Human Capital: Attracting and Retaining a High-Quality
Information Technology Workforce (04-OCT-01, GAO-02-113T).
Few management task facing federal agencies are more critical to
their ability to serve the nation than attracting, retaining, and
motivating people. As our society has transitioned from the
industrial age to the knowledge age, organizations have to come
to recognize people as their most critical assets. The success or
failure of federal agencies, depends on having the right number
of people with the right mix of knowledge and skills. This is
especially true in the information technology (IT) area, where
widespread shortfalls in human capital have contributed to
shortfalls in agency and program performance. This report
discusses why GAO views strategic human capital management as an
area of high risk, particularly in light of expected long-term
demand for a skilled IT workforce; summarizes the progress of
agencies in addressing IT human capital needs; describes the
consistency between suggestions GAO has raised in prior
testimonies and those provided in a recent report on federal IT
human capital needs issued by the National Academy of Public
Administration; and highlight some important challenges that must
be addressed in moving IT human capital reform from proposals to
implementation.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-02-113T
ACCNO: A02136
TITLE: Human Capital: Attracting and Retaining a High-Quality
Information Technology Workforce
DATE: 10/04/2001
SUBJECT: Computer networks
Information technology
Working conditions
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GAO-02-113T
Testimony Before the Subcommittee on Technology and Procurement Policy
Committee on Government Reform, U. S. House of Representatives
United States General Accounting Office
GAO For Release on Delivery Expected at 2: 00 EDT Thursday, October 4, 2001
HUMAN CAPITAL
Attracting and Retaining a High- Quality Information Technology Workforce
Statement of David L. McClure Director, Information Technology Management
Issues
GAO- 02- 113T
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 1 GAO- 02- 113T
Mr. Chairman and Members of the Subcommittee: I appreciate the opportunity
to discuss with you this afternoon the federal government?s strategic
management challenges in the area of human capital, particularly regarding
the information technology workforce. Few management tasks facing federal
agencies are more critical to their ability to serve the nation than
attracting, retaining, and motivating people. As our society has
transitioned from the industrial age to the knowledge age, organizations
have come to recognize people as their most critical assets. Because people
create knowledge and put it to practical use, the success or failure of
federal agencies, like that of other organizations, depends on having the
right number of people with the right mix of knowledge and skills. This is
especially true in the information technology (IT) area, where widespread
shortfalls in human capital have contributed to shortfalls in agency and
program performance.
In previous testimony, we have presented our recommended three- stage
approach to human capital reform. 1 First, in the near term, agencies can
improve their human capital management by taking advantage of the
authorities already available to them under current laws and regulations.
Second, the Administration and the Congress should consider legislation to
allow agencies more flexibility and give them new tools to attract, retain,
and motivate employees- both overall and in critical occupations such as
those in IT. Third, all interested parties should work together to determine
further, possibly more comprehensive human capital reforms.
In my remarks today, I will discuss why we view strategic human capital
management as an area of
high risk, particularly in light of expected long- term demand for a skilled
IT workforce;
summarize the progress of agencies in addressing IT human capital needs;
describe the consistency between suggestions we have raised in prior
testimonies and those provided in a recent report on federal IT human 1
Human Capital: Taking Steps to Meet Current and Emerging Human Capital
Challenges (GAO- 01- 965T, July 2001).
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 2 GAO- 02- 113T
capital needs issued by the National Academy of Public Administration; 2 and
highlight some important challenges that must be addressed in moving IT
human capital reform from proposals to implementation.
We at GAO use the term human capital because (unlike traditional terms such
as personnel and human resource management) it focuses on two principles
that are critical in a modern, results- oriented management environment:
First, people are assets whose value can be enhanced through investment.
As the value of people increases, so does the performance capacity of the
organization and therefore its value to clients and other stakeholders. As
with any investment, the goal is to maximize value while managing risk.
Second, an organization?s human capital approaches must be aligned to
support the mission, vision for the future, core values, goals and
objectives, and strategies by which the organization has defined its
direction and its expectations for itself and its people. An organization?s
human capital policies and practices should be designed and implemented to
achieve these goals, and assessed accordingly.
In January 2001, we added strategic human capital management to our list of
federal programs and operations identified as high risk. 3 However, we
stress that federal employees are not the problem; rather, the problem is a
long- standing lack of effective leadership and management, along with the
lack of a strategic approach to marshaling, managing, and maintaining the
human capital needed for government to discharge its responsibilities and
deliver on its promises. As the federal government struggles with the impact
of more than a decade of government downsizing and curtailed investments in
people, it is increasingly clear that today?s federal human
2 The Transforming Power of Information Technology: Making the Federal
Government an Employer of Choice for IT Employees (National Academy of
Public Administration, Aug. 2001). 3 High- Risk Series: An Update (GAO- 01-
263, Jan. 2001). In addition, see Human Capital: Meeting the Governmentwide
High- Risk Challenge (GAO- 01- 357T, Feb. 2001). Background
Strategic Human Capital Management Is an Area of High Risk
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 3 GAO- 02- 113T
capital strategies are not appropriate to meet the needs of the nation?s
government and its citizens.
