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

Letter

Representation of Women and Minorities in the SES and Its Developmental Pool as of Fiscal Year 2007

The data that we are reporting today provide a demographic snapshot of the career SES as well as the levels that serve as the SES developmental pool for October 2000 and September 2007. Table 1 shows the number of career SES as well as those in the developmental pool, including the percentages of women and minorities. For more information on demographic data governmentwide, see appendix I.

Table 2 shows a further breakdown of the number of SES members, including the percentages of women and minorities, by Chief Financial Officers (CFO) Act agency. For more information on demographic data by CFO Act agency, see appendix I.

As we reported in 2003, the gender, racial, and ethnic profiles of the career SES at the 24 CFO Act agencies varied significantly in October 2000. The representation of women ranged from 13.7 percent to 41.7 percent, with half of the agencies having 27 percent or fewer women. For minority representation, rates varied even more and ranged from 3.1 percent to 35.6 percent, with half of the agencies having less than 15 percent minorities in the SES. In 2007, the representation of women and minorities, both overall and for most individual agencies, was higher than it was in October 2000. The representation of women ranged from 19.9 percent to 45.5, percent with more than half of the agencies having 30 percent or more women. For minority representation, rates ranged from 6.1 percent to 43.8 percent, with more than half of the agencies having over 16 percent minority representation, and more than 90 percent of the agencies having more than 13 percent minority representation in the SES.

For this testimony, we did not analyze the factors that contributed to the changes from October 2000 through September 2007 in representation. OPM and the Equal Employment Opportunity Commission (EEOC), in their oversight roles, require federal agencies to analyze their workforces, and both agencies also report on governmentwide representation levels. Under OPM’s regulations implementing the Federal Equal Opportunity Recruitment Program (FEORP), agencies are required to determine where representation levels for covered groups are lower than the civilian labor force and take steps to address those differences. Agencies are also required to submit annual FEORP reports to OPM in the form prescribed by OPM. EEOC’s Management Directive 715 (MD-715) provides guidance and standards to federal agencies for establishing and maintaining effective equal employment opportunity programs, including a framework for executive branch agencies to help ensure effective management, accountability, and self-analysis to determine whether barriers to equal employment opportunity exist and to identify and develop strategies to mitigate or eliminate the barriers to participation. Specifically EEOC’s MD-715 states that agency personnel programs and policies should be evaluated regularly to ascertain whether such programs have any barriers that tend to limit or restrict equitable opportunities for open competition in the workplace. The initial step is for agencies to analyze their workforce data with designated benchmarks, including the civilian labor force. If analysis of their workforce profiles identifies potential barriers, agencies are to examine all related policies, procedures, and practices to determine whether an actual barrier exists. EEOC requires agencies to report the results of their analyses annually.

In our 2003 report, we (1) reviewed actual appointment trends from fiscal years 1995 to 2000 and actual separation experience from fiscal years 1996 to 2000; (2) estimated by race, ethnicity, and gender the number of career SES who would leave government service from October 2000 through October 2007; and (3) projected what the profile of the SES would be if appointment and separation trends did not change. We estimated that more than half of the career SES members employed in October 2000 will have left service by October 2007. Assuming then-current career SES appointment trends, we projected that (1) the only significant changes in diversity would be an increase in the number of white women with an essentially equal decrease in white men and (2) the proportions of minority women and men would remain virtually unchanged in the SES corps, although we projected slight increases among most racial and ethnic minorities.

Table 3 shows SES representation as of October 2000, our 2003 projections of what representation would be at the end of fiscal year 2007, and actual fiscal year 2007 data. We projected increases in representation among both minorities and women. Fiscal year 2007 data show that increases did take place among those groups and that those increases generally exceed the increases we projected. The only decrease among minorities occurred in African American men, whose representation declined from 5.5 percent in 2000 to 5.0 percent at the end of fiscal year 2007. For more information on our projections, see appendix II.

Table 4 shows developmental pool representation as of October 2000, our 2003 projections of what representation would be at the end of fiscal year 2007, and actual fiscal year 2007 data. We projected increases in representation among both minorities and women. Fiscal year 2007 data show that increases did generally take place among those groups. For more information on our projections, see appendix II.

