[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]





HUMAN CAPITAL SUCCESSION PLANNING: HOW THE FEDERAL GOVERNMENT CAN GET A 
                      WORKFORCE TO ACHIEVE RESULTS

=======================================================================

                                HEARING

                               before the

                     SUBCOMMITTEE ON CIVIL SERVICE
                        AND AGENCY ORGANIZATION

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 1, 2003

                               __________

                           Serial No. 108-116

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform


                                 ______

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                            WASHINGTON : 2003
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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER, 
NATHAN DEAL, Georgia                     Maryland
CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of 
TIM MURPHY, Pennsylvania                 Columbia
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN R. CARTER, Texas                CHRIS BELL, Texas
WILLIAM J. JANKLOW, South Dakota                 ------
MARSHA BLACKBURN, Tennessee          BERNARD SANDERS, Vermont 
                                         (Independent)

                       Peter Sirh, Staff Director
                 Melissa Wojciak, Deputy Staff Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
              Philip M. Schiliro, Minority Staff Director

         Subcommittee on Civil Service and Agency Organization

                   JO ANN DAVIS, Virginia, Chairwoman
TIM MURPHY, Pennsylvania             DANNY K. DAVIS, Illinois
JOHN L. MICA, Florida                MAJOR R. OWENS, New York
MARK E. SOUDER, Indiana              CHRIS VAN HOLLEN, Maryland
ADAH H. PUTNAM, Florida              ELEANOR HOLMES NORTON, District of 
NATHAN DEAL, Georgia                     Columbia
MARSHA BLACKBURN, Tennessee          JIM COOPER, Tennessee

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                    Ronald Martinson, Staff Director
       B. Chad Bungard, Deputy Staff Director and Senior Counsel
                          Chris Barkley, Clerk
            Tania Shand, Minority Professional Staff Member



                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 1, 2003..................................     1
Statement of:
    Messner, Howard M., president, National Academy of Public 
      Administration; and Robert P. Gandossy, global practice 
      leader, talent and organization consulting, Hewitt 
      Associates.................................................    38
    Mihm, J. Christopher, Director, Strategic Issues, U.S. 
      General Accounting Office; and Dan G. Blair, Deputy 
      Director, Office of Personnel Management...................     4
    O'Connor, David J., Deputy Assistant Administrator for 
      Administration and Resources Management, Environmental 
      Protection Agency; Vicki A. Novak, Assistant Administrator 
      for Human Resources and Chief Human Capital Officer, 
      National Aeronautics and Space Administration; and William 
      H. Campbell, Acting Assistant Secretary for Human Resources 
      and Administration, Department of Veterans Affairs.........    73
Letters, statements, etc., submitted for the record by:
    Blair, Dan G., Deputy Director, Office of Personnel 
      Management, prepared statement of..........................    19
    Campbell, William H., Acting Assistant Secretary for Human 
      Resources and Administration, Department of Veterans 
      Affairs, prepared statement of.............................    91
    Davis, Hon. Danny K., a Representative in Congress from the 
      State of Illinois, prepared statement of...................    28
    Davis, Hon. Jo Ann, a Representative in Congress from the 
      State of Virginia, prepared statement of...................     3
    Gandossy, Robert P., global practice leader, talent and 
      organization consulting, Hewitt Associates, prepared 
      statement of...............................................    60
    Messner, Howard M., president, National Academy of Public 
      Administration, prepared statement of......................    40
    Mihm, J. Christopher, Director, Strategic Issues, U.S. 
      General Accounting Office, prepared statement of...........     7
    Novak, Vicki A., Assistant Administrator for Human Resources 
      and Chief Human Capital Officer, National Aeronautics and 
      Space Administration, prepared statement of................    82
    O'Connor, David J., Deputy Assistant Administrator for 
      Administration and Resources Management, Environmental 
      Protection Agency, prepared statement of...................    76

 
HUMAN CAPITAL SUCCESSION PLANNING: HOW THE FEDERAL GOVERNMENT CAN GET A 
                      WORKFORCE TO ACHIEVE RESULTS

                              ----------                              


                       WEDNESDAY, OCTOBER 1, 2003

                  House of Representatives,
          Subcommittee on Civil Service and Agency 
                                      Organization,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:03 p.m., in 
room 2203, Rayburn House Office Building, Hon. Jo Ann Davis of 
Virginia (chairwoman of the subcommittee) presiding.
    Present: Representatives Jo Ann Davis of Virginia, 
Blackburn, Davis of Illinois, and Norton.
    Staff present: Ronald Martinson, staff director; B. Chad 
Bungard, deputy staff director and senior counsel; Vaughn 
Murphy, legislative counsel; Robert White, director of 
communications; John Landers, OPM detailee; Chris Barkley, 
legislative assistant/clerk; Tania Shand, minority professional 
staff member; and Teresa Coufal, minority assistant clerk.
    Mrs. Davis of Virginia. The Subcommittee on Civil Service 
and Agency Organization will come to order. We are going to go 
ahead and start. We would hope we will have a few more 
subcommittee members joining us here shortly. There is probably 
at least three other subcommittees of Government Reform going 
on at the present time, not to mention all of our other 
committees, so we are spread a little thin today.
    I want to thank you all for joining us here today. In 
Congress we are constantly confronted with very immediate 
problems, the here and now, and we don't always have the time 
to step back and take a look at the bigger picture, and that is 
what we are going to do here today, to take a longer-term look 
at the Federal work force and some of the challenges 
confronting it.
    Leadership succession in the public sector is a continuing 
concern among human resources managers at all levels of 
government, and in democracies across the globe. Today we will 
receive a General Accounting Office study detailing efforts in 
four nations: United Kingdom, Canada, Australia, and New 
Zealand.
    And let me just stop here and say a welcome to a member of 
the Parliament of New South Wales who is with us today, Mr. 
Matt Brown. Matt, we welcome you and hope you will enjoy seeing 
how we do it on this side of the water.
    Today, when we hear about these four nations, we will hear 
how they address the issue and some of the successful methods 
managers there have developed.
    The GAO recommendations include making sure top level 
leadership is actively engaged in succession planning, linking 
succession planning to your strategic plan, identifying and 
grooming talented individuals early in their careers, and 
concentrating on development and training.
    That seems like a good recipe to me, and I will 
particularly note the emphasis on staff development.
    And I certainly hope that is not a vote that we are having 
just as we start. If we have to have a vote you will have to 
excuse us for a little bit if we take off. It seems to happen 
every time this subcommittee meets.
    One of the tools that we as a Government have been sorely 
lacking is staff development and training, and that must change 
if we are to meet the challenges of the coming years.
    We have heard for years now that the Federal Government 
faces a potential crisis in its top leadership. For example, as 
many as half of the Senior Executive Service could retire by 
2005. Whether those worse case scenarios come true or not 
remains to be seen, but, regardless, we must do a better job of 
preparing the next generation of leaders.
    I want to again thank our distinguished guests for being 
here, and it is nothing personal that we have to leave in the 
middle of votes every time you guys come, or someone from your 
office, but it tends to be happening here lately. I look 
forward to hearing your remarks.
    [The prepared statement of Hon. Jo Ann Davis follows:]

    [GRAPHIC] [TIFF OMITTED] T2409.001
    
    Mrs. Davis of Virginia. Our ranking member, Mr. Davis, 
isn't here yet, and if you will allow me, when he does come in, 
I will break in between your testimonies to allow him to give 
his opening remarks, if he would like to.
    I ask unanimous consent that all Members have 5 legislative 
days to submit written statements and questions for the hearing 
record, and that any answers to written questions provided by 
the witnesses also be included in the record. Without 
objection, it is so ordered.
    I ask unanimous consent that all exhibits, documents, and 
other materials referred to by Members and the witnesses may be 
included in the hearing record, and that all Members be 
permitted to revise and extend their remarks. Without 
objection, it is so ordered.
    One item in particular I would like to insert into the 
record is the testimony of the Department of Transportation 
regarding its plans for human capital succession planning. 
Unfortunately, they were not able to attend today, and, as 
such, the testimony will be submitted. Without objection, it is 
so ordered.
    It is the practice of this committee to administer the oath 
to all witnesses, and if our witnesses could stand, I will 
administer the oath. And, actually, if all the witnesses would 
like to stand at one time, we can just do it all at once.
    [Witnesses sworn.]
    Mrs. Davis of Virginia. Let the record reflect that the 
witnesses have answered in the affirmative.
    And if you will please be seated.
    Our first witness today is here from the General Accounting 
Office. Chris Mihm is the Director of Strategic Issues at GAO. 
Following him will be another friend of this subcommittee, Dan 
Blair, the Deputy Director of the Office of Personnel 
Management. And we are very glad to have everyone who is here 
to testify before us today to discuss this issue.
    Mr. Mihm, we will begin with you, and you are recognized 
for roughly 5 minutes. We don't have a timer, so be my guest.

STATEMENTS OF J. CHRISTOPHER MIHM, DIRECTOR, STRATEGIC ISSUES, 
   U.S. GENERAL ACCOUNTING OFFICE; AND DAN G. BLAIR, DEPUTY 
            DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT

    Mr. Mihm. Well, thank you, Madam Chairwoman. It is indeed 
an honor and a pleasure to appear before you today to discuss 
the need for increased attention to succession planning and 
management in the Federal Government. And I will take your 
guidance and use my oral statement and keep it just to around 5 
minutes.
    Consistent with the point that you made in your opening 
statement, my major point today is that the experiences of 
other countries provide insights to agencies here in the United 
States on how to engage on broad, integrated, that is, long-
term views of succession planning and management; and that 
these efforts are central to identifying and developing the 
leaders, the managers, and the work force necessary to meet the 
governance challenges of the 21st century, that is that 
succession planning and management, when done right, can help 
an agency become what it needs to be rather than simply 
recreating an existing organization that may no longer be 
appropriate for emerging needs. In other words, succession 
planning is not so much focused on filling a specific position 
or refilling a specific position, but is, rather, more 
concerned with what are the competencies that we need to be 
successful and what is the best way that we are going to get 
those competencies in the future.
    As you noted in your opening statement, the demographic 
facts are that the Federal Government faces a retirement wave 
in the coming years, at some point it is coming. Fortunately, 
and partially in response to these demographic realities, 
succession planning and management is starting to receive 
increased attention by Congress, as evidenced obviously by the 
hearing that you are holding today, by OPM under the leadership 
of Director James and Deputy Director Blair, by OMB, and by the 
agencies.
    As you also mentioned in your opening statement, today you 
are releasing a report that we prepared at your request and 
Senator Voinovich's request that shows some of the specific 
practices that leading public sector organizations in 
Australia, including New South Wales, Canada, New Zealand, and 
the United Kingdom are implementing.
    We learned first, and not surprisingly, that succession 
planning and management in leading organizations has the 
support of top management; and this is evident in at least 
three ways. First, top leadership actively participates in 
succession planning initiatives; it is not something that they 
allow to happen or that they staff out to others, rather, it is 
something that they actively engage in. Second, they use the 
results of the succession planning efforts in order to actually 
staff new positions as a basis of decisionmaking. And, third, 
they make sure that succession planning efforts have the 
resources they need in order to be successful.
    We are in obviously an exceedingly difficult budget time, 
but a lot of these things aren't budget neutral in the short 
term; that is, there are difficult tradeoffs that need to be 
made, and if we are serious about developing our people, we 
have to be willing to devote the resources and the commitment 
and the time to do that.
    Second, successful efforts link to strategic planning. We 
found that leading organizations use their succession planning 
and management as a strategic planning tool that focuses on 
current and future needs and develops pools of high potential 
staff in order to meet the organization's mission over the 
long-term.
    Third, leading efforts identify talent from multiple 
organizational levels, early in employees' careers, and those 
with critical skills; that is, succession planning is not just 
who is next in line, but let us make sure that we have career 
development and career training in place so that we are 
preparing an entire generation for the leadership roles in the 
future.
    Fourth, successful efforts emphasize development 
assignments; that is, that these efforts have developmental or 
stretch assignments for high potential employees in addition to 
the very important formal training components of the succession 
planning programs.
    Fifth, succession planning is understood as being 
instrumental to addressing other human capital challenges such 
as diversity, leadership capacity, and retention. Consistent 
with the importance of this practice, I understand the 
subcommittee will be holding a hearing in the near future on 
SES diversity issues and the candidate development program.
    Sixth, and finally, we learned from leading organizations 
that succession planning and management is used to facilitate 
broader transformation efforts; that is, effective succession 
planning and management initiatives provide a powerful tool for 
fostering agency transformation by selecting and developing 
leaders and managers who support and champion change. I know 
this is a personal signature issue of yours of trying to get a 
handle on the overlap and duplication of programs here at the 
Federal level. If we are going to be serious about attacking 
that, we need to have people, change managers, in place that 
are capable of looking across organizational boundaries and 
making that change take place.
    In summary, governmental agencies around the world are 
anticipating the need for leaders and other key employees with 
the necessary competencies to successfully meet the complex 
challenges of the 21st century. As a result, they are choosing 
succession planning and management initiatives that go beyond 
simply replacing individuals, to initiatives that strategically 
position the organization for the future. While of course there 
is no one right way for organizations to manage the succession 
of their leadership and other key employees, the experiences of 
the countries that we looked at, we believe, provide insights 
for executive agencies here in the United States that they 
could use to ensure that they have the succession planning 
practices in place to protect and even enhance organizational 
capacity.
    That concludes my statement. I would be happy to answer any 
questions you may have.
    [The prepared statement of Mr. Mihm follows:]

