff  indicated that improvements in these areas would increase their  satisfaction to a great extent.
In several areas, SEC employee satisfaction rates among current staff  compare favorably with those of employees governmentwide. As shown  in figure 6, current SEC staff were more satisfied than employees  governmentwide with their overall job, with SEC as a place to work, with  the extent to which their work was meaningful, and with the supervision  that they received.
section_title: SEC Has Placed Greater Emphasis on Compensation-Based Programs Than on Noncompensation Flexibilities
paragraphs: In response to the high turnover rates among attorneys, accountants, and  examiners, SEC has focused largely on compensation-based programs to  recruit, retain, and motivate staff.  Compared with other government  agencies, SEC has more actively used compensation-based flexibilities  such as recruitment bonuses, retention allowances, superior qualification  appointments, and special pay rates (see fig. 7).  SEC also actively uses  performance awards such as cash, quality step increases, and time off.  In  addition to these compensation-based programs, SEC offers a number of  human capital programs aimed at improving the quality of work life.  However, SEC management has only recently increased its focus on  providing greater flexibilities through other human capital programs such  compressed work schedules and telecommuting.
subsections: section_title: SEC Actively Uses Most Compensation-Based Flexibilities and Performance Awards
paragraphs: Under federal statutes, SEC has the authority to implement a variety of  compensation-based flexibilities, including recruitment bonuses, retention  allowances, superior qualification appointments, and special pay rates.   Specifically, SEC can provide up to a 25-percent increase in basic pay to  employees who would otherwise be likely to leave SEC.   Since 1993, SEC  employees have received retention allowances that range from 5 to 21  percent of their basic pay.   SEC uses retention allowances at a rate of 1.32  per 100 employees, or almost 7 times the governmentwide rate.
SEC also uses recruitment bonuses more frequently than other government  agencies.   These bonuses can help agencies compete for top-quality  candidates who are in demand, attract candidates with special  qualifications quickly, and replace staff when turnover is high.   Since 1992,  SEC has provided recruitment bonuses ranging from 3.5 to 21 percent of  basic pay, with an average of 10 percent of basic pay.  SEC uses recruitment  bonuses at a rate of 12.97 per 100 employees, or about 5 times the  governmentwide rate.
Superior qualification appointments allow SEC to set pay for new  appointments or reappointments of individuals to GS positions above step  1 of the grade based on superior qualifications of the candidate.  In the last  few years, SEC has used superior qualifications appointments to hire  examiners who meet specific scholastic achievement and grade-point  average requirements.  SEC uses superior qualification appointments at a  rate of 32.97 per 100 employees, or more than 20 times the governmentwide  rate. Finally, SEC uses special pay rates to address staffing problems  among attorneys, accountants, and examiners. These special rates are not  based on a set percentage of basic pay but on the equivalent of several  steps on the basic pay scale.   In March 2001, SEC received OPM approval  to update the special rates for attorneys and accountants and added  examiners to the special rate category. However, since OPM regulations do  not allow staff who receive special pay to receive locality pay, special pay  becomes less valuable over time.In addition, under SEC’s program, only  employees who are GS-13 to 15 attorneys, GS-12 to 15 accountants, or GS- 11 to 15 examiners with at least 2 years of securities-related experience are  eligible.  SEC uses special pay rates at a rate of 57.25 per 100 employees, or  more than 6 times the governmentwide rate.
Along with the compensation-based flexibilities, SEC uses performance  awards to motivate employees and reward them for high performance.    SEC uses rating-based awards to reward employees for performance  exceeding expectations, as defined by their formal performance appraisal.   SEC has the authority to grant performance awards of up to 10 percent of  an employee’s basic pay and cash awards of up to $10,000 without external  approval. The average award in 1999 was $1,642. SEC uses rating-based  performance awards at a rate of 44 per 100 employees—almost twice the  governmentwide rate. However, only 17 percent of current staff and 18  percent of former staff surveyed indicated that they were generally or very  satisfied with the ability of SEC’s performance incentive system to motivate  them to perform well.  Moreover, 47 percent of current staff and 53 percent  of former staff indicated that they were generally or very dissatisfied with  the performance incentive system.
SEC also uses special act awards, which are one-time lump-sum monetary  awards for specific accomplishments that exceed performance  expectations during the course of a year.  Special act awards are the only  performance-based awards SEC uses less frequently than the other  government agencies—9.52 per 100 employees, compared with 47.71.  An  SEC official said that SEC managers generally prefer to use their incentive  award funds for year-end performance-based awards, rather than for  special act awards throughout the year.  Moreover, SEC employees have  come to expect annual performance awards as an entitlement similar to the  year-end bonuses offered at law firms. SEC also uses time-off awards,  which grant employees additional leave with pay and do not affect annual leave. SEC’s time-off award rate of 18.09 per 100 staff was comparable to  the governmentwide rate.
Finally, SEC uses quality step increases to motivate and retain staff.  A  quality step increase allows employees to progress through the GS pay  scales faster than usual and, unlike bonuses, represents a permanent  increase in basic pay.  Although OPM rules allow a quality step increase  every 52 weeks, SEC officials said that SEC awards quality step increases  only every 2 years because quality step increases have long term budgetary  implications.  But the rate at which  SEC uses quality step increases—20.02  per 100 hundred employees—was still more than 4 times the  governmentwide rate.
Although on average SEC uses compensation-related programs at a higher  rate than other government agencies, OPM officials said that SEC could do  more to address its retention problems.  For example, SEC could offer  higher rating-based performance awards.  As mentioned earlier, in 1999 the  average cash award was $1,642, but according to OPM regulations,  agencies can grant awards of up to $10,000, without external approval.  While OPM officials believe that there is room for SEC to offer higher  amounts, SEC officials said that such action would require additional  budgetary resources.
section_title: SEC Has Only Recently Increased Its Focus on Noncompensation Flexibilities and Work-Life Programs
paragraphs: Only recently has SEC begun to increase its focus on work-life programs to  recruit, motivate, and retain staff.  In general, these programs help  employees balance their work and family lives and include compressed  work schedules, alternate work schedules, telecommuting, and part-time  work arrangements. SEC officials said that they had not placed enough  emphasis on work-life programs in the past and plan to place greater  attention on them in the future.
On February 26, 2001, SEC authorized an agencywide compressed work  schedule program, although this flexibility had been available throughout  most of the federal government for years. According to SEC officials, SEC  had previously piloted compressed work schedules only on a limited basis  in certain divisions because of concerns that a compressed schedule could  adversely affect the agency’s mission.  Our survey, which was conducted  prior to the agencywide implementation of this program, revealed that only  27 percent of the current staff and 13 percent of the former staff were  generally or very satisfied with their ability to use flexible work schedules.   Although some SEC officials said the program would serve only to boost  employee morale and participation would be low, as of May 30, 2001, about  37 percent of SEC’s attorneys, accountants, and examiners had opted to  work a compressed work schedule.  This figure represents the lowest  particpation rate among comparable groups at other financial regulators,  where participants ranged from 44 to 93 percent.  Overall, SEC officials  said that their experience with compressed work schedules had been  positive.