As agencies wrestle with human capital management, they face a significant
challenge in the information management and technology areas. The rapid pace
of technological change in these areas is reflected in the investments in
information technologies made both in the United States as a whole and by
the federal government. By 2004, information technology investments are
expected to account for more than 40 percent of all capital investment in
the United States. The federal government?s IT investment is conservatively
estimated in fiscal year 2002 to be $44 billion- an increase in federal IT
spending of 8.6 percent from fiscal year 2000. 4
This substantial investment should provide opportunities for increasing
productivity and decreasing costs. For example, the public sector is
increasingly turning to the Internet to conduct paperless acquisitions,
provide interactive electronic services to the public, and tailor or
personalize information. As we testified in July, there are over 1,300
electronic government initiatives throughout the federal government,
covering a wide range of activities involving interaction with citizens,
business, other governments, and government employees. 5 In addition, the
Government Paperwork Elimination Act (GPEA) of 1998 requires that by October
21, 2003, federal agencies provide the public (when practicable) the option
of submitting, maintaining, and disclosing required information
electronically. We have found that agencies plan to provide an electronic
option for 3,048 eligible activities by the GPEA deadline. 6
Despite a decrease in projected demand over the last year, the overall
estimated demand for IT workers remains high. Notwithstanding the recent
economic slowdown, employers from every sector, including the federal
government, are still finding it difficult to meet their needs for highly
skilled IT workers. The Bureau of Labor Statistics projects that the demand
for computer systems analysts, engineers, and scientists will
4 Published data from agency Exhibit 53s (as required by OMB Circular A-
11), Clinger- Cohen Act Report on Federal Information Technology (IT)
Investments (Apr. 9, 2001). 5 Electronic Government: Challenges Must Be
Addressed With Effective Leadership and Management (GAO- 01- 959T, July
2001). 6 Electronic Government: Better Information Needed on Agencies?
Implementation of the Government Paperwork Elimination Act (GAO- 01- 1100,
Sep. 2001). Rapid Changes in
Information Technology Require a Skilled and WellManaged Workforce
Demand for Skilled IT Workers Remains Substantial
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 4 GAO- 02- 113T
almost double between 1998 and 2008, and the demand for computer programmers
will increase by 30 percent during the same time period. 7
In April 2001, the Information Technology Association of America (ITAA)
released a study on the size of the private- sector IT workforce, the demand
for qualified workers, and the gap between the supply and demand. 8 Among
the study?s findings were the following:
Information technology employment directly accounts for approximately 7
percent of the nation?s total workforce. Over 10.4 million people in the
United States are IT workers, an increase of 4 percent over the 10 million
reported for last year.
Overall estimated demand for IT workers is down from last year?s forecast
(by 44 percent), partially because of the slowdown in the high- tech sector
and the economy in general. However, the demand for IT workers remains high,
as employers attempt to fill over 900,000 new IT jobs in 2001. Hiring
managers reported an anticipated shortfall of 425,000 IT workers in 2001
because of a lack of applicants with the requisite technical and
nontechnical skills.
The ITAA also reported that despite softening in overall demand, skills in
technical support, database development/ administration, programming/
software engineering, web development/ administration, and network design/
administration remain most in demand by IT and non- IT companies alike.
These positions represent nearly 86 percent of the demand for IT workers
expected in 2001. The study further notes that the demand for enterprise
systems professionals and network designers and administrators is expected
to increase by 62 and 13 percent, respectively, over the 2000 forecast.
7 ?The 1998- 2008 Job Outlook in Brief,? Occupational Outlook Quarterly
(Bureau of Labor Statistics, Spring 2000). 8 When Can You Start? Building
Better Information Technology Skills and Careers (Information Technology
Association of America, Apr. 2001).
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 5 GAO- 02- 113T
For the IT workforce in particular, agencies are beginning to take action by
initiating strategies and plans to attract, retain, and/ or train skilled
workers. Nevertheless, much remains to be done, as agencies generally lack
comprehensive strategies for IT human capital management.
To date, we have issued several products on IT human capital management,
including studies of practices at four agencies: the Small Business
Administration, the United States Coast Guard, the Social Security
Administration, and the Centers for Medicare and Medicaid Services. 9 These
evaluations focused on agency practices needed to maintain and enhance the
capabilities of IT staff. These practices fall in four key areas:
Requirements- assessing the knowledge and skills needed to effectively
perform IT operations to support agency mission and goals
Inventory- determining the knowledge and skills of current IT staff so
that gaps in needed capabilities can be identified
Workforce strategies and plans- developing strategies and implementing
plans for hiring, training, and professional development to fill the gap
between requirements and current staffing
Progress evaluation- evaluating progress made in improving IT human
capital capability, and using the results of these evaluations to
continuously improve the organization?s human capital strategies
In July, we reported that agencies? progress in addressing IT human capital
strategies had been sluggish. 10 Specifically, we stated that although
agencies were initiating strategies and plans to attract, retain, and/ or
train a skilled IT workforce, key issues in each of the four areas mentioned
above were not being effectively addressed.