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    Mrs. Davis of Virginia. Thank you, Mr. Mihm.
    Mr. Blair, we are happy to recognize you for whatever 5 
minutes is on your watch.
    Mr. Blair. Thank you, Madam Chairwoman. I appreciate that 
very much. I have a rather lengthy written statement. I ask 
that it be included for the record, and I will shorten that in 
my oral testimony.
    I am pleased to be here today, Congresswoman Blackburn. It 
is good to be back. And it is also good to be in this panel 
with my good friend Chris Mihm. I have worked with Chris for 
quite a long time on many of these shared issues, and I find it 
a great opportunity to be here on the same panel today.
    Let me briefly detail some of the work that we have done at 
OPM to ensure that we have a good framework in place for 
agencies to access in order to engage in good succession 
planning. Back in 2001, OPM began working closely with the 
agencies, learning about them, learning about their specific 
human capital problems in order to help them develop plans and 
make commitments to move toward more strategic management of 
their most important asset, the work forces. In 2002, OPM, the 
Office of Management and Budget, and GAO collaborated to issue 
a shared document, ``Human Capital Standards for Success,'' 
which provided a clear set of outcomes for agencies to use 
engaging their efforts. As a need for more guidance became 
apparent, OPM developed a human capital assessment and 
accountability framework. This is a model to guide agencies 
toward achieving these standards. Succession planning is woven 
throughout these six standards of success, and the framework 
also focuses attention on agencies engaging in this practice.
    OPM is charged with scoring agencies on the President's 
executive branch score card, and we witnessed agencies moving 
from red to yellow status. What this shows is that agencies are 
not only developing a good work force plan and strategies, but 
beginning to implement them as well. Green scores will only be 
accorded when the plans are implemented and we start to see 
real results, and, honestly, we are not there yet, but we have 
seen progress, and that is good news.
    Further, work force planning and succession planning are 
not a one-time event. Rather, we rate agencies on an ongoing 
quarterly basis and, as the expression goes, what gets measured 
is what gets done; and there is no more compelling way of 
attracting senior level attention to an issue than by scoring 
it.
    While the score card attracts senior level leadership 
attention to improving HR management, there are also other 
ways. For instance, the recently constituted Chief Human 
Capital Officers Council will provide a venue for senior agency 
leaders to focus on human resources needs. The Council, which 
was authorized by the homeland security legislation, has formed 
a subcommittee specifically devoted to leadership development 
and succession planning, and this will help institutionalize 
these efforts as agencies and departments face changing work 
force needs.
    We also need to build capacity in the HR field across 
Government. We have featured trading and guidance on the new HR 
flexibilities which were recently made available, and also 
OPM's human capital officers, and these are our desk officers 
who are devoted to specific agencies and departments, are 
available to advise agencies on the host of human resource 
questions and needs which arise on a daily basis. To do this, 
OPM had to undergo a significant restructuring, which we 
completed last March. To many insiders, this proved to be the 
most significant realignment of the agency since its inception. 
We de-stovepiped 12 separate offices and services, and formed 3 
new externally oriented divisions intended to provide our 
customers, the agencies, with the most contemporary and up to 
date HR advice counsel and the services available.
    OPM's mission has changed. Indeed, our responsibilities in 
evaluating and assessing agencies' progress on the human 
capital front, ensuring employee safety and security, and 
ensuring compliance with merit system principles throughout 
Government have grown, and our new organizational structure 
will allow us to better deliver on these missions and goals.
    We also engaged on our own extensive succession planning. 
We developed a new human capital plan, identified mission 
critical occupations and key competencies, and recently hired 
18 new senior executives under a streamlined approach. Our 
hiring of these executives, 14 of them in 49 days, shows that 
quality hiring can be accomplished quickly when top agency 
leadership, in this case Director James, place a high emphasis 
and high priority on it.
    These efforts are grounded on making sure that we have the 
future talent available to carry out our mission. We have all 
heard of the impending retirement wave. While actual 
retirements are less than those originally predicted, we still 
must be prepared to address the turnover which will eventually 
come. That is why today's hearing is so important, because it 
continues to focus on what OPM and the Federal Government is 
doing to prepare for and ensure a sound and secure future of 
America.
    Thank you, Madam Chairwoman and members of the committee. I 
am happy to answer your questions.
    [The prepared statement of Mr. Blair follows:]

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    Mrs. Davis of Virginia. Thank you, Mr. Blair. It is always 
a pleasure to have you here to testify before this committee, 
and you too, Mr. Mihm.
    I would like to now yield to our ranking member, Mr. Danny 
Davis. Thank you, Danny, for being here. If you would like to 
give an opening statement.
    Mr. Davis of Illinois. Well, I think I will. Thank you very 
much. This is indeed a very busy day, Madam Chairwoman, and I 
want to thank you for your indulgence, and also let me thank 
you for holding this hearing.
    And as we begin, I want to indicate appreciation to 
Director James and her staff for the close working 
relationships that have developed and the kind of relationships 
that we have had with them during this period of time.
    We have heard of all the predictions that there is going to 
be a wave of retirements in the Federal Civil Service, and more 
specifically within the Senior Executive Service. GAO has 
released two reports that document the importance of succession 
planning and the need to incorporate diversity as a management 
initiative in the Senior Executive Service.
    The first report, which was released in 2000 and was 
entitled ``Senior Executive Service Retirement Trends 
Underscore the Importance of Succession Planning'' found that 
of the 6,000 SESes employed in September 1998, 71 percent will 
be eligible to retire by 2005. The report also found that SES 
succession planning is not being done in the Federal 
Government, and that OPM could do more to help agencies with 
their succession plans and to monitor their progress.
    The second report, which was requested by myself and other 
members of the Government Reform Committee, found that if 
current promotion and hiring trends continue, the proportions 
of minority men and women among senior executives will likely 
remain unchanged over the next 4 years. The report, titled 
``Senior Executive Service: Enhanced Agency Efforts Needed to 
Improve Diversity at the Senior Corps,'' which was released 
earlier this year, will be the focus of a hearing the 
chairwoman has agreed to hold during the coming weeks.
    It is my understanding that at today's hearing GAO will 
release a report that will examine the succession planning 
efforts of other countries. The report, which was requested by 
Chairwoman Davis and Senator Voinovich, will help Federal 
agencies develop their own succession planning and management 
initiatives.
    This hearing will help the subcommittee to understand 
better the current status of retirements in the Federal 
Government, how the agencies are planning for the loss in 
leadership continuity and expertise, and what roles agency 
chief human capital officers and the Office of Personnel 
Management can play in assisting agencies in succession 
planning, and what impact retirements will have on the 
diversity of the Senior Executive Service.
    Of course, I look forward to the testimony and exchange of 
all the witnesses, and again want to thank you, Chairwoman 
Davis, for holding this hearing and for the work that you 
continue to do as we explore human capital needs.
    [The prepared statement of Hon. Danny K. Davis follows:]