SEC also allows employees to work alternate work schedules.  This type of  schedule permits employees to establish daily start times within a flexible  band of up to 2 hours before SEC’s official business hours. As with the  other flexibities, SEC officials said that they make every attempt to  accommodate employees’ requests for alternate work schedules.  The only  requirements are that the work schedules still allow for adequate office  coverage and that the employee’s ability to carry out SEC’s mission is not  affected.
SEC also allows temporary, short-term work-at-home arrangements such as  telecommuting, but only within certain parameters. For example, SEC  allows “ad hoc” or occasional telecommuting in connection with a  particular project for up to 2 days if a supervisor believes the alternate  worksite will allow the employee to complete the assignment with fewer  distractions.  SEC also allows limited telecommuting to accommodate  temporary medical conditions or to allow employees to care for family  members.  However, SEC has begun to explore the possibility of allowing  more employees to telecommute by using secured remote workstation  access. A more liberal use of telecommuting would be consistent with the  approach taken by other financial regulators that are also faced with high  turnover levels among examiners, who often leave because of the extensive  travel requirements.  Thus, for example, regulators such as Office of Thrift  Supervision (OTS) and the National Credit Union Association (NCUA) use  telecommuting more broadly than SEC and view it as an inducement to  retain examiners that helps offset extensive travel requirements.  These  regulators generally allow their examiners to work from home when not  conducting examinations as a concession for extensive travel.  In contrast,  SEC officials generally expect examiners who are not conducting  examinations to come into the office.  Financial regulatory officials said  that because they could not compete on the basis of pay, they must fully  use these other flexibilities.
Although SEC has several part-time employees, it does not have a formal  part-time policy.  As of May 30, 2001, some 4 percent of SEC’s attorneys,  accountants, and examiners worked part time.  SEC officials said that they  try to accommodate every staff request for part-time work and have  generally been able to do so.  However, some divisions and offices are more  receptive to part-time work arrangements than others.  For example, SEC  has allowed temporary part-time work for new parents and ill and  recuperating employees.  SEC also has disabled employees that work part- time schedules.  SEC’s use of part-time work was generally comparable to  that of other financial regulators.
Although SEC has begun to focus on these work-life programs, our survey  suggests that there are other flexibilities that warrant management  attention, including expanded flexibility in earning credit hours, reductions  in “donated” overtime, and increased use of overtime pay and  compensatory time off.  First, SEC’s current policy on earning credit hours  allows employees to earn and use only 6 hours per pay period, with no  carryover allowed. That is, if an employee earns 6 credit hours in pay  period one, he or she must also use those hours in pay period 1.  In  contrast, OPM regulations allow employees to accrue up to a total of 24  hours that can be carried over and used in subsequent pay periods.
Second, SEC expects staff to “donate” a certain amount of overtime  without receiving pay or time off in order to complete tasks and keep up  with their workload.  SEC policy states that “employees occupying  professional or supervisory positions are expected to have a sufficient  interest in completing their work assignments on a timely basis or in  keeping their workload reasonably current by performing voluntary work  outside of regular work hours, on their own initiative, whenever it is  necessary.” An SEC official said that this policy is unique to SEC and that  senior management embraces the sentiment of “donated” time. Our survey  revealed that 57 percent of current staff and 51 percent of former staff felt  that this policy had a negative effect on morale, and many complained  specifically about the requirement. Moreover, as a general rule, SEC does  not allow overtime pay for most of its professional staff, nor does it  provide compensatory time off to employees.  According to OPM, SEC  could make greater use of overtime pay and compensatory time. SEC  officials indicated that their budget was an important factor in limiting the  use of these flexibilities.
section_title: SEC Has Taken Steps to Address Strategic Human Capital Management but Faces Challenges
paragraphs: The high turnover rate among attorneys, accountants, and examiners has  forced SEC management to focus greater attention on strategic human  capital management issues.  SEC has taken several positive steps to  strategically align its core mission with its ability to recruit and retain  qualified employees, including improving its recruitment program and  adding a new human capital goal to its performance plan.  However,  because of the high turnover rate and the recent unionization, SEC faces a  number of challenges in its efforts to meet employees’ needs, including  creating an organizational culture that gives priority to human capital  issues and establishing a constructive working relationship with the union.
subsections: section_title: SEC Has Begun to Focus on Strategic Human Capital Management, but Some Gaps Remain
paragraphs: High turnover rates among attorneys, accountants, and examiners at SEC  have been a growing problem for the past several years and have prompted  SEC to begin addressing its staffing challenges from a strategic  perspective. For example, SEC officials said that in late 1999 they finalized  several human capital programs designed to offer employees more  flexibilities, including a comprehensive compressed work schedule  program, student loan repayment program, and formal part-time policy.   However, SEC officials said that these programs could not be implemented  at that time because of the impending vote on joining NTEU. After the  vote to unionize, these programs had to be deferred so that they could be  negotiated as part of the collective bargaining process. Although SEC and  NTEU reached an interim agreement on the compressed work schedule  program, the other programs are part of the ongoing negotiation process.
As part of its new focus on strategic human capital management, SEC has  taken two other steps.  First, it has improved its recruiting efforts. SEC  officials said that to improve the recruiting process, they developed a  formal centralized recruiting program to coordinate the agency’s recruiting  effort for attorneys, accountants, and examiners—which traditionally had  been carried out within divisions and regional offices. In 1999, SEC hired a  chief recruiter, formed a hiring committee that is chaired by the General  Counsel, created a systematic program that makes use of recruiting  strategies such as campus visits and internships, and developed updated  recruiting materials and brochures directed at law students and attorneys.  Further, SEC sends attorneys, usually branch chiefs or office managers  who have attended SEC’s internal recruiter briefing, to conduct on-campus  interviews and attend recruiting events.  In addition, SEC’s enhanced  recruiting program included gathering suggestions for improvement from  hiring officials, recent recruits, and summer legal interns, and studying  recruitment programs in law and public accounting firms to identify best  practices. Second, and more significantly, in April 2001 SEC added a new  goal, “sustain and improve organizational excellence,” to its 2002 annual  performance plan. Under this goal, the plan lists specific objectives,  strategies, and performance goals for human capital management and links  the importance of recruiting and retaining employees to SEC’s ability to  accomplish its mission.
