GAO'S Proposed Human Capital Legislation: Views of the Employee Advisory Council
Published: 2003-09-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: This testimony discusses how the Comptroller General formed the Employee Advisory Council (EAC) about 4 years ago to be fully representative of the GAO population and to advise him on issues pertaining to both management and employees. The members of the EAC represent a variety of employee groups and almost all employees outside of the senior executive service (more than 3,000 of GAO's 3,200 employees or 94 percent). The EAC operates as an umbrella organization that incorporates representatives of GAO's long-standing employee organizations including groups representing the disabled, Hispanics, Asian-Americans, African-Americans, gays and lesbians, veterans, and women, as well as employees in various pay bands, attorneys, and administrative and professional staff.
section_title: What GAO Found
paragraphs: The EAC serves as an advisory body to the Comptroller General and other senior executives by (1) seeking and conveying the views and concerns of the individual employee groups it represents while being sensitive to the mutual interests of all employees, regardless of their grade, band, or classification group, (2) proposing solutions to concerns raised by employees, as appropriate, (3) providing input by assessing and commenting on GAO policies, procedures, plans, and practices and (4) communicating issues and concerns of the Comptroller General and other senior managers to employees.

section_title: Letter
paragraphs: We are pleased to have the opportunity to comment on the Comptroller  General’s Human Capital II proposal.  The Comptroller General formed the  EAC about 4 years ago to be fully representative of the GAO population and  advise him on issues pertaining to both management and employees.  The  members of the EAC represent a variety of employee groups and almost all  employees outside of the senior executive service (more than 3,000 of  GAO’s 3,200 employees or 94 percent).  The EAC operates as an umbrella  organization that incorporates representatives of GAO’s long-standing  employee organizations including groups representing the disabled,  Hispanics, Asian-Americans, African-Americans, gays and lesbians,  veterans, and women, as well as employees in various pay bands,  attorneys, and administrative and professional staff.
As established in our charter, the Employee Advisory Council serves as an  advisory body to the Comptroller General and other senior executives by:   seeking and conveying the views and concerns of the individual  employee groups it represents while being sensitive to the mutual  interests of all employees, regardless of their grade, band, or  classification group;  proposing solutions to concerns raised by employees, as appropriate;  providing input by assessing and commenting on GAO policies,  procedures, plans, and practices; and,  communicating issues and concerns of the Comptroller General and  other senior managers to employees.
In preparing this statement, the EAC considered the results of discussions  with constituents, and input from Council representatives, including  information gathered from employees during the initial introduction of the  proposal and comments provided on the Comptroller General’s revised  proposal.  Although we have limited quantitative data in this regard and  recognize that not all employees have the same opinions regarding all  provisions of the proposed legislation, we believe our testimony is  representative of a substantial cross-section of GAO employees.
In summary, GAO employees generally support many of the provisions in  the proposed legislation.  For example, most employees expressed support  for  the provision to make GAO’s authority to offer voluntary early   provisions to enhance vacation time for upper-level hires and relocation  expenses deemed necessary by the Comptroller General to recruit and  retain top employees, and   the provision to establish an exchange program with the private sector.
However, many employees have expressed concerns about the proposals  that affect pay.  Specifically, many staff are concerned about the potential  negative impact of the change in the basis for annual salary increases,  although some staff recognize the potential benefits for additional reward  and management flexibility.  To a lesser extent, staff are concerned about  changes to pay protections provided under traditional federal employment  rules.  Staff have differing opinions on the provision to change GAO’s name  to the Government Accountability Office.
The EAC recognizes and appreciates the efforts the Comptroller General  has made to address employees’ concerns regarding provisions affecting  pay by (1) providing assurances that the new system will sustain  employees’ purchasing power and provide parity with prevailing locality  pay, (2) proposing short- and longer-term modifications to GAO’s  performance management system, and (3) incorporating a 2-year transition  period for implementation of the new system.    We hope that if the  legislation is enacted, the Comptroller General will continue to be  responsive to the concerns of employees as the agency moves forward in  implementing these changes.
subsections: section_title: GAO Employees Support Most Aspects of the Proposed Legislation but Have Concerns about Pay Provisions and Differing Opinions about the Proposed Name Change
paragraphs: Outreach efforts by EAC representatives indicate that most employees  support many portions of the legislative proposal under consideration by  the Subcommittee but have concerns about provisions in the proposal  related to pay.  Specifically, employees generally support provisions that  make the authorities provided to GAO for voluntary early retirement pay  incentives permanent, to provide enhancements in vacation time and  relocation expenses deemed necessary by the Comptroller General to  recruit and retain top employees, and to establish a private sector  exchange program.  However, many employees are concerned about the  provisions that change the way that annual pay decisions are made and, to  a lesser extent, the proposed change to traditional protections for pay  retention.  Employees had differing opinions about the proposed change to  GAO’s name.