    [GRAPHIC] [TIFF OMITTED] T2409.020
    
    Mrs. Davis of Virginia. Thank you, Mr. Davis.
    I would like to turn now to Mrs. Blackburn and ask do you 
have an opening statement?
    Mrs. Blackburn. No.
    Mrs. Davis of Virginia. Thank you, ma'am.
    Mr. Davis, if you would like to begin with the questioning, 
I will yield to you.
    Mr. Davis of Illinois. Well, thank you very much. And let 
me again thank the witnesses for appearing.
    Mr. Blair, why don't I start with you? You heard my opening 
statement, and you heard the request that had been made and the 
expression of concern relative to diversity within the SES 
ranks. Could you share with us what the Office of Personnel 
Management is currently doing and attempting to do that will 
help reverse those trends?
    Mr. Blair. I think, first and foremost, we have been 
working closely with you, as you know, Congressman, in 
developing a Candidate Development Program for the SES, which 
has an eye toward increasing the diversity in its ranks. I 
understand that is going to be the subject of a hearing in the 
next couple weeks, and I don't want to take any thunder away 
from that hearing, but I think this CDP is very important for 
meeting the goals that we share. I think that there isn't an 
agency head in this Government that is more committed to 
achieving diversity than Director James, and I think that 
conversations that you have had with her exemplify her 
commitment toward working to that goal.
    While we don't have the CDP in place quite yet, let me just 
give you a brief skeletal outline of what that will do. What we 
are looking at doing is allowing people to apply to the CDP, 
work at agencies, and once they graduate from the CDP program 
of instruction over 12 to 14 months, they will be eligible to 
non-competitive appointment in the Senior Executive Service, 
subject to the QRB, Qualifications Review Board, review. I 
think this will be a good way of bringing people into the 
pipeline; it will be a good way of staffing quickly. As we 
know, SES hiring takes far too long as it stands right now, and 
if we are in a war for talent, that talent is quickly snatched 
up by competitors.
    One example of our efforts at diversity I think would be 
the recent 14 new hires or 18 new hires that we have at OPM in 
our SES ranks. We cast a very, very broad net when we 
advertised for that. We did 14 of them with one vacancy 
announcement. We did it to all sources; we brought people from 
inside the Government, outside the Government, from inside OPM, 
outside OPM; and we brought forth a very diverse rank of senior 
executives. I think that is an example of what can be done when 
you have senior agency leadership attention to a problem. And 
it is also a way of bringing about a solution.
    Mr. Davis of Illinois. Thank you very much.
    Mr. Mihm, in GAO's 2000 report on retirement trends in the 
SES, GAO recommended that OPM improve its efforts to identify 
and monitor agency succession planning efforts. Has OPM taken 
sufficient steps since 2000 to assist agencies with their 
overall succession planning efforts?
    Mr. Mihm. Mr. Davis, we are following up on that now both 
because it was a recommendation in that report and also as part 
of a separate request from the chairwoman to look at the 
succession planning program that is in place across the Federal 
Government. I had the opportunity to be at the kickoff meeting 
for the Candidate Development Program, I know that you spoke 
there, as well as Director James, and so we are all looking 
forward to as the details of that roll out and as the program 
gets stood up.
    One thing I would underscore, and Mr. Blair mentioned this, 
is that diversity just doesn't happen, it has to be planned for 
and you have to work hard at it. That was the central message 
of the report that we did in 2000, as you mentioned in your 
statement, that if we don't do anything, that is, if we keep 
with the program that we have in place, we will, at best, keep 
with the current levels, which are not viewed by many as being 
acceptable. So if we are serious about having a more diverse 
Federal work force, we need to augment that with stronger and 
better programs. The work we did overseas showed examples of 
agencies in other countries, in the U.K. and Canada and 
elsewhere, that do instill as a central part of their 
succession planning efforts a desire to have a more diverse 
work force. That is part of the lens that we are going to be 
taking as we begin to look at succession planning programs 
across Government.
    Mr. Davis of Illinois. As we look at across the board, and 
we can leave the diversification out at the moment, let me just 
ask do either one of you or both of you see the level of 
succession planning meeting the need that has been predicted? I 
know we predicted that lots of people were reaching the age 
where their beards turn gray or their hair gets a little 
thinner and, you know, they move on to other things. Overall, 
are we doing enough to prepare when those individuals leave, 
that we are going to have the personnel with the expertise and 
experience that is needed to operate the highest levels of our 
Government?
    Mr. Blair. Let me start on that. I don't know if you can 
ever do enough to prepare, but, indeed, light is being shown 
and heat is being focused on this potential problem. Let us 
remember how we got to where we are today. I think that the 
whole issue of work force planning, in my view, is kind of an 
outgrowth of the GPRA, the Results Act. When we first started 
asking agencies to define their missions and goals and what 
they were supposed to be doing, the next logical question was 
do they have the assets and the resources to accomplish this. I 
think a great amount of credit goes to GAO, to David Walker and 
his staff for highlighting what was a very serious problem in 
that the Federal work force, should we stay where we were at 5 
years ago, wasn't going to be prepared to deliver on the 
results for the American people.
    But in the past few years you have seen a number of reports 
issued, a high emphasis on this. When I came over to OPM, we 
have been engaged for the last 2 years focusing highly on what 
we were going to do to prepare agencies for not only today or 
the immediate future, but for the changing needs as we face the 
future; and I think that while more needs to be done, a lot has 
been accomplished already. As I said in my opening statement, 
this isn't a one-time event, this is an ongoing process, 
because we can prepare for tomorrow, but tomorrow may not bring 
what we thought it was going to. And so agencies, departments 
are going to have to constantly evaluate and re-evaluate where 
they see themselves going not only in the short-term and the 
long-term, but re-evaluate what they need to have in order to 
accomplish those goals.
    Mr. Mihm. I would agree with Mr. Blair, that much has been 
done already, but needs to be done. In fact, that is often a 
joke about a GAO report titled progress has been made, but more 
needs to be done. The baseline, though, from which we are 
developing, we have to keep in mind, is very low, and that is, 
as probably Mr. Messner from the National Academy of Public 
Administration will be able to testify, when NAPA did a study 
in 1997, only 2 of 27 agencies responding said that they had a 
succession planning program in place. In 1999, a joint survey 
done by OPM and the Senior Executive Association found that 50 
percent of all career members of the SES said they didn't have 
a formal succession program in their agency for SES, and 75 
percent said they didn't have a succession planning program for 
other important managers in those agencies.
    Often when we go into agencies and we find succession 
planning that isn't working well, what the problem is it is a 
focus on replacing individual positions; that is, if Dan 
leaves, who is going to replace him, or if I leave, who is 
going to replace me. And that is important, but more important 
is a focus on where does this organization need to be in the 
future. What do we want it to look like, what sort of 
competencies do we want to have in the future, and what are the 
strategies that we are going to put in place to get us there? 
And that is not just looking at who is next in line for a slot, 
it is looking early in people's career; what sort of training 
and development and exposure do we need to give them so that we 
are positioning an entire generation for leadership when they 
are ready.
    Mr. Davis of Illinois. Well, let me thank both of you 
gentlemen, and thank you, Madam Chairwoman, and just close by 
suggestion that not only do I appreciate the comments of the 
witnesses, but I also appreciate the integration with which the 
thinking seems to be, because I am pretty convinced that as we 
do succession planning, if we don't plan diversification in 
that thinking and in that process, it means that I am going to 
keep coming to hearings and look in the room and see a room 
that looks pretty much like this one, as opposed to looking 
different. I am a very simple person, and I have often been 
told that what you see is what you get, and so many of the 
hearings that I attend, quite frankly, many of them there are 
no minority members at all; and there are others they come like 
an old man's teeth, that is, few and far between. And I think 
it is just high time that we actually practice what we preach, 
I am saying, and if we don't do the hard-nosed planning and 
really do it, it is kind of like my mother used to tell us, you 
know, what you do speaks so loudly until I can't hear what you 
are saying. And so I am appreciative of the direction that both 
the agencies seem to be headed, and I really appreciate your 
testimony.
    Mr. Blair. Thank you, sir.
    Mrs. Davis of Virginia. Thank you, Mr. Davis.
    And, Mr. Blair, I don't think you ever can prepare enough, 
as I think my district will tell you since Hurricane Isabel hit 
and we thought we were all prepared, but surely we were not.
    Mrs. Blackburn, I will yield to you for questions.
    Mrs. Blackburn. Thank you so much. And I hope you all can 
hear me. I am kind of spread out with my collection of stuff I 
take with me, and between two microphones here.
    I thank you all for your comments on this, and also thank 
you to you and your staffs for your work. I think that it is 
incredibly important that the Federal Government, as an 
employer, create an environment in which people feel as if they 
can succeed and they can improve their quality of life. As one 
who enjoys mentoring individuals, especially women, I have 
always thought it was important to communicate, when you are 
talking about leadership and leadership skills that are used in 
the marketplace, to have people come to an understanding that 
leadership is a transferable commodity, and a skill developed 
is a skill retained and improved upon. And I would like to know 
what you all are doing, or if in your systems you have a plan 
that allows individuals, especially new hires, younger hires, 
mid-career folks, to look at possibilities in other agencies 
where their skills may be better placed or better used.
    Mr. Mihm, I will go to you first with that.
    Mr. Mihm. One of the most intriguing proposals and, in our 
view, important proposals that is coming out of OPM is to 
augment and perhaps even revitalize the Presidential Management 
Intern Program, which is an entry-level program for certain 
exceedingly high quality individuals and then to supplement 
that with, I am not sure of the right acronym, but basically a 
mid-career program as well. What we have often found in the 
past, and the complaint of many people in the PMI program, 
would be while they love the program and the opportunity to 
move around agencies or even within a single agency, the 
problem had been that after a 2-year period, when the 
internship ends, then it just ends, and the next time they may 
be picked up or cared about in a very direct way would be if 
they qualify 10, 15 years later for a Candidate Development 
Program for the Executive Service.
    The proposal, as we understand it, that OPM is making is 
consistent with one of the better features that we saw in our 
discussions with our counterparts in the United Kingdom. They 
have a program called Fast Stream, which identifies high 
quality individuals when they come in, recruits them into the 
service, and then sticks with them, in a sense, giving them a 
set of developmental, training opportunities, exactly, ma'am, 
what you are talking about, moving them systematically around 
agencies so that they get exposure to different situations and 
the government gets exposure to them, and so that it is a win-
win situation. So that is one of the things we have liked best 
about the OPM proposal.
    Mrs. Blackburn. Right.
    Mr. Blair, before I come to you, let me ask you all this. 
With the Employee Human Resource Info System and the Human 
Capital Assessment and Accountability Workshop, how many 
different agencies have that in place at this point?
    Mr. Blair. I am not sure I understand your question. The 
EHRI is one of the E-Government initiatives that we are working 
on right now, and what that is going to be is an electronic 
repository of employee information that will cover their entire 
career life span.
    Mrs. Blackburn. So it is not in place.
    Mr. Blair. It is not in place. It is in various phases of 
implementation.
    Mrs. Blackburn. OK. And the total cost of that will be 
what?
    Mr. Blair. I would have to get back with you. I know that 
the Director testified last week that there will be significant 
savings produced by all five of the E-Government initiatives, 
but I don't have that at the tip of my tongue right now.
    Mrs. Blackburn. I would love to know that, I certainly 
would.
    The Human Capital Assessment and Accountability Framework 
[HCAAF], how many agencies is that in place in?
    Mr. Blair. Well, that will cover all 24 of the major 
agencies.
    Mrs. Blackburn. OK.
    Mr. Blair. What that framework is, it takes the six 
standards for success, which if an agency is doing well and it 
is managing its work force, it will meet those six standards, 
and what that framework does, it says how do you get there; it 
is what cascades it down and has critical factors and elements 
for success and a checklist of whether or not you are 
performing well.
    Mrs. Blackburn. But are they currently using that system, 
or is that in the process of being implemented?
    Mr. Blair. We are currently using that system in helping 
agencies assess themselves and in assessing the agencies.
    Mrs. Blackburn. In 24 agencies?
    Mr. Blair. Yes.
    Mrs. Blackburn. OK. Great.
    Now, as you look at these initiatives, human capital 
initiatives, how do you see general Government reform 
initiatives tying into those with your human capital planning, 
your reshaping and reorganizing Government, redefining jobs, 
redefining expectations from specific jobs?
    Mr. Mihm, you are shaking your head. Are you all working 
toward a systematic reorganization of different departments, 
expected outcomes, and is there a timeframe for this?
    Mr. Mihm. Well, as you know, the Comptroller General has 
often been talking about, for a variety of reasons, there is a 
need for Government to fundamentally transform what it does and 
how it does business, and in some cases even who does the 
Government's business. We think a central part of those change 
management initiatives must be, obviously, attention to the 
people element of that. When we looked at senior executive, the 
top cadre of career executive perform plans 2 years ago, we 
found that, in our view, they didn't give sufficient attention 
to exactly the types of issues that you are suggesting: change 
management, looking at the ability to look across 
organizational boundaries and form alliances or partnerships 
with people in different organizations. They were real good on 
a lot of basic business acumen, but they weren't as good, and 
this is the contracts, in what we need to do to really change 
Government. That is something that we are working with Mr. 
Blair's staff on, to think about how we can better embed those 
within the SES contracts, and I know that they have a very 
serious initiative on that underway.
    Mr. Blair. Let me just add to that, that it is very 
important that not only a senior executive knows what his or 
her contribution is expected to be to the organization's 
success, but you also need to drive that down into the line 
employees as well. Individual employees need to know how their 
work is valued and what that value is to the organization, 
because without that you don't have the continuity or the kinds 
of expectations that you expect in helping employees reach 
overall mission goals and results. And so it is very, very 
important that not only the senior executives, but line 
employees down to the lowest general schedule levels understand 
what their job is and how that jobs relates to the mission of 
the agency.
    Mr. Mihm. In our case, we call that creating a line of 
sight between individual performance and individual activities 
and organizational goals, and I completely agree that it is 
absolutely critical.
    Mrs. Blackburn. As you all move forward on this, are you 
searching for appropriate ways to incentivize or reward the 
different divisions and agencies and individuals that meet 
their goals and expected outcomes and provide superior 
performance?
    Mr. Blair. Absolutely.
    Mrs. Blackburn. Did I just ask the question you had really 
wanted to answer?
    Mr. Blair. Well, no. Actually, I think that the chairman 
and I had quite a discussion about this back in the spring. The 
President did propose a pay-for-performance proposal in the 
budget that we have been working to enact. Let me just say that 
our compensation as it now stands does very little to reward or 
differentiate in performance, and that we need to change that; 
that we give large across-the-board pay raises to good 
performers, poor performers, bad performers, no performers, 
great performers, every kind of performer, and that is not the 
way to run a railroad or a Government.
    Mrs. Blackburn. Or a business.
    Mr. Blair. Exactly.
    Mrs. Blackburn. Thank you.
    Mr. Mihm. I would completely agree. We do need to create 
incentives, and pay needs to be part of that for increased 
performance. In our own case in GAO, that is clearly the way 
that we have been moving under the leadership of the 
Comptroller General. The key part of that we are finding is to 
make sure that you have a performance management system in 
place that is credible, reliable, modern, and includes a set of 
safeguards; and once that is there, then you can easily move to 
a pay-for-performance scheme.
    Mrs. Blackburn. Madam Chairwoman, thank you.
    Ms. Davis of Virginia. Thank you, Mrs. Blackburn.
    You know, obviously there is a large number of senior level 
Federal employees who are eligible for retirement in the near 
future, and we keep hearing how it is a human capital crisis, 
but is it really a human capital crisis? Since people have been 
coming and going from Government service for as long as we have 
had a Government, why is that a greater issue or problem today 
than it was in the past?
    Mr. Blair. Well, I think today you see greater numbers of 
people eligible, and I think the key word there is eligible, 
for retiring than we have seen in the past. And while we have 
made some projections, it has turned out that we haven't seen 
quite the retirement wave that we thought it was going to be, 
it has been more of a high tide, so to speak. But we expect 
that tide to continue to come in, and we need to be prepared 
for that. And so I think some people have described this as a 
human capital crisis. Well, I am one to say that I don't know 
if I describe it as a crisis, but it certainly has focused 
attention, and this is the kind of needed attention that this 
area has needed for a long time. And so call it what you might, 
but we need the kind of attention, we need to continue to come 
up with solutions to many of the impending problems that we are 
going to see not only in the next 5 years, but 10, 15 years 
down the line.
    Mr. Mihm. I would agree with Dan in terms of the numbers of 
eligibility, and then just add to that what makes this time 
unique and particularly an opportunity is that the need for 
change is so great, and that is that the risk and the danger of 
a succession planning approach that simply recreates the 
existing organization, it was never the right thing to do and 
now it is completely intolerable. The fiscal situation just 
doesn't allow us that luxury.
    Mrs. Davis of Virginia. This may be more to you, Mr. Mihm, 
but, Dan, if you have an answer, you can certainly give it. 
What do you think are the factors that led to the graying of 
the Government work force and how did we get here? How did we 
get to this bubble where we have the problem today and we 
didn't have it in the past?
    Mr. Mihm. Well, I think that as Dan was pointing out, it is 
not so much that it is more gray now, taking Mr. Davis' note, 
that it is more gray now than perhaps it had been in the past. 
We are, to some extent, at a historical moment in that a lot of 
the generation that came in when the Federal Government was 
more activist in nature, in the 1960's, is now entering or 
nearing retirement age, and so there was a bubble there that is 
moving its way through. For example, the agency, with my 
understanding, that has the highest number of retirement 
eligibility, HUD, had a huge influx in staff and dollars about 
this period 20, 25, 30 years ago, and so there is a bubble that 
is working its way through there. I think fundamentally, 
though, as I mentioned, the issue is that the opportunity for 
using succession planning in a way that allows us to rethink 
missions and roles of Government, and how we want to do 
business, is greater than perhaps it has been in the past, and 
that is the issue that we need to take advantage of.
    Mr. Blair. I would only add that it is demographics. We see 
this nationwide, it is not a phenomena of the Federal 
Government, it is a phenomena of the private sector as well. 
The baby boom generation is aging, we are reaching that bubble, 
and so we are going to see an increasing number of retirements. 
Also, over the last 10 years we saw the Government downsize, 
and in that downsizing a number of agencies just shut down 
their hiring practices. So you didn't have people coming into 
the pipeline, and so as people progressed and grew in their 
Government positions and roles, and progressed through their 
grades, you didn't have anyone backing them up. And so that is 
what makes this problem particularly troublesome, is that we 
didn't have the pipeline in place, the backfill, so to speak, 
that when people do retire, that you have people there to 
immediately take their places. And that is why succession and 
workplace planning is so important, is because, as Chris said 
earlier, you will know not only that you need to fill the 
position, but the question is do you even need that position 
anymore, because you may not need that position anymore, you 
may need five positions over here and none over there. And that 
is what these exercises are all about, to look into a crystal 
ball and project down the road not only who you are going to 
need in place, but what those places should be.
    Mrs. Davis of Virginia. Don't we have quite a few GS-14s 
and 15s that are there now that have the experience and they 
have learned, that could just step into the places of the 
SESes?
    Mr. Blair. We have them in place, but I think that you will 
see that demographically they are reaching retirement 
eligibility as well. I think the average Federal worker is age 
47.
    Mrs. Davis of Virginia. That is pretty young, Dan.
    Mr. Blair. Yes, ma'am. Yes, ma'am. But that puts some 
within 8 years of retirement. And so that is why even at 14 or 
15, and 14 or 15 is oftentimes where people end their careers, 
most don't make it into the SES. And so we just didn't see the 
entry level hires over the past 10 years that we may have seen 
otherwise had Government not closed the doors on many of its 
hiring efforts.
    Mr. Mihm. We worked with OPM data and found something like 
70 percent of the executive corps is retirement eligible over 
the next couple of years; about half of the GS-15s, or 
traditional feeder pool, is retirement eligible; a little bit 
under half of the GS-14s would be retirement eligible. It gets 
to exactly the point that Mr. Davis was mentioning, is that if 
we don't augment, in the case of diversity programs, those 
programs by just reproducing or going to the next level back, 
we are buying ourselves very small time.
    Mrs. Davis of Virginia. Dan, as you know, succession 
planning requires top level management. Is OPM doing its best 
to ensure that the agency's leaders know what they are doing 
and that they are committed to work force planning? What is OPM 
doing to make sure that all agencies are going to be ready?
    Mr. Blair. Well, I think what is leading that effort is the 
President's executive branch score card and how we are rating 
and ranking the agencies. You don't really get anyone's 
attention until you start measuring what they are doing, and 
rating a department secretary or agency head on how well they 
are managing their work force certainly gets their attention. 
And so we have seen progress being made. As of the end of the 
third quarter in this fiscal year, I believe 12 agencies were 
at yellow in terms of status on human capital. We will be 
releasing the fourth quarter scores within the near term. 
Hopefully we will see some more improvements. I don't think we 
will see anyone at green yet, but it is too early to tell. But 
we are seeing improvements. And we have also required that 
agencies have work force planning and succession plans in 
place. We have seen most agencies comply with that. I think 
maybe there are five or six that don't at this point, but we 
are working with all of them.
    This has been a challenge. I think Chris mentioned earlier 
that as of 1997, which was 6 years ago, only one, was it you 
said?
    Mr. Mihm. Two of 27.
    Mr. Blair. Two of 27 agencies had any kind of work force 
planning in place. And so this is a relatively young and new 
concept for the Government to be engaging in, but something 
that seems to have been grasped quite quickly, and it is due to 
hearings such as this that brings high level attention and 
shines light on a problem that really needs that attention.
    Mrs. Davis of Virginia. And I would assume OPM is going to 
stay on these agencies on a regular basis so that they don't 
slip?
    Mr. Blair. Absolutely.
    Mrs. Davis of Virginia. Well, I want to thank both of you 
gentlemen. We have a lot more questions, but we do have two 
more panels.
    Mr. Davis of Illinois. Can I ask one?
    Mrs. Davis of Virginia. Yes, sir, you certainly may. You 
may ask two if you would like.
    Mr. Davis of Illinois. Just one, actually.
    Mr. Mihm intrigued me with something that you said in terms 
of the numbers of people who came into the Government during 
the 1960's as a result of its activist perception. So you are 
saying that if people believe that the Government is doing 
something, then recruitment won't be a problem?
    Mr. Mihm. It certainly helps. You know, one of the great 
things about marketing or recruiting, one of GAO's recruiters 
recruiting for the Federal Government is our mission, and being 
able to recruit based on what we do.
    Mr. Davis of Illinois. I thought that was interesting, 
because I thought of myself, and I actually started to come to 
work for the Federal Government during that period, and that is 
exactly the reason that I almost became a bureaucrat.
    Mr. Mihm. The one that got away, sir.
    Mrs. Davis of Virginia. It was in the late 1960's for me, 
Danny, not the early 1960's. The late 1960's, all I ever heard 
about was go to work for Civil Service, great benefits, great 
retirement, but it was really tough to get in.
    I want to thank both of you gentlemen, and I am sure we 
will have other questions, and we may submit questions to you 
in writing to have you reply back for the record. And thank you 
again for being willing to come up.
    Mr. Blair. Thank you.
    Mr. Mihm. Thank you.
    Mrs. Davis of Virginia. I would now like to invite our 
second panel of witnesses to please come forward to the witness 
table. On this panel we have Howard Messner, president of the 
National Academy of Public Administration. Next we have Robert 
Gandossy, global practice leader for talent and organization 
consulting at Hewitt Associates.
    And I would like to thank you gentlemen for being patient, 
and the record will show that we have already administered the 
oath, and I will remind you that you are under oath when you 
testify.
    The panel will now be recognized for an opening statement, 
and we will ask you to summarize your testimony in 5 minutes, 
and any more complete statement that you have may be included 
in the record.
    I want to welcome you, Mr. Messner, and thank you for being 
with us today, and thank you for your patience, and you are 
recognized for 5 minutes.