Despite these positive developments, SEC has not addressed several  important human capital management issues. In general, the objectives and  strategies in the annual performance plan address many of the aspects of a  comprehensive strategic human capital plan.  However, they do not  specifically address succession planning.  An earlier GAO report noted that  high-performing organizations consider continuity of leadership through  succession planning and executive development a critical success factor in  effective human capital management and ultimately, in achieving an  organization’s missions and goals. Although our survey results revealed  that only 2 percent of former employees and 4 percent of current  employees cited their eligibility to retire as a somewhat or very important  reason to leave SEC, SEC’s turnover rate makes succession planning  critical.
SEC officials said that the agency has always had relatively high turnover  but recent high turnover in mid- and entry-level staff could result in a  shortage of experienced staff to assume management roles.  For example,  the average tenure of attorneys leaving SEC declined from 3.4 years in 1992  to 2.5 years in 1999.  Among examiners, the average tenure also declined  from 2.9 years to 1.9 years over the same period. In addition, 47 percent of  current employees that responded to our survey indicated that when they  first began working at SEC, they planned to work at the agency for 5 years  or less. SEC statistics showed that many are not even staying that long. As  of February 2001, 76 percent of SEC examiners had worked at SEC for  fewer than 3 years. In the Division of Enforcement, 11 of 35 branch chiefs  had been in their positions fewer than 10 months. Although SEC has  provided general strategies in its annual performance plan to address  recruiting and retaining staff, SEC officials have not articulated the details  of how the agency plans to carry out these strategies and address this  aspect of their staffing crisis.
Further, while SEC’s plan mentions broad strategies for evaluating the  effectiveness of its recruitment efforts and regularly reviewing employee  complaints, SEC currently has no formal mechanism to gauge the impact of  these initiatives.  Most high-performing organizations that we have studied  evaluate the effects of their human capital policies and make fact-based  decisions on their effectiveness, often through employee satisfaction  surveys and focus groups. SEC has used neither of these strategies, and  while the 2002 plan recognizes the importance of exit interviews as a  strategy to gauge overall employee satisfaction, SEC has yet to implement a  formal process to collect and analyze data from exit interviews. Similarly,  SEC has not taken a formal approach to analyzing quantifiable data such as  the number, size, and costs of bonuses, awards, and other incentives, and  their distribution among segments of the workforce—measures that would  help show whether the agency’s incentive programs are effectively  motivating its employees. These types of evaluations would do more than  simply measure the effectiveness of the agency’s human capital strategies;  they would also help identify staffing issues before they become major  problems. Although SEC receives an OPM oversight review every 4 years  that could provide some insight into issues of use to management, periodic  employee satisfaction surveys could supplement the information gathered  from OPM oversight reviews.
Finally, SEC officials said that the Office of Administrative and Personnel  Management (OAPM) would be reorganized to increase its focus on  recruiting and strategic goals for the workplace. Currently, OAPM staff  provide traditional personnel administration services, such as  administering the payroll, processing and maintaining employee records,  overseeing contract and lease administration, as well as enhancing overall  human resources customer service within SEC. The strategic role of human  capital staff is vital if SEC is to increase the effectiveness of its current  human capital management practices. However, nothing in the agency’s  performance plan suggests that the human capital function would be  elevated in stature within SEC and hold “a place at the table” among senior  management in decisionmaking.  In the high-performing organizations that  we studied, human capital staff participated as full members of  management teams and ensured that those teams proactively addressed  human capital issues.  For example, several organizations we studied told  us that they involved their human capital staff as decisionmakers and  internal consultants by having leaders or members of their human capital  staff serve on senior executive planning committees, consult directly with  line managers regarding specific human capital strategies, and offer expert  advice via centralized human capital offices or Intranet sites.  Although  SEC currently has no plans to implement most of these steps, it has  addressed at least one issue.  SEC plans to revise its Intranet home page to  provide employees information on the various benefits and programs SEC  offers.  In addition, the revised home page will allow employees to ask  questions and make suggestions via E-mail.
section_title: SEC Faces Challenges as It Enhances Its Human Capital Management
paragraphs: SEC has begun to recognize the importance of human capital management  in accomplishing its mission and has taken steps to make it a priority  within the organization and a part of its key planning efforts. But the  agency still faces a number of human capital challenges that will require  the sustained attention and commitment of its leaders.  These challenges  might have contributed to the employees’ concerns identified in our survey.
First, SEC has not created an organizational culture that ensures ongoing  attention to human capital issues.  Our survey revealed that while current  employees are satisfied with many aspects of their jobs, many areas for  improvement remain (fig. 8).
The high-performing organizations that we studied focus on valuing and  investing in their employees and on aligning their “people policies” to  support organizational performance goals. In contrast, SEC has not made  these principles an important part of its human capital management  strategies. As discussed earlier, some of the agency’s policies concerning  overtime, telecommuting, compressed work schedules, and the use of  credit hours could be improved in order to raise employee morale.  In  addition, our survey results collectively indicate that SEC staff believed  SEC’s organizational culture did not sufficiently value and motivate  employees. For example, 38 percent of current employees were dissatisfied  with the extent to which upper-level management was committed to  making SEC the “best place it can” be within the constraints of pay and  benefit plans and the extent to which upper management demonstrated  through daily actions and decisions that employees’ well-being and morale  were important. In high-performing organizations, management views  people as a strategic asset. Further, these organizations demonstrate that  effective strategic human capital management requires the sustained  commitment and attention of senior leaders and managers at all levels.  Strategic human capital management practices require that management  continually monitor and refine SEC’s human capital approaches to ensure  their ongoing effectiveness in addressing employees’ needs.
A second challenge is for SEC management to successfully negotiate a  collective bargaining agreement with the union.  Such an agreement will  create the policies that will guide management’s interaction with the union  and set the tone for the future.  Ultimately it will affect SEC’s ability to  implement human capital policies. Negotiating this contract is a major  challenge for SEC because its management is unfamiliar with the collective  bargaining process and union practices and there are dozens of issues to be  negotiated, including the use of compensatory time and compensatory pay,  credit hours and “donated” time policies, the promotion process, and the  student loan repayment program. Other agencies we spoke with said that  developing a cooperative relationship with a union is vital if the union is to  benefit the employees. Better communication and coordination between  SEC management and the union could reduce potential conflict and  enhance resolutions.  In addition, training SEC managers and supervisors  to work in a unionized environment would be beneficial.  SEC has  recognized the need for greater expertise in labor relations and has set  aside funding in its 2002 budget for two staff positions to develop and  operate a newly created labor relations unit.
section_title: Conclusions
paragraphs: SEC’s human capital management practices have been shaped largely by  the need to confront a growing staffing crisis that threatens to impair the  agency’s ability to carry out its mission. Our survey results showed that  inadequate compensation is the primary reason that employees leave the  agency. SEC has sought legislation that would allow it to offer salaries  commensurate with those of other financial regulators.  While the  legislation is pending, SEC actively uses compensation flexibilities to retain  and recruit staff.  SEC’s efforts appear to be appropriate, but increasing  compensation by itself cannot solve SEC’s retention challenge and enhance  employee satisfaction and commitment to the agency, because SEC  employees can still opt for higher private sector pay.  Other financial  regulators face similar private sector competition and have accepted that  they will never be able to compete on the basis of pay alone.  Therefore,  even as SEC is moving toward pay parity, efforts to enhance its human  capital programs as a means to recruit and retain employees will remain  important.