subsections: section_title: Most Employees Support Proposals to Improve GAO’s Ability to Realign the Workforce and Attract and Retain High Quality Employees
paragraphs: Most employees support the Comptroller General’s proposed provisions to  make permanent GAO’s 3-year authority to offer voluntary early retirement  and voluntary separation payments to provide flexibility to realign GAO’s  workforce.  In addition, GAO employees recognize that attracting and  retaining high-quality employees and managers throughout the  organization is vitally important for the future of GAO.  Employees thus  generally support the provisions to offer flexible relocation  reimbursements, provide upper-level hires with 6-hour leave accrual, and  establish an executive exchange program with private sector organizations.   Most employees commented positively on these authorities so long as  there are internal controls to monitor and report on their use, as are  present to provide accountability for other authorities throughout GAO.
section_title: Many Employees Are Concerned about the Provisions That Affect Pay
paragraphs: Many employees expressed concern about the provisions that affect the  determination of annual pay increases and pay retention.  The opinions  expressed by employees generally fall into three categories:  (1) general  concerns and some supporting views regarding changes in traditional civil  service employment rules that could reduce the amount of annual pay  increases provided for economic adjustments but provide greater  opportunity for rewarding performance, (2) concerns about making a  portion of annual economic adjustments variable based on performance  assessment, and to a lesser extent (3) concerns about the loss of traditional  pay retention protections.
subsections: section_title: Concerns and Supporting Views on Proposed Changes That Could Reduce Annual Pay Provided for Economic Adjustments but Provide Greater Rewards
paragraphs: The first area of employee concern is proposed changes to traditional  federal civil service employment rules that have historically provided a  fixed annual increase for all federal employees determined by the President  and the Congress.  Government employees in general, and GAO employees  in particular, often conduct work that can have far reaching implications  and impacts.  Such work can positively or negatively affect segments of the  population and thereby the general public’s perceptions of, and reactions  to, the federal government, including Members of Congress.  Over the  years, the Congress has developed a bulwark of protections to shield  federal workers from reprisals that might result from their service as  employees.  Included among these has been the process by which federal  employees’ salaries are annually adjusted as a result of the passage of, and  signing into law, of the annual budget.
The historical process relies on passage of legislation which includes an  annual increase in pay to reflect increases in inflation and overall  employment costs, followed by determinations by the President (and the  Office of Personnel Management) to calculate the distribution of the  legislative economic adjustments between an overall cost-of-living  adjustment and locality-based increases to reflect differences in cities  across the nation. The current mechanism for annual federal pay  adjustments is found in Public Law 101-509, the Federal Employees Pay  Comparability Act.
The Comptroller General has expressed his concern about trends in the  executive branch that make it highly likely that the current civil service pay  system will be the subject of comprehensive reform within the next few  years.  Citing federal agencies that already have many of these flexibilities,  such as the Federal Aviation Administration and the new Department of  Homeland Security, as well as agencies currently seeking reform, such as  the Department of Defense, he has stated his belief that GAO needs to be  “ahead of the curve.”
Under the proposal, rather than relying on the administration’s  determination and the Congress’ mandate for an annual salary adjustment,  GAO can develop and apply its own methodology for the annual cost-of- living adjustments and compensation differences by locality that the  Comptroller General believes would be more representative of the nature,  skills, and composition of GAO’s workforce.  Some employees have  expressed following concerns.
Removing GAO from the traditional process significantly alters a key  element of federal pay protection that led some employees to seek  employment in the federal sector.  Changing this protection could  diminish the attractiveness of federal service and result in the need for  higher salaries to attract top candidates.
A portion of appropriations historically intended to provide all federal  employees with increases to keep pace with inflation and the cost of  living in particular localities should not be tied to individual  performance.
GAO-based annual economic adjustments are more likely to be less  than, rather than more than, amounts annually provided by the  Congress; thus employees performing at lower (but satisfactory) levels  who may not receive an equal or greater amount in the form of a bonus  or dividend may experience an effective pay cut from amounts  traditionally provided.
The flexibility for the Comptroller General to use funds appropriated for  cost-of-living adjustments for pay-for-performance purposes could  imperil future GAO budgets by making that portion of the annual budget  discretionary where it was once mandatory.
The wide latitude provided in the proposal gives the Comptroller  General broad discretion and limited accountability for determining  whether employees receive annual across-the-board economic  adjustments, the amount of such adjustments, and the timing of  adjustments could result in unfair financial harm for some employees if  the broad authorities were improperly exercised.
