Strategic human capital management is a pervasive challenge facing the federal government. In January 2001, and again in January 2003, we identified strategic human capital management as a governmentwide high- risk area after finding that the lack of attention to strategic human capital planning had created a risk to the federal government’s ability to serve the American people effectively. As our previous reports have made clear, the widespread lack of attention to strategic human capital management in the past has created a fundamental weakness in the federal government’s ability to perform its missions economically, efficiently, and effectively. In the wake of extensive downsizing during the early 1990s, done largely without sufficient consideration of the strategic consequences, agencies are experiencing significant challenges to deploying the right skills, in the right places, at the right time. Agencies are also facing a growing number of employees who are eligible for retirement and are finding it difficult to fill certain mission-critical jobs, a situation that could significantly drain agencies’ institutional knowledge. Other factors such as emerging security threats, rapidly evolving technology, and dramatic shifts in the age and composition of the overall population exacerbate the problem. Such factors increase the need for agencies to engage in strategic workforce planning to transform their workforces so that they will be effective in the 21st century. There are a variety of models of how federal agencies can conduct workforce planning. For example, in 1999 OPM published a five-step model that suggests agencies define their strategic direction, assess their current and future workforces, and develop and implement action plans for closing identified gaps in future workforce needs. Since then, NAPA and the International Personnel Management Association (IPMA) have reported on workforce models used by federal, state, and local governments and industry, and developed their own generic models. Comparing these models, NAPA and IPMA found that the following four steps are generally common to strategic workforce planning efforts: examining future organizational, environmental, and other issues that may affect the agency’s ability to attain its strategic goals; determining skills and competencies needed in the future workforce to meet the organization’s goals and identifying gaps in skills and competencies that an organization needs to address; selecting and implementing human capital strategies that are targeted toward addressing these gaps and issues; and evaluating the success of the human capital strategies. However, they also reported that federal agencies often implement these steps differently and focus on a variety of issues based on their particular circumstances when preparing their strategic workforce plans. For example, faced with a long lead time to train employees hired to replace those retiring and an increasing workload, SSA focuses a large part of its workforce planning effort on estimating and managing retirements. Unlike SSA, PBGC officials faced a future workload that could rise or fall sharply. Consequently, PBGC focused its November 2002 workforce plan on identifying skills to manage the combined efforts of federal staff and contractors to address a volatile workload. Planning, developing, and implementing workforce planning strategies, such as those that involve reshaping the current workforce through early separations, managed attrition, or increased hiring, can cause significant changes in how an agency implements its policies and programs. Our work on the human capital experiences of leading organizations as well as organizations that are undergoing major mergers and transformations has identified numerous lessons that can help federal agencies successfully implement strategic workforce planning strategies. These lessons include the following: Ensuring that top management sets the overall direction and goals of workforce planning. Top leadership that is clearly and personally involved in strategic workforce planning provides the organizational vision that is important in times of change; can help provide stability as the workforce plan is being developed and implemented; and provides a cadre of champions within the agency, including both political and career executives, to ensure that planning strategies are thoroughly implemented and sustained over time. It can also help integrate workforce planning efforts with other key management planning efforts, such as succession planning and information technology or financial management reforms, to ensure that such initiatives work together to achieve the agency’s goals. For example, we have reported that to be effective, succession planning needs the support and commitment of an organization’s top leadership. In other countries, government agencies’ top leadership (1) actively participates in the succession planning and management programs; (2) regularly uses these programs to develop, place, and promote individuals; and (3) ensures that these programs receive sufficient financial and staff resources and are maintained over time. Involve employees and other stakeholders in developing and implementing future workforce strategies. Agency managers, supervisors, employees, and employee unions need to work together to ensure that the entire agency understands the need for and benefits of changes described in the strategic workforce plan so that the agency can develop clear and transparent policies and procedures to implement the plan’s human capital strategies. Involving employees and other stakeholders on strategic workforce planning teams can develop new synergies that identify ways to streamline processes and improve human capital strategies and help the agency recognize and deal with the potential impact that the organization’s culture—the underlying