9 Information Technology Management: SBA Needs to Establish Policies and
Procedures for Key IT Processes (GAO/ AIMD- 00- 170, May 2000); Information
Technology Management: Coast Guard Practices Can Be Improved (GAO- 01- 190,
Dec. 2000); Information Technology Management: Social Security
Administration Practices Can Be Improved (GAO- 01- 961, Aug. 2001); and
Medicare: Information Systems Modernization Needs Stronger Management and
Support (GAO- 01- 824, Sep. 2001). 10 Human Capital: Building the
Information Technology Workforce to Achieve Results (GAO- 01- 1007T, July
2001). Agencies Are Making
Limited Progress in Addressing IT Human Capital Issues
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 6 GAO- 02- 113T
In the area of requirements, several of the agencies we reviewed had begun
evaluating their short and longer term IT needs. However, none of them had
completed these efforts. For instance, we found that the Small Business
Administration did not have any policies or procedures to identify
requirements for IT skills. Also, although the U. S. Coast Guard had
conducted an assessment of the knowledge and skills needed by its IT
officers and enlisted personnel, it had not done so for its civilian
workforce.
Although an IT inventory identifying the knowledge and skills of current
staff is essential to uncovering gaps between current staff and
requirements, our work to date has revealed that none of the reviewed
agencies had a complete knowledge and skills inventory. For example, the U.
S. Coast Guard and the Small Business Administration maintained a limited
amount of information on IT knowledge and skills, and the Social Security
Administration lacked an IT- specific knowledge and skills inventory.
In addition to establishing requirements and creating an inventory, an
agency needs to develop a workforce plan that is linked to its strategic and
program planning efforts. The workforce plan should identify its current and
future human capital needs, including the size of the workforce, its
deployment across the organization, and the knowledge, skills, and abilities
needed for the agency to pursue its shared vision. The workforce planning
strategy should specifically outline the steps and processes that an agency
should follow when hiring, training, and professionally developing staff to
fill the gap between requirements and current staffing. Among the four
agencies we reviewed, none had developed comprehensive IT- specific
workforce strategies or plans. For example, although the Social Security
Administration did have a broad workforce transition plan that includes
actions to improve its processes (for projecting workforce needs, for
recruiting, and for training and developing employees), these actions were
not specific to IT staff.
Finally, meaningful progress evaluation systems are necessary to determine
whether agency human capital efforts are effective and to ensure that the
results of these evaluations are used to make improvements. While agencies
we reviewed did track various human capital efforts, such as progress in
filling IT positions, none of the agencies had fully analyzed or reported on
the effectiveness of their workforce strategies and plans.
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 7 GAO- 02- 113T
Shortcomings in IT human capital management have serious ramifications.
Without complete assessments of requirements, agencies will lack assurance
that they have identified the number of staff and the specific knowledge and
skills needed or that they have developed strategies to fill these needs.
Also, without an inventory of knowledge and skills, agencies will not have
assurance that they are optimizing the use of their current IT workforce,
nor will they have data on the extent of skill gaps. This information is
necessary for developing effective workforce strategies and plans. If they
cannot analyze and document the effectiveness of workforce strategies and
plans, senior decisionmakers will lack assurance that they are effectively
addressing knowledge and skill gaps.
Judging from trends, the shortage of qualified IT professionals is likely to
lead to greater reliance on contracted workers, so that agencies can
supplement their existing workforces with external expertise. Indeed, from
fiscal year 1990 to 2000, federal spending on contracted IT services
increased from $3.7 billion to about $13.4 billion.
Relying on contracting to fill workforce gaps is not a panacea. We have
previously reported that some procurements of services are not being done
efficiently, putting taxpayer dollars at risk. 11 In particular, agencies
were not clearly defining their requirements, fully considering alternative
solutions, performing vigorous price analyses, or adequately overseeing
contractor performance. Also, agencies appear to be at risk of not having
enough of the right people with the right skills to manage service
procurements. Following a decade of downsizing and curtailed investments in
human capital, federal agencies currently face skills, knowledge, and
experience imbalances that, without corrective action, will worsen,
especially in light of the numbers of federal workers becoming eligible to
retire in the coming years. Consequently, a key question we face in the
federal government is whether we have today, or will have tomorrow, the
ability to acquire and manage the procurement of the increasingly
sophisticated services that the government needs.
As we recently testified, 12 past efforts at workforce reduction were not
always oriented toward shaping the makeup of the force. For example, the
11 Contract Management: Trends and Challenges in Acquiring Services (GAO-
01- 753T, May 2001). 12 Human Capital: Major Human Capital Challenges at the
Departments of Defense and State (GAO- 01- 565T, Mar. 2001). Agency Reliance
on
Contracted IT Services Requires Improved Oversight Capabilities
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 8 GAO- 02- 113T
Department of Defense (DOD) found that its workforce reductions had led to a
serious shortfall in the acquisition workforce. To improve the efficiency of
contracting operations- and in part to help offset the effects of this
shortfall- the department instituted streamlined acquisition procedures.
However, the DOD Inspector General reported that the efficiency gains from
the streamlined procedures had not kept pace with acquisition workforce
reductions. The Inspector General reported that while the workforce had been
reduced by half, DOD?s contracting workload had increased by about 12
percent 13 and that senior personnel at 14 acquisition organizations
believed that workforce reductions had led to such problems as less
contractor oversight.
Unless these reductions in the acquisition workforce are addressed, they
could undermine the government?s ability to efficiently acquire contract
services, including IT services.