The Comptroller General has not made a compelling case regarding the  need for these pay-related and other legislative changes, for example by  showing that existing cost-of-living adjustment mechanisms are  inaccurate or that the agency has had difficulty in attracting and  retaining high-quality employees.
On the other hand, some employees also recognize that the proposed pay  provisions may offer some distinct advantages for some employees.  Some  employees commented in support of the provision indicating that   the existing system for calculating inflation and local cost adjustments  may not accurately reflect reality;  most employees would not likely be harmed by a system that allocates a  greater share of pay to performance-based compensation;  the authorities would allow GAO managers to provide greater financial  rewards to the agency’s top performers, as compared to the present pay- for-performance system;   making a stronger link between pay and performance could facilitate  GAO’s recruitment of top talent.
In addition, the provision may, to a limited extent, address a concern of  some field employees by providing alternatives to reductions in force in  times when mandated pay increases are not fully funded or in other  extraordinary circumstances.  For example, from 1992 to 1997, GAO  underwent budgetary cuts totaling 33 percent (in constant fiscal year 1992  dollars.)  To achieve these budgetary reductions, GAO staff was reduced by  39 percent, primarily through field office closures and the associated  elimination of field-based employees.  While we hope the agency will never  again have to manage budget reductions of this magnitude, this provides a  painful example of the vulnerability of staffing levels, particularly in the  field, to budgetary fluctuations.  The proposed pay provisions would  provide the Comptroller General with greater flexibility to manage any  future budget crises by adjusting the annual pay increases of all employees  without adversely and disproportionately impacting the careers and lives of  field-based employees.
section_title: Concerns about Making a Portion of Annual Pay Increases Variable Based on Performance Assessment
paragraphs: In addition to the revised basis for calculating annual economic  adjustments, employees are concerned about the provision that transforms  a portion of the annual pay increases that have historically been granted to  federal employees for cost-of-living and locality-pay adjustments into  variable, performance-based pay increases and bonuses.  Because the GAO  workforce is comprised of a wide range of highly qualified and talented  people performing a similarly wide range of tasks, employees recognize  that it is likely that some employees at times have more productive years  with greater contributions than others.  Therefore, most agree with the  underlying principle of the provision to provide larger financial rewards for  employees determined to be performing at the highest level.  However, in  commenting on the proposal, some employees said that GAO management  already has multiple options to reward high performers through bonuses,  placement in top pay-for-performance categories, and promotions.  Others  expressed concern that increased emphasis on individual performance  could result in diminished teamwork, collaboration, and morale because  GAO work typically is conducted in teams, often comprised of employees  who are peers. “The PFP (pay-for-performance) process involves managers making very fine distinctions in  staff’s performance in order to place them in discrete performance management categories.   These categories set artificial limits on the number of staff being recognized for their  contributions with merit pay and bonuses.”
Related to concerns about subjectivity in the performance assessment  system, Council representatives and employees expressed concern about  data indicating that as a group, minorities, veterans, and field-based  employees have historically received lower ratings than the employee  population as a whole.  While the data indicate that the disparity is  considerably improved or eliminated for employees who have been with  the agency fewer than 5 years, some employees have serious reservations  about providing even greater discretion in allocating pay based on the  current performance management system.
section_title: Concerns about the Loss of Traditional Pay Retention Protections
paragraphs: To a lesser extent, some employees expressed concerns about the  elimination of traditional federal employment rules related to grade and  pay retention for employees who are demoted due to such conditions as a  workforce restructuring or reclassification.  The proposed legislation will  allow the Comptroller General to set the pay of employees downgraded as  a result of workforce restructuring or reclassification at their current rates  (i.e., no drop in current pay), but with no automatic annual increase to  basic pay until their salaries are less than the maximum rates of their new  grades or bands.
Employee concern, particularly among some Band II analysts and mission  support staff, focuses on the extent to which this provision may result in a  substantial erosion in future pay, since there is a strong possibility that  these two groups may be restructured in the near future.  For example, one  observation is that the salary range within pay bands is such that senior  analysts who are demoted would likely wait several years for their next  increase in pay or bonus.  In this circumstance, employees would need to  reconcile themselves to no permanent pay increases regardless of their  performance.  Some employees cited this potential negative impact on staff  motivation and productivity and emphasized that to continue providing  service at the level of excellence that the Congress and the American  people expect from GAO, this agency needs the best contributions of all its  midlevel and journeymen employees.  However, the EAC recognizes that,  absent this kind of authority and given some of the authorities already  provided to the Comptroller General, some employees who may be  demoted could otherwise face termination rather than diminished salary  increases.