STATEMENTS OF HOWARD M. MESSNER, PRESIDENT, NATIONAL ACADEMY OF 
PUBLIC ADMINISTRATION; AND ROBERT P. GANDOSSY, GLOBAL PRACTICE 
 LEADER, TALENT AND ORGANIZATION CONSULTING, HEWITT ASSOCIATES

    Mr. Messner. Thank you, Madam Chairwoman and members of 
this subcommittee. I will leave a longer statement because the 
National Academy of Public Administration has a longstanding 
interest in this subject of succession planning. We have been 
working in the field since 1992 and have turned out a number of 
reports, one of which Chris Mihm kindly referred to and has 
been used as a reference. Our latest report, which I am going 
to turn over to the committee, is really a series of reports 
with 21st century managers series, and in that we revisit this 
whole question of succession planning, and I would like to make 
it available to the committee, if that is all right.
    The Academy is an independent non-profit organization; it 
has been chartered by the Congress; it is composed of some 550 
people we refer to as fellows; it is very much like the 
National Academy of Sciences, only its focus and its mandate 
from the Congress is to look at management issues, and we do 
studies of Government agencies. The people who are fellows in 
the Academy have headed agencies, have worked in Federal 
agencies and also worked State, local, and internationally.
    The reason that we are so interested in the question of 
succession planning is because it speaks to the resources that 
are available to the National Government. We spend hundreds of 
millions of dollars on the human resources of the Federal 
Government, and if we do it right, if we spend the money 
usefully, we end up with people who provide outstanding 
services to the people of America, and that is what it all 
about, get the programs out that the Congress empowers the 
President to administer.
    In order to make this investment pay off, we really need to 
be careful to look forward and not just at the present time. I 
spent 26 years in the Government, both in the executive branch 
and in the legislative branch, and I know what most managers 
know: we are concerned with today. You have a lot of mandates, 
a lot of questions, a lot of jobs require you to pay attention 
to what is going on around you, and the future is that dim 
prospect that you might get to if you can get through today's 
workload.
    Succession planning argues for thinking ahead, and that is 
a hard argument to win. It takes political leadership. The 
political leadership of agencies that comes in doesn't stay 
very long. Our studies show that most assistant secretaries 
stay about 21 months, and you don't do much succession planning 
in 21 months. What you can do is inspire the career service, 
particularly the middle of the career service, to think about 
succession planning and start processes that encourage 
employees to look to the future.
    Where the Academy has found good succession planning, and 
there isn't that much of it, we think about 28 percent of the 
agencies actually have programs for succession planning 
underway. Where you do find good succession planning, you 
usually find other attributes of a healthy personnel system: 
mobility, job training, diversity, upward mobility. Those are 
ingredients in the planning process, and you usually find some 
kind of linkage between the strategic goals of the agency and 
the development of the employees of that agency. Private 
sector, not always well, not uniformly well; General Electric, 
IBM come to mind that are places where succession planning is a 
kind of way of life. The Federal Government, the Social 
Security Administration I would call your attention to, which 
has had a longstanding history of trying to develop strategies 
for the future.
    We agree very much with the GAO and others that there is a 
potential for losing a lot of our senior talent in the next 
decade; partly because of the demographics, partly because of 
economics, partly because we have created a personnel system 
that encourages mobility. And the Congress made the pension 
programs of the Government portable. You have enabled people to 
think in terms of coming in and out of the Government with much 
more flexibility. So at the top of the system you have 
developed and trained people who are attractive in the private 
sector and the university system, in the not-for-profit sector. 
People have options and choices, and take them.
    At the bottom of the system you are bringing in young 
people with very different expectations than I had when I 
started in the early 1960's with the NASA and the space 
program. I came in with the thought that a minimum of 30 years 
was acceptable and happy thought, and I was, first, happy to 
have the job and, second, very happy to be part of such an 
exciting career path. Today you will find, among the younger 
employees, attitudes that say I can come in and go out of the 
Government at will; there are talents that are portable; I 
don't lose my pension rights, I can retain those, they are 
vested in me. And so you have created a very competitive 
marketplace in a shrinking market, and that shrinking market 
requires us to think smarter and be more strategic in our 
thinking of how we deal with human resources.
    The National Academy has a continuing interest in this 
field. We work with agencies everyday to try to encourage the 
thought of long-term service to the public, and we would be 
very happy to help this committee in any way possible. I thank 
you for the opportunity to speak to you, and if I can answer 
questions after my colleague's remarks, I would be glad to do 
it.
    [Note.--The Hewitt report entitled, ``How Companies Grow 
Great Leaders, Top Companies for Leaders 2003, Research 
Highlights,'' may be found in subcommittee files.]
    [The prepared statement of Mr. Messner follows:]

