Leadership in agencies across the federal government is essential to providing the accountable, committed, consistent, and sustained attention needed to address human capital and related organization transformation issues. Leaders must not only embrace reform, they must integrate the human capital function into their agencies’ core planning and business activities. Senior executive leadership is especially key today as the federal government faces significant reform challenges. OPM’s 2006 Federal Human Capital Survey (FHCS) results showed that the government needs to establish a more effective leadership corps. For example, slightly less than half of employees responding to the survey reported a high level of respect for their senior leaders or are satisfied with the information they receive from management on what is going on in the organization. Similarly, only 38 percent of respondents agreed or strongly agreed with the statement that leaders in their organization generate high levels of motivation and commitment in the workforce. This represents little change from the 2004 survey when 37 percent of respondents had positive responses to this question. However, a majority of respondents, 58 percent, agreed or strongly agreed that managers communicate the goals and priorities of the organization. This level of response is essentially the same as the 2004 survey when 59 percent of respondents provided a positive response to this item. OPM plays a key role in fostering and guiding improvements in all areas of strategic human capital management in the executive branch. As part of its key leadership role, OPM can assist—and as appropriate, require—the building of the infrastructures within agencies needed to successfully implement and sustain human capital reforms and related initiatives. OPM can do this in part by encouraging continuous improvement and providing appropriate assistance to support agencies’ efforts. For example, OPM has exerted human capital leadership through its Human Capital Scorecard of the President’s Management Agenda to assist agencies in improving strategic management of their human capital. Also, OPM has developed the governmentwide FHCS to assist agencies and OPM in better understanding specific and governmentwide agency workforce management conditions and practices in the areas of leadership, performance culture, and talent. Most recently, OPM began a television campaign to promote federal employment and has undertaken a greater focus on succession planning to respond to the forthcoming federal retirement wave. However, in leading governmentwide human capital reform, OPM has itself faced challenges in its capacity to assist, guide, and certify agencies’ readiness to implement reforms. We recently reported that OPM has made commendable efforts in transforming itself from less a rulemaker, enforcer, and independent agent to more a consultant, toolmaker and strategic partner in leading and supporting executive agencies’ human capital management systems. We also reported on OPM’s leadership of transformation efforts. Using the new senior executive performance-based pay system and other recent human capital reform initiatives as a model for understanding OPM’s capacity to lead and implement future human capital reforms, we identified seven key lessons learned, which are (1) ensure internal OPM capacity to lead and implement reform, (2) ensure that executive branch agencies’ infrastructures support reform, (3) collaborate with the Chief Human Capital Officer (CHCO) council, (4) develop clear and timely guidance, (5) share best practices, (6) solicit and incorporate feedback, and (7) track progress to ensure accountability. In addition to the lessons learned that can be applied to future human capital reforms, we recommended, among other things, that OPM (1) improve its capacity for future reforms by reexamining its own agencywide skills and (2) address issues specific to senior executive pay systems, such as sharing best practices and tracking progress towards goals. OPM has said that it has made progress toward achieving its operational and strategic goals. Equally important is OPM’s leadership in federal workforce diversity and oversight of merit system principles. In our review of how OPM and the Equal Employment Opportunity Commission (EEOC) carry out their mutually shared responsibilities for helping to assure a fair, inclusive, and nondiscriminatory federal workplace, we found limited coordination between the two agencies in policy and oversight matters. The lack of a strategic partnership between the two agencies and an insufficient understanding of their mutual roles, authority, and responsibilities can result in a lost opportunity to realize consistency, efficiency, and public value in federal equal employment opportunity and workplace diversity human capital management practices. We recommended that OPM and EEOC regularly coordinate in carrying out their responsibilities under the equal employment opportunity policy framework and seek opportunities for streamlining like reporting requirements. Both agencies acknowledged that their collaborative efforts could be strengthened but took exception to the recommendation to streamline requirements. We continue to believe in the value of more collaboration. As of August of last year, the two agencies had begun discussions on ways to increase coordination. Strategic human capital planning is the centerpiece of federal agencies’ efforts to transform their organizations to meet the governance challenges of the 21st century. Generally, strategic workforce planning addresses two critical