Strategic human capital management, and specifically the need to develop results-oriented organizational cultures, is receiving increased attention across the federal government. The Congress has underscored the consequences of human capital weaknesses through a wide range of oversight hearings held over the last few years. In addition, to foster a results-oriented culture in federal agencies, the Congress is considering legislative proposals to, among other things, focus attention on the impact poor performance can have on the effectiveness of an organization and require agencies to have a chief human capital officer to select, develop, and manage a productive, high-quality workforce. The President’s Management Agenda, released in August 2001, identified human capital as one of the five key governmentwide management challenges currently facing the federal government. Subsequently, the Office of Management and Budget and OPM developed criteria that recognized the importance of creating a performance culture that appraises and rewards employees based on their contributions to organizational goals as a key dimension of effective human capital management. We developed a model of strategic human capital management to highlight the kinds of thinking that agencies should apply, as well as some of the steps they can take, to make progress in managing human capital strategically. The model consists of eight critical success factors, which are organized to correspond with four cornerstones of effective strategic human capital management: (1) leadership, (2) strategic human capital planning, (3) acquiring, developing, and retaining talent, and (4) results- oriented organizational cultures. Within the cornerstone of results-oriented organizational cultures, a critical success factor is linking unit and individual performance to organizational goals. One way to reinforce accountability and alignment of individual performance expectations with organizational goals is through the use of results-oriented performance agreements. We have reported that other countries have begun to use their performance management systems as a strategic tool to help achieve results. In particular, they use performance agreements to align and cascade organizational goals to individual performance expectations through several levels in their organizations. They also use performance agreements to help identify the crosscutting connections both within and between agencies and align the performance commitments of top-level executives with broader governmentwide priorities. Further, our work has shown that U.S. agencies have benefited from their use of results-oriented performance agreements for political and senior career executives. Although each agency developed and implemented performance agreements that reflected its specific organizational priorities, structures, and cultures, the performance agreements met the following characteristics. They strengthened alignment of results-oriented goals with daily operations, fostered collaboration across organizational boundaries, enhanced opportunities to discuss and routinely use performance information to make program improvements, provided a results-oriented basis for individual accountability, and maintained continuity of program goals during leadership transitions. Prior to OPM amending its regulations on senior executive performance management systems, BLM, FHWA, IRS, and VBA implemented systems that used a set of balanced expectations to manage senior executive performance. BLM implemented a balanced approach to manage its senior executive performance to focus attention and accountability on organizational priorities, make resource allocations, and minimize employee frustration. BLM incorporated performance elements in senior executives’ individual performance plans for the rating year ending June 2000 that were structured around its strategic goals to (1) “Restore and Maintain the Health of the Land,” (2) “Serve Current and Future Publics,” and (3) “Improve Organizational Effectiveness.” BLM also included a performance element in the senior executives’ plans to “Improve Human Resources Management and Quality of Work Life.” (For more information on BLM’s senior executive performance plans, see app. II.) FHWA implemented a balanced approach to managing its senior executive performance in response to its 1999 employee satisfaction survey. Specifically, the majority of employees that responded indicated that they did not understand their workgroup’s role in implementing FHWA’s corporate management strategies that were based on the Malcolm Baldridge National Quality Award and the Presidential Quality Award Criteria—leadership, strategic planning, customer and partner focus, information and analysis, human resource development and management, process management, and business results. Beginning in fiscal year 2000, FHWA appraised senior executives on these corporate management strategies. (For more information on FHWA’s senior executive performance plans, see app. III.) In response to the Internal Revenue Service Restructuring and Reform Act of 1998, IRS initiated a method of measuring performance designed to foster quality service, promote compliance with the tax laws, and consider the impact on employees. In fiscal year 2000, IRS implemented a senior executive performance management system that aligned the executives’ performance expectations with a set of balanced expectations consisting of employee satisfaction, customer satisfaction, and business results, and with two additional areas of responsibility—leadership and equal employment opportunity. (For more information on IRS’s senior executive performance plans, see app. IV.) VBA adopted a balanced scorecard approach