section_title: Employee Had Differing Opinions regarding a Change in GAO’s Name
paragraphs: Finally, employees had differing opinions regarding the provision to change  GAO’s name to the Government Accountability Office.  Some employees  are concerned that the proposed change in GAO’s name to more accurately  reflect the work that we do will damage GAO’s “brand recognition.”  Most  employees who oppose the name change do not see the current name as an  impediment to doing our work or to attracting quality employees.  Some  employees expressed concern that the legacy of high-quality service to the  Congress that is embedded in the name “United States General Accounting  Office” might be lost by changing the name.  Other employees support the  name change and cited their own experiences in being recruited or  recruiting others and in their interaction with other federal agencies.  In  their opinion, the title “General Accounting Office” reflects  misunderstandings and incorrect assumptions about GAO’s role and  function by those who are not familiar with our operations and may serve  as a deterrent to attracting employees who are otherwise not interested in  accounting.
section_title: The EAC Appreciates the Comptroller General’s Efforts to Address Concerns of GAO Employees about Pay-Related Human Capital II Provisions
paragraphs: We appreciate the Comptroller General’s efforts to involve the Employee  Advisory Council and to solicit employee input through discussions of the  proposal.  As a result of employee feedback and feedback from GAO  managers and the EAC, the Comptroller General has made a number of  revisions and clarifications to the legislative proposal along with  commitments to address concerns relating to the annual pay adjustment by  issuing formal GAO policy to formally establish his intent to retain  employees’ earning power in implementing the authorities; by revising the  performance management system; and by deferring implementation of pay  changes until 2005.
subsections: section_title: Retention of Earning Power and Locality Pay Parity
paragraphs: Key among the commitments made by the Comptroller General is his  assurance to explicitly consider factors such as cost-of-living and locality- pay differentials among other factors, both items that were not in the  preliminary proposal.  In addition, the Comptroller General has said that  employees who are performing adequately will be assured of some annual  increase that maintains spending power.  He outlined his assurance in  GAO’s weekly newsletter for June 30th that successful employees will not  witness erosion in earning power and will receive an annual adjustment  commensurate with locality-specific costs and salaries.  According to the  Comptroller General, pay protection commitments that are not included in  the statute will be incorporated in the GAO orders required to implement  the new authorities.  This is consistent with the approach followed when  GAO made similar pay protection commitments during the conversion to  broad bands in the 1980s.  To the extent that these steps are taken, overall  employee opinion of the changes should improve because much of the  concern has focused on making sure that staff who are performing  adequately do not witness economic erosion in their pay.
section_title: Planned Revisions to Performance Management
paragraphs: In response to concerns regarding the performance management system  and the related variable elements of annual pay increases raised by the  EAC, employees, and senior managers, the Comptroller General has told  employees that he will provide increased transparency in the area of  ratings distributions, for example by releasing summary-level performance  appraisal results.  In addition, the Comptroller General has stated that he  plans to take steps to improve the performance management system that  could further reduce any disparities. Specifically, on June 26, the  Comptroller General released a "Performance Management System  Improvement Proposal for the FY 2003 Performance Cycle" that outlines  proposed short-term improvements to the analyst performance  management system that applies to the majority of GAO employees.  These  include additional training for staff and performance managers and a  reduction in the number of pay categories from five to four.  A number of  longer-term improvements to the performance appraisal system requiring  validation are also under consideration, including weighting competencies  and modifying, adding, or eliminating competencies.  For all employees to  embrace any additional pay-for-performance efforts, it is vital that the  Comptroller General take steps that will provide an increased level of  confidence that the appraisal process is capable of accurately identifying  high performers and fairly distinguishing between levels of performance.
section_title: Deferred Implementation of Pay Provisions
paragraphs: Finally, the Comptroller General has agreed to delay implementation of the  pay-for-performance provisions of the proposal until October 1, 2005.  This  change should provide an opportunity to assess efforts to improve the  annual assessment process and lessen any impact of changes in the  permanent annual pay increase process for employees approaching  retirement.  It should also provide an opportunity to implement a number  of measures designed to improve confidence in the annual assessment  process.
section_title: Conclusion
paragraphs: In summary, as GAO employees we are proud of our work assisting the  Congress and federal agencies to make government operations more  efficient and effective.  Although all of us would agree that our agency is  not perfect, the EAC believes GAO is making a concerted effort to become  a more effective organization.  We will continue to work closely with  management to improve GAO, particularly in efforts to implement and  monitor any additional authorities granted to the Comptroller General.  We  believe that it is vital that we help to develop and implement innovative  approaches to human capital management that will enable GAO to  continue to meet the needs of the Congress; further improve the work  environment to maximize the potential of our highly skilled, diverse, and  dedicated workforce; and serve as a model for the rest of the federal  government.
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