The challenges facing the government in maintaining a high- quality IT
workforce are long- standing and widely recognized. As far back as 1994, our
study of leading organizations revealed that strengthening the skills of IT
professionals is a critical aspect of strategic information management. 14
Specifically, leading organizations identify existing IT skills and needed
future skills, as well as determining the right skill mix. Accordingly, we
suggested that executives should systematically identify IT skill gaps and
targets and integrate skill requirements into performance evaluations. In
our more recent study of public and private sector efforts to build
effective Chief Information Officer (CIO) organizations, 15 we found that
leading organizations develop IT human capital strategies to assess their
skill bases and recruit and retain staff who can effectively implement
information technology to meet business needs.
The federal CIO Council has been actively studying issues related to IT
human capital, focusing on the government?s ability to attract, retain, and
train a qualified workforce. To examine the magnitude of federal IT human
13 DOD Acquisition Workforce Reduction Trends and Impacts (Office of the
Inspector General, Department of Defense, Feb. 29, 2000). 14 Executive
Guide: Improving Mission Performance Through Strategic Information
Management and Technology (GAO/ AIMD- 94- 115, May 1994).
15 Maximizing the Success of Chief Information Officers: Learning from
Leading Organizations (GAO- 01- 376G, Feb. 2001). Recommendations
Regarding IT Human Capital Have Been Consistent
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 9 GAO- 02- 113T
capital challenges and suggest possible solutions, the CIO Council asked the
National Academy of Public Administration (NAPA) to study IT compensation
strategies and to make recommendations on how the government can best
compete for IT talent. 16
NAPA?s resulting study noted a number of problems inherent in the federal
government?s human resource management system. These problems included a pay
gap with the private sector and a compensation system that is overly focused
on internal equity. The study commented that current pay disparities with
the private sector, overly narrow pay ranges, and the inadequacy of special
pay rates hinder the government?s ability to compete for IT workers.
Regarding compensation, the study noted that the current system is closely
aligned with internal equity by law, regulation, and practice, with little
real attention paid to external equity and contribution equity. 17 According
to the study, private sector organizations typically consider and establish
a strategic balance among internal, external, and contribution equity in
determining pay rates and reward structures.
NAPA?s study also includes an evaluation of two alternative compensation
models. The first of these makes limited changes to the current General
Schedule (GS) system, such as eliminating steps and combining some grades.
The second is a market- based model that introduces more comprehensive
reforms, including increased emphasis on performance and competencies.
NAPA?s study concluded that the second model embodies the best approach to
human capital reform. NAPA?s recommendations are shown in table 1.
16 The Transforming Power of Information Technology: Making the Federal
Government an Employer of Choice for IT Employees (National Academy of
Public Administration, Aug. 2001). 17 In an internal equity system, pay is
determined by the relative value of each job within an organization.
External equity is based on a comparison with similar jobs throughout the
labor market. Contribution equity is based on an employee?s performance and
contribution relative to other employees.
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 10 GAO- 02- 113T
Table 1: NAPA Recommendations NAPA recommendation Description
Establish a market- based, payfor- performance compensation system.
This compensation approach would establish broad pay ranges, tie base pay to
market rates, and link increases in pay to competencies and results to
attract and retain IT talent. Allow for flexibility in the treatment of
individuals and occupations.
The new compensation system would ensure that managers have the flexibility
to pay individual workers for their respective skills and competencies as
well as their contributions to the organization.
Improve recruiting and hiring processes. The new compensation system for IT
professionals
needs to be linked to faster, enhanced recruitment and hiring processes.
Balance the three dimensions of equity. A new federal IT compensation system
would provide
a better balance among internal equity (that is, equity among government
jobs), external equity (between jobs in the government and in other
sectors), and contribution equity (among individual employees). Offer
competitive benefits. The new system would offer a more competitive
benefits package for senior technical employees as well as executives.
Promote work/ life balance programs. Federal managers and human resources
specialists
must actively market work/ life benefits and programs so that potential IT
workers are aware of them.
Encourage management ownership. Managers must (1) actively participate in
the design
and implementation of agency- specific features of the new system, (2) be
rewarded for effectively implementing and managing the system, and (3) be
held accountable for not carrying out their management responsibilities.
Support technical currency and continuous learning. Agency management should
design and support
developmental activities such as formalized training, on- the- job training,
computer- assisted learning, selfinstructional guides, coaching, and other
approaches.
Build in reliability, clarity, and transparency. Agency budgets and
management decisions must
support full implementation of the new system. The new system must be
reliable, meaning that it consistently conforms with policies so that the
same set of circumstances always leads to a fair decision and result.
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 11 GAO- 02- 113T
Although we have not analyzed all aspects of these recommendations, many of
them are consistent with suggestions we have made in prior testimonies, 18
as well as with the practices that we have instituted in our own internal
human capital management. For example, we have suggested that government pay
systems should be based on performance and contributions rather than on
longevity. Similarly, in our own human capital management at GAO, we have
implemented pay for performance and are developing a competency- based
evaluation system. We have also suggested that government employers use more
flexible approaches to setting pay; in our own human capital management
system, we have instituted broad pay bands for mission staff. More examples
are given in table 2, which compares the NAPA recommendations with related
suggestions we have made in previous work and practices we have adopted
within GAO.
Table 2: Comparison of NAPA Recommendations with GAO Suggestions and Current
Practices GAO suggestions/ practices NAPA recommendations GAO suggestions
GAO?s own practices
Establish a marketbased, pay- forperformance
compensation system.