in fiscal year 1999 as a strategic management tool to drive organizational change, provide feedback to employees on measures they can influence, link performance appraisal and reward systems to performance measures, and provide incentives to managers to work as teams in meeting performance measures. Its scorecard included measures for accuracy, speed and timeliness, unit cost, customer satisfaction, and employee development and satisfaction. VBA incorporated these measures in the performance appraisals for senior executives in its regional offices where the majority of senior executives are located. (For more information on VBA’s senior executive performance plans, see app. V.) Effective performance management systems translate organizational priorities and goals into direct and specific commitments that senior executives will be expected to achieve during the year. To this end, BLM, FHWA, IRS, and VBA developed a set of expectations for senior executive performance that were intended to balance organizational results, customer satisfaction, and employee perspectives and offered a menu of expectations for senior executives to incorporate into their individual performance plans. They appraised senior executives’ contributions to organizational results by the core competencies and supporting behaviors senior executives followed or the targets they met. In addition, the agencies appraised senior executives’ performance against their expectations for customer satisfaction and employee perspectives. OPM’s regulations emphasize holding senior executives accountable for their individual and organizational performance by linking individual performance management with results-oriented organizational goals. To appraise senior executive contributions to organizational results, BLM, FHWA, IRS, and VBA identified core competencies and supporting behaviors for senior executives to follow, while VBA also identified targets for senior executives to meet that are directly linked to organizational results, as shown in table 1. Core competencies and supporting behaviors: The agencies identified core competencies and supporting behaviors for senior executives to follow that are intended to contribute to their agencies’ achievement of performance goals. For example, FHWA set a performance expectation for senior executives to develop strategies to achieve FHWA’s strategic objectives and performance goals. To help meet this expectation, the Director of Field Services-South convened the “Southern Executive Safety Summit” in 2000 to address the region’s highway fatality rates—the highest in the nation— and their impact on FHWA achieving its goal on safety. The participants, including state and federal transportation and safety officials from the region, learned what each state was doing to decrease fatality rates and discussed how to create new safety strategies for each state and the region as a whole. Following the summit, Kentucky, North Carolina, and Mississippi held subsequent state safety summits and pursued numerous initiatives to reduce fatalities. The senior executive reported in his self- assessment for fiscal year 2001 that many states in the region have experienced a reduction in the number of highway fatalities since the Southern Executive Safety Summit, which is helping FHWA meet its goal of reducing the number of highway-related fatalities by 20 percent in 10 years. Similarly, to address IRS’s performance expectation for senior executives to develop and execute plans to achieve organizational goals, a senior executive who is the area director for compliance in New York has a performance expectation in his fiscal year 2002 individual performance plan to ensure that taxpayers affected by the events of September 11, 2001, are treated and audited according to their circumstances, and that the compliance guidelines and policy regarding affected taxpayers are adhered to. In particular, these taxpayers—including individuals and businesses— were not to be audited for prior tax years before the end of March 2002, if such an audit was necessary. To contribute to its strategic goal to restore and maintain the health of the land, BLM set an expectation for senior executives to understand and plan for the condition and use of public lands. In particular, the senior executive who heads the Colorado state office had a performance expectation in her individual performance plan for the 2001 performance appraisal cycle to conduct land use assessments and complete plans as scheduled for the Gunnison Gorge National Conservation Area. In her self-assessment for the 2001 performance appraisal cycle, she stated that she began conducting land use assessments for Gunnison Gorge and approved “pre-plans,” which outline the anticipated schedule, budget, and stakeholder involvement to complete a land use plan. Targets directly linked to organizational results: VBA identified targets with specific levels of performance for senior executives to meet. These targets link to the priorities in VBA’s balanced scorecard and the Department of Veterans Affairs’ (VA) strategic goals. For example, to contribute to VA’s strategic goal to “provide ‘One VA’ world class service to veterans and their families through the effective management of people, technology, processes and financial resources” and to address its priority of accuracy, VBA set a national target of 72 percent for fiscal year 2001 for the accuracy rate of original and reopened compensation and pension claims and appeals that were completed and determined to be technically accurate. To contribute to that national target, the senior executive in the Nashville regional office had a performance expectation for his office to meet a target accuracy rate of 59.2 percent.