In a 2001 report, we estimated that by the end of fiscal year 2006 about 31 percent of the 24 CFO agencies’ employees working in 1998, or 493,000 people, will be eligible to retire, and about half of the eligible employees (236,000 people, the equivalent of 15 percent of the 1998 workforce) would actually retire. We included the SES in our analysis, but did not separately analyze or break out data for the SES. In 2000, we reported on SES retirement eligibility and pointed out that because individuals normally do not enter the SES until well into their careers, SES retirement eligibility is much higher than for the workforce in general. Our analysis showed that 71 percent of the almost 6,000 career SES members employed as of October 1, 1998, would reach regular retirement eligibility by the end of fiscal year 2005. We concluded that the retirement eligibility trends of the SES point to the importance of agencies placing appropriate emphasis and attention on SES succession planning because SES retirements will result in a loss of leadership continuity, institutional knowledge, and expertise among the government’s top career managers. The importance that we place on workforce planning, including planning related to employee retirement, is illustrated by our designation of strategic human capital management as a governmentwide high-risk area that needs urgent attention to ensure that the federal government functions economically, efficiently, and effectively. The Civil Service Reform Act of 1978 that established the SES states, among other things, that the policy of the federal government is to ensure equal employment opportunity in the workforce. It is generally recognized that a diverse SES corps can be an organizational strength that contributes to achieving results. In fact, we consider diversity so important that we identify it in our model for federal agencies on strategic human capital management as one of the eight critical success factors for strategic management. The demographics of the public served by the federal government are changing, and diversity has evolved from public policy to a business need. SES losses over the next several years present both a challenge for the federal government in filling the vacant positions and an opportunity to affect, through selections to the SES, the diversity of the corps. Because of the wave of retirements and normal attrition for other reasons, the federal government will have the challenge and opportunity to replace over half of its SES corps during fiscal years 2001 through 2007. Our simulation estimates that almost 3,400 of the 6,100 career SES members as of October 2000 will have left the service by October 2007. While a large portion of the GS-15s and GS-14s who represent the primary pool of replacements will also have left by October 2007, substantial numbers of minorities and women will be among the potential SES candidates in that pool. However, if current SES appointment trends continue, the proportion of the SES represented by minorities will remain essentially unchanged. Table 1 presents the results by racial, ethnic, and gender groups of our simulation of SES attrition and projection of SES appointments using current trends. The simulation estimates that 56 percent of the SES members who held positions at the start of fiscal year 2001 will leave service during the ensuing 7 years. The table also shows that the racial/ethnic profile of those SES members who will remain in the service throughout the 7-year period will be about the same as it was for all SES members in October 2000. This is because minorities will be leaving at essentially the same rate overall as white members. Thus, any change in minority representation will be the result of new appointments to the SES. However, as the last columns of table 1 show, if current appointment trends continue, the result of replacing over half of the SES will be a corps whose racial and ethnic profile is virtually the same as it was before. The outlook regarding gender diversity is somewhat different because the percentage represented by white women is estimated to increase by 4 percentage points and the percentage of minority women minimally by 0.5 percentage point. The proportion representing minority men is estimated to be virtually unchanged, only a 0.2 percentage point increase while white men’s proportion will decrease by 5 percentage points. To ascertain what the racial, ethnic, and gender profile of the candidate pool for SES replacements will look like, we performed the same simulations and projections for GS-15s and GS-14s as we did for the SES. Over 80 percent of career SES appointments of federal employees come from the ranks of GS-15s. Similarly, those promoted to GS-15 are GS-14s over 90 percent of the time. Table 2 presents the results for GS-15s and table 3 for GS-14s. The results for both are similar to those for the SES, but a somewhat lower proportion will leave because GS-15s and GS-14s are generally younger and have somewhat different propensities to leave than SES members. Almost half of the GS-15s (24,499, or 47 percent) and about a third of GS- 14s (28,419, or 34 percent) will have left government service by October 2007 according to our simulation. Minority representation among those GS-15s who remain will be about the same as it was in fiscal year 2001, indicating that whites and minorities will leave at about the same rates. However, the proportion of the remaining GS-14s represented by minorities will increase somewhat (by 1.5 percentage points) and the proportion of both grades represented by white and minority women will also increase. Moreover, if current promotion trends to GS-15 and GS-14 continue, marginal gains by almost all of the racial and ethnic groups would result. Our simulation shows that significant numbers of minority GS-15s (4,673) and GS-14s (10,567) will be employed