Managing for Results: Human Capital Management Discussions in
Fiscal Year 2001 Performance Plans (24-APR-01, GAO-01-236).
The Government Performance and Results Act calls for agencies to
address human capital in the context of performance-based
management and specifically requires that annual performance
plans describe how agencies will use their human capital to
support the accomplishment of their goals and objectives.
Designing, implementing, and maintaining a strategic human
capital management focus are critical to maximizing the
performance and ensuring the accountability of the federal
government for the benefit of the American people. GAO found that
the ways in which federal agencies discussed human capital
challenges in their fiscal year 2001 performance plans reflected
different levels of attention to the critical human capital
challenges agencies face. When viewed collectively, GAO found
that there is a need to increase the breadth, depth, and
specificity of many related human capital goals and strategies.
The plans' discussions of human capital should continue to show
progress in moving away from form to substance, or from simply
describing human capital challenges to detailing the what, why,
how, and when of the strategies to address those challenges. The
discussions should also demonstrate a better link between human
capital management and the agencies' strategic and programmatic
planning to maximize performance and ensure the best resource
allocation. Overall, with the increasing attention to human
capital, the fiscal year 2001 plans showed that substantial
opportunities exist for goals and strategies as they focus on a
more systematic, in-depth, and continuous effort to evaluate and
improve their human capital management. Agencies will need to
follow up through effective implementation and assessment to
determine whether their plans lead to improvements in human
capital management and programmatic outcomes.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-01-236
ACCNO: A00856
TITLE: Managing for Results: Human Capital Management
Discussions in Fiscal Year 2001 Performance Plans
DATE: 04/24/2001
SUBJECT: Federal employees
Personnel management
Personnel recruiting
Performance measures
Human resources training
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GAO-01-236
Report to Congressional Committees
United States General Accounting Office
GAO
April 2001 MANAGING FOR RESULTS
Human Capital Management Discussions in Fiscal Year 2001 Performance Plans
GAO- 01- 236
Page 1 GAO- 01- 236 Human Capital Discussions in Performance Plans
April 24, 2001 The Honorable Fred Thompson, Chairman Committee on
Governmental Affairs United States Senate
The Honorable George V. Voinovich, Chairman The Honorable Richard J. Durbin,
Ranking Member Subcommittee on Oversight of Government Management,
Restructuring and the District of Columbia Committee on Governmental Affairs
United States Senate
The Honorable Daniel K. Akaka, Ranking Member Subcommittee on International
Security, Proliferation, and Federal Services Committee on Governmental
Affairs United States Senate
The Honorable Dan Burton, Chairman Committee on Government Reform House of
Representatives
After a decade of government downsizing and curtailed investment, it is
becoming increasingly clear that today?s human capital (people) strategies
are not appropriately constituted to adequately meet current and emerging
needs of the government and its citizens in the most efficient, effective,
and economical manner possible. Attention to strategic human capital
management is important because building agency employees? skills,
knowledge, and individual performance must be a cornerstone of any serious
effort to maximize the performance and ensure the accountability of the
federal government.
Because strategic human capital management is a pervasive challenge across
the federal government, we recently identified it as a governmentwide high-
risk area. 1 Specifically, our work has shown that the systematic
integration of human capital planning and program planning
1 High- Risk Series: An Update (GAO- 01- 263, Jan. 2001).
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 01- 236 Human Capital Discussions in Performance Plans
has not been adequately and uniformly addressed across the federal
government. 2 Further, our Performance and Accountability Series reports
have indicated that federal agencies are experiencing critical strategic
human capital challenges. 3 (See fig. 1).
Figure 1: Strategic Human Capital Challenges
Source: GAO analysis.
Addressing these challenges will require a cultural transformation
throughout the federal government that recognizes the dynamics associated
with a transition to a knowledge- based economy. The vast majority of the
needed improvements in human capital management could be achieved if federal
agencies took a comprehensive review of the size, shape, and skills of their
human capital profile and adopted a more strategic and performance- based
approach to managing their workforces. This would require agency leaders to
establish a baseline of their human capital profile; build a business case
for future human capital requirements; and then make targeted investments as
part of the agency strategy to attract, develop, and retain the talent
necessary to meet its mission and goals. Further, agency leaders need to
build employees? skills, knowledge, and performance; empower employees and
provide them with the tools to do their best; and implement the modern
performance
2 Managing for Results: Opportunities for Continued Improvements in
Agencies? Performance Plans (GAO/ GGD/ AIMD- 99- 215, July 20, 1999); and
Managing for Results: An Agenda To Improve the Usefulness of Agencies?