As stated earlier, we have not analyzed the factors contributing to changes in representation; therefore care must be taken when comparing changes in demographic data since fiscal year 2000 to the projections we made in 2003, as we do in tables 3 and 4. For example, we have not determined whether estimated retirement trends materialized or appointment and separation trends used in our projections continued and the impact these factors may have had on the diversity of the SES and its developmental pool.

Considering retirement eligibility and actual retirement rates of the SES is important because individuals normally do not enter the SES until well into their careers; thus SES retirement eligibility is much higher than for the workforce in general. As we have said before, as part of a strategic human capital planning approach, agencies need to develop long-term strategies for acquiring, developing, motivating, and retaining staff. An agency’s human capital plan should address the demographic trends that the agency faces with its workforce, especially retirements. In 2006, OPM reported that approximately 60 percent of the executive branch’s 1.6 million white-collar employees and 90 percent of about 6,000 federal executives will be eligible for retirement over the next 10 years. If a significant number of SES members were to retire, it could result in a loss of leadership continuity, institutional knowledge, and expertise among the SES corps, with the degree of loss varying among agencies and occupations. This has important implications for government management and emphasizes the need for good succession planning for this leadership group. Rather than simply recreating the existing organization, effective succession planning and management, linked to the strategic human capital plan, can help an organization become what it needs to be. Leading organizations go beyond a “replacement” approach that focuses on identifying particular individuals as possible successors for specific top- ranking positions. Rather, they typically engage in broad, integrated succession planning and management efforts that focus on strengthening both current and future capacity, anticipating the need for leaders and other key employees with the necessary competencies to successfully meet the complex challenges of the 21st century.

Succession planning also is tied to the federal government’s opportunity to affect the diversity of the executive corps through new appointments. In September 2003, we reported that agencies in other countries use succession planning and management to achieve a more diverse workforce, maintain their leadership capacity, and increase the retention of high-potential staff. Racial, ethnic, and gender diversity in the SES is an important component for the effective operation of the government.

Representation of Women and Minorities in the PCES, EAS, and CSP Program

As we have testified before the House Subcommittee on Federal Workforce, Postal Service, and the District of Columbia, Committee on Oversight and Government Reform, the Postal Service expects nearly half of its executives to retire within the next 5 years, which has important implications and underscores the need for effective succession planning. This presents the Postal Service with substantial challenges for ensuring an able cadre of postal executives and also presents opportunities for the Postal Service to affect the composition of the PCES. Table 5 updates information we provided last year for the PCES and EAS levels 22 and above, from September 1999 to September 2007, showing increases in the representation of women and minorities.

Since last year’s testimony, we have studied the pools of potential successors that the Postal Service can draw from in selecting PCES promotions. The Service’s policy encourages selecting employees from the CSP program when it promotes employees to the PCES. The current CSP program—which first accepted participants in 2004—is intended to identify pools of potential successors for PCES positions and develop these employees so that they can promptly and successfully assume PCES positions as these positions become available. Nearly 87 percent of postal employees promoted to the PCES in fiscal years 2004 through 2007 were participating in the CSP program, and nearly 7 in 10 promotions were drawn from CSP program participants in EAS levels 25 and above. Table 6 shows increases in the representation of women and minorities in the CSP program from September 2004 to September 2007 among program participants at EAS level 25 and above.

We also have not analyzed factors that contributed to changes in the representation levels in the PCES, EAS, or CSP program. The Postal Service, like executive branch agencies, has responsibility for analyzing its workforce to determine (1) where representation levels for covered groups are lower than the civilian labor force and take steps to address those differences and (2) whether barriers to equal employment opportunity exist and to identify and develop strategies to mitigate or eliminate the barriers to participation.

The Postal Accountability and Enhancement Act, enacted in 2006, expressed Congress’s interest in diversity in the Postal Service. It required the Postal Service Board of Governors to report on the representation of women and minorities in supervisory and management positions, which is a different focus from this statement on the PCES, EAS, and CSP program. This Board of Governors’ report provided trend data for supervisory and management positions for fiscal years 2004 through 2007, as well as for the career workforce as a whole. In this regard, the report highlighted data for all career employees in the Service’s workforce, noting that from fiscal years 2004 through 2007 the percentage of women increased from 38.3 percent to 39.7 percent, while the percentage of minorities increased from 36.8 percent to 38.3 percent over the same period.