throughout fiscal years 2000 through 2007, and our projection of promotions also shows substantial numbers of minorities at the GS-15 (8,957) and GS-14 (15,672) levels. These numbers indicate that significant numbers of minority candidates for appointment to the SES should be available. With respect to gender, the percentage of white women at GS-15 is projected to increase by 2.6 percentage points and at GS-14 by 1.0 percentage point. The proportions of minority women will increase by 0.9 percentage point for GS-15s and 0.6 percentage point for GS-14s while those for minority men will increase 0.7 percentage point for GS-15s and 0.5 percentage point for GS-14s. White men will represent 4.2 percentage points less of GS-15s and 2.1 percentage points less of GS-14s. The results of our simulation of SES attrition and our projection of appointments to the SES over the October 1, 2000, through September 30, 2007, period show variation across the 24 CFO agencies, as illustrated in table 4. However, as with the governmentwide numbers discussed in the previous section, agencies tend to increase the proportion of women in the SES, particularly white women, and decrease the proportion of white men. The proportion represented by minorities tended to change relatively little. The precision of our estimates of SES attrition at individual agencies by racial, ethnic, and gender groups is likely to be less precise than for our overall SES estimates because of the smaller numbers involved. Nevertheless, the agency-specific numbers should be indicative of what agency profiles will look like on October 1, 2007, if current appointment trends continue. The racial, ethnic, and gender profiles of the career SES at the 24 CFO agencies varied significantly on October 1, 2000. The representation of women ranged from 13.7 percent to 36.1 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. Detailed data on each CFO agency in the same format as tables 1, 2, and 3 are included in appendix II. Our simulation results also varied for the proportion of SES members who will leave service by October 1, 2007, but most of the CFO agencies are estimated to lose at least half of their SES corps. The effect on representation of minorities and women in the residual SES also varies but exhibits little change at most agencies for minorities from the October 1, 2000, profile. Only 3 agencies exhibited increases in minority representation of more than 1 percentage point. Increases for women were higher once again with only 1 agency having an increase of less than 3 percentage points. Most of the changes for women were accounted for by white women. Our projection of what the SES would look like if current appointment trends continued through October 1, 2007, also showed variation with 12 agencies having increased minority representation and 10 having less. While projected changes for women are often appreciable, with 16 agencies having gains of 4 percentage points or more and no decreases, projected minority representation changes in the SES at most of the CFO agencies are small, exceeding a 2 percentage point increase at only 6 agencies, with 10 agencies having decreases. The diversity picture for GS-15s and GS-14s is somewhat better than that for the SES at most agencies. The main differences from the SES are that a smaller proportion of the GS-15 and GS-14 population is estimated to leave government service and projected representation of minorities tends to be somewhat greater for those grades compared to the SES. Even after considering estimated attrition, agencies tend to have substantial numbers of minorities and women in the SES replacement pool and projected promotions to GS-15 and GS-14 increase those numbers. As mentioned above, appendix II presents detailed information on GS-15s and GS-14s at the CFO agencies. Again, our estimates for the GS-15 and GS-14 populations at individual agencies are likely to be less precise than our governmentwide figures because of the smaller numbers involved but should be indicative of what agency profiles will look like in October 2007. OPM has recently reaffirmed its commitment to diversity in the career SES, and has provided guidance to federal departments and agencies on maintaining and increasing workforce diversity. The four federal agencies we visited had implemented, or were in the process of implementing, many if not all of the steps recommended by OPM in its guidance. OPM, EEOC, and the four federal agencies we visited all said that our analysis was an accurate reflection of the likely future composition of the career SES if current patterns of selection and attrition continue. They all said that more diversity was needed in the SES and that based on our estimates more efforts would need to be taken if diversity is to increase. In an April 2002 memorandum to federal departments and agencies, the Director of OPM reaffirmed OPM’s commitment to diversity in the SES. About 2 years before, in June 2000, OPM provided comprehensive guidance to federal departments and agencies for building and maintaining a diverse workforce. OPM recommended the following: incorporate diversity program activities and objectives into agency workforce planning and executive succession planning; incorporate diversity into recruitment planning and activities, and use tools and techniques that are more likely to discover and attract a more diverse field of candidates (i.e., visits to majority-minority campuses, partnerships with minority organizations, and advertisement in specialty media); continually monitor the agency workforce profile, and the numbers of women and minorities participating in agency development programs; and build accountability for hiring, retaining, and developing a diverse, high- quality workforce into the performance management system for managers and supervisors. We visited the departments of Energy, the