Annual Performance Plans (GAO/ GGD/ AIMD- 98- 228, Sept. 8, 1998). 3
Performance and Accountability Series: Major Management Challenges and
Program Risks: A Governmentwide Perspective (GAO- 01- 241, Jan. 2001). In
addition, see the accompanying 21 reports on specific agencies, numbered
GAO- 01- 242 through GAO- 01- 262.
Page 3 GAO- 01- 236 Human Capital Discussions in Performance Plans
management and incentives systems needed to foster individual accountability
and focus on achieving agency missions and goals. Agency leaders also need
to apply the tools and flexibilities already available under existing laws
and regulations to make substantial progress in managing their human
capital.
To help agency leaders begin a more systematic, in- depth, and continuous
effort to evaluate and improve their agencies? human capital, we issued a
human capital self- assessment framework, which identifies a number of human
capital elements and underlying values that are common to highperforming
organizations. 4 We also identified common principles that underlay the
human capital strategies and practices of the private sector for federal
agencies to consider as they work to improve their own human capital
management. 5 Some of these principles are to hire, develop, and sustain
leaders according to leadership characteristics identified as essential to
achieving specific missions and goals; hire, develop, and retain employees
according to competencies; and use performance management systems, including
pay and other meaningful incentives, to link performance to results.
As part of the Government Performance and Results Act (GPRA) annual
performance planning requirements, agencies are to establish resultsoriented
performance goals and describe the strategies and resources- including human
capital- needed to accomplish those goals. Given the established GPRA
requirements and the pervasive challenge the federal government faces in
strategic human capital management, we prepared this report at our own
initiative to provide a descriptive analysis of how, if at all, the 24
agencies covered by the Chief Financial Officers (CFO) Act addressed human
capital in their performance plans for fiscal year 2001, under which
agencies are currently operating. Because of your interest and the critical
importance of strategic human capital planning, employee empowerment, and
performance management, we are addressing this report to you.
4 Human Capital: A Self- Assessment Checklist for Agency Leaders (GAO/ OCG-
00- 14G, Sept. 2000). 5 Human Capital: Key Principles From Nine Private
Sector Organizations (GAO/ GGD- 00- 28, Jan. 31, 2000).
Page 4 GAO- 01- 236 Human Capital Discussions in Performance Plans
We found that each agency discussed human capital to at least a limited
extent in its fiscal year 2001 performance plan and covered a variety of
activities. (See fig. 2). We provide examples in this report that illustrate
these activities.
Figure 2: Summary of Human Capital Activities Discussed in Annual
Performance Plans for Fiscal Year 2001
Source: GAO analysis of annual performance plans.
Overall, agencies? plans reflected different levels of attention to human
capital, ranging from merely identifying human capital challenges to putting
forward solutions to address those challenges, such as by defining actual
plans, committing resources, and assigning accountability. For example, some
agencies identified the unique human capital challenges they confront within
their broad operating environment, but they did not include specific
strategies or goals for resolving those challenges. In other cases, agencies
set specific annual performance goals to address a human capital challenge
or articulated human capital strategies that are being used. Results in
Brief
Page 5 GAO- 01- 236 Human Capital Discussions in Performance Plans
When viewed collectively, we found that there is a need to increase the
breadth, depth, and specificity of many related human capital goals and
strategies and to better link them to the agencies? strategic and
programmatic planning. For example, very few of the agencies? plans
addressed
succession planning to ensure reasonable continuity of leadership;
performance agreements to align leaders? performance expectations with the
agency?s mission and goals;
competitive compensation systems to help the agency attract, motivate,
retain, and reward the people it needs;
workforce deployment to support the agency?s goals and strategies;
performance management systems, including pay and other meaningful
incentives, to link performance to results;
alignment of performance expectations with competencies to steer the
workforce towards effectively pursuing the agency?s goals and strategies;
and
employee and labor relations to ground a mutual effort on the strategies
to achieve the agency?s goals and to resolve problems and conflicts fairly
and effectively.
As our self- assessment guide makes apparent, agencies must address a range
of interrelated elements to ensure that their human capital approaches
effectively support mission accomplishment. 6 Agencies will need to follow
up through effective implementation and assessment to determine whether
their plans lead to improvements in human capital management and
programmatic outcomes. The human capital discussions in the fiscal year 2001
plans, therefore, can serve as a starting point from which to gauge progress
in subsequent efforts and plans. We plan to continue our review of human
capital discussions in agencies? fiscal year 2002 performance plans. In
commenting on a draft of this report, the Acting Director, Office of
Personnel Management (OPM), generally agreed with the contents of this
report and said that it would make a useful contribution to agencies?
strategic human capital management. The Office of Management and Budget
(OMB) staff provided technical suggestions, which we have incorporated where
appropriate.