Provide authority to establish Senior Level positions.
Address pay compression between the maximum and lower SES pay levels,
perhaps by delinking federal executive compensation from congressional pay,
or by raising the cap on executive performance bonuses. a
Established Senior Level positions to meet certain scientific, technical,
and professional needs.
Established pay for performance system.
Developing a competency model/ competency- based appraisal system.
Offering pay bonuses to attract and retain workers for hard- to- fill
positions, such as IT positions requiring specific technical skill sets.
Allow for flexibility in the treatment of individuals and occupations.
Provide more flexible pay approaches.
Revise Reduction in Force (RIF) rules. a
Provide authority to offer voluntary early retirement. a
Provide authority to offer voluntary separation incentives. a
Pursue phased retirement approaches, whereby federal employees with needed
skills could change from full- time to part- time employment and receive a
portion of their federal pension while still earning pension credits. a
Using broadbanding system for mission staff.
Revised Reduction in Force (RIF) rules.
Have authority to offer voluntary early retirement.
Have authority to offer voluntary separation incentives.
18 Human Capital: Taking Steps to Meet Current and Emerging Human Capital
Challenges (GAO- 01- 965T, July 2001); Human Capital: Managing Human Capital
in the 21 st Century (GAO/ T- GGD- 00- 77, Mar. 2000); Human Capital:
Meeting the Governmentwide High- Risk Challenge (GAO- 01- 357T, Feb. 2001);
Human Capital: Building the Information Technology Workforce to Achieve
Results (GAO- 01- 1007T, July 2001).
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 12 GAO- 02- 113T
GAO suggestions/ practices NAPA recommendations GAO suggestions GAO?s own
practices
Improve recruiting and hiring processes.
Improve the federal hiring system.
Authorize agencies to use appropriated funds for selective recruiting,
recognition, and team building activities. a
Provide more hiring flexibility in such fields as information technology,
where there is severe competition with other sectors for talent.
Use enabling technology to improve hiring processes.
Using a 25- percent pay differential (equal to the OPM pay differential
for executive branch IT hires) to bring aboard entry- level IT staff.
Using noncompetitive hiring authority (e. g., internship program, critical
skills program).
Enhancing our Applicant Tracking System and exploring Web- based
recruitment services to advertise vacancies, receive and process
applications, and support recruitment targeted for specific skills. Balance
the three dimensions of equity. Offer competitive benefits.
Provide flexible ?cafeteria? benefits such as those available to many
private sector workers under Section 125 of the Internal Revenue Service
Code. a
Allow employees who travel on government business to keep their ?frequent
flyer? miles. a
Institute phased retirement, allowing federal employees with needed skills
to change from full- time to part- time employment and receive a portion of
their federal pension while still earning pension credits. a
Implemented recognition and awards program.
Pay commuting subsidies (pending).
Establish college loan repayment fund (pending). Promote work/ life
balance programs.
Implemented Flexitime and Flexiplace.
Established business casual dress.
Established a day- care facility.
Established a fitness center. Encourage management ownership.
Improve employee accountability.
Establish performance management systems that assess and reward employee
performance in light of organizational goals and values.
Establishing a competency- based appraisal system that underscores agency
goals and values, which are linked to the agency strategic plan.
Support technical currency and continuous learning.
Enhance career development and training, and promote continuous learning.
Authorize agencies to use appropriated funds to pay for selected
professional certifications, licensing, and professional association costs.
a
Establish fellowships with the private sector, particularly in critical
occupations. a
Making use of contractor resources in the IT area to supplement both the
numbers and skills of government employees.
Transitioning from traditional classroom training to an approach that
balances classroom training with online training delivered at the desktop,
as well as other learning experiences.
Build in reliability, clarity, and transparency.
Perform workforce and succession planning.
Create mission and vision statements.
Develop strategic planning and performance measurement processes.
Align human capital policies and practices with organizational missions
and core values.
Use teams, including ?just- in- time? and ?virtual? teams.
Implemented the following:
Human capital self- assessment checklist
Human capital profile/ planning
Employee feedback survey and suggestion program
Employee Advisory Council
Enhanced employee communications/ participation
Skill/ knowledge inventory
Employee preference survey a Legislative action is required to permit this
practice.
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 13 GAO- 02- 113T
As noted in table 2, we have identified and made use of a variety of tools
and flexibilities to address our human capital challenges; some of these
were made available to us through the GAO Personnel Act of 1980 and some
through legislation passed by the Congress in 2000, but most are available
to all federal agencies. Figure 1 shows those flexibilities that were made
available to us through legislation.
Figure 1: Legislative Flexibilities Used to Address GAO?s Human Capital
Challenges
Broadbanding system for mission staff Noncompetitive hiring authority (e.
g., internship, critical skills programs) Special pay rates Positions at
Senior Level for technical staff Targeted early outs and buyout authority
Revised Reduction in Force (RIF) rules
Regarding our own IT and other technical staff, we have taken a number of
steps to address our workforce needs, including the following:
Using a 25- percent pay differential (equal to the OPM pay differential
for executive branch IT hires) to bring aboard entry- level technical staff
for our IT team.
Offering pay bonuses in attracting and retaining workers for hard- to-
fill positions, such as IT positions requiring specific technical skills.