Interior, and Veterans Affairs (VA) and the Social Security Administration (SSA), each of which has had efforts in these OPM-recommended areas under way, often for a number of years. According to agency officials, three of the four agencies have diversity goals for their career SES. Officials at all four agencies told us that they have in place, or are putting in place, agencywide human capital planning and executive succession management, which includes diversity as an element in planning. All four agencies have programs for entry-level minority recruiting and for leadership development, which they believe will lead to an increased minority presence in leadership and executive ranks sometime in the future. Officials at all four agencies said that building a diverse workforce was an element in their current performance evaluation for agency executives. All four agencies either have in place or are putting in place human capital information systems that will be able to generate, periodically or on request, reports to management officials on the diversity of the current workforce at any level, and on the ethnic and gender composition of recent agency hires. (See app. III for details on the responses of OPM and the four agencies concerning workforce diversity in general and SES diversity in particular.) Response to GAO’s Analysis OPM officials, after reviewing our analysis of present SES diversity and projections of future SES composition, said that women and minorities continued to be underrepresented in the federal executive corps. They said that it would be unsatisfactory if the racial, ethnic, and gender composition of the career SES in 2007 were as we projected. EEOC expressed concern about the trends suggested by our analyses to the extent that they may point to the presence of arbitrary barriers that limit qualified members of any group from advancing into the SES. Energy, Interior, VA, and SSA said that our analysis of their current and future career SES diversity was reasonable. All of the agencies agreed that improvements needed to be made in their current SES diversity. All of them also said that the composition of the career SES that we projected if present selection trends continued would not be acceptable. Moreover, all four agreed that they would need to undertake additional efforts beyond those currently used if diversity is, in fact, to be enhanced. We asked OPM, EEOC, and the four agencies we visited for comments on a draft of this report. The Director of OPM’s comments are reprinted in appendix IV. Also, the comments of EEOC’s Acting Director of Communications and Legislative Affairs are reprinted in appendix V, those from the Commissioner of SSA in appendix VI, those from the Secretary of Veterans Affairs in appendix VII, and those from the Director, Office of Management, Budget and Evaluation, Department of Energy, are in appendix VIII. The Department of the Interior said that it had no comments on the draft report. OPM said that it concurs with our findings and welcomes the attention this report will bring to a critical opportunity facing the federal workforce and federal hiring officials. The Director said that increasing diversity in the executive ranks continues to be a top priority for OPM and that the agency has been proactive in its efforts to help federal agencies obtain and retain a diverse workforce, particularly in the senior ranks. She also said that talk is not enough, only results matter and that OPM itself in the past year has expanded its efforts to attract senior managers from government and the private sector and changed its SES performance standards to reflect a priority recruitment of qualified minorities. The comments cited several efforts OPM had under way to promote diversity, such as leading the Interagency Task Force on Hispanic Employment and reaching out to the next generation of public servants—college and university undergraduates—as they begin to choose career paths by such actions as hosting a reception in January 2003 for students from Historically Black Colleges and Universities to introduce them to and explain the hiring process for the federal government. EEOC said that the projected large losses in the SES ranks present the government with both a challenge and an opportunity to further strengthen the SES through employment practices that will ensure that the SES corps is staffed with the best and brightest talent available regardless of race, ethnicity, gender, or disability. EEOC went on to say that in the years ahead, federal agencies will need to continue their vigilance in ensuring a level playing field for all federal workers and should explore proactive strategies, such as succession planning, SES development, and mentoring programs for midlevel employees, to ensure a diverse group of highly qualified candidates for SES positions. EEOC listed a number of initiatives it said it had begun recently to help agencies identify and remove barriers to free and open competition in the federal workplace. However, most of these initiatives were related to the equal employment opportunity (EEO) compliant process and EEO data reporting and only tangentially to SES diversity. SSA said that it agrees with the reports findings and conclusions, including the value of all the OPM recommended actions we cite in the report. SSA said that it has been implementing such actions since late 1998. SSA also commented that it agrees with all of the information we present about SSA’s efforts to increase SES diversity. Energy said that more needs to be done to enhance SES diversity, particularly in light of the retirement and other losses anticipated over the next 5 years. Energy said that the attrition has important implications for government management and emphasizes the need for good succession planning as well as racial, ethnic, and gender diversity in the SES corps. Energy reiterated the efforts it has under way, discussed earlier in this report and in appendix III, to enhance SES diversity in the future and said that it is committed to enhancing diversity. VA commented that it generally agreed with our observations. VA said that it is undertaking efforts to increase diversity within its SES ranks. EEOC, Energy, and VA also made technical comments, which we incorporated where appropriate. Unless you announce its contents earlier, we will make no further distribution of this report until 30 days after its date. At that time, we will send copies to the Director of OPM, the Chair of EEOC, the heads of the 24 CFO agencies covered by the report, and other interested committees and members of Congress. We will also make copies available to others on request. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov. If you have questions, please call me on (202) 512-6806 or contact Thomas G. Dowdal, Assistant Director, on (202) 512-6588 or at dowdalt@gao.gov. Major contributors to this report are listed in appendix IX. Our objectives were to (1) identify the effect of estimated employment separations on the racial, ethnic, and gender diversity among the career Senior Executive Service (SES), GS-15s, and GS-14s in the 24 Chief Financial Officer (CFO) agencies and governmentwide, (2) determine the effect of estimated appointments to refill these vacancies on diversity, and (3) obtain from the Office of Personnel Management (OPM), the Equal Employment Opportunity Commission (EEOC), and four selected agencies their observations on our estimates and on SES diversity during this time of change. To determine the effect of estimated employment separations and appointments to fill these vacancies on racial, ethnic, and gender diversity, we analyzed personnel data from OPM’s Central Personnel Data File (CPDF) to determine past trends and used statistical simulation to estimate future trends. We analyzed separation data for fiscal years 1996 through fiscal year 2000 (the most recent data available at the time we started our analyses) for each of the three grade levels. We included voluntary retirements, other retirements, resignations, death, and terminations for poor performance or conduct in separations. For separations, we calculated each employee’s years of service by finding the difference between the service computation date (we used the 15th of each month as the day) and the date of actual separation. Similarly, we calculated age at separation by finding the difference between the date of birth (we used the 15th of each month as the day) and the date of separation. We calculated the age and years of service for employees at the end of the fiscal year similarly but used September 30 as the end date. For each 2-year interval in the years of service and age of those who separated from service during the period 1996 through 2000, we calculated the probability of leaving by dividing the number of workers that separated by the number of employees in the workforce with a similar combination of years of service and age who were on board at the end of the fiscal year preceding the fiscal year of separations. We put all staff members who were 67 years and older into a single group. We similarly grouped all employees with 32 or more years of service. Using regression, we then modeled the rate of separation as a function of years of service, age, agency type (civilian or defense), race (white or nonwhite), and gender. We developed an equation that estimates the rate of separation for any age, years of service, as well as agency type, race, and gender combination. We applied a statistical simulation technique to each of the 83,153 GS-14, 51,826 GS-15 and 6,110 SES workforce members on board as of September 30, 2000 (the end of fiscal year 2000). Each employee’s age and years of service as well as race, ethnicity, gender, and agency type were used as input into the simulation. Based on the simulation results, an employee was considered to have “separated” if the predicted rate of separation (from zero to 1.0) was greater than a simulation-generated random number from zero to 1. If the predicted value was less than a generated random number then the individual employee was deemed not to have separated. This process was repeated for each employee. The process was then continued for those employees who were not estimated as having separated in fiscal year 2001, but with each employee now being 1 year older and having 1 more year of service. As before, the employee’s new age and new years of service were used as input into the model and a predicted rate of separation was contrasted with a new generated random number to determine whether the employee was considered as separated in fiscal year 2002. A separation decision was made for each of the remaining employees, and each employee was either counted as having separated in fiscal year 2002 or 1 year was again added to both age and years of service. This process was repeated seven times for each year from fiscal years 2001 through 2007. The total number of separations by grade level, agency type, race, ethnicity, and gender was calculated across all 7 years. To determine how many employees remained after the separations, we subtracted the number separated for each combination of grade level, race, ethnicity, and gender from the total number of staff in the agency at that grade level. To determine what percentage of this remaining workforce was in each of the race, ethnicity, and gender groups, we divided the number remaining for each race, ethnicity, and gender by the total number of staff remaining at each agency. To estimate the race and gender profile of expected appointments in fiscal years 2001 through 2007, we analyzed by agency career appointment trends for the SES, GS-15, and GS-14 grade levels by race and gender for fiscal years 1995 through 2000. We included