6 GAO/ OCG- 00- 14G, Sept. 2000.
Page 6 GAO- 01- 236 Human Capital Discussions in Performance Plans
GPRA calls for agencies to address human capital in the context of
performance- based management and specifically requires that annual
performance plans describe how agencies will use their human capital to
support the accomplishment of their goals and objectives. In addition, OMB?s
fiscal year 2001 guidance for agencies? annual performance plans (OMB
Circular No. A- 11, Part 2) states that agencies? annual plans may include
agencywide goals for internal agency functions and operations, such as
employee skills and training, workforce diversity, retention, downsizing,
and streamlining. Building on the fiscal year 2001 guidance, the fiscal year
2002 guidance notes the increased emphasis on the use of workforce planning
and other specific strategies that align human capital with the fulfillment
of an agency?s mission. The fiscal year 2002 guidance specifies for the
first time that agencies should include performance goals covering human
capital management areas, such as recruitment, retention, skill development
and training, and appraisals linked to program performance.
We have noted that the more useful annual performance plans discuss, or
refer to a separate plan, the human capital needs- in terms of knowledge,
skills, and abilities- necessary for achieving goals and the workforce
planning methods by which these needs were determined. 7 Also, the more
useful plans describe how strategies- in such areas as recruitment and
hiring, retention and separation, training and career development, employee
incentives, and accountability systems- meet workforce needs and support the
achievement of goals.
Addressing the federal government?s human capital challenges is a
responsibility shared by many parties. We have noted that OPM and OMB have
substantial roles to play in fostering a more results- oriented approach to
strategic human capital management across the government. 8 OPM has begun
stressing to agencies the importance of integrating strategic human capital
management with agency planning. OPM has also rolled out a workforce
planning model, with associated research tools, and has launched a Web site
to facilitate information- sharing about workforce planning issues. In
addition, OPM has published A Handbook for Measuring Employee Performance:
Aligning Employee Performance Plans
7 Agency Performance Plans: Examples of Practices That Can Improve
Usefulness to Decisionmakers (GAO/ GGD/ AIMD- 99- 69, Feb. 26, 1999). 8
Human Capital: Meeting the Governmentwide High- Risk Challenge (GAO- 01-
357T, Feb. 1, 2001). Background
Page 7 GAO- 01- 236 Human Capital Discussions in Performance Plans
with Organizational Goals. Recently, OPM revised the Senior Executive
Service performance management regulations so that a balanced scorecard of
customer satisfaction, employee perspectives, and organizational results is
to be used by agencies to evaluate executives? performance.
OPM?s sustained commitment and attention will be critical to making a real
difference in the way federal agencies manage human capital. It is likely
that OPM will continue moving from ?rules to tools,? and that its most
valuable contributions in the future will come less from traditional
compliance and approval activities than from its initiatives for assisting
agencies as a strategic partner. For example, we have noted that OPM could
make a substantial contribution by continuing to review, streamline, and
simplify OPM regulations and guidance to determine their continued relevance
and utility. Related to this, we also have noted that OPM could make human
capital flexibilities and best practices more widely known to agencies by
communicating ?how to? success stories and taking full advantage of its
ability to facilitate information- sharing and outreach to human capital
managers throughout the federal government.
While OMB had played a limited role in strategic human capital management,
recent actions show OMB?s growing interest and potential importance in
working with agencies to ensure that they have the human capital
capabilities needed to achieve their strategic goals and missions. First,
the President?s fiscal year 2001 budget gave new prominence to human capital
management by making the alignment of federal human capital to support
agency goals a Priority Management Objective. Another positive step is the
increased attention to strategic human capital issues in OMB?s Circular No.
A- 11, Part 2, guidance to agencies on preparing the fiscal year 2002
performance plans.
Most recently, in another important and positive step, the President?s
fiscal year 2002 budget notes that the current civil service system does not
do all it should to reward achievement or encourage excellence and limits
the ability of agencies to compete successfully for highly skilled senior
talent. The budget states that the administration will seek legislation to
provide program managers new and expanded workforce restructuring tools.
According to the budget, these actions, combined with improved
accountability through better linkage of program performance with budget
decisionmaking and other reforms, will make the federal government more
responsive and effective.
Page 8 GAO- 01- 236 Human Capital Discussions in Performance Plans
OMB is perfectly positioned to assume greater leadership over governmentwide
strategic human capital issues. First, given its central role in the budget
process and responsibility for overall leadership over executive branch
management improvement, OMB has the ability to leverage the cabinet
secretaries and deputy secretaries to help ensure that their agencies view
strategic human capital management as critically important in their overall
strategic planning, performance management, and budgeting efforts. Second,
OMB has the ability through resource allocations to help ensure that
agencies give greater attention to the linkages between agency missions and
the human capital needed to pursue them.