Making wide use of contractor resources in the IT area to supplement both
the numbers and skills of government employees. Currently, about 60 percent
of the staff supporting GAO internal IT operations and initiatives are
contractor staff. Given staffing constraints and market conditions, we have
found this arrangement to work very well. We focus our training of in- house
staff on project management, contract management, and technical training to
ensure sound project management and oversight of the contractors. Using
contractor resources has given us the ability to quickly bring on staff with
the IT skills needed to carry out new projects/ initiatives.
Using the authority that the Congress provided in our 2000 legislation to
create Senior Level positions to meet certain scientific, technical, and
professional needs and to extend to those positions the rights and benefits
of SES employees. One of the areas targeted was IT. We recently established
four new Senior Level technical IT positions and provided
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 14 GAO- 02- 113T
other specialists- such as our Chief Statistician and Chief Accountant- with
new titles and SES- equivalent benefits.
We believe that three of the authorities provided in our 2000 legislation
may be appropriate to other agencies and are worth congressional
consideration at this time. Authority to offer voluntary early retirement
and voluntary separation incentives could give agencies additional
flexibilities with which to realign their workforces, correct skills
imbalances, and reduce high- grade, managerial, or supervisory positions
without reducing their overall number of employees. Further, the authority
to establish Senior Level positions could help agencies become more
competitive in the job market, particularly in critical scientific,
technical, or professional areas, such as IT.
Implementing reforms in human capital management will present significant
challenges. Among most difficult will be (1) the sustained commitment
demanded from the executive and legislative branch leaders, including
agencies, the Office of Management and Budget (OMB), the Office of Personnel
Management (OPM), and Congress, and (2) the cultural transformation that
will be required by a new approach to human capital management.
In its report on IT human capital, NAPA also recognizes the importance of
these two factors. The report identifies a number of steps that would be
required for implementation of a new system (see figure 2). Among these,
NAPA includes the need to promote leadership by identifying champions for
the new system within agencies. Further, NAPA acknowledges in its discussion
that implementing its recommendations will challenge the existing culture of
many agencies, and it recommends change management and training efforts for
both managers and employees.
Figure 2: NAPA?s Suggested Actions for Implementation of its Recommendations
Identify champions for the new system in the political and career leadership
of each agency.
Translate the report recommendations into legislative and programmatic
action items. Translate the legislative and programmatic decisions into
detailed agency- by- agency action items.
Develop communications and education strategies. Develop a detailed plan to
carry out these strategies. Provide sufficient funding for both the system
and the implementation activities.
Reform Implementation Faces Challenges
Human Capital: Attracting and Retaining a High- Quality Information
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Page 15 GAO- 02- 113T
We agree that the steps that NAPA describes are essential elements for an
effective implementation strategy. We have, for example, identified six
elements that our work suggests are particularly important in implementing
and sustaining management improvements that actually resolve the problems
they address. 19 These elements are (1) a demonstrated leadership commitment
and accountability for change; (2) the integration of management improvement
initiatives into programmatic decisionmaking; (3) thoughtful and rigorous
planning to guide decisions, particularly to address human capital and
information technology issues; (4) employee involvement to elicit ideas and
build commitment and accountability; (5) transforming organizational culture
and aligning organizations to streamline operations and clarify
accountability; and (6) strong and continuing congressional involvement. I
would like to particularly highlight leadership and transforming
organizational culture, two of the key elements in implementing such
reforms.
The sustained commitment of leaders within the executive and legislative
branches is essential to the success of any implementation. The key players
in the human capital area- agency leaders, OPM, OMB, and the Congress- all
need to be actively involved in leading and creating change.
As we have previously testified, the key change for agency leaders who hope
to improve their agencies? human capital management is to focus on people as
a strategic asset. 20 To create a workforce that shares the agency?s vision
and is aware of the contribution that each employee can make toward
achieving it, the agency?s senior leaders must convey this vision clearly
and consistently throughout the organization by their words and deeds and
the example they set. Political appointees and career managers may bring
differing values to the team, but they must work at building mutual
understanding and trust and at committing themselves to a shared set of
goals for their agency. An essential step in achieving these goals is to
create an effective workforce. Senior leadership need to ensure that their
agencies are determining their current and future workforce needs, assessing
how their current and anticipated future workforce
19 Management Reform: Elements of Successful Improvement Initiatives (GAO/
T- GGD- 0026, Oct. 1999). 20 Human Capital: Meeting the Governmentwide High-
Risk Challenge (GAO- 01- 357T, Feb. 2001). Implementation Will
Require Sustained, Committed Leadership
Agency Leaders Need to Focus on Human Capital
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 16 GAO- 02- 113T
compares with these needs, and developing effective strategies to fill the
gaps.
A useful tool for assessing overall human capital management is GAO?s human
capital framework, which identifies a number of human capital elements and
underlying values that are common to high- performing organizations. 21 As
our framework makes apparent, agencies must address a range of interrelated
elements to ensure that their human capital approaches effectively support
mission accomplishment. Although no single recipe exists for successful
human capital management, highperforming organizations recognize that all
human capital policies, practices, and investments must be designed,
implemented, and assessed by the standard of how well they support the
organization?s vision of what it is and where it wants to go.
