GAO'S Proposed Human Capital Legislation: Views of the Employee  
Advisory Council (16-JUL-03, GAO-03-1020T).			 
                                                                 
The Comptroller General formed the Employee Advisory Council	 
(EAC) about 4 years ago to be fully representative of the GAO	 
population and advise him on issues pertaining to both management
and employees. The members of the EAC represent a variety of	 
employee groups and almost all employees outside of the senior	 
executive service (more than 3,000 of GAO's 3,200 employees or 94
percent). The EAC operates as an umbrella organization that	 
incorporates representatives of GAO's long-standing employee	 
organizations including groups representing the disabled,	 
Hispanics, Asian-Americans, African-Americans, gays and lesbians,
veterans, and women, as well as employees in various pay bands,  
attorneys, and administrative and professional staff. As	 
established in our charter, the Employee Advisory Council serves 
as an advisory body to the Comptroller General and other senior  
executives by: seeking and conveying the views and concerns of	 
the individual employee groups it represents while being	 
sensitive to the mutual interests of all employees, regardless of
their grade, band, or classification group; proposing solutions  
to concerns raised by employees, as appropriate; providing input 
by assessing and commenting on GAO policies, procedures, plans,  
and practices; and, communicating issues and concerns of the	 
Comptroller General and other senior managers to employees. In	 
preparing for our testimony today, the EAC considered the results
of discussions with constituents, and input from Council	 
representatives, including information gathered from employees	 
during the initial introduction of the proposal and comments	 
provided on the Comptroller General's revised proposal. Although 
we have limited quantitative data in this regard and recognize	 
that not all employees have the same opinions regarding all	 
provisions of the proposed legislation, we believe our testimony 
is representative of a substantial cross-section of GAO 	 
employees.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-1020T					        
    ACCNO:   A07546						        
  TITLE:     GAO'S Proposed Human Capital Legislation: Views of the   
Employee Advisory Council					 
     DATE:   07/16/2003 
  SUBJECT:   Employee benefit plans				 
	     Employee retirement plans				 
	     Employee transfers 				 
	     Employees with disabilities			 
	     Government employees				 
	     Personnel management				 

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GAO-03-1020T

                                       A

Test i mony Before the Subcommittee on Civil Service and Agency
Organization, Committee on Government Reform, House of Representatives

For Release on Delivery Expected at 2: 00 p. m. EDT GAO*S PROPOSED
Wednesday, July 16, 2003 HUMAN CAPITAL

LEGISLATION View of the Employee Advisory Council

Statement of Christopher A. Keisling, Employee Advisory Council Member

GAO- 03- 1020T

GAO United States General Accounting Office

A

Page 1 GAO- GAO- 03- 1020T

Good afternoon, Madam Chairwoman and members of the Subcommittee. My name
is Chris Keisling. I am one of three liaisons to the Comptroller General
and the Congress selected by GAO*s 23- member Employee Advisory Council
(also known as the EAC). I am an Assistant Director in GAO*s Atlanta Field
Office and while my role on the Council is to represent Band III employees
in all field offices, I am here today, at the Subcommittee*s invitation,
to provide the views of the Council and a wide cross- section of GAO on
the Comptroller General*s Human Capital II proposal.

The Comptroller General formed the EAC about 4 years ago to be fully
representative of the GAO population and advise him on issues pertaining
to both management and employees. The members of the EAC represent a

variety of employee groups and almost all employees outside of the senior
executive service (more than 3,000 of GAO*s 3,200 employees or 94
percent). The EAC operates as an umbrella organization that incorporates
representatives of GAO*s long- standing employee organizations including
groups representing the disabled, Hispanics, Asian- Americans, African-
Americans, gays and lesbians, veterans, and women, 1 as well as employees
in various pay bands, attorneys, and administrative and professional
staff. 2 As established in our charter, the Employee Advisory Council
serves as an

advisory body to the Comptroller General and other senior executives by: 
seeking and conveying the views and concerns of the individual employee

groups it represents while being sensitive to the mutual interests of all
employees, regardless of their grade, band, or classification group; 
proposing solutions to concerns raised by employees, as appropriate; 
providing input by assessing and commenting on GAO policies,

procedures, plans, and practices; and,  communicating issues and concerns
of the Comptroller General and other senior managers to employees. In
preparing for our testimony today, the EAC considered the results of
discussions with constituents, and input from Council representatives,

1 While these organizations historically operated under separate charters
by the Comptroller General, they now are included in the charter of the
EAC and appoint representatives to serve on the Council.