Processes Used for Selecting SES and PCES Members

Executive branch agencies have processes for selecting members into the SES and developmental programs that are designed to create pools of candidates for senior positions. The Postal Service also has processes for selecting PCES members and participants in its CSP program from which potential successors to the PCES could come.

Selecting Career SES Members

OPM regulations require federal executive agencies to follow competitive merit staffing requirements for initial career appointments to the SES or for appointment to formal SES candidate development programs, which are competitive programs designed to create pools of candidates for SES positions. Each agency head is to appoint one or more Executive Resources Boards (ERB) to conduct the merit staffing process for initial SES career appointments. ERBs review the executive and technical qualifications of each eligible candidate and make written recommendations to the appointing official concerning the candidates. The appointing official selects from among those candidates identified by the ERB as best qualified and certifies the executive and technical qualifications of those candidates selected. Candidates who are selected must have their executive qualifications certified by an OPM-administered Qualifications Review Board (QRB) before being appointed to the SES.

According to OPM, it convenes weekly QRBs to review the applications of candidates for initial career appointment to the SES. QRBs are independent boards of three senior executives that assess the executive qualifications of all new SES candidates. Two criteria exist for membership on a QRB: at least two of three members must be career appointees, and each member must be from a different agency. In addition, OPM guidance states that QRB members cannot review candidates from their own agencies. An OPM official stated that an OPM official acts as administrator, attending each QRB to answer questions, moderate, and offer technical guidance but does not vote or influence voting. OPM guidance states that the QRB does not rate, rank, or compare a candidate’s qualifications against those of other candidates. Instead, QRB members judge the overall scope, quality, and depth of a candidate’s executive qualifications within the context of five executive core qualifications—leading change, leading people, results driven, business acumen, and building coalitions—to certify that the candidate’s demonstrated experience meets the executive core qualifications.

To staff QRBs, an OPM official said that OPM sends a quarterly letter to the heads of agencies’ human capital offices seeking volunteers for specific QRBs and encourages agencies to identify women and minority participants. Agencies then inform OPM of scheduled QRB participants, without a stipulation as to the profession of the participants. OPM solicits agencies once a year for an assigned quarter and requests QRB members on a proportional basis. The OPM official said that OPM uses a rotating schedule, so that the same agencies are not contacted each quarter. Although QRBs generally meet on a weekly basis, an OPM official said that QRBs can meet more than once a week, depending on caseload. The official said that because of the caseload of recruitment for SES positions recently, OPM had been convening a second “ad hoc” QRB. According to another OPM official, after QRB certification, candidates are officially approved and can be placed.

In addition to certification based on demonstrated executive experience and another form of certification based on special or unique qualities, OPM regulations permit the certification of the executive qualifications of graduates of candidate development programs by a QRB and selection for the SES without further competition. OPM regulations state that for agency candidate development programs, agencies must have a written policy describing how their programs will operate and must have OPM approval before conducting them. According to OPM, candidate development programs typically run from 18 to 24 months and are open to GS-15s and GS-14s or employees at equivalent levels from within or outside the federal government. Agencies are to use merit staffing procedures to select participants for their programs, and most program vacancies are announced governmentwide. OPM regulations provide that candidates who compete governmentwide for participation in a candidate development program, successfully complete the program, and obtain QRB certification are eligible for noncompetitive appointment to the SES. OPM guidance states that candidate development program graduates are not guaranteed placement in the SES. Agencies’ ERB chairs must certify that candidates have successfully completed all program activities, and OPM staff and an ad hoc QRB review candidates’ training and development experience to ensure that it provides the basis for certification of executive qualifications.

OPM also periodically sponsors a centrally administered federal candidate development program. According to an OPM official, the OPM-sponsored federal candidate development program can be attractive to smaller agencies that may not have their own candidate development program, and OPM administers the federal program for them. According to OPM officials, 12 candidates graduated from the first OPM-sponsored federal candidate development program in September 2006. Of those, 8 individuals have been placed; 1 is about to be placed, and 3 are awaiting placement. In January 2008, OPM advertised the second OPM-sponsored federal candidate development program, and selections for the second program are pending.