conversions, appointments (new hires), and promotions into each grade level. We combined the data for each fiscal year into a single 6-year total for each grade level. We determined what percentage each equal employment opportunity (EEO) group (race and ethnicity by gender; for example, African-American females) constituted of these past accessions for each level. We assumed that the number of separations estimated for fiscal years 2001 through 2007 would all be refilled through accessions. Therefore, the number of estimated accessions equaled the number of estimated separations. To estimate how many accessions would occur for each EEO group during fiscal years 2001 through fiscal year 2007, we multiplied an agency’s predicted total separations times an EEO group’s percentage of an agency’s past accessions. For example, if the Department of Commerce was expected to have 100 separations for a particular grade level and African- American males were 6 percent of Commerce’s past accessions at that grade level, then we estimated that Commerce’s accessions to fill these 100 vacancies would include six African-American males (100 separations times 0.06). These calculations were done for the period from fiscal years 2001 through 2007 as a whole, not year by year. To assess the effect that accessions to refill the positions vacated by separations had on the EEO profile, we added these expected career accessions to the career staff members we expected to remain after separations in each agency at each grade level at the end of fiscal year 2007. We then calculated the percentage for each racial and ethnic group by gender in each grade level within each agency. These calculations were done for each of the 100 iterations of separation predictions for each race, ethnicity, gender, agency, and grade level. Because these replacement calculations were done for each of the 100 iterations, we determined confidence intervals around all estimates reported. In general, confidence intervals for EEO groups for specific agencies are likely to be less precise than the governmentwide ones. We used regression analysis to develop a statistical model using five variables: (1) age at the end of each year for fiscal years 2001 through 2007, (2) years of service at the end of each year for fiscal years 2001 through 2007, (3) race and ethnicity, (4) gender, and (5) whether employed by a Defense agency or a non-Defense agency that most closely fits actual rates of separation over fiscal years 1996 through 2000. The objective in developing the statistical model was to minimize the squared differences between the actual rates of separation and the predicted rates of separation. An index, which is known as the squared correlation coefficient and is bounded between zero and one, is one useful numerical quantity to assess the strength or predictive power of the mathematical model. A perfect fit in a model would yield a squared correlation coefficient of 1.00. In our mathematical model, we achieved squared correlation coefficients of 0.73 for the SES and 0.75 for both the GS-14s and GS-15s. Thus, we were able to capture and predict three-fourths of the variability in the rates of separation for the 5 years of separation data. Therefore, one limitation is that our model does not predict with 100 percent accuracy the actual rates of separation, although it is uncommon in real world applications to find such a high squared correlation as our model achieved when dealing with behavioral data such as separating from federal government employment. The accuracy of our projections are also limited by the assumptions we made. Because the model is based on past trends, the estimates of future separations and appointments assume that factors affecting past trends will continue into the future. If one or more assumptions are incorrect, then the projections would change. The model does not account for possible changes in the future such as substantial pay increases, major changes in personnel policies, substantial changes in the number of employees, or large government reorganizations, such as creation of the Department of Homeland Security. For example, our past work has shown that a major increase in SES pay reduces the rate of retirements (and thus separations) in the first 3 years after the pay hike, followed by an increase in subsequent years. Many nonwork factors can influence an employee’s decision to separate from the government. Factors such as an individual’s health or children’s age/college status may affect the decision of when to separate. Data for these other factors were not available to be included in the statistical model. Other nonwork factors, such as future stock market performance, were not included. Because we did not include transfers from one agency to another as separations, the estimated separations for individual agencies are probably not as precise as separations governmentwide. Similarly, because we did not include promotions from GS-14 to GS-15 or appointments to the SES from GS-14 or GS-15, separations for GS-14s and GS-15s are probably underestimated. We asked OPM and EEOC to comment on our estimates and their implications for diversity in the SES. We also asked OPM and EEOC to provide information on any efforts they had planned or under way to address diversity, considering the magnitude of estimated SES losses. In addition, we visited four federal agencies—two with relatively high proportions of women and/or racial and ethnic minorities in the SES and two with relatively low proportions—and sought the same information from them as we had from OPM. Our work was performed from October 2001 through September 2002 in accordance with generally accepted government auditing standards. We presented to each of the four agencies we examined—the departments of Energy, the Interior, and Veterans Affairs (VA) and the Social Security Administration (SSA)—the results of our simulation of Senior Executive Service (SES) losses and projections of the SES racial, ethnic, and gender profiles at each agency if current appointment trends continue. We also presented our governmentwide simulation results and projections to the Office of Personnel Management (OPM) and the Equal Employment Opportunity Commission (EEOC). SSA and the three departments said our analysis of their career SES, and GS-15 and GS-14, losses and future diversity was reasonable. All of the agencies agreed that improvements needed to be made in their current SES diversity in at least some minority and gender groups. All four also acknowledged that the composition of the career SES that we projected if present selection trends continued would not be acceptable and discussed efforts they had made and were planning to take to promote diversity in general and in the career SES in particular. These efforts have significant elements in common. Because almost all career SES selections come from within the agency with a relative few selected from other agencies, agency officials generally agreed that the most effective way to enhance SES diversity is to increase diversity of the GS-15 and GS-14 feeder pool. OPM officials also said that if our projections were the actual result of SES selections through fiscal year 2007, that result would be unacceptable from a diversity standpoint. The reactions of these six agencies to the data and what they are doing and plan to do to address diversity in the career SES are summarized below. SSA’s goal is that its workforce at all levels, including the SES, should be at least as diverse as the national civilian labor force. To achieve this end, SSA officials said that the agency would need to improve its representation of Asian Americans and Native Americans; our analysis indicates that an increase of Hispanic representation would also be needed. SSA recently reinstituted an SES candidate development program, and also has separate leadership development programs for GS-13 and GS-14 and for GS-9 through GS-12. Thus, most employees above entry level can apply for management and leadership development programs. SSA officials said that it was agency policy to include women and minorities in the screening of applicants and final selections for these programs. SSA has made an effort to have line management “buy in” to diversity by making a case that diversity is not only a good thing in itself but enhances the agency’s ability to perform its mission. Executives in SSA are held accountable for diversity as an element in their performance contracts. SSA’s Office of Human Resources provides the Commissioner with a monthly summary of the ethnic and gender composition of each component of the agency by grade level, and a similar summary of the hiring done during the previous month. The Commissioner reviews these summaries with the deputy commissioners each month, which enables the Commissioner to demonstrate to senior managers the agency’s commitment to diversity and hold them accountable with their peers for the diversity in their units. SSA does regular entry-level recruiting at historically black colleges and Hispanic institutions and also has co-op agreements with Native American tribal colleges. SSA uses the Outstanding Scholar Program to recruit minorities and women, and makes use of authority granted by OPM to use bilingual registers for hiring. SSA has internal advisory councils for women, minority groups, and persons with disabilities. These councils, which are chartered by the SSA Commissioner and composed of volunteers, exist at national headquarters and at the SSA regional offices. They provide input and advice to SSA national and regional management on diversity issues and also join in SSA recruiting efforts where appropriate. Interior uses the relevant civilian labor force as a basis for looking at diversity at all levels but had not yet prepared a comparison labor force for its career SES. Interior planned to do so in the near future. A department official acknowledged that the current diversity of the career SES in Interior is unsatisfactory, and that future diversity cannot be enhanced without additional efforts. The official noted that diversity at the entry level and midlevel has improved and that, with the assistance of the candidate development program that it has had for some time, this improvement will eventually be reflected at the SES level. Interior officials noted that recruitment, workforce information, and workforce planning has until very recently been left up to the components within Interior instead of being handled at the departmental level. Officials of the U.S. Geological Survey, Office of Surface Mining, and Bureau of Land Management told us that they have had ongoing efforts to recruit minorities at educational institutions and career fairs. The Geological Survey has developed a job applicant database, which allows for tracking of the job selection process through all of its stages; thus, diversity of the applicant pool through successive screenings can be noted. Other parts of Interior do not have this type of process, although at least one other component uses the Geological Survey’s process. Interior management has recently acted to shift responsibility for recruitment and workforce planning (and thus for diversity) from components to the departmental level. The Deputy Assistant Secretary for Human Resources is developing a national recruitment initiative, under which Interior components will collaborate in recruiting and diversity will be included as one factor in recruiting. The Deputy Assistant Secretary is also preparing a human capital plan for submission to OPM, which will associate workforce planning with the departmental mission and will target diversity at midlevel and senior level. A senior official at Energy said that more progress