2 These members are elected by their constituency to 2- year terms and may
seek reelection once.

Page 2 GAO- GAO- 03- 1020T

including information gathered from employees during the initial
introduction of the proposal and comments provided on the Comptroller
General*s revised proposal. Although we have limited quantitative data in
this regard and recognize that not all employees have the same opinions

regarding all provisions of the proposed legislation, we believe our
testimony is representative of a substantial cross- section of GAO
employees.

In summary, GAO employees generally support many of the provisions in the
proposed legislation. For example, most employees expressed support for

 the provision to make GAO*s authority to offer voluntary early
retirement permanent,  provisions to enhance vacation time for upper-
level hires and relocation

expenses deemed necessary by the Comptroller General to recruit and retain
top employees, and  the provision to establish an exchange program with
the private sector.

However, many employees have expressed concerns about the proposals that
affect pay. Specifically, many staff are concerned about the potential
negative impact of the change in the basis for annual salary increases,

although some staff recognize the potential benefits for additional reward
and management flexibility. To a lesser extent, staff are concerned about
changes to pay protections provided under traditional federal employment
rules. Staff have differing opinions on the provision to change GAO*s name
to the Government Accountability Office.

The EAC recognizes and appreciates the efforts the Comptroller General has
made to address employees* concerns regarding provisions affecting pay by
(1) providing assurances that the new system will sustain employees*
purchasing power and provide parity with prevailing locality pay, (2)
proposing short- and longer- term modifications to GAO*s performance
management system, and (3) incorporating a 2- year transition period for
implementation of the new system. We hope that if the legislation is
enacted, the Comptroller General will continue to be responsive to the
concerns of employees as the agency moves forward in implementing these
changes.

Page 3 GAO- GAO- 03- 1020T

Outreach efforts by EAC representatives indicate that most employees
support many portions of the legislative proposal under consideration by
the Subcommittee but have concerns about provisions in the proposal
related to pay. Specifically, employees generally support provisions that
make the authorities provided to GAO for voluntary early retirement pay
incentives permanent, to provide enhancements in vacation time and
relocation expenses deemed necessary by the Comptroller General to recruit
and retain top employees, and to establish a private sector exchange
program. However, many employees are concerned about the provisions that
change the way that annual pay decisions are made and, to a lesser extent,
the proposed change to traditional protections for pay

retention. Employees had differing opinions about the proposed change to
GAO*s name. Most employees support the Comptroller General*s proposed
provisions to make permanent GAO*s 3- year authority to offer voluntary
early retirement and voluntary separation payments to provide flexibility
to realign GAO*s workforce. In addition, GAO employees recognize that
attracting and retaining high- quality employees and managers throughout
the organization is vitally important for the future of GAO. Employees
thus generally support the provisions to offer flexible relocation
reimbursements, provide upper- level hires with 6- hour leave accrual, and
establish an executive exchange program with private sector organizations.
Most employees commented positively on these authorities so long as there
are internal controls to monitor and report on their use, as are present
to provide accountability for other authorities throughout

GAO. 3 Many employees expressed concern about the provisions that affect
the determination of annual pay increases and pay retention. The opinions
expressed by employees generally fall into three categories: (1) general
concerns and some supporting views regarding changes in traditional civil

service employment rules that could reduce the amount of annual pay
increases provided for economic adjustments but provide greater
opportunity for rewarding performance, (2) concerns about making a

3 For example, the Comptroller General detailed GAO*s use of the
flexibilities provided in the first round of authorities granted in the
GAO Personnel Flexibilities Act of October 2000 in U. S. General
Accounting Office, Assessment of Public Law 106- 303, GAO- 03- 954 SP
(Washington, D. C., June 27, 2003). GAO Employees

Support Most Aspects of the Proposed Legislation But Have Concerns About
Pay Provisions and Differing Opinions About the Proposed Name Change

Most Employees Support Proposals to Improve GAO*s Ability to Realign the
Workforce and Attract and Retain High- Quality Employees

Many Employees Are Concerned About The Provisions That Affect Pay

Page 4 GAO- GAO- 03- 1020T

portion of annual economic adjustments variable based on performance
assessment, and to a lesser extent (3) concerns about the loss of
traditional pay retention protections.

The first area of employee concern is proposed changes to traditional
federal civil service employment rules that have historically provided a
fixed annual increase for all federal employees determined by the
President and the Congress. Government employees in general, and GAO
employees in particular, often conduct work that can have far reaching
implications and impacts. Such work can positively or negatively affect
segments of the population and thereby the general public*s perceptions
of, and reactions to, the federal government, including Members of
Congress. Over the years, the Congress has developed a bulwark of
protections to shield federal workers from reprisals that might result
from their service as employees. Included among these has been the process
by which federal employees* salaries are annually adjusted as a result of
the passage of, and signing into law, of the annual budget.