To meet our objective, we reviewed the fiscal year 2001 performance plans
that the 24 CFO agencies submitted to Congress. In addition, we reviewed our
individual reports on agencies? fiscal year 2001 performance plans; GPRA
requirements for agencies? performance plans; guidelines contained in OMB?s
Circular No. A- 11, Part 2; and our guidance, reports, and testimonies
discussing strategic human capital management. 9 We selected examples based
on our guides to assist agencies and Congress with effectively implementing
GPRA, specifically our guides to improving the usefulness of agency
performance plans. 10
We did our work from September 2000 to March 2001 in Washington, D. C., in
accordance with generally accepted government auditing standards. We
requested comments on a draft of this report from the Director of OMB and
the Acting Director of OPM, and we asked officials in each of the agencies
profiled to verify the accuracy of the information presented from their
respective fiscal year 2001 performance plans. We incorporated their
comments where applicable. We did not independently verify the accuracy of
the information contained in the agencies? fiscal year 2001 performance
plans.
9 GAO/ OCG- 00- 14G, Sept. 2000; Human Capital: Managing Human Capital in
the 21st Century (GAO/ T- GGD- 00- 77, Mar. 9, 2000); and GAO/ GGD- 00- 28,
Jan. 31, 2000. 10 GAO/ GGD/ AIMD- 99- 69, Feb. 26, 1999; The Results Act: An
Evaluator?s Guide to Assessing Agency Annual Performance Plans (GAO/ GGD-
10. 1. 20, April 1998); and Agencies? Annual Performance Plans Under the
Results Act: An Assessment Guide to Facilitate Congressional Decisionmaking
(GAO/ GGD/ AIMD- 10. 1. 18, Feb. 1998). Scope and
Methodology
Page 9 GAO- 01- 236 Human Capital Discussions in Performance Plans
Agencies? fiscal year 2001 performance plans covered a variety of human
capital activities, as illustrated by the following examples.
1. Recruit and Retain Employees on the Basis of Current and Projected Needs.
A high- performing organization identifies the best strategies for filling
its talent needs through recruiting and hiring and follows up with
appropriate investments to develop and retain the best possible workforce.
Agencies? performance plans reflected different levels of attention to
employee recruitment and retention. As part of a discussion of challenges
confronting the agency, the U. S. Mint?s fiscal year 2001 plan notes that a
key issue facing the agency is its ability to attract and retain employees
with the skills needed to perform the agency?s unique mission. The Mint
explains that it is difficult for the agency to successfully compete for and
retain employees with skills more commonly found in the private
manufacturing and marketing sectors as well as in information technology.
The Mint notes that it is exploring ways to increase the attractiveness of
employment, such as rewarding and evaluating employees in accordance with
its strategic plan goals and objectives, although the plan does not provide
any performance goals or measures directly associated with the Mint?s human
capital challenges or initiatives.
Going beyond describing challenges facing the agency, the Department of
Justice set a goal to ?strengthen human resource recruitment and retention
efforts, providing for a workforce that is well- trained and diverse.?
Specifically, Justice states that on the basis of an assessment of
recruitment and retention issues, the Immigration and Naturalization Service
(INS) needs to recruit and retain qualified Border Patrol agents.
Consequently, INS set a fiscal year 2001 target to increase its deployment
of border patrol agents to 9,807 from the level of 7,982 achieved in fiscal
year 1998. (See fig. 3.) As part of its human capital strategy to increase
the number of these agents on board, the plan states that INS will train
over 200 border patrol agents as recruiters, establish a toll- free job
information hotline, and consider recruitment bonuses. Consistent with GPRA
requirements for annual performance plans, INS also describes its procedures
to validate and verify its data on the number of agents on board. Human
Capital
Activities Discussed in Annual Performance Plans for Fiscal Year 2001
Page 10 GAO- 01- 236 Human Capital Discussions in Performance Plans
Figure 3: INS? Data Related to Border Patrol Agents
Source: U. S. Department of Justice, Fiscal Year 2001 Summary Performance
Plan.
Our work has found that the Department of Defense (DOD) faces an especially
significant challenge in retaining the hundreds of thousands of new recruits
it enlists each year. 11 DOD set a performance goal to ?recruit,
retain, and develop personnel to maintain a highly skilled and motivated
force capable of meeting tomorrow?s challenges? and states it will use four
measures- enlisted recruiting, recruit quality benchmarks, active retention
rates, and reserve attrition rates- to demonstrate its progress in meeting
this goal. Specifically, for its enlisted recruiting measure, DOD set a
fiscal year 2001 target of 205,248 for new active force personnel and notes
that this target allows for discharges, promotions, and anticipated
retirements to maintain statutorily defined military end- strengths. DOD
reports that in fiscal year 1999 it recruited 186,600 personnel and had not
met its target of 194,500. According to its plan, DOD intends to improve the
results of its recruiting efforts by expanding advertising, increasing the
number of recruiters, and providing enhanced enlistment bonuses.