We have previously reported on the crucial roles that OPM and OMB play in
human capital management. 22 OPM?s responsibility is to work with agencies
to create systems to effectively recruit, develop, manage, and retain a
high- quality and diverse workforce, and to regulate these systems. In this
capacity, OPM has been emphasizing to agencies the importance of integrating
strategic human capital management into agency planning. 23 Among other
things, OPM has brought attention to the need to integrate human capital
professionals into agencies? planning processes. 24 OPM has also taken three
steps to alleviate specific IT human capital challenges: it has established
special salary rates for IT professionals (as well as scientists and
engineers), it has issued a new classification standard for IT specialist
positions, and it has piloted a new approach to establishing and assessing
qualifications for IT work. OPM has also been focusing more attention on
developing tools to help agencies. For example, it is developing a workforce
planning model, with associated research tools,
21 Human Capital: A Self- Assessment Checklist for Agency Leaders (GAO/ OCG-
00- 14G, Sep. 2000). 22 Human Capital: Meeting the Governmentwide High- Risk
Challenge (GAO- 01- 357T, Feb. 2001). 23 See OPM?s Strategic Human Resources
Management: Aligning With the Mission (U. S. Office of Personnel Management,
Sep. 1999). 24 See The HR Workforce: Meeting the Challenge of Change (U. S.
Office of Personnel Management, Jan. 2000). See also A Call to Action: A
Coalition on the Future of the Federal Human Resource Management Profession
(Federal Section of the International Personnel
Management Association, Sep. 2000). OPM and OMB Must Be
Leaders in Human Capital Management
Human Capital: Attracting and Retaining a High- Quality Information
Technology Workforce
Page 17 GAO- 02- 113T
and has launched a Web site on workforce planning issues to facilitate
information sharing. Further, OPM recently revised the SES performance
management regulations so that in evaluating executive performance, agencies
will use a balanced scorecard of customer satisfaction, employee
perspectives, and organizational results.
In prior testimony, we have pointed out that OPM could make substantial
additional contributions by taking advantage of its ability to facilitate
information- sharing on best practices among human capital managers
throughout the federal government. 25 In short, OPM should continue to move
from ?rules to tools?; its most valuable contributions will come less from
traditional compliance activities than from its initiatives as a strategic
partner to the agencies.
Like OPM, OMB has increased its efforts to promote strategic human capital
management. OMB?s role in setting governmentwide management priorities and
defining resource allocations is critical to encouraging agencies to
integrate strategic human capital management into their core business
processes. In this role, OMB recently released the FY2002 President?s
Management Agenda, which provides the President?s strategy for improving the
management and performance of the federal government. 26 The report
identifies strategic management of human capital as an area for
governmentwide improvement. In line with suggestions we have made, OMB is
expecting agencies to take full advantage of existing authorities to better
acquire and develop a high quality IT workforce. OMB also wants agencies to
redistribute staff to front- line service delivery and reduce the number of
organizational layers as they make better use of IT systems capabilities and
knowledge sharing. Also, OMB?s Circular No. A- 11 guidance on preparing
annual performance plans states that agencies? fiscal year 2002 annual
performance plans should set goals in such areas as recruitment, retention,
training, appraisals linked to program performance, workforce diversity,
streamlining, and family- friendly programs.
What is now required is the sustained and forceful leadership to make the
promise of these initiatives a reality. Important areas for attention
include
25 Human Capital: Meeting the Governmentwide High- Risk Challenge (GAO- 01-
357T, Feb. 2001). 26 President?s Management Agenda for Fiscal Year 2002
(Office of Management and Budget, August 2001).
Human Capital: Attracting and Retaining a High- Quality Information
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Page 18 GAO- 02- 113T
benchmarking and best practices efforts within the executive branch and
greater attention during resource allocation to the links between agency
missions and the human capital needed to pursue them.
We have previously noted that leadership on the part of Congress will be
critical if governmentwide improvements in strategic human capital
management are to occur. 27 To raise the visibility of the human capital
issue and move toward a consensus on legislative reforms, both parties in
both houses of Congress must stress commitment to people as an urgent
federal management concern. Among the most encouraging developments in this
regard have been the efforts of this Subcommittee to draw attention to human
capital issues.
Congress has opportunities available through its confirmation, oversight and
appropriations, and legislative roles to ensure that agencies recognize
their responsibilities and have the needed tools to manage their people for
results. For example, Congress can draw wider attention to the critical role
of human capital in the confirmation process, during which the Senate can
make clear its commitment to sound federal management and explore what
prospective nominees plan to do to ensure that their agencies recognize and
enhance the value of their people. 28
As part of the oversight and appropriations processes, Congress can examine
whether agencies are effectively managing their human capital programs. It
can also encourage more agencies to use the flexibilities available to them
under current law and to reexamine their approaches to strategic human
capital management in the context of their individual missions, goals, and
other organizational needs.
Further, Congress can play a defining role in determining the scope and
appropriateness of additional human capital flexibilities that agencies may
seek through legislation. When agencies request legislative exceptions from
current civil service constraints, Congress can require that they make a
sound business case based on rational and fact- based analyses of their
27 Human Capital: Meeting the Governmentwide High- Risk Challenge (GAO- 01-
357T, Feb. 2001). 28 Toward this end, we have developed a set of questions
for political appointees that the Senate may use during the confirmation
process. See Confirmation of Political Appointees: Eliciting Nominees? Views
on Leadership and Management Issues (GAO/ GGD- 00- 174, Aug.