Our survey results provide useful information that can help SEC  management identify key opportunities to improve employee job  satisfaction and morale.  The survey results identified various nonpay  issues that are important to employees, in particular opportunities for  advancement and the quality of administrative support services.  Other  areas that management should evaluate to address employees’ concerns  include the effectiveness of the performance incentive system, the quality  of supervision, the appraisal process, and the work review process.  These  survey results provide a baseline for future employee surveys that measure  job satisfaction and morale and help identify employee concerns and issues  that SEC needs to address.
Strategic human capital management is a pervasive challenge in the federal  government; SEC is no exception. GAO has identified focusing on people as  a strategic asset as the first step for improving federal agencies’ human  capital management. By including a goal on human capital in its annual  performance plan, SEC has taken a useful first step toward aligning human  capital management with its core mission.  Although SEC has addressed  many aspects of strategic human capital planning, more remains to be  done—for example, in the areas of succession planning and evaluation of  human capital programs.  Without a clear vision on how to recruit, develop,  and retain employees, SEC may not be able to fill positions that are vital to  accomplishing the agency’s mission.
section_title: Recommendations
paragraphs: Although SEC has taken steps toward strengthening its strategic human  capital management plans, it has not yet devised a method of measuring the  success of its initiatives.  We recommend that the Chairman, SEC, use  formal approaches such as periodically surveying its employees to evaluate  employees’ job satisfaction and morale, identify employee concerns, and  analyze the effectiveness of the agency’s use of flexibilities and work-life  programs to retain employees.
Strategic human capital management, a component vital to addressing  SEC’s current staffing crisis, has received little attention from the  Commission until recently.  Although SEC has added a human capital goal  to its annual performance plan, its strategies do not detail the steps  necessary to meeting this goal.  Therefore, we recommend that the  Chairman, SEC, enhance its annual performance plan by including a  strategy for succession planning and expanding the human capital  strategies presented in the annual performance plan into a comprehensive,  coordinated workforce planning effort, that includes all of SEC’s divisions  and offices.
Finally, to help create an organizational culture that ensures ongoing  attention to human capital issues, we recommend that the Chairman, SEC,  identify ways to involve human capital leaders in decisionmaking and  establish a practice that requires management to continually monitor and  refine SEC’s human capital approaches to ensure their ongoing  effectiveness in addressing employees’ needs, including working with the  union to expeditiously address the areas of dissatisfaction identified in our  survey.
section_title: Agency Comments and Our Evaluation
paragraphs: SEC officials provided written comments on a draft of this report that are  reprinted in appendix VI.   In general, SEC concurred with the report’s  finding that inadequate compensation was the reason for the high turnover  at the agency.  Appendix VI provides additional information on SEC  comments except for those discussed below. We also received written  technical comments and suggestions from SEC that we have incorporated  where appropriate.
In response to our recommendation that it periodically survey its  employees to measure the effectiveness of human capital program  initiatives, SEC commented that they would review the results of our  survey and the one conducted by OPM in 2001 and that as needed, will  continue to survey employees.  We agree with SEC that reviewing these  results is a useful first step in evaluating the success of its human capital  initiatives.  However, SEC has no systematic process for independently  surveying its employees.  The intention of our recommendation on  developing formal methods to measure the success of its initiatives is for  SEC to develop fact-based measures by which to judge the success of  specific human capital initiatives, as well as identify concerns and gauge  employee satisfaction and morale on an ongoing basis.
As agreed with your offices, unless you publicly release its contents earlier,  we plan no further distribution of this report until 30 days from its issuance  date. At that time, we will send copies of this report to the Chairman and  Ranking Minority Members of the House Committee on Financial Services;  the Chairman and Ranking Minority Members of the Senate Committee on  Banking, Housing and Urban Affairs and other Congressional committees.   We will also send copies to the Chairman of SEC and will make copies  available to others upon request.
If you or your staff have any questions regarding this report, please contact  me or Orice Williams at (202) 512-8678.  Key contibutors to this report are  acknowledged in appendix VII.
section_title: Scope and Methodology
paragraphs: To determine the factors that influence staff turnover, job satisfaction, and  employee morale within SEC, we conducted a survey of all SEC attorneys,  accountants, and examiners employed as of February 7, 2001, as well as  those who had left SEC between June 1, 1999, and October 23, 2000.  The  surveys were conducted shortly after SEC employees voted to join the  union.  The impact that unionization had on our survey results is unknown.
The survey of current SEC staff was conducted using a self-administered  electronic questionnaire posted on the World Wide Web. Both SEC officials  and GAO sent E-mail notifications to 1,915 SEC staff beginning on February  8, 2001.  We then sent each employee who was surveyed a unique password  by E-mail to ensure that only members of the target population could  participate in our survey. We closed the survey on March 23, 2001, having  received a total of 1,380 responses, for an overall response rate of 72  percent.  The survey of 487 former SEC staff was conducted by mail. We  sent one follow-up mailing containing the full survey instrument to  nonrespondents approximately 4 weeks after the initial mailing and a  second follow-up containing an abbreviated survey to all remaining  nonrespondents approximately 4 weeks later.   We received 336 completed  surveys from former SEC employees, for a response rate of 69 percent.
While our survey results are generalizable to the current and former SEC  staff populations as described above, the practical difficulties of  conducting any survey may introduce errors into estimates made from  surveys.  Although we administered our surveys to all known members of  the populations of current and former employees, and thus our results are  not subject to sampling error, nonresponse to the entire survey or  individual questions can introduce a similar type of variability or bias into  our results—to the extent that those not responding differ from those who  do respond in how they would have answered our survey questions. We  took steps in the design, data collection, and analysis phases of our survey  to minimize sampling, population coverage, measurement, and data-  processing errors, such as checking our population lists against known  totals of employees, pretesting and expert review of questionnaire  questions, followup with those not reachable at original addresses or  otherwise not immediately responding.