11 Human Capital: Major Human Capital Challenges at the Departments of
Defense and State (GAO- 01- 565T, Mar. 29, 2001); Major Management
Challenges and Program Risks: Departments of Defense, State, and Veterans
Affairs (GAO- 01- 492T, Mar. 7, 2001); and Major Management Challenges and
Program Risks: Department of Defense (GAO- 01- 244, Jan. 2001).
Page 11 GAO- 01- 236 Human Capital Discussions in Performance Plans
2. Hire a Diverse Workforce. A high- performing organization maintains an
environment characterized by inclusiveness that reflects a variety of styles
and personal backgrounds and is responsive to the needs of diverse groups of
employees.
Agencies present different approaches in their performance plans to address
diversity. For example, the National Science Foundation focuses on the total
number of hires to science and engineering positions from underrepresented
groups. The Department of the Interior plans to increase the general
diversity of its workforce rather than the growth rate of specific groups
and set a goal to increase the diverse representation of its total workforce
by at least 3.1 percent for fiscal year 2001 from an unspecified fiscal year
1997 level. Interior states that more detailed supporting documents are
being developed.
The Department of Housing and Urban Development (HUD), on the other hand,
set a goal to continue to improve its workforce diversity by increasing the
percentage of specific underrepresented groups, including Hispanics, women,
and women and minority managers, by 0.3 percentage points. For example, HUD
intends to focus on increasing the share of Hispanics to 7.4 percent of
employees in fiscal year 2001, based on estimated achievement of 7. 1
percent representation in fiscal year 2000. Hiring a diverse workforce can
be one aspect of ensuring that HUD has the appropriate mix of staff with the
proper skills to carry out its missions. HUD?s human capital has been an
area of focus under our high- risk program since 1994. 12
3. Identify Skills and Training Needs and Provide Development Opportunities.
A high- performing organization makes appropriate investments in education,
training, and other developmental opportunities to help its employees build
the competencies needed to achieve the organization?s mission.
Some agencies describe in their fiscal year 2001 performance plans their
efforts to identify the skills and training needs of employees. For example,
the Federal Technology Service (FTS), a major component of the General
Services Administration (GSA), describes its strategy to identify core
competencies for each profession, create individual development plans, and
provide employees with state- of- the- art technology and tools to help
12 GAO- 01- 263, Jan. 2001.
Page 12 GAO- 01- 236 Human Capital Discussions in Performance Plans
improve overall performance. Although it did not provide details, FTS also
plans to increase its investment in employee training by providing employees
with an individual training budget of 1 percent of salaries- in addition to
the normal 4 percent training allocation- which is intended to allow
employees to have a direct role in their own development. To measure
progress towards its performance goal to provide increased opportunities for
employee development and respond to employee needs, FTS used a survey that
GSA administered to over 13,000 employees on FTS? quality culture and
organizational climate. The survey used a 7- point response scale and
included 87 questions covering 15 categories, such as learning and
development, communication, and teamwork. To measure its performance, FTS
uses a composite indicator that combines the responses across all the
questions. However, the GSA plan does not discuss the validity of the
composite indicator as a measure of performance or its usefulness to GSA in
pinpointing improvement opportunities.
A few fiscal year 2001 performance plans describe agencies? strategies to
focus attention and resources on employee development. For example, the
Environmental Protection Agency (EPA) plan states that the agency faces a
future of formidable programmatic challenges, accelerating change, and
competition in recruiting people with the skills needed to effectively carry
out its mission. To address these concerns, EPA recognizes that it needs to
make a continual investment in developing its workforce. EPA reported that
it conducted a workforce assessment that identifies critical skills needed
through 2020. Although the plan does not provide details on the needed
skills, it describes several training programs based on this workforce
assessment. These programs include (1) the New Skills/ New Options, which
will equip support staff with needed skills to assume vital roles in EPA;
(2) the Mid- level Development Program, which will provide crosscutting
skills and competencies to mid- level employees to enable them to be
successful in a more dynamic and interdependent workplace; (3) the
Leadership Development Program, which will develop supervisors, managers,
and executives who will foster continued professional development; and (4)
the EPA Intern Program, which will recruit a cadre of diverse employees. We
recently reported that one of EPA?s performance and accountability
challenges is to place greater emphasis on developing a comprehensive human
capital approach. 13
13 Major Management Challenges and Program Risks: Environmental Protection
Agency (GAO- 01- 257, Jan. 2001).
