The OPM 2004 FHCS results and OPM’s 2005 follow-up focus group discussions suggest that information is not cascading effectively from top leadership throughout the organization. Further, according to the summary reports of OPM’s follow-up focus group discussions, overall communication was selected by employees as one of the most important areas to address. Some focus group participants said that managers and employees were unaware of what is going on in the organization due to a lack of internal and cross-divisional communication. Focus group participants also described not knowing where the agency is heading and not having a clear understanding of how their activities aligned with the overall vision and mission of the agency. As figure 1 shows, fewer employees below the SES level at OPM as well as the rest of government reported being satisfied with the information they receive. Further there were significantly fewer employees at OPM, especially in the GS-1 to GS-12 range, reporting “satisfaction with the information they receive from management on what’s going on in the organization” when compared with the rest of the government. On the other hand, significantly more SES employees at OPM indicated satisfaction with the “information they were receiving from management” than SES employees at all the other government agencies participating in the 2004 FHCS. A similar gap between OPM SES and GS-level employees, as well as for their relative counterparts from the rest of government, is evident when employees were asked if they agreed that “managers promote communication among different work units.” OPM employees also expressed concerns regarding their views of senior leaders. As shown in figure 1, roughly two-thirds of OPM employees, as well as employees in the rest of government, indicated that their immediate supervisors or team leaders are doing a good or very good job. Employee perceptions of senior level leadership were not as positive, however. When survey respondents were asked if they agreed with the statement “I have a high level of respect for my organization’s senior leaders,” nearly twice as many OPM SES employees agreed with this statement as compared with OPM GS-level employees. Survey respondents were also asked if they were “satisfied with the policies and practices of your senior leaders” and OPM SES employees also agreed with this statement more than twice the level of OPM GS-level employees. For both items, the percent of OPM GS-level respondents agreeing with these statements tends to be lower than for their counterparts in the rest of government. A similar pattern of OPM SES and OPM GS-level response can be seen in Figure 1 for the percent of employees agreeing with the statement “leaders generate high levels of motivation and commitment in the workforce.” OPM’s analysis of responses to this question by its divisions and offices show that the Human Capital Leadership and Merit System Accountability (HCLMSA) division had the lowest positive and largest negative response of any division at about 28 percent and 51 percent respectively. This issue of leaders generating motivation and commitment was selected by all six of the HCLMSA focus groups as one of the most important issues that OPM needs to address. Because the HCLMSA division is OPM’s frontline organization that partners with agencies to achieve human capital success by providing oversight and leadership to agencies, it will play a key role in OPM initiatives to implement human capital reform—so it will need effective leadership to guide its transformation. OPM is clearly aware of the most critical issues for its agency leaders to address, such as the lack of overall and cross-divisional communication, issues related to employee views of senior management, and obtaining employee input to individual work plans linked to the agency strategic plan. Based on OPM’s May 2006 action plans, the agency is planning to improve communication through such means as “visits to OPM field locations, brown bag lunches with the Director, an email box where employees can make suggestions on more efficient and effective ways of doing business, Web Casts, and employee meetings.” According to the May 11, 2006 memo from OPM’s CHCO to Director Springer, OPM has released several messages to employees regarding steps that it will be taking to improve communications agencywide and to address each of the specific critical issues within individual organizations of the agency. OPM officials told us that many of these actions have already occurred, such as senior executives visiting field locations. To improve its cross-divisional communication, OPM has developed and posted a functional organization directory on its internal website, which it has accomplished almost a month ahead of schedule. To address employee concerns regarding views of senior leaders, OPM is establishing a process in all divisions to solicit employee input on various initiatives and setting aside “open door” time for employees to speak with their managers. Furthermore, OPM has created an action plan to help employees better understand how their work fits into the overall mission of the agency by providing a mechanism to increase employee input to work plans related to its strategic plan. As I have testified on many occasions, in recent years GAO has learned a great deal about the