To assess SEC’s use of human capital policies and practices to recruit,  motivate, and retain staff, we reviewed SEC’s Personnel Operating Policies  and Procedures (POPPS), which include guidance on all SEC human  capital policies.  We also interviewed officials and staff from several SEC  divisions and offices, including Corporation Finance, Enforcement,  Investment Management, and Market Regulation, as well as the Offices of  the Chief Accountant, General Counsel, and Compliance Inspections and  Examinations to obtain information on the use of various SEC human  capital programs and the application of policies across the agency.  In  addition, we compared SEC’s human capital policies and practices to those  of other federal financial regulators by reviewing their personnel policies  and interviewing officials from the Commodity Futures Trading  Commission, the Federal Reserve Board of Governors, the Federal Deposit  Insurance Corporation, the Office of the Comptroller of the Currency, the  Office of Thrift Supervision (OTS), and the National Credit Union  Association (NCUA). Moreover, we interviewed National Association of  Securities Dealers Regulation, Inc., and New York Stock Exchange officials  about their turnover rates and human capital practices.  We also  interviewed officials from NTEU, the Office of Personnel Management  (OPM), and the Office of Management and Budget (OMB) to obtain their  views on SEC’s human capital policies and practices.  Finally, we reviewed  various OPM’s reports on human capital issues.
To assess SEC’s management of its human capital, we applied some of the  concepts from our prior work on human capital management, most notably  Human Capital: A Self-Assessment Checklist for Agency Leaders  (GAO/OCG-00-14G, Sept. 2000).  In addition, we interviewed relevant  officials from SEC’s Office of the Executive Director and the Office of  Administrative and Personnel Management.  We also conducted structured  interviews with a random sample of first-level managers, known as branch  chiefs, to gain better insights into SEC’s organizational culture. Finally, we  reviewed SEC’s 1997 GPRA strategic plan and 2002 Annual Performance  Plan to determine how the agency had integrated human capital  management into its organizational structure.
We did our work in Washington, D.C.; Chicago, IL; and; New York, NY  between September 2000 and August 2001 in accordance with generally  accepted government auditing standards.
section_title: GAO Survey of Currect SEC Attorneys, Accountants, and Examiners
paragraphs: The U.S. General Accounting Office, an independent agency of Congress, has been asked to study employee turnover at the SEC in order to determine the factors that may influence the relatively high rate of employee turnover currently being experienced by the SEC.  As a part of our study, we are sending a questionnaire to attorneys, accountants, and examiners at the SEC to obtain their opinions about various aspects of working at the SEC.  We are also surveying former SEC employees to ask them a series of similar questions.  We realize that SEC employees recently received a survey from the Office of Personnel Management (OPM).  Our survey focuses on different issues.
Most of the questions in this questionnaire can be answered by checking boxes or filling in blanks.  Space has been provided at the end of the questionnaire for any additional comments. The questionnaire should take about 20 to 30 minutes to complete.
GAO will take steps to ensure the privacy of your responses. The identification number is included only to aid us in our follow-up efforts.  Responses will not be reported in any way that would allow an individual respondent to be identified.
Please return this in the enclosed postage-paid envelope within 10 business days of receipt to avoid costly follow-up efforts.
If you have any questions, please call either Karen Tremba at (202) 512-3113 or Patrick Ward at (312) 220-7675.
We urge you to complete this questionnaire.  We cannot develop meaningful information without your frank and honest answers.  Thank you very much for your time.
A. Your Initial Decision to Work at the SEC 1.To what extent, if at all, did each of the following positively influence your decision to begin working at the SEC? (Check one box in each row) (1) (2) (3) (4) (5) (6)
subsections: section_title: Personal satisfaction from type of work
paragraphs: Desire to balance work and personal life Preparation for work outside of the SEC Desire to contribute to the SEC's mission Desire to work on important issues in your field Desire to work in a specific city or location Other - please specify: 2.When you began working at the SEC, how long did you plan on working here? (Check one.) %<RXU6DWLVIDFWLRQRU'LVVDWLVIDFWLRQZLWK9DULRXV$VSHFWVRI<RXU-RE &XUUHQWO\KRZVDWLVILHGRUGLVVDWLVILHGDUH\RXZLWKHDFKRIWKHIROORZLQJDVSHFWVRI\RXUMREZLWKWKH6(&" D<RXU&RPSHQVDWLRQ Your total pay (excluding benefits)
section_title: performance appraisal system to motivate you to perform well The consistency with which the performance appraisal system is applied within your working unit The ability of the performance incentive system (awards and other recognition) to motivate you to perform well The consistency with which the performance incentive system is applied within your working unit
section_title: quality work The extent to which the SEC provides you with the administrative resources (e.g., support staff) you need to do your job well The extent to which the SEC provides you with the physical resources (e.g., fax machines, computers, copiers, etc.) you need to do your job well
paragraphs: Overall, based on the issues raised in question 3, how satisfied or dissatisfied are you with the  work?   (Check one.)
5.Overall, how would you rate the current level of morale in your division or office?  (Check one.)
Very high .......................................................... 1%   Generally high  ..............................................20   Neither high nor low .....................................34   Generally low.................................................31   Very low..........................................................13   No basis to judge .............................................1 6.How positive or negative an effect do you believe each of the following factors, as they currently exist, have on the level of morale in your division or office?   (Check one box in each row.)
The level of compensation (i.e., pay and benefits)
The fairness of the promotion process The meaningfulness of the work The extent to which you are treated with respect The extent to which the job allows people to balance work and personal life The amount of travel required for the job The consistency with which leave policies (e.g. sick leave, family-friendly leave) are implemented in different divisions or offices The amount of uncompensated overtime The performance appraisal process The organizational structure of the division or office (e.g., division of responsibilities, levels of management, etc.)
The process for review of work The quality of communication within the division or office The quality of support services Other - Please specify: __________________________________ Other - Please specify: __________________________________ 7.How important, if at all, are each of the following, as they currently exist, in your plans to stay with or leave the SEC?   (Check one box in each row) importan t reason to leave importan t reason to leave a.Your eligibility to retire b.Your level of compensation (i.e., pay and benefits) d.The fairness of the promotion e.The meaningfulness of your work f.The extent to which you are treated g.The ability to balance your work and h.The amount of travel required for i.The implementation of leave policies within your division or office (e.g. sick leave, family-friendly leave) m.The performance appraisal process n.The organizational structure of your division or office (e.g., division of responsibilities, levels of management) o.The process for review of your work p.The quality of communication within q.The quality of support services s.Other - Please specify: t.Other - Please specify: 8.Looking at the list of reasons in question 7, what would you say is the primary reason you might leave the SEC in the near future?    (Enter the letter  a- t  of the primary reason from question 7.)