Page 13 GAO- 01- 236 Human Capital Discussions in Performance Plans
The Department of Education surveyed its managers on their staffs? knowledge
and skills for carrying out Education?s mission. Education then set a goal
for fiscal year 2001 that 70 percent of its managers, from a fiscal year
1998 baseline of 58 percent, agree that staff possess adequate knowledge and
skills. (See fig. 4.) Education?s strategy for achieving its goal is to
introduce a broad range of new training and development programs in a
variety of formats, such as customized training for teams; and to continue
to provide development opportunities for its employees, such as university
course offerings, programs sponsored by the U. S. Department of Agriculture
(USDA) Graduate School, and the on- line Learning Network. Consistent with
the practices that we have reported that can make performance plans more
useful, Education describes its data source to measure this goal, validation
procedures, and data limitations. 14
Figure 4: Education?s Data Related to Staff Knowledge and Skills
Source: U. S. Department of Education, Vol. 1, Department- wide Objectives:
1999 Performance Reports and 2001 Plans.
4. Link Executive Performance to Organizational Goals. A highperforming
organization aligns performance expectations for its leaders with
organizational goals to enhance accountability for performance.
We recently reported on the emerging benefits from selected agencies? use of
performance agreements with their senior political and career
14 GAO/ GGD/ AIMD- 99- 69, Feb. 26, 1999.
Page 14 GAO- 01- 236 Human Capital Discussions in Performance Plans
executives as one approach to defining accountability for specific goals,
monitoring progress during the year, and then contributing to performance
evaluations. 15 Two agencies discussed in that report- the Department of
Transportation (DOT) and the Department of Veterans Affairs? (VA) Veterans
Health Administration (VHA)- discuss in their fiscal year 2001 performance
plans their continued use of performance agreements. For example, DOT states
that it is cascading the performance agreement goals between the Secretary
and administrators or departmental officers to all Senior Executive Service
members within the framework of its performance evaluation system. VHA?s
implementation of individual performance agreements is negotiated between
the Under Secretary for Health and all senior executives in VHA. These
agreements contain quantifiable performance targets and other organizational
priorities to which executives are held accountable for achieving.
In addition to a discussion on performance agreements, VA cites in its plan
other activities under way to enhance accountability for performance. For
example, the Veterans Benefits Administration (VBA) integrated a balanced
scorecard of performance measures into its executive appraisal system on
such areas as service delivery, customer service, and employee satisfaction.
VBA has established an automated Balanced Scorecard that is available to all
employees via VA?s Intranet and reports results at both the operational and
strategic levels. VA also notes in its fiscal year 2001 performance plan
that the National Cemetery Administration developed and is using consistent
performance standards for all cemetery directors that are linked to its
strategic goals. These performance standards address the areas of customer
service and stewardship of VA?s national cemeteries, employee development,
and cemetery operations.
5. Attend to Work Environment. A high- performing organization provides
employees appropriate technology to perform their work and a safe
environment to help elicit their best performance.
As indicated in their performance plans, some agencies are trying to create
work environments that support employee performance. For example, in USDA?s
fiscal year 2001 performance plan, the National Agricultural Statistics
Service (NASS) links the work environment- and particularly the availability
of information technology- to improved performance.
15 Managing for Results: Emerging Benefits From Selected Agencies? Use of
Performance Agreements (GAO- 01- 115, Oct. 30, 2000).
Page 15 GAO- 01- 236 Human Capital Discussions in Performance Plans
Specifically, NASS set a target in fiscal year 2001 that 90 percent of
employees ?strongly agree? or ?agree? that the work environment is not an
impediment to doing their jobs well. The plan reports that in both fiscal
years 1998 and 1999, 80 percent of employees ?strongly agree? or ?agree?
that the work environment was not an impediment; the target for fiscal year
2000 was 85 percent. To accomplish this goal, NASS plans to implement new
systems, such as a local area network, video conferencing, and document
archiving and retrieval systems. According to the plan, NASS will use
periodic organizational climate surveys to track employees? ratings of their
work environment.
The Social Security Administration (SSA) set a strategic objective ?to
provide a physical environment that promotes the health and well being of
employees.? As one of its performance measures, the agency will use a survey
to measure the percentage of employees reporting that they are satisfied
with the level of security in their facilities. SSA set a goal for fiscal
year 2001 that 75 percent of employees are satisfied with security in their
facilities, compared to 64 percent in fiscal year 1998. (See fig. 5.) To
achieve this objective, SSA states in its plan that it will continue to
enhance ongoing programs for assessing and addressing security requirements
and for identifying and resolving health and safety problems in the
workplace.