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    Mrs. Davis of Virginia. Thank you very much, Mr. Messner.
    Mr. Gandossy? Am I pronouncing it correctly?
    Mr. Gandossy. Gandossy.
    Mrs. Davis of Virginia. Gandossy.
    Mr. Gandossy. Madam Chair and members of the subcommittee, 
thank you for having me here. I have presented to boards of 
directors and senior management teams of some of the world's 
largest corporations, but this is my first time before a 
subcommittee, so I am honored to be here.
    Mrs. Davis of Virginia. Well, we are glad to have you.
    Mr. Gandossy. I also want to say that I am not an expert on 
the Federal Government, but I am an expert on succession 
planning and management practices and leadership practices of 
the world's largest corporations.
    I want to begin by echoing what some of my colleagues have 
already said, and that is that succession management is a 
system; it is a process; it is a set of practices; it is a way 
of operating and managing an enterprise; and it can't be done 
well by adopting someone else's best practices.
    For decades, leaders of all walks of life have understood 
that people are the source of lasting competitive advantage for 
any organization. The late, great Alfred Sloan, one of the 
leaders of General Motors, once said, take my assets and leave 
my people, and I will have it all back in 5 years. Bill Gates 
of Microsoft said, take 20 of our best people and overnight we 
become a mediocre company. And more recently Jim Collins wrote 
a terrific book called ``Good to Great'' in which he said that 
first finding the best people, then you determine the strategy 
and the priorities for the enterprise, and that is the way to 
operate.
    But in spite of this knowledge and deep-seated 
understanding, many organizations do not operate with these 
principles in mind. They are characterized by tenure-based 
systems rather than those based on contribution; they hire and 
develop B players, as opposed to seeking and identifying the 
best; and they have a high tolerance for mediocrity and 
substandard performance. But driven by fierce competition and 
demographics, as we have talked about, and the prevalence of 
better models to follow, the last decade has brought with it 
much more rigor and more sophistication in terms of how 
organizations throughout the world manage their talent.
    In spite of this, in both the public and the private 
sector, we face a leadership crisis. The demographic challenges 
alone are daunting. As was said already this afternoon, aging 
boomers are beginning to retire, or at least begin to think 
about it. And as this boomer bubble bursts, the biggest 
challenge is the drop in the number of people between the ages 
of 35 and 44. Over the next 15 years there will be a 15 percent 
drop in that key population that is the category of people that 
is so critical to developing future leaders. Since peaking in 
the late 1990's, the numbers for this group have decreased 
markedly, and will continue to fall until 2015, when again they 
will begin to slope upwards.
    But the leadership crisis exists for more than demographic 
reasons. Confidence in leaders has declined everywhere. The 
lack of integrity by a few have tainted all. Temptations 
abound, uncertainty is great, and too many institutions have 
under-invested in identifying and developing talented leaders. 
And what does this mean for the future, and where will leaders 
come from, and what are the best organizations around the world 
doing to develop leaders? And in parallel to your study of 
institutions around the world, public institutions, we have 
done a study of private institutions around the world.
    In 2001, Hewitt Associates, which is one of the largest 
human resources consulting firms in the world, undertook what 
we called a top companies for leaders study, and in that we 
wanted to understand with empirical data what is it that the 
best companies do to develop future leaders, and we embarked on 
surveying CEOs and human resources executives at 240 of the 
largest 500 companies in the world. We interviewed, in-depth, 
leaders at those companies, and in 2003 we cast a global net in 
which we looked at over 320 companies in the United States and 
hundreds more in Europe and in Asia Pacific.
    Based on that experience, we found that there were three 
fundamentals that exist in all of these companies that do this 
well, and we identified the best of the best. And of those 
three fundamentals, we refer to them as the three truths of 
what these organizations do, and you have heard a little bit 
already this afternoon from public institutions as well. The 
first that is required is top executive leadership and 
inspiration. And let me say that without the passionate and 
visible commitment of the top executive, developing great 
leaders is not possible.
    It seems intuitive that top executive involvement would be 
a critical success factor, but involvement in developing people 
takes on a whole new dimension. It is imperative that the 
senior executives not only are involved, but they actively 
participate; that they provide the inspiration, the commitment, 
and the time and focus on developing people. For example, CEOs 
at the best companies in the world are intimately involved in 
succession planning; they participate in talent reviews, they 
coach and mentor their direct reports. They are involved in a 
process to make sure that the key people fill the best 
positions.
    Leadership development workshops at many companies have a 
guest appearance from the top executives, but at the top 
companies the leadership development initiatives are developed 
and owned by the top executives. They are not only present, 
they are teaching, they are learning, they are observing, they 
are interacting first-hand with the very best people. They own 
it. This is not head-nodding passive support, this is often an 
in-your-gut belief, and that is how you run the enterprise, and 
it is the way to get better results.
    For CEOs of top companies, that means spending as much a 
quarter of their time on people and developing people. Jack 
Welch, the former chairman of General Electric, used to say 
that he would spend 50 percent of his time developing people 
and managing talent. His successor, Jeff Immelt, spends 15 to 
16 full days during the months of April and May, when GE 
conducts its famed Session C, which is their succession 
planning process. When things were running well, Larry Bossidy, 
the former chairman of AlliedSignal and Honeywell, would spend 
20 percent of his time on people; when things were not going 
well, he would double that investment. And at times Roger 
Enrich, the former CEO of PepsiCo, would spent 25 to 30 percent 
of his time just coaching and developing emerging leaders. They 
spend the time because there is a direct link to business 
results, and running an effective organization, to them, is 
developing leadership capability.
    The second fundamental that we found is a maniacal focus on 
high potentials, and it begins with who comes in the door. They 
are ruthless and fanatical in searching for the best talent; 
not the best talent out there, but the best talent for them, 
for their particular agency, for their enterprise. And once 
that talent is in the door, they spend the same time and care 
in identifying high potentials and developing those high 
potentials. They are careful about evaluating that talent, and 
they focus a lot of attention on matching leaders with key 
jobs, and providing global and regional assignments that 
promote strong development, and they invest in discovering what 
matters in preparing people for certain roles. Some companies 
go so far as not only know the key capabilities and 
competencies required for certain jobs, but the sequence in 
which someone has to go through certain jobs to acquire those 
jobs.
    The third fundamental is the right leadership practices 
done right. Many institutions have common elements of 
leadership development, and talent and succession management 
programs, but what sets apart the best is a careful design and 
a lean design of programs, but a relentless dedication to 
executing on these programs flawlessly. They do not separate 
and set apart these programs from running the enterprise; they 
are integral to running the enterprise. All of the top 
companies that we have identified have formal succession 
planning processes, as compared to only 68 percent of all other 
companies.
    Succession management at top companies usually includes 
elements of assessing potential talent, developing high 
potentials, lists of successors for key jobs, and a structured 
talent review process. As we look into the future, the 
challenges are daunting and the opportunities are great for 
public and private institutions. Top companies are well on 
their way to preparing themselves and their people to meet 
these challenges head-on; they are a step ahead of the rest, 
and they are not complacent.
    That concludes my formal remarks. I would be happy to take 
your questions.
    [The prepared statement of Mr. Gandossy follows:]

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    Mrs. Davis of Virginia. Thank you, Mr. Gandossy and Mr. 
Messner.
    We will begin the questioning with my ranking member, Mr. 
Davis.
    Mr. Davis of Illinois. Thank you very much, Madam 
Chairwoman.
    Mr. Messner, you indicate in your testimony that by 2007 we 
can expect about 50 percent of the SES personnel to retire. Do 
you see us having in place a system or systems that will 
produce or generate the kind of replacement personnel that we 
need?
    Mr. Messner. Well, in some cases, in the minority of cases. 
I think less than half the agencies have a system that I could 
point to now and feel comfortable as a taxpayer that they are 
going to produce the products that we need. I think the 
emphasis that is being placed on this subject now is going to 
help us. I think your committee's attention is going to help 
us. And I think making this program a part of the President's 
initiatives for management improvement would help us even more.
    Mr. Davis of Illinois. I know that we could develop 
leadership development programs or we could develop systems 
that we don't have, but given the fact that we are talking 
about a relatively short period of time, are there things that 
you could see happening or see us doing that we don't 
necessarily have on the scope right now?
    Mr. Messner. I do. I think that we have to work agency by 
agency. The cultures of these agencies are so different; the 
histories of them, the kinds of problems they are dealing with, 
and, therefore, the kinds of people they recruit. I have been 
part of agencies that had basically a scientific and 
engineering cast to them; the employees came from a set of 
engineering and scientific trainings that made them interested 
in certain development programs that are different than others 
that I have been with where they come out of the social 
sciences and human resource areas.
    I really believe the Academy finds it better to, one, 
highlight the need and then, two, work with individual agencies 
on tailoring and designing programs that fit that particular 
culture and that particular leadership group. There is no 
simple way to do it, it seems to me, or at least we haven't 
found it. There are some principles, and I think you have heard 
some of those today by some of the witnesses.
    Mr. Davis of Illinois. How do you respond to those 
individuals in other kinds of discussions who suggest that we 
need across-the-board approaches and systems, as opposed to 
looking at and tailoring activity toward individual agencies? I 
know that as we discussed A-4 performance and some other 
things, we have had individuals who suggest that across-the-
board might be a better approach than the agency-by-agency 
attack.
    Mr. Messner. Let me just say I believe in standards. I 
mean, I think you can set some standards, you can set some 
goals, you can set some principles in place and urge people to 
participate across the board; and I think this President has 
done a pretty good job in trying to simplify management 
attainment symbols through the different colors that he gives 
if you achieve something. That helps, and I think saying 
universally we want to have succession planning in every one of 
our agencies, as my colleague just says happens in 100 percent 
of the great companies in this country, helps you. But, 
finally, you have to get in there and see the culture and work 
with the people in a particular situation. Many of our agencies 
are insular, don't have a lot of comings and goings of people; 
the people come in at the bottom of the system, stay for 30 
years and end up at the top of the system; and you really have 
to work with that kind of a system on an individual basis.
    Mr. Davis of Illinois. Mr. Gandossy, I was intrigued by 
your approach to developing top-flight leadership for the best 
of companies and companies that have indeed excelled and 
continue to do so. Do you think that the structure of the 
Federal Government lends itself to that kind of leadership 
development?
    Mr. Gandossy. First of all, it would be presumptuous for me 
to suggest much about the Federal Government, given I am not an 
expert, but what I do know and what I do know about 
organizations throughout the world is that I think that there 
are common frameworks and common elements that apply to all 
enterprises, regardless of whether they are public institutions 
or private. There are characteristics about the Federal 
Government that I do think make it much more problematic. One 
of the things that I said is most important in the private 
sector is the inspiration of senior executives and the 
leadership of senior executives, and the role of the board of 
directors, I might add. In the Federal Government, where there 
are political appointees that, as you indicated, turn over 
every 21 months I believe you said, Mr. Messner, I think it 
makes it much more challenging, but not impossible by any 
stretch.
    Mr. Davis of Illinois. That was precisely what I was 
thinking as I tried to follow and as I did follow, you know, 
the cost of the turnover. I mean, can we separate sort of the 
political leadership and the actual operational management so 
that individuals within would in fact be in a position to 
provide the kind of visionary approaches that will stimulate, 
motivate, and activate other personnel to internalize what it 
is that you are trying to convey?
    Mr. Gandossy. I would defer to Mr. Messner on that, but on 
the face of it I would say absolutely yes.
    Mr. Messner. You know, succession planning for the 
political level is provided by elections. In the case of the 
career service, I have always believed that the career service 
needs to take ownership and some pride of ownership in the 
Governmental enterprise; they are the people who come and stay, 
are especially cared for and have the privilege of serving for 
long periods of time, and they are very capable of leadership 
and the formation of ideas. The Senior Executive Service is an 
excellent vehicle into which we move the best and the finest, 
as someone once said, and I think they are capable of 
leadership.
    I do think the political leadership has to say we want this 
to happen, we will give you time to make this happen, and then 
we are going to ask you questions to see if it is happening in 
a proper way.
    Mr. Davis of Illinois. I find both your positions 
intriguing, of course. I think that is a sticking point; I 
mean, I couldn't see a lot of people actually running for 
elective office if they didn't think they were going to be in 
charge, as opposed to somebody else, but I think that is a 
line.
    Mr. Messner. Yes, it is.
    Mr. Davis of Illinois. And I think that will have a great 
deal to do with implementation of the kind of approach that you 
laid out.
    Thank you both very much.
    Mr. Messner. Thank you.
    Mrs. Davis of Virginia. Thank you, Mr. Davis.
    I am not going to jump to the Republican side, I am going 
to yield to Ms. Holmes-Norton, who has joined us, and see if 
you have any questions.
    Ms. Norton. I do, Madam Chair. I rushed up, with apologies, 
from a homeland security hearing, which is still going on, 
because I want to thank you for holding this hearing. I regard 
it as a very important hearing. I remember just a couple years 
ago when Mr. Voinovich had a joint hearing of our subcommittee 
and his own committee because of the notion that so many of the 
Civil Service were in fact going to retire, and I would like to 
ask the question in that regard.
    Yes, they are retiring. These folks who are leaving the 
Federal Government now came perhaps at the golden age of the 
Civil Service, when in fact working as a civil servant was the 
functional equivalent of working for your country, was one of 
the best jobs in the United States, with its benefits, which 
now lag behind, for example, in health care, well behind the 
Fortune 500 and Fortune 1,000.
    You spoke, Mr. Gandossy, about turnover at the political 
level. Well, these days, turnover of CFOs may be even more 
rapid. I am not sure that very top level is what matters to the 
civil servant, because the civil servant knows that we have a 
merit service, and that the Chair and I may go, and the 
President may go, but the civil servant is protected from that 
political turnover. So the civil servant may well look to the 
SES and how it is treated to decide whether to go to the 
private sector, which, if I may say so, is a whole lot more, 
forgive the expression, sexy to many young people today than 
coming to Government. And so we find it far harder, it seems to 
me, than our parents did to get the best and the brightest to 
automatically decide the Federal Government is where we ought 
to go.
    And I don't believe this problem is confined to the 
obvious, to science, where you might expect it, to engineering, 
to places where talent is rationed. I am concerned with what I 
will call, even though there is disagreement in the Congress 
with the core functions of Government. Because there has been 
so much contracting out in Democratic and Republican 
administrations, there is a lot of disagreement on what is it 
that Government must do; and we will have to fight those 
battles out and there is a big FAA problem up here now, and 
that battle is being fought out. Quite aside from that kind of 
problem, I am wondering whether or not we could get to the 
point, given the scarcity of talent, I am talking about 
management talent, not simply technical talent, whether we 
could get to the point that we would be contracting out 
functions that the Chair and I might agree were indeed core 
functions just because of the lack of competent leadership to 
manage those functions. That would be my concern about the SES, 
and I want to know whether you think that we could get to that 
point because of talent problems, recruitment problems, 
succession problems, and competition with the private sector.
    Mr. Messner. I will take a crack at that, Congresswoman, 
and it is nice to see you.
    Ms. Norton. My pleasure, Mr. Messner. We go back many 
years. He and I both will keep to ourselves how many.
    Mr. Messner. We will, indeed. I will keep that 
confidential.
    I think the irresistible impulse of public service lies in 
the nature of that service. The Government never could compete 
for financial rewards; it can't compete for many of the things 
that the private sector can do. And I had 26 years of 
Government service and 15 in the private sector, so I had a 
great chance to contrast the two. The Government will always 
lose if it is a question of salary, if it is a question of 
benefits, if it is a question of perks, if it is a question of 
travel, and if it is a question of privacy, because in the 
public sector you are transparent and you have to be on display 
at all times; in the private sector that isn't true. So we go 
into the game, so to speak, of competition for talent knowing 
that set of facts.
    On the other side of ledger, however, is the mission of the 
Federal Government. I came into the Government in 1962 to work 
for the space program, and it was a new idea and a fresh idea, 
and there was no place else in this country you could go for 
that kind of excitement. And in the 26 years I moved 10 or 12 
times from agency to agency, program by program, and met 
thousands and thousands of employees who were in the work for 
the fun of it, the excitement of it, and the service of it; and 
that is a pretty good deal. If I have to compete for talent, I 
used to recruit for OMB up at the Maxwell School and Stanford, 
and all these great learning institutions, and I did quite well 
talking about the substance of the program you would get to 
participate in.
    Ms. Norton. Mr. Messner, would you do as well today?
    Mr. Messner. It would be hard to say that the excitement is 
easier, but then I am older, so who knows, if I was 25 again, 
it would be as exciting.
    Ms. Norton. No, I am talking about what you are recruiting 
to, not your own vigor, which I do not doubt.
    Mr. Messner. Thank you. Thank you, Congresswoman.
    Ms. Norton. I am talking about the Government you are 
recruiting to, where the same person from Yale Management 
School, for example, is recruited by Fortune 500 companies as 
well as the Federal Government. It was very intriguing in 1962. 
What do you do to replace that, or at least to compete with the 
private sector, which, I hate to tell you, may be just as 
intriguing as the Federal Government these days.
    Mr. Messner. Yes, your point is obviously well taken. It 
seems to me that we have to make a very good case today to get 
the attention of the best and the brightest in young people, 
and with the problems of homeland security and the threats to 
this country, with the opportunities in public health and 
science and engineering, I think that case could be made, and I 
think we will do well if we make the case soundly.
    Mr. Gandossy. I think you have made an excellent 
observation, and I won't speak to the issue of what the Federal 
Government can do or should do to recruit top talent, but I 
will say that the observation that you made about having to 
rethink what is core to the Federal Government, and what 
perhaps is acquired on the outside, there are certainly 
parallels with the private sector of either alliances or 
outsourcing or acquisitions that are often done because of the 
shortage of talent; they are not done necessarily for strategic 
or business reasons, they are done because we do not have the 
talent to grow and maintain operations, and that is quite 
widespread. In the 1990's there were over 60,000 joint ventures 
and alliances in the private sector. We would expect in the 
next 10 years for those to increase substantially, and they are 
often done for the reasons that you cited.
    Ms. Norton. Thank you, Madam Chair.
    Mrs. Davis of Virginia. Thank you, Ms. Norton.
    I have just a few questions, because I do want to move on 
to the third panel.
    Mr. Messner, this one is to you. Do you think there are any 
problems or challenges in succession planning that you believe 
are unique just to Government agencies, as opposed to the 
private sector?
    Mr. Messner. That is a really wonderful question. There are 
functions of the Government which are inherently governmental, 
in my opinion, things having to do with national security and 
the integrity of the financial systems of the Government and 
the public. I think there are some things that are unique, 
challenges which aren't replicated either in the private sector 
or in the not-for-profit sector, and that requires extra 
thought and longevity. Certainly work in national security 
areas of intelligence and defense have unique aspects that 
require everything from personal secrecy of behavior to 
standards of work that aren't found anywhere else, and that 
then requires extra thought when it comes to planning for the 
succession of such individuals. And I have never not thought 
the Government was a very serious place and required serious 
thought, so we have an extra burden in the public sector that 
isn't found in the private sector, it is an undercurrent that 
requires each person who comes into the Government to have a 
sense of extra responsibility, and that is reflected in 
succession planning.
    Mrs. Davis of Virginia. In your opinion, what are the most 
important, say, two or three things that OPM or individual 
agencies could be doing to strategically manage their 
succession planning?
    Mr. Messner. Well, first of all, you have to ask the 
question. If you are in OPM, you have to say to the agency, let 
us talk about succession planning for an afternoon. I think the 
Office of Management and Budget should be involved in that. I 
spent 13 years of my career in the Office of Management and 
Budget, and I know when we asked a question, it got a lot of 
attention in the agencies. And I think if the Congress will 
ask, in their oversight of OMB and the Office of Personnel 
Management, what they are doing to ensure that each agency is 
coming up with a sound plan, I think that would really spur 
some pretty good attention.
    Mrs. Davis of Virginia. Mr. Gandossy, I guess I understand 
that you haven't been involved with the Federal Government, but 
do you have any practices or lessons learned from the private 
sector that you think might benefit the Government?
    Mr. Gandossy. I think many of the things that go on in the 
private sector are applicable. There are various talent review 
processes, ways to identify emerging talent, ways to accelerate 
the development of that talent by movement of people through 
key jobs, research that is done to identify what are the 
capabilities and competencies that people need and how they go 
about getting them. All those things are applicable to any 
institution.
    Mrs. Davis of Virginia. When you talk about, and I think it 
was in your statement, that right programs done right, could 
you expound on that a little bit and tell me exactly what you 
meant?
    Mr. Gandossy. There is a tendency in the consulting field, 
and I would say in the human resources field, to be enamored 
with the design or the sophistication of programmatic things; 
they tend to be over-built, instead of being practical and fit 
the needs of an organization and be embedded in what their 
mission is. And I think what you find in the best companies is 
that there is a lean design in whatever they do, they don't 
over-build, they tend to have very solid metrics about whether 
they are being effective or not, and they are integral to 
running the business. Everything else is extraneous, and drags 
on the organization and becomes a bureaucracy. So I think when 
we say right programs done right, that is what we are referring 
to.
    Mrs. Davis of Virginia. We certainly don't have any 
bureaucracies in any of our agencies, so that shouldn't hurt 
us.
    Mr. Gandossy. Good.
    Mrs. Davis of Virginia. And I would say, Mr. Messner, that 
maybe our political appointees may stay longer than 21 months 
if they could be confirmed a little quicker.
    Mr. Messner. That is a very good point.
    Mrs. Davis of Virginia. I do want to thank both of you 
gentleman for coming today, and we do have other questions that 
we probably would like to submit to you in writing to have your 
answer in the record, and then we will make sure that the 
committee members have a chance to review them, but I don't 
want to keep the other witnesses waiting much longer. And I do 
thank both of you gentlemen for coming, and, Mr. Gandossy, you 
did very good. It might have been your first time, but I am 
sure you will be asked back.
    Mr. Gandossy. Thank you.
    Mr. Messner. Thank you very much.
    Mrs. Davis of Virginia. I would now like to invite our 
third panel of witnesses to please come forward, and I thank 
you for your patience.
    On this panel we have representatives of various Federal 
agencies that are putting the things we are talking about today 
into practice. From the Environmental Protection Agency we have 
David O'Connor, the Deputy Assistant Administrator for 
Administration and Resources Management; next we will hear from 
Vicki Novak, the Assistant Administrator for Human Resources 
and Chief Human Capital Officer for NASA; and finally we are 
pleased to have William Campbell, the Acting Assistant 
Secretary for Human Resources and Administration at the 
Department of Veterans Affairs.
    I want to thank you all again for coming today, and I do 
apologize for the wait, but I am glad you all were willing to 
hang around for a little bit. And I have already sworn all 
three of you in, so we will begin with Mr. O'Connor.
    Mr. O'Connor, you are recognized for roughly 5 minutes.