is needed in making and keeping the department’s career SES diverse. The official noted that there has been a recent significant increase in diversity at the GS-14 and 15 levels, which could be reflected in future SES selections. Energy uses the civilian labor force as a basis for judging diversity, and also compares itself with other federal agencies. Energy hosted a Human Capital Summit in 2001, which resulted in a renewed commitment to executive succession planning. After this summit, Energy restarted an SES candidate development program, which had been inactive since 1994, with its Human Resource Management office coordinating with its Office of Civil Rights to develop a diversity recruitment strategy for the program. Energy had an intern program to bring in recruits for technical positions at the GS-7/9 level and, according to a senior official, 50 to 55 percent of the interns in that program have been minorities, and most have stayed long enough to reach the GS-12/13 level. A new career intern program recently began and it is too early to report its results. Pursuant to Executive Order 13171, dealing with Hispanic federal employment, Energy has set up an internship program aimed specifically at Hispanics. Energy is also establishing a formal mentoring program, under which GS-13 through GS-15 staff members can benefit from guidance from SES executives. Senior Energy officials noted that Energy does regular periodic diversity analysis of the workforce, and may extend this analysis to job applicants in the future. Building diversity is one of the key leadership attributes of the annual performance review for Energy executives. Energy officials noted that it is especially difficult to recruit qualified minorities for scientific and technical positions, especially considering the competition for such candidates from the private sector and other agencies, such as the National Aeronautics and Space Administration. Energy uses authorities such as recruitment and retention bonuses and relocation allowances to help in minority recruitment. Energy could also use dual compensation waivers for this purpose, but does not often use this option at present because, in the opinion of a senior Energy official, it is complicated to implement. A senior official said that Energy is considering applying for general waivers for certain occupational categories. In addition, Energy said that it uses executive search firms to increase the cadre of minority candidates. VA also said that our analysis was reasonable, and that more diversity was needed and greater efforts would be required if diversity is to increase. However, VA does not have an agreed-upon standard, such as the civilian labor force used by some agencies, by which to evaluate diversity in the career SES. Senior VA officials told us that, like Interior, VA has until recently left issues such as recruitment and leadership development to agency components. Officials of the Veterans Benefits Administration (VBA) and Veterans Health Administration (VHA) said that they were concerned about diversity in their management ranks, and had stepped up efforts to recruit minorities at lower levels and to prepare them for leadership. An official of the National Cemetery Administration said that it had made similar efforts, but had run into difficulties with finding minority candidates with civil service status and getting them on final selection lists. VA said that it had recently submitted to the Office of Management and Budget a restructuring plan under which, among other things, it will conduct an evaluation of its leadership development programs and develop a national recruitment and marketing plan. According to agency officials, both VHA and VBA have instituted leadership development programs, with VBA having had an SES candidate development program for some time. VA announced an SES candidate development program in October 2001, and training for the initial group of participants began in November 2002. VA also recently began to develop a plan for workforce management and succession planning. In addition, VA’s Office of Diversity Management and Equal Employment Opportunity, at the request of the VA Assistant Secretary for Human Resources and Management, is providing diversity information on VA’s current composition and monthly hiring. While diversity has been an element in performance evaluation for VA executives, this information will for the first time allow VA to fairly evaluate executives for diversity performance, according to a VA official. To gain a broader prospective on SES diversity issues, we met with OPM officials to get their reaction to our work. The officials agreed that our methodology was reasonable. They said that women and minorities continued to be underrepresented in the federal executive corps. OPM’s strategy for increasing executive diversity is to encourage agencies to enhance diversity at entry level and midlevel, identify individuals with leadership ability early in their careers, and provide experience and learning opportunities to prepare them for senior level positions. OPM cited the following actions as among the major steps it has taken to address diversity in the SES. Creating an Interagency Task Force on Hispanic Employment to focus on the continued underrepresentation of Hispanics in the federal workforce. The Director of OPM chairs the task force. Fostering the establishment and growth of agency candidate development programs, which train selected GS-14 and GS-15 employees in the skills necessary for success in the career SES. Issuing the first annual Report to the President on Hispanic Employment in the Federal Government, concerning the state of Hispanic employment. Meeting with leaders from 21 different Hispanic organizations to discuss barriers to Hispanic recruitment and retention as well as to enlist their support in recruitment. The