2000). Congressional Leadership Will
Be Critical to Improving Human Capital Governmentwide
Human Capital: Attracting and Retaining a High- Quality Information
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Page 19 GAO- 02- 113T
needs, the constraints under which they presently operate, and the
flexibilities available to them. For example, before we submitted human
capital legislative proposals for GAO last year, we made sure not only to
identify in our own minds the human capital flexibilities that we needed,
but also to give Congress a clear indication of our needs, our rationale,
and the steps we were taking to maximize benefits and manage risks.
Ultimately, Congress may wish to consider comprehensive legislative reform
in the human capital area to give agencies the tools and reasonable
flexibilities they need to manage effectively while retaining appropriate
safeguards. As part of this effort, Congress may also wish to consider the
extent to which traditional ?civil service? approaches- structures,
oversight mechanisms, rules and regulations, and direction- setting- make
sense for a government that is largely a knowledge- based enterprise that
has adopted and is now implementing modern performance management
principles.
Another critical challenge for implementing any reform is addressing needed
changes in prevailing organizational cultures. As we have noted in previous
testimony, a cultural transformation will be key for a successful transition
to a new approach to human capital management. 29 A culture of hierarchical
management approaches will need to yield to one of partnerial approaches;
process- oriented ways of doing business will need to yield to results-
oriented ones; and organization ?silos? will need to become integrated.
Although government organizations have often proven to be slow to make these
kinds of cultural changes, agencies that expect to make the best use of
their human capital will need to create a culture that strongly emphasizes
performance and supports employees in accomplishing their missions. Such a
culture will include appropriate performance measures and rewards and a
focus on continuous learning and knowledge management.
Organizational performance problems are often linked to organizational
culture. For example, a ?siloed? culture at the Federal Aviation
Administration was one of several underlying causes of acquisition problems
in the agency?s multibillion- dollar modernization program, which has
experienced cost overruns, schedule delays, and significant
29 Human Capital: Meeting the Governmentwide High- Risk Challenge (GAO- 01-
357T, Feb. 2001). Organizational Cultures
Will Require Change
Human Capital: Attracting and Retaining a High- Quality Information
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Page 20 GAO- 02- 113T
performance shortfalls. 30 Cultural issues have also been linked to
longstanding security problems at Department of Energy weapons laboratories,
and to intractable waste, fraud, abuse, and mismanagement problems in the
Social Security Administration?s high- risk Supplemental Security Income
program. 31 Overcoming such problems requires overcoming the barriers that
result from an entrenched organizational culture.
Implementing new approaches to human capital management will require agency
leaders and managers to steer their organizational cultures in a new
direction. A number of tools and strategies are available for this purpose,
including modern performance management and incentive approaches- directed
at either individuals or teams- to help empower and motivate staff, reward
high performance, and ensure accountability. (For example, our study on the
use of executive performance agreements found that despite variations among
agencies reflecting differing agency goals and priorities, such agreements
produce a consistent range of benefits, including strengthening alignment of
goals with daily operations and fostering collaboration across
organizational boundaries. 32 ) Since the 1995 revision of the federal
government?s performance appraisal and rewards policies, agencies have more
flexibility than previously to develop and (with OPM approval) implement
performance appraisal systems to meet their specific goals and needs. Such
flexibility is important as agencies try to establish a ?line of sight?
between individual employees and agency goals and objectives. The effort
required is not trivial: agencies we have studied have struggled to link
employee performance expectations to agency goals. 33 Further, many agencies
have reported that they do not know whether their incentive programs are
effectively motivating their employees. 34 These problems underscore the
need for
30 Major Management Challenges and Program Risks: Department of
Transportation (GAO01- 253, Jan. 2001). 31 Major Management Challenges and
Program Risks: Social Security Administration (GAO01- 261, Jan. 2001). 32
Managing for Results: Emerging Benefits From Selected Agencies? Use of
Performance Agreements (GAO- 01- 115, Oct. 2000).
33 Managing for Results: Using GPRA to Assist Oversight and Decisionmaking
(GAO- 01872T, June 2001). 34 Human Capital: Using Incentives to Motivate and
Reward High Performance (GAO/ TGGD- 00- 118, May 2000).
Human Capital: Attracting and Retaining a High- Quality Information
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Page 21 GAO- 02- 113T
innovation and flexibility in human capital management, as well as continual
efforts to capture data not only on employee performance, but also on the
effectiveness of agencies? efforts at human capital management.
In summary, Mr. Chairman, designing, implementing, and maintaining effective
human capital strategies for all federal workers, but particularly for the
IT workforce, will be critical to achieving the goals of maximizing the
performance and ensuring the accountability of the federal government. In a
performance management environment where federal agencies are held
accountable for delivering improvements in program performance, the ?people
dimension? is of paramount importance. Overcoming human capital management
challenges will determine how successfully the federal government can build,
prepare, and manage its workforce.
Mr. Chairman, this concludes my statement. I would be pleased to respond to
any questions that you or other members of the Subcommittee may have at this
time.
For further information regarding this testimony, please contact me at (202)
512- 6240 or by email at mcclured@ gao. gov. Individuals making key
contributions to this testimony included Barbara Collier and Margaret Davis.
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