STATEMENTS OF DAVID J. O'CONNOR, DEPUTY ASSISTANT ADMINISTRATOR 
  FOR ADMINISTRATION AND RESOURCES MANAGEMENT, ENVIRONMENTAL 
PROTECTION AGENCY; VICKI A. NOVAK, ASSISTANT ADMINISTRATOR FOR 
   HUMAN RESOURCES AND CHIEF HUMAN CAPITAL OFFICER, NATIONAL 
AERONAUTICS AND SPACE ADMINISTRATION; AND WILLIAM H. CAMPBELL, 
      ACTING ASSISTANT SECRETARY FOR HUMAN RESOURCES AND 
         ADMINISTRATION, DEPARTMENT OF VETERANS AFFAIRS

    Mr. O'Connor. Thank you very much, Madam Chairwoman and 
members of the subcommittee. I am very pleased to be here today 
to discuss our agency's approach to work force development and 
succession planning.
    I will start off by saying that it was in the mid to late 
1990's that these issues of the aging work force first began to 
surface at EPA, and at that same time we began dealing with 
some serious concerns about diversity of our work force and 
skill needs at the agency. And back in about 1997, in response 
to those concerns, we developed an EPA Workforce Development 
Strategy. We began this strategy by conducting a serious 
assessment of the skills and the competencies that the agency 
would need over the next 20 years to successfully fulfill its 
mission. Then, based on this assessment, we created a series of 
programs to address the developmental needs of employees at all 
levels across EPA. So today at the agency you will find 
developmental programs targeted are clerical and support staff, 
our non-supervisory and middle grade staff, our supervisors and 
managers, and our senior executives. There is not time today to 
discuss all of those, but I would like to highlight three 
particular initiatives under our Workforce Development Strategy 
that are important to the issue of succession planning.
    When we took a look at our age demographics a few years 
ago, as you have already heard several people state, we 
realized that 60 percent of our SES corps will be eligible to 
retire by 2008. I think about half of them are probably 
eligible right now. We also noted that the overwhelming 
majority of all of our employees were already in the age 
bracket of 45 to 55 years. So we were concerned that not only 
might we potentially lose a lot of talent in the SES, but those 
people that you would typically look to be coming up behind 
them are also in essentially the same retirement situation; 
and, in fact, less than 5 percent of the employees at EPA were 
under the age of 30.
    As we focused on the impending retirements of our senior 
management ranks, we also realized that many of our SES 
employees had been in their very same positions for many years, 
some of them even for decades. In November 2001, the agency 
formally initiated an SES Mobility Program that was designed to 
revitalize and strengthen our programs and our SES corps. The 
primary purpose of the Mobility Program is to ensure that the 
agency's senior leaders have a wide-ranging set of skills and 
the expertise to react to continuous change. This program 
reflects our belief that our senior executives and, indeed, 
much of our work force will require increasingly broad-based, 
rather than narrow, experiences if EPA is to be successful in 
meeting the challenges of the future. In the first year and a 
half of this program, 71 of our 245 SESers were assigned into 
new SES positions. We have now made mobility consideration a 
part of filling every SES vacancy that comes up, and we are 
working very hard to instill the expectation and the value of 
mobility and broad-based experience throughout our work force.
    To help prepare EPA for an expected loss of SESers to 
retirement, we also developed an SES Candidate Development 
Program last year. This is intended to create a cadre of 
managers who will be ready to step in behind retiring SESers. 
It has been more than 10 years since we had such a program. 
Last year we selected 51 candidates through a very highly 
competitive process. Those candidates will be completing their 
program, for the most part, this winter. Several have already 
received SES certification from OPM, and a few others have 
actually been selected into the SES in recent months. And we 
are now discussing when to start a second Candidate Development 
Program either later this year or by 2004.
    One of the most successful efforts in attracting new talent 
to the agency has been our EPA professional interim program. 
This is a program that is designed to be a model for attracting 
the highest quality and diverse applicants to EPA with the hope 
that they will be among our future leaders. It is a 2-year 
program, and unlike the PMI program that was mentioned earlier, 
when we hire people into this program, they are permanent 
employees of EPA and they do have a job at the end of 2 years. 
But in the first 2 years we give them broad experiences in 
developmental activities, rotational assignments all across the 
agency. They have experience in headquarters and in our regions 
in a variety of jobs all before they are officially assigned to 
a final position at the end of the 2-years.
    We have hired an intern class each of the last 6 years; our 
sixth one just came on this month. It is an extremely 
competitive program; this year we had about 2,000 applicants 
for 39 positions. Most of them are selected as outstanding 
scholars; they have a wide range of degrees and are assigned to 
all offices and regions across EPA. I am very proud that today 
we have hired 191 interns. Forty-five percent of these are 
minorities or people with disabilities, and our retention rate 
so far is 90 percent. This is the highest profile and most 
visible hiring program in the agency, it gets a lot of 
attention right in the Administrator's office, and we are 
extremely proud of it.
    We recognized, in our efforts to deal with diversity over 
the last several years, that with an agency that is no longer 
growing, to change the profile significantly is going to be a 
very difficult task, but we also recognized that we have a 
monumental opportunity in future years with these retirements 
that are coming up. This EPA Intern Program is a model that we 
created to kind of set the stage for taking advantage of that 
opportunity to really ensure that we are bringing in the best 
people and diverse people into this agency. I would love it if 
you could see our assembled interns, it gives you quite a bit 
of confidence in the future of the Federal work force.
    Now, while we are pleased with the implementation and 
success of these initiatives, we still face challenges in 
achieving the President's management agenda. We have devoted, 
even in times of tough budgets, some optimal resources and 
attention to this initiative. It does have the close attention 
of the administrator and all of our senior leadership. We have 
appointed a senior level human capital strategy implementation 
group; we are now developing a Human Capital Accountability 
Plan for all of our initiatives and for tying our 
accomplishments in the human capital arena to our overall 
mission results; and we are finally working to better integrate 
EPA's human resource systems with the budget and planning 
process, and we believe this will position the agency to 
effectively achieve our human capital goals.
    Again, I appreciate the opportunity to speak here today. I 
would be happy to answer questions.
    [The prepared statement of Mr. O'Connor follows:]