The primary reason is ….  ______       or     Your eligibility to retire .................................................................................0% Your level of compensation (i.e., pay and benefits) ............................... 68 Your opportunities for advancement ......................................................... 7 The fairness of the promotion process ...................................................... 3 The meaningfulness of your work  ............................................................. 1 The extent to which you are treated with respect  ................................... 3 The ability to balance your work and personal life  ................................. 2 The amount of travel required for your job  .............................................. 1 The implementation of leave policies within your division or office (e.g. sick leave, family-friendly leave) ............................................. 0 The amount of uncompensated overtime  ................................................. 3 Your physical working conditions  ............................................................. 1 The quality of supervision ........................................................................... 2 The performance appraisal process ........................................................... 1 The organizational structure of your division or office (e.g., division  of responsibilities, levels of management) ............................................... 0 The process for review of your work  ........................................................ 1 The quality of communication within your division or office  ................ 2 The quality of support services  .................................................................. 3 The quality of training .................................................................................. 1 9.If any of the following changes were made in your division or office, to what extent, if at all, would these changes increase your level of job satisfaction at the SEC?   (Check one box in each row)
Increase your level of compensation (i.e., pay and benefits) Implement a program by which the SEC would assist in paying off student loans Improve opportunities for advancement Improve the fairness of the promotion process Increase the meaningfulness of your work Increase the extent to which you are treated with respect Improve your ability to balance your work and personal life Decrease the amount of travel required for your job Improve the implementation of leave policies within your division or office (e.g. sick leave, family-friendly leave)
10.In which SEC unit do you currently work?  (Check one.)   1.
Division of Corporate Finance..........................................................11%    2.
Division of Enforcement ...................................................................38 ...
3.
Division of Investment Management...............................................12 ...
4.
Division of Market Regulation............................................................6 .....
5.
Office of Administrative Law Judges.................................................0 .......
6.
Office Administrative and Personnel Management .........................0 .......
7.
Office of the Chief Accountant...........................................................1 .....
8.
Office of Compliance Inspections and Examinations ...................22 ...
9.
Office of the Comptroller....................................................................0 .......
10.
Office of Economic Analysis ..............................................................0 .......
11.
Office of Equal Employment Opportunity........................................0 .......
12.
Office of the Executive Director........................................................0 .......
13.
Office of Filings and Information Services.......................................0 .......
14.
Office of the General Counsel ............................................................5 .....
15.
Office of Information Technology .....................................................0 .......
16.
Office of the Inspector General..........................................................0 .......
17.
Office of International Affairs ............................................................1 .......
18.
Office of Investor Education and Assistance ...................................1 .......
19.
Office of Legislative Affairs ................................................................0 .......
20.
Office of Municipal Securities ............................................................0 .......
21.
Office of Public Affairs, Policy Evaluation, and Research..............0 .......
22.
Office of the Secretary ........................................................................0 .......
11.In which location do you work?  (Check one.)   1.
Washington, D.C. Metropolitan Area Offices ................. 48%   2.
Northeast Regional Office ................................................12   3.
Boston District Office..........................................................4   4.
Philadelphia District Office ................................................4   5.
Southeast Regional Office...................................................3   6.
Atlanta District Office .........................................................3   7.
Midwest Regional Office .....................................................8   8.
Central Regional Office.......................................................4   9.
Fort Worth District Office...................................................3 10.
Salt Lake District Office ......................................................1 11.
Pacific Regional Office........................................................5 12.
San Francisco District Office .............................................3 16.Do you plan to leave the SEC, through retirement or resignation, within one of the following time periods? (Check one)
Attorney.................. 59%  Accountant............ 25 1.
Less than 1 year................. 9% 2.
Examiner............... 16 3.
2 to less than 3 years.........7 4.
3 to less than 5 years.......11 :KDWLV\RXUJUDGHRUOHYHO"&KHFNRQH 5.
I have no plans to leave the SEC within the   1.
GS-7......................... 3%            next 5 years .....................13   2.
GS-8........................ 0 6.
Unsure at this time .........45   3.
GS-9........................ 4   4.
GS-10...................... 0 :KDWLV\RXUVH["&KHFNRQH   5.
GS-11...................... 3   6.
GS-12...................... 7 1.
Male................................... 60%   7.
GS-13.................... 18 2.
Female ..............................38   8.
GS-14.................... 43   9.
GS-15.................... 17 :KDWLV\RXUUDFH"&KHFNRQH 10.
SES........................ 3 1.
White................................. 82% 2.
African-American ..............7 $UH\RXDPDQDJHURUVXSHUYLVRU"&KHFNRQH 3.
Native American................0 4.
Yes.......................... 25% 5.
No.......................... 74 $UH\RXRI+LVSDQLFRULJLQ"&KHFNRQH +RZORQJKDYH\RXZRUNHGIRUWKH6(&"&KHFNRQH 1.
Less than 1 year ...................14% 2.
No......................................89   1 to less than 2 years.......... 14   2 to less than 3 years.......... 10   3 to less than 5 years.......... 14 :KDWLV\RXUDJH"&KHFNRQH   5 to less than 10 years........ 18 1.
Under 25 ............................. 5%   10 to less than 15 years...... 15 2.
25 to less than 30 .............12   15 to less than 20 years........ 5 3.
section_title: GAO Survey of Former SEC Attorneys, Accountants, and Examiners
paragraphs: Among former staff, 336 staff responded to our survey.  No more than 52  staff failed to respond to any particular question, with the exception of  question 8, to which 73 staff failed to respond.
The U.S. General Accounting Office, an independent agency of Congress, has been asked to study employee turnover at the SEC in order to determine the factors that may influence the relatively high rate of employee turnover currently being experienced by the SEC.  As a part of our study, we are sending a questionnaire to former SEC attorneys, accountants, and examiners at the SEC to obtain their opinions about why they left the SEC as well as various aspects of working at the SEC.  We are also surveying current SEC employees, asking them a series of similar questions.
Most of the questions in this questionnaire can be answered by checking boxes or filling in blanks. Space has been provided at the end of the questionnaire for any additional comments.  The questionnaire should take about 20 to 30 minutes to complete.
GAO will take steps to ensure the privacy of your responses. The identification number is included only to aid us in our follow-up efforts.  Responses will not be reported in any way that would allow an individual respondent to be identified.
Please return your completed questionnaire in the enclosed pre-addressed, postage-paid envelope within 10 working days of receipt.  In the event the envelope is misplaced, the return address is: U.S. General Accounting Office Ms. Karen Tremba *6WUHHW1:5RRP$ Washington, DC 20548 If you have any questions, please call either Karen Tremba at (202) 512-3113 or Patrick Ward at (312) 220-7675.
We urge you to complete this questionnaire.  We cannot develop meaningful information without your frank and honest answers.  Thank you very much for your time.
subsections: section_title: A. Your Initial Decision to Work at the SEC
paragraphs: 1.To what extent, if at all, did each of the following positively influence your decision to begin working at the SEC? (Check one box in each row) (1) (2) (3) (4) (5) (6)
section_title: Personal satisfaction from type of work
paragraphs: Desire to balance work and personal life Preparation for work outside of the SEC Desire to contribute to the SEC's mission Desire to work on important issues in your field Desire to work in a specific city or location Other - please specify: 2.When you began working at the SEC, how long did you plan on working here? (Check one.)