challenges and opportunities that characterize organizational transformation. Several such lessons are of particular relevance to today's discussion. For example, GAO has recognized that soliciting and acting on internal feedback such as that obtained through employee surveys, provides a key source of information on how well an organization is developing, supporting, using and leading staff, as well as how internal operations are functioning and meeting employee needs as they carry out their mission. OPM's practices in this area are based in part on GAO’s experience and include efforts to gain insight into employee perceptions of leadership and explicit follow-up activities to address identified concerns. OPM’s planned actions are important steps in the right direction. Moving forward, as OPM implements its action plans to address issues of communication and motivation, it is important that it frequently communicate with employees on the progress of each of its planned actions and how these changes will affect them. OPM should also communicate any challenges or delays faced in its planned actions as soon as possible and the reasons why any changes to plans might be made. The 2006 FHCS deployed just last month, will provide an initial indication of the extent to which the new initiatives are responding to employee concerns. A high-performance organization needs a dynamic, results-oriented workforce with the requisite talents, multidisciplinary knowledge, and up- to-date skills to ensure that it is equipped to accomplish its mission and achieve its goals. We have reported that acquiring and retaining a workforce with the appropriate knowledge and skills demands that agencies improve their recruiting, hiring, development, and retention approaches so that they can compete for and retain talented people. Similar to other agencies, OPM faces challenges in recruiting and retaining a high-quality, diverse workforce and these challenges could limit OPM’s capacity to accomplish its current mission, which includes in part leading other agencies in addressing their own recruitment and retention challenges. Further, if OPM is to lead governmentwide human capital reform and transition from less of a rulemaker, enforcer, and independent agent to more of a consultant, toolmaker, and strategic partner, it should identify the skills and competencies of the new OPM, determine any skill and competency gap, and develop specific steps to fill that gap. The FHCS shows that OPM employees identified several issues related to its current workforce: Workforce skills. Some OPM employees were concerned about a lack of skills among OPM’s current workforce. Our analysis of the 2004 FHCS shows that 67 percent of OPM employees agreed that “the workforce has the job relevant knowledge and skills necessary to accomplish organizational goals” compared with 74 percent of employees from the rest of government. Among OPM’s divisions, HCLMSA had the lowest rate of agreement and highest rate of disagreement with the above statement at, respectively, 25 percent and 59 percent. This division provides leadership to agencies in their human capital transformation efforts. If HCLMSA lacks the knowledge and skills necessary to accomplish OPM’s current organizational goals, the division may have difficulty managing the additional responsibilities of leading and implementing future governmentwide human capital reform. Agencies are also concerned with OPM’s current workforce capacity. We spoke with agency CHCOs, HR directors, and their staffs about OPM’s current capacity, and they expressed concern about whether OPM has the technical expertise needed to provide timely and accurate human capital guidance and advice. For example, agency officials said that the perceived lack of federal human resource expertise among some OPM Human Capital Officers (HCO) makes it difficult for them to assist agencies when communicating policy questions to appropriate OPM employees. For example, an HR director told us that their agency contacted the responsible HCO about the Outstanding Scholars Program and did not get a response from OPM for two to three weeks. When OPM finally responded, they said each agency was deciding how to administer the program. In the end, the agency’s General Counsel Office had to contact another agency to learn how they administered the program. Many CHCOs and human resource directors told us they believed that OPM’s expertise has declined over the last decade, while noting that OPM is facing many of the same personnel issues as all federal agencies regarding the loss of federal human capital talent and institutional knowledge. OPM’s ability to lead and oversee human capital management policy changes that result from potential human capital reform legislation could be affected by its internal capacity and ability to maintain an effective leadership team, as well as, an effective workforce. CHCOs and human resource directors expressed concern about the loss of OPM employees with technical expertise that will be needed to effectively assist agencies with future human capital efforts. One CHCO believed OPM’s capacity is dependent upon a few key employees, in particular in the area of innovative pay and compensation approaches, adding that the potential loss of these employees could create a tipping point that severely damages OPM’s capacity.