    Human Capital Management: FAA's Reform Effort Requires a More
    Strategic Approach (03-FEB-03, GAO-03-156).

    In 1996, the Federal Aviation Administration (FAA) undertook a
    human capital reform effort under one of the most flexible human
    capital management environments in the federal government,
    including broad exemptions from title 5 laws governing federal
    civilian personnel management. GAO was asked (1) to examine the
    changes FAA initiated in its reform effort, including whether
    they required an exemption from title 5 and their implementation
    status; (2) determine the effects of the reform effort according
    to available data and the views of FAA officials, managers, and
    employees; and (3) assess the extent to which FAA's reform effort
    incorporated elements that are important to effective human
    capital management.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-03-156
        ACCNO:   A06000
      TITLE:     Human Capital Management: FAA's Reform Effort Requires a
    More Strategic Approach
         DATE:   02/03/2003
      SUBJECT:   Labor force
    	     Human resources utilization
    	     Personnel management
    	     Strategic planning
    	     Best practices

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    GAO-03-156

                                           A

    Appendi x VI

    GAO Contacts and Staff Acknowledgments GAO Contacts Gerald L. Dillingham,
    Ph. D. (202) 512- 3650 Christopher A. Keisling (404) 679- 1917 Staff

    In addition to those individuals named above, William Doherty, Michele
    Acknowledgments

    Fejfar, David Hooper, Jason Schwartz, E. Jerry Seigler, Margaret Skiba,
    Tina Smith, Alwynne Wilbur, and Kristy Williams made key contributions to
    this report.

    (540006)

    Report to Congressional Requesters

    February 2003 HUMAN CAPITAL MANAGEMENT FAA*s Reform Effort Requires a More
    Strategic Approach

    GAO- 03- 156

    Letter 1 Results in Brief 3 Background 6 FAA Initiated Personnel Changes
    in Three Broad Areas, Some of Which Required Exemptions from Title 5 9

    Key Elements of Personnel Reform Have Not Yet Been Fully Implemented 17
    FAA Had Little Data on Reform*s Effects, and Views of FAA Officials

    Often Differed from Views of Managers and Employees We Interviewed 24 FAA
    Has Not Fully Incorporated Elements Needed for Effective

    Human Capital Management 35 Conclusions 44 Recommendations 45 Agency
    Comments and Our Evaluation 46

    Appendixes

    Appendix I: Scope and Methodology 49

    Appendix II: Structured Interview Form and Selected Results 51

    Appendix III: Elements for Effective Human Capital Management 61

    Appendix IV: Core Compensation Pay Bands and Grade Conversion for 2002 64

    Appendix V: FAA Human Resource Management Office*s Balanced Scorecard
    Performance Measures 66

    Appendix VI: GAO Contacts and Staff Acknowledgments 68 GAO Contacts 68
    Staff Acknowledgments 68

    Tables Table 1: Overview of Human Resource Management Office*s Balanced
    Scorecard Performance Measures 39 Table 2: Chronology of Internal and
    External Evaluations of FAA*s

    Personnel Reform 41 Figures Figure 1: Implementation Status of Selected
    Initiatives within the

    Three Areas of FAA*s Personnel Reform That Did or Did Not Require an
    Exemption from Title 5 4

    Figure 2: Selected FAA Human Capital Reform Initiatives and Their Need for
    an Exemption from Title 5 10 Figure 3: Career Level Pay Bands for Job
    Categories under Core

    Compensation 12 Figure 4: Implementation Status of Selected FAA Personnel
    Reform Initiatives 18

    Figure 5: Compensation Systems Applicable to FAA*s Workforce 20 Figure 6:
    Compensation of Air Traffic Controllers in Field Facilities

    and Regional and Headquarters Offices, 2002 26 Figure 7: Number of FAA
    Employees Represented by Unions,

    1991- 2001 28 Figure 8: Inspector General*s Comments on the Effects of

    Personnel Reform on Hiring Times 29 Figure 9: Funding Alternatives Used
    for Managers* PCS