assumptions, beliefs, values, attitudes, and expectations generally shared by an organization’s members—can have on the implementation of such improvements. Changes that recognize how they may challenge the existing culture, and include appropriate steps to deal with potential problems, are more likely to succeed than strategies that do not. Establish a communication strategy to create shared expectations, promote transparency, and report progress. A communication strategy is especially crucial in the public sector where a full range of stakeholders and interested parties are concerned not only with what human capital and programmatic results will be achieved by a plan, but also with the processes that are to be used to achieve those results. For example, if a workforce plan calls for employing strategies that have not been extensively used before, such as recruitment bonuses, employees may be concerned about whether the processes will be followed consistently and fairly. In general, communication about the goals, approach, and results of strategic workforce planning is most effective when done early, clearly, and often and is downward, upward, and lateral. Figure 2 describes how PBGC adopted several of these lessons during its recent workforce planning efforts. It is essential that agencies determine the skills and competencies that are critical to successfully achieving their missions and goals. This is especially important as changes in national security, technology, budget constraints, and other factors change the environment within which federal agencies operate. For example, as discussed in our July 2003 report on the Department of Homeland Security’s (DHS) international cargo container programs, DHS Customs officials have developed two new programs for increasing the security of such cargo that require recruiting and training about 270 staff to work with their foreign counterparts at more than 40 international ports and international shipping companies. To fully implement the new security programs, DHS expects to recruit and train candidates with diplomatic, language, and risk assessment (targeting) skills for 2- to 3-year permanent assignments at foreign ports. We reported that because some of these ports are in countries that our government considers hardship assignments, DHS faces a daunting challenge in attracting U.S. personnel with the necessary skills for these assignments. We recommended, among other improvements, that DHS develop human capital plans that clearly describe how the cargo security programs will meet the programs’ long-term demands for skilled staff. DHS officials agreed to develop human capital plans to better ensure the programs’ long- term success. We have reported on similar human capital challenges at other agencies. For example, in June 2003, we testified that the Securities and Exchange Commission (SEC) had failed to fill most of the new staff positions it needed to examine recent high-profile corporate failures and accounting scandals. In our June 2002 report on the Federal Energy Regulatory Commission (FERC), we stated that the increasing competitive nature of the natural gas and electricity markets made it critical that FERC have more staff members knowledgeable about how the energy markets work and how to regulate these markets effectively. However, FERC did not have a strategic human capital management plan to guide its efforts to transform its workforce and had not taken full advantage of the personnel flexibilities and tools available to federal agencies in addressing its human capital challenges. In April 2002, we found that the individual federal trade agencies responsible for negotiating, monitoring, and enforcing U.S. trade agreements lacked sufficient staff members with the expertise to perform the necessary economic, technical, and legal analyses for the new agreements. The agencies collectively did not have sufficient expertise to adequately complete these analyses and faced problems with recruitment and high turnover rates. The scope of agencies’ efforts to identify the skills and competencies needed for their future workforces varies considerably, depending on the needs and interests of a particular agency. Whereas some agencies may decide to define all the skills and competencies needed to achieve their strategic goals, others may elect to focus their analysis on only those most critical to achieving their goals. The most important consideration is that the skills and competencies identified are clearly linked to the agency’s mission and long-term goals developed jointly with key congressional and other stakeholders during the strategic planning process. If an agency identifies staff needs without linking the needs to strategic goals, or if the agency has not obtained agreement from key stakeholders on the goals, the needs assessment may be incomplete and premature. Agencies can use various approaches for making a fact-based determination of the critical human capital skills and competencies needed for the future. For example, PBGC collected qualitative information from interviews with agency executives and managers on the factors influencing the agency’s capability to acquire, develop, and retain critical skills and competencies. Another approach, used by the Department of the Army, is to collect extensive information from employee surveys on education, training, and other factors that may influence employees’ skills. Information on attrition rates and projected retirement rates, fluctuations in workload, and geographic and demographic trends can also be useful. When estimating the number of employees needed with specific skills and competencies, it is also important to consider opportunities for reshaping the workforce by reengineering current work processes, sharing work among offices within the agency and with other agencies that have similar missions, and competitive sourcing. (See fig.