Your total pay (excluding benefits)
section_title: Amount of annual leave you were eligible for
section_title: system (awards and other recognition) to motivate you to perform well The consistency with which the performance incentive system was applied within your working unit
paragraphs: WKH6(&"&KHFNRQHER[LQHDFKURZ L&RPPXQLFDWLRQ:LWKLQ<RXU'LYLVLRQ The extent to which management communicated to you, in a timely manner, information that affected your work The extent to which information on shifting priorities was communicated to you in a timely manner The guidance you received from management on what your work priorities should be (i.e., what you should focus on or pursue) The effort made by your division’s or office’s management to get the opinions and thinking of the people who work there The level of communication between different divisions or offices within the SEC The extent to which you received the training you need to perform your job The extent to which the training you received met your professional development needs Overall, based on the issues raised in question 3, how satisfied or dissatisfied were you with the SEC as a  work?   (Check one.)
5.Overall, how would you rate the current level of morale in the SEC division or office in which you worked at the time you left the SEC?  (Check one.)
Very high .......................................................... 2%   Generally high  ..............................................12   Neither high nor low .....................................20   Generally low.................................................38   Very low..........................................................28   No basis to judge .............................................0 6.How positive or negative an effect do you believe each of the following factors had on the level of morale in your division or office?   (Check one box in each row.)
The level of compensation (i.e., pay and benefits)
section_title: The quality of communication within the division or office
paragraphs: The quality of support services Other - Please specify: __________________________________ Other - Please specify: __________________________________ 7.How important, if at all, were each of the following factors in your decision to leave the SEC?   (Check one box in each row) importan t reason to leave importan t reason to leave a.Your eligibility to retire b.Your level of compensation (i.e., pay and benefits) d.The fairness of the promotion e.The meaningfulness of your work f.The extent to which you were g.The ability to balance your work and h.The amount of travel required for i.The implementation of leave policies within your division or office (e.g. sick leave, family-friendly leave) n.The organizational structure of your division or office (e.g., division of responsibilities, levels of management) o.The process for review of your work  p.The quality of communication within q.The quality of support services s.Other - Please specify: t.Other - Please specify: 8.Looking at the list of reasons in question 7, what would you say was the primary reason you left the SEC? (Enter the letter  a- t  of the primary reason from question 7.)
The primary reason is ….  ______       or     Your eligibility to retire .................................................................................0% Your level of compensation (i.e., pay and benefits) ............................... 51 Your opportunities for advancement ......................................................... 8 The fairness of the promotion process ...................................................... 2 The meaningfulness of your work  ............................................................. 5 The extent to which you are treated with respect  ................................... 4 The ability to balance your work and personal life  ................................. 3 The amount of travel required for your job  .............................................. 2 The implementation of leave policies within your division or office (e.g. sick leave, family-friendly leave) ............................................. 0 The amount of uncompensated overtime  ................................................. 1 Your physical working conditions  ............................................................. 0 The quality of supervision ........................................................................... 7 The performance appraisal process ........................................................... 1 The organizational structure of your division or office (e.g., division  of responsibilities, levels of management) ............................................... 2 The process for review of your work  ........................................................ 0 The quality of communication within your division or office  ................ 0 The quality of support services  .................................................................. 0 The quality of training .................................................................................. 0 9.If any of the following changes were made in your division or office, to what extent, if at all, would these changes have increased your level of job satisfaction at the SEC?   (Check one box in each row)
Increased your level of compensation (i.e., pay and benefits) Implemented a program by which the SEC would assist in paying off student loans Improved opportunities for advancement Improved the fairness of the promotion process Increased the meaningfulness of your work Increased the extent to which you were treated with respect Improved your ability to balance your work and personal life Decreased the amount of travel required for your job Improved the implementation of leave policies within your division or office (e.g. sick leave, family-friendly leave)
10.In which SEC unit were you working when you left?  (Check one.)   1.
Division of Corporate Finance..........................................................18%..
2.
Division of Enforcement ...................................................................38 ...
3.
Division of Investment Management...............................................15 .....
4.
Division of Market Regulation............................................................9 .....
5.
Office of Administrative Law Judges.................................................0 .......
6.
Office Administrative and Personnel Management .........................0 .......
7.
Office of the Chief Accountant...........................................................2 .......
8.
Office of Compliance Inspections and Examinations ...................14 .....
9.
Office of the Comptroller....................................................................0 .......
10.
Office of Economic Analysis ..............................................................0 .......
11.
Office of Equal Employment Opportunity........................................0 .......
12.
Office of the Executive Director........................................................0 .......
13.
Office of Filings and Information Services.......................................0 .......
14.
Office of the General Counsel ............................................................4 .....
15.
Office of Information Technology .....................................................0 .......
16.
Office of the Inspector General..........................................................0 .......
17.
Office of International Affairs ............................................................0 .......
18.
Office of Investor Education and Assistance ...................................0 .......
19.
Office of Legislative Affairs ................................................................0 .......
20.
Office of Municipal Securities ............................................................0 .......
21.
Office of Public Affairs, Policy Evaluation, and Research..............0 .......
22.
Office of the Secretary ........................................................................0 .......
11.In which location did you work?  (Check one.)   1.
Washington, D.C. Metropolitan Area Offices ................. 57%   2.
Northeast Regional Office ................................................17   3.
Boston District Office..........................................................4   4.
Philadelphia District Office ................................................2   5.
Southeast Regional Office...................................................1   6.
Atlanta District Office .........................................................1   7.
Midwest Regional Office .....................................................7   8.
Central Regional Office.......................................................2   9.
Fort Worth District Office...................................................2 10.
Salt Lake District Office ......................................................0 11.
Pacific Regional Office........................................................5  12.
San Francisco District Office .............................................2 :KDWLV\RXUVH["&KHFNRQH 1.
Attorney.................. 70% 2.
Accountant............ 18  Examiner............... 13 :KDWLV\RXUUDFH"&KHFNRQH :KDWZDV\RXUJUDGHRUOHYHOZKHQ\RXOHIWWKH6(&" 1.
White................................. 86% 2.
African-American ..............7 3.
Native American................0   1.
GS-7......................... 2% 4.
Asian or Pacific Islander ..4   2.
GS-8........................ 0 5.
Other - Please specify:  .....3   3.
GS-9........................ 2   4.
GS-10...................... 0 $UH\RXRI+LVSDQLFRULJLQ"&KHFNRQH   5.
GS-11...................... 2   6.
GS-12...................... 7 1.
Yes....................................... 4%   7.
GS-13.................... 26 2.
No......................................96   8.
GS-14.................... 43   9.