The historical process relies on passage of legislation which includes an
annual increase in pay to reflect increases in inflation and overall
employment costs, followed by determinations by the President (and the
Office of Personnel Management) to calculate the distribution of the
legislative economic adjustments between an overall cost- of- living
adjustment and locality- based increases to reflect differences in cities
across the nation. The current mechanism for annual federal pay
adjustments is found in Public Law 101- 509, the Federal Employees Pay
Comparability Act. 4 The Comptroller General has expressed his concern
about trends in the

executive branch that make it highly likely that the current civil service
pay system will be the subject of comprehensive reform within the next few
years. Citing federal agencies that already have many of these
flexibilities, such as the Federal Aviation Administration 5 and the new

4 While the goal of the act is to achieve full comparability, namely pay
parity, between federal employees and their nonfederal counterparts on a
locality- by- locality basis, the law has never been implemented as
originally enacted as a result of a provision in the law that authorizes
the President to offer an alternative pay plan in times of war or *serious
economic conditions affecting the general welfare.*

5 While the Federal Aviation Administration is not required to grant cost-
of- living allowances or locality- pay increases, agency management has
elected to continue providing these pay adjustments as they are generally
applied to the federal pay system. Concerns and supporting views

on proposed changes that could reduce annual pay provided for economic
adjustments but provide greater rewards

Page 5 GAO- GAO- 03- 1020T

Department of Homeland Security, as well as agencies currently seeking
reform, such as the Department of Defense, he has stated his belief that
GAO needs to be *ahead of the curve.*

Under the proposal, rather than relying on the administration*s
determination and the Congress* mandate for an annual salary adjustment,
GAO can develop and apply its own methodology for the annual cost-
ofliving adjustments and compensation differences by locality that the
Comptroller General believes would be more representative of the nature,
skills, and composition of GAO*s workforce. Some employees have expressed
the following concerns.

 Removing GAO from the traditional process significantly alters a key
element of federal pay protection that led some employees to seek
employment in the federal sector. Changing this protection could diminish
the attractiveness of federal service and result in the need for higher
salaries to attract top candidates.  A portion of appropriations
historically intended to provide all federal

employees with increases to keep pace with inflation and the cost of
living in particular localities should not be tied to individual
performance.  GAO- based annual economic adjustments are more likely to
be less than, rather than more than, amounts annually provided by the
Congress; thus

employees performing at lower (but satisfactory) levels who may not
receive an equal or greater amount in the form of a bonus or dividend may
experience an effective pay cut from amounts traditionally provided.  The
flexibility for the Comptroller General to use funds appropriated for

cost- of- living adjustments for pay- for- performance purposes could
imperil future GAO budgets by making that portion of the annual budget
discretionary where it was once mandatory.  The wide latitude provided in
the proposal gives the Comptroller General

broad discretion and limited accountability for determining whether
employees receive annual across- the- board economic adjustments, the
amount of such adjustments, and the timing of adjustments. This could
result in unfair financial harm for some employees if the broad
authorities were improperly exercised. 6  The Comptroller General has not
made a compelling case regarding the

need for these pay- related and other legislative changes, for example by
showing that existing cost- of- living adjustment mechanisms are
inaccurate 6 While management*s salary increase decisions for employees
are not subject to appeal

under the current system, some employees feel that the application of any
methodology that GAO establishes to determine the amount of annual
economic increases under the proposed approach should be subject to
appeal.

Page 6 GAO- GAO- 03- 1020T

or that the agency has had difficulty in attracting and retaining high-
quality employees.

On the other hand, some employees also recognize that the proposed pay
provisions may offer some distinct advantages for some employees. Some
employees commented in support of the provision indicating that

 the existing system for calculating inflation and local cost adjustments
may not accurately reflect reality;  most employees would not likely be
harmed by a system that allocates a

greater share of pay to performance- based compensation;  the authorities
would allow GAO managers to provide greater financial

rewards to the agency*s top performers, as compared to the present payfor-
performance system;  making a stronger link between pay and performance
could facilitate

GAO*s recruitment of top talent. In addition, the provision may, to a
limited extent, address a concern of some field employees by providing
alternatives to reductions in force in times when mandated pay increases
are not fully funded or in other extraordinary circumstances. For example,
from 1992 to 1997, GAO underwent budgetary cuts totaling 33 percent (in
constant fiscal year 1992 dollars.) To achieve these budgetary reductions,
GAO staff was reduced by 39 percent, primarily through field office
closures and the associated

elimination of field- based employees. While we hope the agency will never
again have to manage budget reductions of this magnitude, this provides a
painful example of the vulnerability of staffing levels, particularly in
the field, to budgetary fluctuations. The proposed pay provisions would
provide the Comptroller General with greater flexibility to manage any
future budget crises by adjusting the annual pay increases of all
employees without adversely and disproportionately impacting the careers
and lives of field- based employees.