With respect to oversight of and selection into the SES, we note that the Chairmen of the two Subcommittees represented here today introduced legislation in October 2007, which would create a Senior Executive Service Resource Office within OPM to improve policy direction and oversight of, among other things, the structure, management, and diversity of the SES. In addition, this legislation would require agencies to establish SES Evaluation Panels of diverse composition to review the qualifications of candidates.

Selecting PCES Members

Because the Postal Service has specific statutory authority to establish procedures for appointments and promotions, it does not fall under the jurisdiction of the OPM QRB and its certification activities. Instead, the Postal Service promotes EAS and other employees to the PCES when these employees are selected to fill PCES vacancies. Promotions generally involve EAS employees in levels 25 and above who are CSP program participants and who were identified as potential PCES successors through a nomination and evaluation process (either through self- nomination or nomination by a PCES “sponsor”). As previously noted, the CSP program is intended to identify and develop these employees so that they can promptly and successfully assume PCES positions as these positions become available.

The selecting official for a PCES-I position (i.e., the relevant officer) is required to obtain approval for the selection decision from the relevant member of the Service’s Executive Committee. Postal Service policy notes that employees promoted to the PCES should be CSP participants except in rare cases. However, participation in the CSP program does not trigger any promotion decision, and any employee can be promoted to the PCES, regardless of whether that person is participating in CSP. Further, there are no requirements for PCES vacancies to be advertised, nor are selecting officials required to interview candidates for such vacancies. According to postal officials, selecting officials use a variety of methods to fill PCES-I vacancies, which may involve interviews and discussion among officers regarding candidates or potential candidates, or which may involve considering employees who have had developmental assignments. Such discussions may happen when the vacancy is in one area of the country and potential candidates are in other areas, or when potential candidates are in CSP program position pools outside the jurisdiction of the selecting official.

The Postal Service has implemented a structured process to select nominees to participate in up to 5 of the approximately 400 CSP program position pools. First, the Service conducts a range of preparatory activities for the 2-year CSP program cycle, including a needs assessment for the program, such as determining what PCES positions have been created or eliminated and any CSP position pools where succession planning is shallow. The Service’s Employee Development and Diversity Office, which is responsible for the CSP program, coordinates activities with CSP program liaisons throughout the Service, who provide administrative support and information about the program.

Second, the Postal Service receives nominations for each 2-year CSP program cycle, including self-nominations and other nominations from PCES sponsors. Nominees complete applications that include self- assessments against the eight competencies in the Service’s Executive Competency Model. PCES sponsors and the relevant PCES-I executives also evaluate each nominee and make recommendations to the CSP program committees to either support or not support each nominee.

Third, each of the Service’s 43 officers convenes a CSP program committee of three or more executives to consider nominees for each position pool under each officer’s jurisdiction. Each CSP program committee reviews nominees for pools under its jurisdiction and makes recommendations regarding each nominee. Officers then select participants for their pools, subject to review and approval by the responsible member of the Executive Committee. The Postmaster General and Chief Human Resources Officer also review some selections for “critical” position pools that are so designated by each officer.

Fourth, once selected, CSP participants develop an individual development plan (IDP) that outlines planned developmental activities and assignments for the 2-year CSP program cycle. IDPs are reviewed and approved by the CSP program committees and by the relevant executives.

Chairman Davis, Chairman Akaka, and Members of the Subcommittees, this concludes our prepared statement. We would be pleased to respond to any questions that you may have.

Contacts and Acknowledgments

For further information regarding this statement, please contact Kate Siggerud, Director, Physical Infrastructure Issues, on (202) 512-2834 or at siggerudk@gao.gov; or George Stalcup, Director, Strategic Issues, on (202) 512-6806 or at stalcupg@gao.gov. Individuals making key contributions to this statement included Gerald P. Barnes and Belva Martin, Assistant Directors; Karin Fangman; Kenneth E. John; Kiki Theodoropoulos; and Greg Wilmoth.

Appendix I