Page 16 GAO- 01- 236 Human Capital Discussions in Performance Plans
Figure 5: SSA?s Strategic Objective Related to Physical Environment
Source: Social Security, Performance Plan for Fiscal Year 2001, Revised
Final Performance Plan for Fiscal Year 2000.
Page 17 GAO- 01- 236 Human Capital Discussions in Performance Plans
6. Establish an Employee- Friendly Workplace. A high- performing
organization provides work- life programs and services that improve an
employee?s ability to balance work and family obligations and enhance job
satisfaction.
Some agency performance plans discuss how they intend to improve the
workplace through expanded work- life services. For example, the Department
of Labor states that it will continue to offer referral services for
employees in the work- life areas of childcare, elder care, and adoptive
services. Also, the plan states that services will include a toll- free ?1-
800? telephone counseling service and the use of the Internet as an
additional feature to access referral resources. In addition, Labor will
review internal practices and procedures to improve worker accommodations,
among other things.
To improve job satisfaction and the quality of work life, the Indian Health
Services (IHS) of the Department of Health and Human Services set a
performance measure to improve its overall Human Resource Management Index
(HRMI) score to at least 95 points in fiscal year 2001 from a baseline of 93
points in fiscal years 1998 and 1999. The HRMI employee survey measures 14
different work- related issues, such as management culture and employee
morale, and is used to determine if the agency?s human resource program is
meeting employee and management expectations. According to its plan, IHS
expects to raise the HRMI score by at least one point each year. The IHS
plan notes that the HRMI has been in use at the Department since 1991 and is
designed to be a valid measure of management practices that are important to
organizational performance. The IHS plan also notes that the agency is
taking several actions to improve its HRMI score, but IHS does not detail
how the actions will help it achieve the one- point improvement goal and,
ultimately, organizational performance.
7. Choose an Appropriate Organizational Structure. A highperforming
organization recognizes the importance of choosing a structure that supports
the organization?s mission and takes into account its present and future
needs.
The transition to a knowledge- based government will increasingly prompt
federal agencies to adopt flat, flexible, and team- oriented organizational
structures. For example, the Department of Health and Human Service?s
Administration for Children and Families (ACF) states in its fiscal year
2001 performance plan that it intends to reduce bureaucratic levels and rely
more on teams in an effort to support its strategic goal to build a
Page 18 GAO- 01- 236 Human Capital Discussions in Performance Plans
results- oriented organization. Specifically, ACF set a goal to increase
manager- to- staff ratio from 1: 4.6 in fiscal year 1993 to 1: 9 in fiscal
year 2001. ACF reports that the fiscal year 1999 target was not attained and
lowered its fiscal year 2000 target because of staff separations and severe
outside hiring limitations. ACF provides trend data from fiscal year 1995
and cites personnel data as the data source.
8. Streamline, Simplify, and Expedite Personnel Operations. A high-
performing organization tailors its personnel operations to quickly bring
needed talent on board and to make progress in the ?war
for talent? in a competitive, knowledge- based economy. Some agency
performance plans describe their efforts to make their human capital
processes more efficient. According to OPM?s fiscal year 2001 performance
plan, its Office of Human Resources and Equal Employment Opportunity
(OHREEO) works as a business partner with OPM managers to assist them in
maximizing the use of the agency?s human resources toward accomplishing
OPM?s goal to recruit, develop, and maintain a highly skilled and diverse
workforce. In support of this goal, OHREEO plans to streamline and automate
staffing processes and, specifically, to reduce all recruitment and hiring
cycle times to an average of 48 days in fiscal year 2001 from a baseline
average of 58 days in fiscal year 1999. The plan notes that the data on
cycle time are retrieved from various documents that track the dates when
(1) OHREEO receives the Request for Personnel Action, (2) the vacancy
announcement opens, and (3) the selection list is sent to the selecting
official.
The Department of Commerce describes ?Commerce Opportunities OnLine? (COOL)
as an automated, Web- based vacancy announcement, application, and referral
system. This system is intended to broaden Commerce?s distribution of
vacancy announcements to anyone who has access to the Web, reduce the time
to disseminate announcements to applicants, and provide applicants an on-
line avenue for submission of their applications. COOL also is to benefit
Commerce managers by permitting on- line issuance of referral lists of
eligible candidates to the selecting official, facilitating e- mail
communication between the selecting official and applicant, and allowing the
selecting official to automatically notify the Human Resource Office when he
or she has completed the selection process.