In addition to the revised basis for calculating annual economic
adjustments, employees are concerned about the provision that transforms a
portion of the annual pay increases that have historically been granted to
federal employees for cost- of- living and locality- pay adjustments into
variable, performance- based pay increases and bonuses. Because the GAO
workforce is comprised of a wide range of highly qualified and talented
people performing a similarly wide range of tasks, employees recognize
that it is likely that some employees at times have

more productive years with greater contributions than others. Therefore,
most agree with the underlying principle of the provision to provide
larger Concerns about making a

portion of annual pay increases variable based on performance assessment

Page 7 GAO- GAO- 03- 1020T

financial rewards for employees determined to be performing at the highest
level. However, in commenting on the proposal, some employees said that
GAO management already has multiple options to reward high performers
through bonuses, placement in top pay- for- performance categories, and
promotions. Others expressed concern that increased emphasis on individual
performance could result in diminished teamwork, collaboration, and morale
because GAO work typically is conducted in teams, often comprised of
employees who are peers.

These concerns are compounded by long- standing widespread employee
concerns regarding the accuracy and validity of GAO*s performance
appraisal system, which is used for the current system of performancebased
pay adjustments. Any effort to increase the link between pay and
performance implicitly relies upon the existence of a reliable method for
gauging individual performance. We received comments that the varying
levels of complexity, time frames, resource availability, and sensitivity
of GAO work make it difficult to objectively assess individual performance

and to fairly and accurately compare employees* performance with
sufficient precision. In other words, some employees believe that the
subjectivity inherent in the system does not provide a valid basis for
distinguishing between subtle differences in performance that may be
measured in tenths of a percentage point between performance categories.
Employee concerns about performance assessment have not significantly
changed as a result of the new competency- based system GAO implemented
last year. The comments we have heard are consistent with the concerns
expressed to the Congress by GAO employees in 1993:

*The PFP (pay- for- performance) process involves managers making very
fine distinctions in staff*s performance in order to place them in
discrete performance management categories. These categories set
artificial limits on the number of staff being recognized for their
contributions with merit pay and bonuses.*

Related to concerns about subjectivity in the performance assessment
system, Council representatives and employees expressed concern about data
indicating that as a group, minorities, veterans, and field- based
employees have historically received lower ratings than the employee
population as a whole. While the data indicate that the disparity is
considerably improved or eliminated for employees who have been with the
agency fewer than 5 years, some employees have serious reservations about
providing even greater discretion in allocating pay based on the current
performance management system.

Page 8 GAO- GAO- 03- 1020T

To a lesser extent, some employees expressed concerns about the
elimination of traditional federal employment rules related to grade and
pay retention for employees who are demoted due to such conditions as a
workforce restructuring or reclassification. The proposed legislation will

allow the Comptroller General to set the pay of employees downgraded as a
result of workforce restructuring or reclassification at their current
rates (i. e., no drop in current pay), but with no automatic annual
increase to basic pay until their salaries are less than the maximum rates
of their new grades or bands.

Employee concern, particularly among some Band II analysts and mission
support staff, focuses on the extent to which this provision may result in
a substantial erosion in future pay, since there is a strong possibility
that these two groups may be restructured in the near future. For example,
one observation is that the salary range within pay bands is such that
senior analysts who are demoted would likely wait several years for their
next increase in pay or bonus. In this circumstance, employees would need
to reconcile themselves to no permanent pay increases regardless of their
performance. Some employees cited this potential negative impact on staff
motivation and productivity and emphasized that to continue providing
service at the level of excellence that the Congress and the American
people expect from GAO, this agency needs the best contributions of all
its midlevel and journeymen employees. However, the EAC recognizes that,
absent this kind of authority and given some of the authorities already
provided to the Comptroller General, some employees who may be demoted
could otherwise face termination rather than diminished salary increases.