needs: (1) aligning an organization’s human capital program with its current and emerging mission and programmatic goals and (2) developing long-term strategies for acquiring, developing, motivating, and retaining staff to achieve programmatic goals. The long-term fiscal outlook and challenges to governance in the 21st century are prompting fundamental reexaminations of what government does, how it does it, and who does it. Strategic human capital planning that is integrated with broader organizational strategic planning is critical to ensuring agencies have the talent they need for future challenges. An agency’s strategic human capital plan should address the demographic trends that the agency faces with its workforce, especially pending retirements. In 2006, OPM reported that approximately 60 percent of the government’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. We have found that leading organizations go beyond a succession planning approach that focuses on simply replacing individuals and engage in broad, integrated succession planning and management efforts that focus on strengthening both current and future organizational capacity to obtain or develop the knowledge, skills, and abilities they need to meet their missions. For example, about one third of the Nuclear Regulatory Commission’s (NRC) workforce with mission-critical skills will be eligible to retire by 2010. At the same time, NRC’s workforce needs to expand because NRC expects to receive applications for new nuclear power reactors beginning in October 2007. Although there is room for further improvement, we found that NRC’s human capital planning framework is generally aligned with its strategic goals and coherently identifies the activities needed to achieve a diverse, skilled workforce and an infrastructure that fully supports the agency’s mission and goals. The agency’s framework included using its human capital authorities, developing a critical skills and gaps inventory tool, and using targets and measures to monitor the composition of its hires and separations. NRC has been effective in recruiting, developing, and retaining a critically skilled workforce, though it is unclear if this trend will continue in the next few years. We also have reported in recent years on a number of human capital issues that have hampered the Department of State’s ability to carry out U.S. foreign policy priorities and objectives, particularly at posts central to the war on terror. For example, the department initiated a number of efforts to improve its foreign language capabilities. However, it has not systematically evaluated the effectiveness of these efforts, and it continues to experience difficulties filling its language-designated positions with language proficient staff. We reported that these gaps in language proficiency can adversely affect the department’s ability to communicate with foreign audiences and execute critical duties. Another example of the government’s strategic human capital planning challenges involves its acquisition workforce. The government increasingly relies on contractors for roles and missions previously performed by government employees. Acquisition of products and services from contractors consumes about a quarter of discretionary spending governmentwide and is a key function in many federal agencies. We reported in 2003 that because of a more sophisticated business environment, most acquisition professionals would need to acquire a new set of skills focusing on business management. In a forum hosted by the Comptroller General in July 2006, acquisition experts reported that agency leaders have not recognized or elevated the importance of the acquisition profession within their organizations, and a strategic approach has not been taken across government or within agencies to focus on workforce challenges, such as creating a positive image essential to successfully recruit and retain a new generation of talented acquisition professionals. Faced with a workforce that is becoming more retirement-eligible and finding gaps in talent because of changes in the knowledge, skills, and competencies in occupations needed to meet their missions, agencies need to strengthen their efforts and use of available flexibilities to acquire, develop, motivate, and retain talent. A chronic complaint about the federal hiring process is its lengthy procedures, which puts the federal government at a competitive disadvantage. In recent years, Congress, OPM, and agencies have taken significant steps to streamline the hiring process. For example, Congress has provided agencies with flexibilities such as the use of categorical rating and exemptions from the pay and classification restrictions of the General Schedule. OPM’s efforts included improvements to the USAJOBS Web site as well as other measures, such as job fairs and television commercials, to make the public more aware of the work federal employees do. OPM has also established a model 45-day hiring program— the time-to-hire period from the date a vacancy announcement closes to the date a job offer is extended. In addition, OPM has developed a Hiring Tool Kit on its website to help agencies improve their hiring processes. Moreover, OPM assists agencies on the use of student employment program flexibilities, which can expedite the hiring process and lead to noncompetitive conversion to permanent employment. Our work, however, has found that agencies’ use of the tools and flexibilities that Congress has provided has been uneven. OPM has made some progress in assessing how agencies are using their hiring flexibilities and authorities.