Page 19 GAO- 01- 236 Human Capital Discussions in Performance Plans
Designing, implementing, and maintaining a strategic human capital
management focus are critical to maximizing the performance and ensuring the
accountability of the federal government for the benefit of the American
people. We found that the ways in which agencies discussed human capital
challenges in their fiscal year 2001 performance plans reflected different
levels of attention to the critical human capital challenges agencies face.
When viewed collectively, we found that there is a need to increase the
breadth, depth, and specificity of many related human capital goals and
strategies. The plans? discussions of human capital should continue to show
progress in moving away from form to substance, or from simply describing
human capital challenges to detailing the what, why, how, and when of the
strategies to address those challenges. The discussions should also
demonstrate a better link between human capital management and the agencies?
strategic and programmatic planning to maximize performance and ensure the
best resource allocation. Overall, with the increasing attention to human
capital, the fiscal year 2001 plans showed that substantial opportunities
exist for improvements, and we expect that agencies will continue to refine
their goals and strategies as they focus on a more systematic, in- depth,
and continuous effort to evaluate and improve their human capital
management. Agencies will need to follow up through effective implementation
and assessment to determine whether their plans lead to improvements in
human capital management and programmatic outcomes.
We provided a draft of this report to the Director of OMB and the Acting
Director of OPM on January 23, 2001, for their review and comment. We
subsequently shared with the Director of OMB and the Acting Director of OPM
portions of the draft that we updated to reflect our testimonies on human
capital and the President?s fiscal year 2002 budget. 16 The Director of OMB
did not provide written comments; however, OMB staff provided technical
suggestions, which we have incorporated where appropriate.
OPM?s Acting Director provided written comments in his February 9, 2001,
letter, which is included in appendix I. In that letter, he stated that this
report would make a useful contribution to the ongoing agency implementation
of GPRA and to the increased attention to the federal government?s strategic
human capital management. He also provided
16 GAO- 01- 565T, Mar. 29, 2001; GAO- 01- 492T, Mar. 7, 2001; and GAO- 01-
357T, Feb. 1, 2001. Concluding
Observation Agency Comments and Our Evaluation
Page 20 GAO- 01- 236 Human Capital Discussions in Performance Plans
several suggestions that OPM believes would make the report even more
useful.
OPM suggested, and we have included in the report, a reference to its 1999
publication A Handbook for Measuring Employee Performance: Aligning Employee
Performance Plans with Organizational Goals as another tool to help agencies
in their efforts.
OPM stated that the draft report ?leaves an impression that agencies have
not taken any previous actions to include human resources management actions
in their strategic and annual planning? and did not acknowledge other
examples of human capital activities under way. As the draft report noted,
the scope of this review focused on human capital activities discussed in
agencies? performance plans for fiscal year 2001. Therefore, we did not
consider prior performance or strategic plans, or other human capital
activities in the analysis for this report.
OPM suggested that we be clear that the report does not include all
instances of human capital planning that we found in the fiscal year 2001
performance plans. We did not intend to imply that the report describes each
reference to human capital issues in agencies? annual performance plans.
Rather, as stated in the draft, we selected examples based on our guides to
assist agencies and Congress with effectively implementing GPRA,
specifically our guides on improving the usefulness of agency performance
plans.
Finally, OPM suggested that it would be helpful to emphasize that managing
the effective tactical use of several existing flexibilities is its own
challenge, particularly in view of the limited resources, and agencies would
do well to develop coordinated approaches to their use. This point is beyond
the objective and scope of our review and, therefore, not included in our
discussion.
We are sending copies of this report to Senator Joseph Lieberman, Ranking
Member of the Senate Committee on Governmental Affairs; Senator Thad
Cochran, Chairman of the Senate Governmental Affairs? Subcommittee on
International Security, Proliferation, and Federal Services; Representative
Henry Waxman, Ranking Minority Member of the House Committee on Government
Reform; the Honorable Mitchell E. Daniels, Jr., Director of OMB; Steven R.
Cohen, Acting Director of OPM; and other interested parties. We will also
make this report available to others upon request.
Page 21 GAO- 01- 236 Human Capital Discussions in Performance Plans
If you have any questions about this report, please contact me or Lisa
Shames on (202) 512- 6806. Key contributors to this report were Dottie Self
and Janice Lichty.
J. Christopher Mihm Director, Strategic Issues
Appendix I: Comments From the Office of Personnel Management
Page 22 GAO- 01- 236 Human Capital Discussions in Performance Plans
Appendix I: Comments From the Office of Personnel Management
Appendix I: Comments From the Office of Personnel Management
Page 23 GAO- 01- 236 Human Capital Discussions in Performance Plans
Appendix I: Comments From the Office of Personnel Management
Page 24 GAO- 01- 236 Human Capital Discussions in Performance Plans (410608)
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