Finally, employees had differing opinions regarding the provision to
change GAO*s name to the Government Accountability Office. Some employees
are concerned that the proposed change in GAO*s name to more accurately
reflect the work that we do will damage GAO*s *brand recognition.* Most
employees who oppose the name change do not see the current name as an
impediment to doing our work or to attracting quality employees. Some
employees expressed concern that the legacy of highquality service to the
Congress that is embedded in the name *United States General Accounting
Office* might be lost by changing the name. Other employees support the
name change and cited their own experiences in being recruited or
recruiting others and in their interaction with other federal agencies. In
their opinion, the title *General Accounting Office* reflects
misunderstandings and incorrect assumptions about GAO*s role and function
by those who are not familiar with our operations Concerns about the loss
of

traditional pay retention protections

Employees Had Differing Opinions Regarding a Change in GAO*s name

Page 9 GAO- GAO- 03- 1020T

and may serve as a deterrent to attracting employees who are otherwise not
interested in accounting.

We appreciate the Comptroller General*s efforts to involve the Employee
Advisory Council and to solicit employee input through discussions of the
proposal. As a result of employee feedback and feedback from GAO managers
and the EAC, the Comptroller General has made a number of revisions and
clarifications to the legislative proposal along with commitments to
address concerns relating to the annual pay adjustment by issuing formal
GAO policy to formally establish his intent to retain employees* earning
power in implementing the authorities; by revising the performance
management system; and by deferring implementation of pay changes until
2005.

Key among the commitments made by the Comptroller General is his assurance
to explicitly consider factors such as cost- of- living and localitypay
differentials among other factors, both items that were not in the
preliminary proposal. In addition, the Comptroller General has said that
employees who are performing adequately will be assured of some annual
increase that maintains spending power. He outlined his assurance in GAO*s
weekly newsletter for June 30th that successful employees will not witness
erosion in earning power and will receive an annual adjustment

commensurate with locality- specific costs and salaries. According to the
Comptroller General, pay protection commitments that are not included in
the statute will be incorporated in the GAO orders required to implement

the new authorities. This is consistent with the approach followed when
GAO made similar pay protection commitments during the conversion to broad
bands in the 1980s. To the extent that these steps are taken, overall
employee opinion of the changes should improve because much of the concern
has focused on making sure that staff who are performing adequately do not
witness economic erosion in their pay.

In response to concerns regarding the performance management system and
the related variable elements of annual pay increases raised by the EAC,
employees, and senior managers, the Comptroller General has told employees
that he will provide increased transparency in the area of

ratings distributions, for example by releasing summary- level performance
appraisal results. In addition, the Comptroller General has stated that he
plans to take steps to improve the performance management system that The
EAC Appreciates

the Comptroller General*s Efforts to Address Concerns of GAO Employees
About Pay- Related Human Capital II Provisions

Retention of Earning Power and Locality Pay Parity

Planned Revisions to Performance Management

Page 10 GAO- GAO- 03- 1020T

could further reduce any disparities. Specifically, on June 26, the
Comptroller General released a *Performance Management System Improvement
Proposal for the FY 2003 Performance Cycle* that outlines

proposed short- term improvements to the analyst performance management
system that applies to the majority of GAO employees. These include
additional training for staff and performance managers and a reduction in
the number of pay categories from five to four. A number of longer- term
improvements to the performance appraisal system requiring validation are
also under consideration, including weighting competencies and modifying,
adding, or eliminating competencies. For all employees to embrace any
additional pay- for- performance efforts, it is vital that the Comptroller
General take steps that will provide an increased level of confidence that
the appraisal process is capable of accurately identifying high performers
and fairly distinguishing between levels of performance.

Finally, the Comptroller General has agreed to delay implementation of the
pay- for- performance provisions of the proposal until October 1, 2005.
This change should provide an opportunity to assess efforts to improve the

annual assessment process and lessen any impact of changes in the
permanent annual pay increase process for employees approaching
retirement. It should also provide an opportunity to implement a number of
measures designed to improve confidence in the annual assessment process.

In summary, as GAO employees we are proud of our work assisting the
Congress and federal agencies to make government operations more efficient
and effective. Although all of us would agree that our agency is not
perfect, the EAC believes GAO is making a concerted effort to become a
more effective organization. We will continue to work closely with
management to improve GAO, particularly in efforts to implement and
monitor any additional authorities granted to the Comptroller General. We
believe that it is vital that we help to develop and implement innovative

approaches to human capital management that will enable GAO to continue to
meet the needs of the Congress; further improve the work environment to
maximize the potential of our highly skilled, diverse, and dedicated
workforce; and serve as a model for the rest of the federal government.
Madam Chairwoman, this concludes my formal statement. I would be

pleased to answer any questions you may have. Deferred Implementation

of Pay Provisions Conclusion

(990840)

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