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    Mrs. Davis of Virginia. Thank you, Mr. O'Connor.
    Ms. Novak, we are going to try and get your statement in. 
We have three votes right now, and we probably have about 12 
minutes before we have to be over there.
    Ms. Novak. Let me see if I can shorten this up.
    Mrs. Davis of Virginia. If you could do a quick summary, it 
would be great, and then we will come back after the three 
votes.
    Ms. Novak. Let me just say good afternoon, and I am Vicki 
Novak from NASA, and I am the Chief Human Capital Officer 
there. I am very pleased to be here today, and would just like 
to take a quick opportunity to express our appreciation for the 
cooperation that NASA has received from this committee, as well 
as from the House Science and Senate Governmental Affairs 
Committees on the human capital legislation that we are 
seeking. We are remaining optimistic on that.
    Mrs. Davis of Virginia. We are too.
    Ms. Novak. Good.
    Our Administrator, Sean O'Keefe, has testified on a number 
of occasions, particularly in hearings related to the NASA 
human capital legislative provisions. Our agency faces a number 
of internal and external challenges to our ability to manage 
our human capital. Some of these, such as the aging work force, 
the wave of pending retirements, and skills imbalances, we 
share with many other agencies. We do feel that our challenge 
is exacerbated some because we have primarily scientists and 
engineers at our agency, approximately 60 percent of our work 
force, and we are competing for scientist and engineering 
talent in a labor market that faces declining numbers of young 
folks graduating from college with science and engineering 
degrees, while the demand for such talent in the public and the 
private sector is increasing significantly. We have many 
different programs and initiatives at NASA to help us manage 
our human capital more strategically. They are in the written 
testimony, so rather than go into any of those, let me skip to 
some comments that I would like to make directly related to 
leadership development and succession planning.
    To ensure that we have a well developed leadership pool for 
the future, and to respond to our demographics, our leadership 
has made leadership development and succession planning a very 
high priority, and we are very committed to doing this well. 
Our leadership strategy is aligned with the President's 
management agenda, our NASA strategic plan, and it is the 
foundation of our agency's Strategic Human Capital Plan. It 
starts with recruiting people who demonstrate the values and 
the qualities that we want, and then, in a very deliberate kind 
of way, training and developing them so that they will be able 
to step into our future leadership positions.
    We have a leadership model that is pivotal in our 
succession planning strategy, and it is actually the umbrella 
for our leadership development programs; it was developed 
internally after talking to over 600 NASA managers and senior 
leaders about what it is that we really need in the agency for 
the future, as well as for today, and it identifies 
competencies that we need as well as it guides the 
developmental programs that we have in place today and are 
planning for the future.
    To ensure that our folks, our employees are trained in a 
consistent manner, we have formal leadership development 
programs. We have a fellowship program that provides 
opportunities for our best and brightest employees to go to 
well recognized colleges and universities and Federal training 
institutions; we have a leadership development program that 
targets mid-level employees for future leadership 
opportunities; and we have a very robust Senior Executive 
Candidate Development Program which I would like to mention we 
have had five classes. We have selected over 200 people who 
have gone through the program, and about 73 percent of those 
who have graduated have been selected into SES positions at 
NASA, approximately 50 percent of which have been women and 
minorities. So we are very proud of that program. We are 
getting ready to announce another one, and we are also going to 
be partnering with OPM on their program.
    We have a number of informal succession planning and 
leadership development programs as well. We put great focus on 
coaching and mentoring; we have done a number of things in that 
area recently which are contained in my testimony to enhance 
that. We also are spending a lot of time and effort on 
knowledge sharing so that we can make sure that we capture our 
best practices, both the good things we do as well as those 
areas where we have had problems; we are going to learn from 
those and make sure that they are incorporated in a big way 
into our leadership development programs.
    Let me stop at that. I know I am rushing a bit, but I would 
like to give my colleague a chance.
    [The prepared statement of Ms. Novak follows:]

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    Mrs. Davis of Virginia. I appreciate that, Ms. Novak, and I 
appreciate your being short, but we are going to have to wait 
for Mr. Campbell when we get back. If you all can wait, we will 
probably be gone 30 minutes. Is that OK with all the witnesses?
    The committee will stand in recess.
    [Recess.]
    Mrs. Davis of Virginia. I want to thank you all for your 
patience. We had some very important votes to vote on, so it 
took us a little while.
    Ms. Novak, we finished with you, so we will go on to Mr. 
Campbell. And I do really appreciate your patience for waiting, 
and we are anxious to hear what you have to say.
    Mr. Campbell. Thank you, Madam Chairwoman, Mr. Davis. It is 
really a pleasure for me to be here as a person who has been a 
Federal employee for 29 years, a member of the Senior Executive 
Service for 18, and holding down two appointed positions. At 
this point I am truly interested in what is going to happen 
with succession planning because I am much closer to the end of 
my career than the beginning.
    My written testimony is submitted for the record, and I 
will keep my remarks rather abbreviated.
    Our focus has been on establishing a process to ensure that 
work force and succession planning efforts take place at all 
organizational levels, with a clear delineation of roles and 
responsibilities. This is very difficult in an organization as 
large as the Department of Veterans Affairs. We deliver our 
services to our Nation's heros through our 162 medical centers, 
our more than 850 outpatient clinics, our 43 domiciliaries, 206 
vet centers, 57 regional offices, and 120 national cemeteries. 
We are a very complex business.
    A recent significant accomplishment for VA is the 
publication of our Strategic Human Capital Plan. This plan 
ensures that consistent and comprehensive work force and 
succession planning efforts are now taking place across VA. I 
would like to acknowledge the five human resource interns that 
are attending this hearing and are sitting in the back of the 
room. Our plan contains past and projected work force trends 
and present strategies to ensure that VA recruits, retains, and 
develops a quality and diverse work force. This lan is 
available to all of our employees on our VA Web site.
    Between 1998 and 2002, VA's average total employment was 
220,000 FTE. The average age of our employees is 47 years of 
age, and approximately 15 percent of those people who are 
eligible to retire during that time did so. The average age of 
our retirees was 62 years of age. We also had another 10 
percent of our employees who left for reasons other than 
retirement. The average age of our new hires is 38 years old. 
VA's historic turnover has been relatively constant, and if 
historic turnover trends continue, the department may not be 
facing the human capital crisis that some in Federal Government 
may expect; however, I am not very sanguine about this.
    We are concerned over our retirement eligibility figures. 
Let me share a few statistics with you. Retirement eligibility 
is rising precipitously. Today, 40,000 employees, or 18 percent 
of our work force, are eligible to retire. By 2007, that will 
jump to 80,000 employees, or 37 percent of our work force; and 
by 2010, 135,000 of our employees, or 60 percent of our work 
force. Over 70 percent of VA's senior executives can retire by 
2005, including myself.
    If the turnover continues at these historic rates, the 
challenges ahead will be manageable. The potential for crisis 
does exist, however, if many employees retire in addition to 
those who have done so historically. Our plans address this 
worst case scenario. The VA Strategic Plan for 2003-2008 
contains detailed objectives, performance targets, and outcome 
measurements focused on both immediate priorities, as well as 
long-term goals. VA is among the first of Federal agencies to 
institute the use of online entrance and exit surveys for newly 
appointed and separating employees. The data can be accessed at 
both the national and local levels to determine why employees 
choose VA and why they leave. Our first national summary is 
going to be published this month.
    Today, October 1, 2003, VA will convert a significant 
portion of its work force from the current pass/fail system to 
a five-tier performance system. This new system addresses the 
President's management agenda requirement to differentiate 
between high and low performers.
    VA has placed a major emphasis on recruitment and marketing 
initiatives. We have redesigned our job information Web site to 
make it more user-friendly and interactive. We have developed 
brochures aimed at both college students and veterans promoting 
careers within the Department of Veterans Affairs. We are 
engaged in a concerted effort to increase VA's participation at 
college job fairs and are making targeted recruitment to 
address diversity as a key part of our planning process.
    I am particularly proud of VA's accomplishments in the area 
of leadership development and diversity. VA has instituted a 
national Senior Executive Service Candidate Development Program 
after a period of many years since the last one. We have 
initiated programs to educate managers and employees on the 
importance of diversity management and how to analyze and build 
effective diversity strategies.
    The Secretary's Task Force on the Employment and 
Advancement of Women in the Department of Veterans Affairs 
recently completed its report, and the Secretary has approved 
the committee's recommendations that include a comprehensive 
plan to increase the number of women in leadership positions.
    In summary, I am proud of VA's achievements. We have 
enhanced coordination and collaboration, and the sharing of 
best practices within the entire Department of Veterans 
Affairs. VA faces an extremely high retirement eligibility over 
the next few years. We must prepare for the possibility of 
higher rates of turnover in mission-critical occupations. If 
these rates increase significantly, we will need the capability 
to hire quickly and at competitive pay rates, and as part of 
that, one of the first efforts we have made, is a legislative 
proposal on physician pay that we have sent up to the Hill. We 
must address the question of whether the current hiring and pay 
systems in the Federal Government provide the flexibility 
needed to compete in today's job environment.
    Thank you very much.
    [The prepared statement of Mr. Campbell follows:]