organizations have goals and missions related to five different sectors: Hispanic education, federal employment, national advocacy, private sector, and professional organizations. The Director has held two meetings with the organizations and issued guidance to federal agencies about the benefits of utilizing the organizations' expertise. Co-chairing the Asian American and Pacific Islanders (AAPI) Joint Task Force with EEOC. The task force issued its Report on AAPI Federal Employment and Glass Ceiling Issues. Hosting, in partnership with the Department of Labor, the first Asian Pacific American Federal Career Advancement Summit in May 2002. OPM conducted several workshops on diversity issues and preparing for the SES. Meeting with the founders of the new employee group—the African American Federal Executive Association—which formed in 2002. One result from this meeting was an OPM initiative called the Executive Diversity Roundtable. The roundtable will be a venue for discussions focused solely on increasing and leveraging diversity in the executive ranks. Replacing “Cultural Awareness” with “Leveraging Diversity” as an SES leadership competency. A panel of public and private sector experts worked with OPM to revise the title and definition for the SES leadership competency that deals with diversity. The revised competency embodies the values of building, managing, and maintaining a diverse workforce; is results oriented; and stresses accountability. Compiling best practices that agencies can use to develop strategies to improve the representation of minorities and women in the federal workforce and including them in the fiscal year 2001 annual Federal Equal Opportunity Recruitment Program (FEORP) Report to Congress. Issuing the first Semi-Annual Statistical Report to the President on Hispanic Employment in Federal Agencies. The report compared Hispanic hiring in fiscal year 1995 with that of fiscal year 2001. It contained information on hiring activity both governmentwide and by individual agency and provided information about federal agency utilization of available hiring tools. Issuing a guide to federal agencies, Building and Maintaining a High Quality, Diverse Workforce. Conducting sessions on diversity issues as part of 1-week seminars offered to federal managers by OPM's Management Development Centers. During fiscal year 2001, conducting two workshops for agencies about federal equal employment opportunity regulations and federal agency roles and reporting requirements. Launching a new disability Web site in June 2002, a one-stop source of information for managers, applicants, and human resources professionals that is designed to be both comprehensive and user- friendly. Issuing a model plan on the employment of adults with disabilities. Regularly presenting workshops on diversity issues at numerous nationwide conferences of organizations with compatible goals, including organizations representing the interests of African Americans, Hispanics, women, Asians and Pacific Islanders, and persons with disabilities. Regularly providing consultation services and technical assistance to individual agencies regarding their questions, plans, and activities on diversity issues. In addition, upon request, OPM provided workshops to organizations that expressed interest in developing future leaders. These workshops focused on the application process and understanding the leadership competencies necessary for SES membership. These services were provided to about 10 federal agencies during fiscal year 2001. For EEOC’s reaction, see the “Agency Comments” section of the letter and appendix V, where its comments are reprinted. In addition to the individual named above, the following individuals made significant contributions to this report: Walter E. Reed, Jr., Steven J. Berke, Mitchell B. Karpman and Gregory H. Wilmoth. 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. 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Summary: The federal government faces large losses in its Senior Executive Service (SES), primarily through retirement but also because of other normal attrition. This presents the governmental with substantial challenges to assuring an able management cadre and also provides opportunities to affect the composition of the SES. GAO estimated the number of SES members who would actually leave service through fiscal year 2007 and reviewed the implications for diversity, as defined by race, ethnicity, and gender, of the estimated losses. Specifically, GAO estimated by race, ethnicity, and gender the number of members of the career SES who will leave government service from October 1, 2000, through September 30, 2007, and what the profile of the SES will be if appointment trends do not change. GAO made the same estimates for the pool of GS-15s and GS-14s, from whose ranks the vast majority of replacements for departing SES members come, to ascertain the likely composition of that pool. More than half of the 6,100 career SES members employed on October 1, 2000, will have left service by October 1, 2007. Using current SES appointment trends, the only significant changes in diversity will be an increase in the number of white women and an essentially equal decrease in white men. About 46 percent of GS-15s and 34 percent of GS-14 workforce will provide agencies the opportunity to select minority members for the SES. Estimates for 24 large agencies showed substantial variation in SES losses in the proportion leaving and the effect on agencies' racial, ethnic, and gender profiles, with 10 agencies with decreases in minority representation and 12 with increases. The 6 agencies GAO visited recognize that the SES needs to be more diverse than GAO's projections estimate and have efforts under way to address SES diversity. They also recognize that more will have to be done than in the past if diversity is to be enhanced.