GS-15.................... 15 :KDWLV\RXUDJH"&KHFNRQH 10.
SES........................ 2 1.
Under 25 ............................. 3% :HUH\RXDPDQDJHURUVXSHUYLVRU"&KHFNRQH 2.
25 to less than 30 .............16 3.
Yes.......................... 27% 4.
No.......................... 73 5.
40 to less than 50 .............15 6.
50 to less than 60 ...............3 7.
section_title: Additional Details From GAO Survey of Current and Former SEC Attorneys, Accountants, and Examiners
paragraphs: Included in this appendix are charts that supplement the analysis in the  report.  Figures 9 and 10 show, respectively, the extent to which different  aspects of their jobs were a source of dissatisfaction for staff and had a  negative effect on staff morale.  Figures 11 and 12 show the extent to which  different aspects of their job had a positive influence on their decisions to  stay at SEC and those that had a positive influence on morale.  Figure 13  shows the extent to which different factors had a positive influence on staff  decisions to begin working at SEC.
section_title: Key Human Capital Management Principles From Nine Private Sector Organizations
paragraphs: In 1999, we were asked to identify what common principles, if any,  underlay the human capital strategies and practices of private sector  organizations regularly cited as leaders in the area of human capital  management.  To gather this information, we interviewed representatives  of nine private sector organizations that were recognized in the current  literature as being innovative or effective in strategically managing their  human capital.  On the basis of the information they provided, we  identified 10 underlying and interrelated principles of human capital  management that were common to the 9 organizations: 1. Treat human capital management as being fundamental to  strategic business management. Integrate human capital  considerations when identifying the mission, strategic goals, and core  values of the organization as well as when designing and implementing  operational policies and practices.
2.
Integrate human capital functional staff into management  teams. Include human capital leaders as full members of the top  management team rather than isolating them to provide after-the-fact  support.  Expand the strategic role of human capital staff beyond that  of providing traditional personnel administration services. 3. Leverage the internal human capital function with external  expertise. Supplement internal human capital staff’s knowledge and  skills by seeking outside expertise from consultants, professional  associations, and other organizations, as needed. 4. Hire, develop, and sustain leaders according to leadership  characteristics identified as essential to achieving specific  missions and goals.  Identify the leadership traits needed to achieve  high performance of mission and goals; and build and sustain the  organization’s pool of leaders through recruiting, hiring, development,  retention, and succession policies and practices targeted at producing  leaders with the identified characteristics. 5. Communicate a shared vision that all employees, working as one  team, can strive to accomplish.  Promote a common understanding  of the mission, strategic goals, and core values that all employees are  directed to work as a team to achieve.  Create a line-of-sight between  individual contributions and the organization’s performance and  results. 6. Hire, develop, and retain employees according to competencies.
Identify the competencies—knowledge, skills, abilities, and  behaviors—needed to achieve high performance of mission and goals  and build and sustain the organization’s talent pool through recruiting,  hiring, development, and retention policies and practices targeted at  building and sustaining those competencies. 7. Use performance management systems, including pay and other  meaningful incentives, to link performance to results.  Provide  incentives and hold employees accountable for contributing to the  achievement of mission and goals.  Reward employees who meet or  exceed clearly defined and transparent standards of high performance. 8. Support and reward teams to achieve high performance.  Foster a  culture in which individuals interact and support and learn from each  other as a means of contributing to the high performance of their peers,  units, and the organization as a whole.  Bring together the right people  with the right competencies to achieve high performance as a result,  rather than in spite, of the organizational culture.
9.
Integrate employee input into the design and implementation of  human capital policies and practices.  Incorporate the first-hand  knowledge and insights of employees and employee groups to develop  responsive human capital policies and practices.  Empower employees  by making them stakeholders in the development of solutions and new  methods of promoting and achieving high performance of  organizational missions and goals. 10. Measure the effectiveness of human capital policies and  practices.  Evaluate and make fact-based decisions on whether human  capital policies and practices support high performance of mission and  goals.  Identify the performance return on human capital investments.
section_title: Comments From the Securities and Exchange Commission
paragraphs: The following are GAO’s comments on the Securities and Exchange  Commission’s letter dated August 31, 2001.
subsections: section_title: GAO Comments
paragraphs: 1. SEC commented that they do not believe that an attribution from a  former employee regarding the remoteness of the Chairman and  division heads and the quality of communication represented the views  of most employees throughout the Commission.  While we did not  intend to imply that all SEC employees have this opinion, our survey  results indicated that 33 percent of current and 45 percent of former  employees cited the quality of communication as having a generally or  very negative effect on morale. 2. Although SEC agrees that the agency has not addressed succession  planning in its annual performance plan, SEC commented that  succession planning has been part of its human resources effort since  the mid-1980’s.   We do not question whether SEC recognizes the  importance of succession planning, but its actions have not been  documented through detailed goals, objectives, and strategies in its  annual performance plan.
3.
In addressing our finding that SEC has yet to implement a formal  process to collect and analyze data from exit interviews, SEC stated  that since late 1998, they had been collecting data from exit surveys  completed by departing employees as part of the checkout process.    However, this standardized form captures only limited information,  including a brief statement on why an employee resigned, the name of  the new employer, and the new salary. SEC officials said that they  generally do not receive meaningful responses on these forms.   However, exit interviews would allow SEC to collect a much richer  body of information and would also allow SEC officials to explore  human capital issues beyond those related to compensation.  4. SEC commented that it is also important to acknowledge that its Office  of Administrative and Personnel Management (OAPM) has taken  measures to enhance overall Human Resource customer service within  the agency.  By stating that OAPM offers traditional personnel  administrative services, we did not intend to imply that the office has  made no effort to explore ways to improve customer service, which is  an important part of the service OAPM provides. The intent of our  recommendation is to ensure SEC’s ongoing attention to human capital  issues by involving human capital leaders in decisionmaking and  establishing a practice that management continually monitor and refine  SEC’s human capital approaches.
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: In addition to the persons named above, Emily Chalmers, Stuart Kaufman,  Edwin Lane, Carl Ramirez, Ellen Rubin, Karen Tremba, and Patrick Ward  made key contributions to this report.
section_title: GAO’s Mission
paragraphs: The General Accounting Office, the investigative arm of Congress, exists to  support Congress in meeting its constitutional responsibilities and to help improve  the performance and accountability of the federal government for the American  people. GAO examines the use of public funds; evaluates federal programs and  policies; and provides analyses, recommendations, and other assistance to help  Congress make informed oversight, policy, and funding decisions. GAO’s  commitment to good government is reflected in its core values of accountability,  integrity, and reliability.
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subsections: section_title: Order by Mail or Phone
section_title: Visit GAO’s Document Distribution Center
section_title: To Report Fraud, Waste, and Abuse in Federal Programs
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section_title: Public Affairs