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    Mrs. Davis of Virginia. Thank you, Mr. Campbell.
    I want to thank all three of you again. I can't say enough 
how much I appreciate your patience.
    And I am going to yield now to our ranking member, Mr. 
Davis, for questions.
    Mr. Davis of Illinois. Thank you very much, Madam 
Chairwoman.
    Let me ask each of you how much interaction is there 
between your agency and the Office of Personnel Management 
relative to succession planning and/or planning for 
diversification. Each of you indicated that you had your own 
program activities going.
    Mr. O'Connor. I will be happy to answer your question 
first, Mr. Davis. We have actually, in the last few years, been 
pleased, perhaps more pleased than we had been before, about 
our interaction with OPM, particularly as we developed and 
designed our Candidate Development Program and our, what I 
consider very successful, EPA Interim Program class. Our staff 
has spent quite a bit of time there; we have actually sent some 
of our staff on detail to OPM and have had quite a bit of 
interaction, and I know that our folks in our human resource 
office are very pleased with the interaction that we have had 
with them.
    Mr. Davis of Illinois. So you worked jointly on goals, 
objectives, and approaches?
    Mr. O'Connor. We have, indeed. And my boss, who couldn't be 
here today, himself has been over to OPM with folks over there 
on a number of issues, and would also tell you that he is very 
pleased with the interaction that we have been experiencing.
    Ms. Novak. If I may, I would like to say that we at NASA 
are enjoying a very good relationship with OPM in terms of our 
Leadership Development Programs. When we need their help, they 
are there to help us. We do some things independently, but now 
there is a much closer scrutiny and look at what we are doing 
in this area as a result of the President's management agenda 
in this Human Capital Scorecards. Leadership development is one 
of the five pillars and main areas that OPM is focusing on when 
it evaluates agencies, so that makes us all a little more 
attentive to it, I think, and causes us to interface more 
often.
    Mr. Campbell. Likewise, we at VA enjoy a very good 
relationship with the Office of Personnel Management. We have 
used some of their criteria in developing our plans. I am the 
chief human capital officer for VA, and I have not yet had an 
opportunity to attend more than one of the chief human capital 
officer meetings, but it looks like a very good venue to get 
not only productive discussions with OPM, but with the other 
large agencies also, to find out what everybody is doing, what 
is working and what is not working; kind of use somebody else's 
effort to see if something is worthwhile doing or not.
    Mr. Davis of Illinois. Now, they have their Candidate 
Development Program. Each one of you has your own Candidate 
Development Program. What I am trying to determine is how 
significant would the difference be, or would the goals be the 
same, in terms of the individual agency programs, as well as 
the program that has been developed by OPM. And maybe you 
wouldn't be able to know that.
    Mr. O'Connor. I think the first thing I would say is we put 
our program in place before theirs was in place. I think as all 
agencies, ours is open to employees at other agencies to apply 
to, and we did have a fair response from other agencies.
    I guess I am not all that familiar with OPM's program, the 
details of it, but I suspect that there will probably be more 
interaction and activity among Federal agencies of the 
candidates in that program, perhaps, than in our own. We do 
provide some opportunities to go outside the agency, but I 
suspect if we looked at OPM's program, there are probably more 
of those types of opportunities.
    Ms. Novak. My understanding is that OPM is rolling this out 
almost as we speak, and I think there are more details to come. 
We have certainly told them that we were anxious to 
participate, but we will continue to run our own program. But I 
believe that there will be more governmentwide participation in 
their program than we typically see in our NASA program, for 
instance.
    Mr. Campbell. Two or 3 weeks ago members of the Office of 
Personnel Management staff came and briefed me on their 
program, trying to see if there was interested within the 
Department of Veterans Affairs. I would say that they are 
complimentary. I would look at their program as an adjunct to 
ours. The Government is not monolithic, it is different 
everywhere you go, and I think for the smaller agencies, of 
which there are many that cannot afford to have their own 
programs, I think the OPM program is going to be a lifeline. 
For somebody like us, where we have large benefit offices that 
are headed by senior executives and we have large health care 
delivery systems of many hospitals, let us say between 4 and 10 
medical centers, I think that we would try to key in on people 
that we knew were going to be successful in those jobs. So I 
would think that, at VA, we would use theirs as an adjunct, 
maybe for areas like finance, human resources, and general 
administration, and try to concentrate on our core business 
with our own program.
    Mr. Davis of Illinois. I will try and get more into that 
with them, because I would assume that their program is more 
focused on development for succession as well as diversity. And 
I don't know whether or not there is more emphasis on diversity 
in their program than there might be on the programs that you 
already have going. I could see that being a difference that 
might exist between the two.
    Mr. Campbell. Mr. Davis, I don't know what their program is 
going to do, but of the 15 participants, we limited it to a 
small number to begin with because we wanted to keep the 
quality of our program up; and several of the candidates that 
we have are very well qualified to be SES at present, and three 
have already been selected for SES positions before finishing, 
all three women, one Hispanic and two majority females. We have 
15 participants; 53 percent are female, 13 percent are African-
American, and 27 percent are Hispanic. So we have really tried 
to look at having a more diverse work force. I can't speak for 
OPM's program.
    Mr. Davis of Illinois. OK. Let me just ask one additional 
question, and that is you heard the discussion that we just had 
with the last panel relative to whether or not the structure of 
the Federal Government would lend itself to some of the 
leadership development ideas that were articulated especially 
relative to what goes on or what is going on in private 
industry. Do you see any impediments to leadership development 
because of this structure? And what I am really getting at is 
kind of where we end it off, talking about the line that exists 
between the responsibilities, let us say, of political 
appointees and members of the SES corps. I am saying kind of 
like where do you stop, or is there a stopping place? And if 
that in some ways may prevent or could prevent certain kinds of 
visionary long-range planning and development activity to 
occur, because it certainly could be aborted, it could 
certainly be stifled. I mean, I could certainly see the 
possibility of it not being supported when the next change 
comes, and that kind of thing. That is where I am really going.
    Mr. O'Connor. I guess since my boss is a political 
appointee, I will be very careful in how I answer the question, 
Mr. Davis, if I could. I think it probably cuts both ways to 
some extent, depending on the individuals. Sometimes there is a 
lot of inertia amongst the career people that can be broken 
through by the change of political appointees, and there are 
instances in EPA's recent past where we have made some 
aggressive steps because of direction from the political 
appointees. On the other hand, there are often the frustrations 
of launching a program, only to have a new political team come 
in and want to put their own look on it, and having to abandon 
it and be set back. So I think it can cut both ways.
    Ms. Novak. I would like to say that one of the things that 
Mr. Gandossy said was that top executive leadership and 
commitment is critical to this whole discussion. For instance, 
in our situation at NASA, we have a political leader as well, 
but what we are trying to do there is to institutionalize some 
things so that all of this will live well beyond his days at 
NASA; and I think that is very, very possible to do. I mean, it 
doesn't just end with top management, we have to make sure that 
folks at all levels in management are committed to this, more 
diversity in the senior leadership ranks; and then the 
politicals can come and go, and I think good things will 
continue to happen.
    Mr. Davis of Illinois. I guess I could see it going either 
way, depending upon the players. I mean, certainly I can see 
the person who gets appointed to one of these saying I really 
only intend to be here for 4 years or 3 years, depending on how 
long it takes to be confirmed, and I am going to try to make my 
mark during this period; I mean, I have only got 2 years, I am 
going back wherever I came from, and I am going to try and put 
a stamp on this while I am here. So, yes, I guess it can go 
either way.
    Thank you very much, Madam Chairwoman. I am finished.
    Mrs. Davis of Virginia. Thank you, Mr. Davis.
    Ms. Novak, NASA Langley Research Center is in my district, 
and I hear from them quite often that there is a real concern 
out there about aging talent and that the organization is not 
investing in its future. And earlier this year, GAO reported 
that NASA's work force profile, particularly for scientists and 
engineers, points to the need for effective succession 
planning, and I guess my question is has the agency made any 
progress in identifying its critical skills and competencies 
that are at risk across the agency? I mean, are we in dire 
straits? I hear that from my constituents a lot.
    Ms. Novak. I don't believe we are in dire straits, but 
clearly we need to be very aggressive and proactive about what 
we are doing. About a year and a half ago, recognizing that the 
demographics did not look good, we developed--and it has taken 
us a while, but we have it--a competency management system and 
some work force planning and analysis tools that we didn't have 
before, which have in fact given us the capability, for the 
first time at an agency level, as well as going down to the 
center levels, to identify competencies where we either are at 
risk or gaps. We look at attrition models and we see where 
large numbers of folks are retirement eligible or we predict 
will be going in the future, and what we are doing now is we 
are targeting training and development programs, as well as 
recruitment programs around those areas that we have developed. 
For instance, systems engineering, human factors engineering, 
business management is another one; but we are trying to 
integrate this and tie it all together so that we have a plan 
that makes sense and we are going after the right people in 
terms of developing and we are instituting the right kinds of 
programs. So I don't see it as badly as some of your 
constituents.
    Mrs. Davis of Virginia. I think the ones that I have spoken 
to, and a lot of my friends work out at NASA Langley, and there 
is a big concern that they could end up being privatized or 
something of that nature because you just don't have the 
skills, you don't have the people in there. I would like to be 
able to tell them they are OK, but I don't know that I can 
right now.
    Ms. Novak. I think that the situation is much better now 
than it was several years ago, and we are in a very deliberate 
kind of way stepping back and looking at our attrition models 
and our work force analysis tools that we have that we didn't 
have before, and trying to come in a preemptive kind of way 
avoid the kind of thing that they are concerned is going to 
happen.
    Mrs. Davis of Virginia. Because, quite frankly, you walk 
out to NASA Langley and there is a lot of gray bearded guys out 
there.
    Ms. Novak. I know. I know a lot of them.
    Mrs. Davis of Virginia. The women aren't gray haired 
because we can get ours in a bottle.
    But there is some concern, so I would certainly hope we are 
taking a good close look at scientists, especially. That is not 
something that I would want to be outsourcing our scientists; 
that would make me a little bit nervous.
    Mr. O'Connor, I have heard great things about EPA. I know 
you started out red and are now up to yellow and doing great, 
and GAO has said some good things about what you all are doing, 
and I hope you will continue on the right track.
    And Mr. Campbell, I have an area of concerns of yours as 
well. I have a lot of veterans in my district, 100,000 or so. 
Just a couple. And healthcare is one of their big issues, as we 
all know, and I noticed that there is a possible shortage of 
nurses and something that you may have a little problem with. 
Has the nursing shortage adversely affected you all to this 
date? And if so, what steps are you using to address it?
    Mr. Campbell. Well, the nursing shortage is a national 
nursing shortage, and it is far greater than VA. And I would 
not want to leave you the impression that everything is fine 
with us; it has been manageable so far, but there are some real 
structural problems in the nursing profession that make it very 
difficult to attract and keep people; it is a very high stress 
profession. We have many opportunities for nurses, even nurse 
executives that are paid at the executive level, with VA, and 
we would hope that we can get nurses who no longer want to be 
caregivers into other professions. As a matter of fact, the 
Veterans Health Administration has an executive career field, 
and it is targeted for key leaders below the senior executive 
level such as chiefs of staff at medical centers, associate 
directors, and nurse executives. We have just selected people 
for our third class. The demographics for that class, we have 
138 participants; 61 percent are female, 13 percent are 
African-American, 3 percent are Hispanic, and 5 percent are 
Asian-American. So we are trying not only to fill these key 
medical delivery positions, but we also have other areas.
    A few years ago we had the national performance review, and 
it targeted four series, four disciplines: accounting and 
finance, procurement and contracting, EEO, and human resources. 
And because of that we had a hemorrhaging of our senior talent; 
many people took early retirements and buyouts, some others 
just chose to retire because they were eligible, and young 
people chose not to come into those fields because they looked 
like they were not going to be around for their career. And so 
we have huge problems. When you are trying to hire people, your 
human resource staff is the one that you go to for help, and 
that was, quite frankly, decimated. Then you look at the ages. 
I don't know about the age for human resource staffs, but I 
know in other areas like financial management, 83 percent of 
our senior financial mangers, GS-13 and above, will be eligible 
to retire in 2005. All of them won't retire, but even if a 
significant number do, we have a real problem.
    Mrs. Davis of Virginia. What steps are you taking there? 
Because that is a real problem, 83 percent.
    Mr. Campbell. We have the same problem in some of our other 
business areas. We are trying to live within the work force 
that we believe we can get. We are fortunate in that we have a 
lot of redundancy. Each medical center has its own accounting 
staff and does its own bill paying and does its own 
contracting, and Secretary Principi, this summer, approved a 
reorganization of those contracting, accounting and finance, 
and logistics so that we can live within what we think will be 
a smaller work force that will come to us. The chief financial 
officers for our Veterans Integrated Service Networks have been 
complaining almost non-stop; they can't hire people on a one-
for-one basis, we just cannot attract enough people.
    So in this case we are fortunate that we believe that we 
can reorganize for that, but I don't know what we are going to 
do in the area of health care providers, because you can't 
automate health care.
    Mrs. Davis of Virginia. Well, you not only have the problem 
with the nurses; do you have the problem with physicians as 
well?
    Mr. Campbell. We have a turnover rate of almost 11 percent 
annually with doctors.
    Mrs. Davis of Virginia. Now, are they leaving for higher 
pay or are they leaving because they don't like the conditions, 
or what?
    Mr. Campbell. That is the conventional wisdom. I don't know 
enough about the physicians and what they would get externally. 
I have been a Federal employee for 29 years, and I am not 
really that conversant. I know that my wife works for 
physicians, and they make a lot more than we pay. And although 
Title 38 gives us special pay for the physicians, and I think 
it is quite generous, obviously some of them don't.
    Mrs. Davis of Virginia. Well, if it makes you feel any 
better, it is the same problem in the private sector; the 
physicians are dropping out like flies and dropping Medicare 
patients like flies.
    Mr. Campbell. But it is not universal. We find it in some 
specialities, and we have to contract out at what I think of as 
huge rates for specialty care, particularly things like 
cardiology.
    Mrs. Davis of Virginia. Well, you certainly have your work 
cut out for you, because there is, of course, a shortage of 
nurses in the private sector, and with the veterans, the number 
of veterans that we have that are wanting the health care right 
now, and that is one of their biggest cries. And probably one 
of the biggest complaints that I hear in the district is that 
they wait a year for an appointment at the VA, at the medical 
center, and now with the conflicts that we have had here 
recently, we are going to have even more veterans coming in who 
are going to need health care, so I think your problem is going 
to be compounded more so than these two folks sitting with you 
at the table. And I hope you don't retire in the next year, 
because then we are going to have to train somebody else to 
come and do what you do.
    Mr. Campbell. I may not, but it won't be much longer than 
that.
    Mrs. Davis of Virginia. Do you have anybody coming up 
behind you?
    Mr. Campbell. Yes, I do. I have been able to hire some 
younger people who are going to be around.
    Mrs. Davis of Virginia. Well, I am pleased to hear. You are 
the one who said you had five interns in here?
    Mr. Campbell. Yes, ma'am.
    Mrs. Davis of Virginia. Well, I don't want to keep you all 
any longer because already you are going to hit all the 
traffic. And we probably will have, I know I have more 
questions to ask you, and if I could submit them to you in 
writing and have you respond for the record; and other members 
of the committee may want to do that as well. So I would 
appreciate your prompt replies to them.
    And, again, I would like to sit here; you guys are the ones 
I really wanted to talk to, and I really could sit here and 
talk to you for the rest of the evening, but I am sure you have 
other things to do.
    Mr. O'Connor. We would enjoy that.
    Mrs. Davis of Virginia. You might enjoy it; you might not.
    Ms. Novak. We think we would.
    Mrs. Davis of Virginia. I think you would.
    But I certainly appreciate your jobs and what you are 
doing, and your willingness to come and testify today. My hat 
is off to you, and just make sure you protect America out there 
and get the right people in there working, and let the work 
force know how much we appreciate them. I think that is one of 
the biggest things, we just don't thank our Federal work force 
enough for the job that they do.
    Ms. Novak. If I may just add, we have a new center 
director, Roy Bridges, down at the Langley Research Center. I 
don't know if you have had the chance to meet Roy yet.
    Mrs. Davis of Virginia. I haven't had the opportunity to 
meet him, but I was just talking to my staff this week that we 
need to get it set up.
    Ms. Novak. I will have a discussion with him and let him 
know that he needs to meet you and assure you and reassure the 
employees that everything is OK.
    Mrs. Davis of Virginia. All right. Thank you so much.
    And with that, the hearing is adjourned.
    [Whereupon, at 4:48 p.m., the subcommittee was adjourned, 
to reconvene at the call of the Chair.]
    [Additional information submitted for the hearing record 
follows:]

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