    Promotional Moves between Field Facilities, Fiscal Years 1999- 2001 31
    Figure 10: Number of Formal EEO Complaints by Year 34 Figure 11: FAA
    Employees* Views on the Model Work Environment 35

    Figure 12: Volpe Center*s Views on Importance of Linkage 40 Figure 13:
    Study*s Views on FAA*s Implementation of Personnel

    Reform 43 Figure 14: Inspector General*s Views on FAA*s Implementation of

    Personnel Reform 43 Figure 15: Consultant*s Views on FAA*s Implementation
    of Personnel

    Reform 44 Figure 16: Eight Critical Success Factors Corresponding with the

    Four High- Risk Human Capital Challenges That Can Help Agencies Manage
    Human Capital Strategically 62 Figure 17: Six Key Practices for Effective
    Use of Human Capital

    Flexibilities 63

    Abbreviations

    CFR Code of Federal Regulations EEO Equal Employment Opportunity FAA
    Federal Aviation Administration FAACMA FAA Conference Managers Association
    FLRA Federal Labor Relations Authority GFT Guaranteed Fair Treatment GS
    General Schedule NAPA National Academy of Public Administration NATCA
    National Air Traffic Controllers Association OMB Office of Management and
    Budget OPM Office of Personnel Management PCS Permanent Change of Station

    This is a work of the U. S. Government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. It may contain
    copyrighted graphics, images or other materials. Permission from the
    copyright holder may be necessary should you wish to reproduce copyrighted
    materials separately from GAO*s product.

    Letter

    February 3, 2003 The Honorable John L. Mica Chairman, Subcommittee on
    Aviation Committee on Transportation and

    Infrastructure House of Representatives

    The Honorable Thomas M. Davis III Chairman, Committee on Government

    Reform House of Representatives

    The Honorable David Weldon, M. D. House of Representatives

    The Federal Aviation Administration (FAA) is managing its personnel under
    one of the most flexible human capital management environments in the
    federal government. This is a result of 1995 legislation that granted the
    agency broad exemptions from laws governing federal civilian personnel
    management found in title 5 of the United States Code. Congress provided
    these flexibilities in response to FAA*s position that the inflexibility
    of federal personnel systems was one of the most important constraints to
    the agency*s ability to be responsive to the airline industry*s needs and
    to increase productivity in air traffic control operations. In 1996, FAA
    announced a sweeping reform of its personnel management system. As we have
    reported, 1 major change initiatives generally require a minimum of 5 to 7
    years to provide meaningful and lasting results, and so FAA*s
    implementation of personnel reform should now be approaching a point where
    such results might be discernable. As some other federal agencies, such as
    the National Aeronautics and Space Administration, have requested similar
    human capital flexibilities, and others, such as the Transportation
    Security Administration, are now operating under similar exemptions from
    title 5 requirements, FAA*s experiences in implementing its flexibilities
    could provide valuable information to Congress in considering whether to
    grant the use of such flexibilities at other agencies and in overseeing
    their use.

    1 U. S. General Accounting Office, Managing for Results: Using Strategic
    Human Capital Management to Drive Transformational Change, GAO- 02- 940T
    (Washington, D. C.: July 15, 2002).

    You asked us to review the status of FAA*s personnel reform. As agreed, we
    answered the following questions:  What changes did FAA initiate after
    being granted broad flexibilities in

    1995 and to what extent did these changes require exemptions from title 5?

     What is the status of the implementation of FAA*s human capital reform
    initiatives, and what factors have affected the pace and extent of
    implementation?

     What are the effects of FAA*s human capital reform initiatives according
    to data collected by FAA and the views of FAA human resource and labor
    management officials, managers and employees, and unions?

     To what extent has FAA*s reform effort incorporated elements that are
    important to effective human capital management in the federal government?

    To answer these questions, we reviewed personnel management requirements
    in title 5 and the changes FAA made to its personnel management system as
    a part of the agency*s reform effort. We collected and analyzed internal
    and external evaluations of different aspects of FAA*s personnel reform
    and the available data on the results of reform. We discussed reform with
    agency managers and human resource management officials and union
    representatives and conducted 176 structured

    interviews of randomly selected managers and employees in 27 field
    facilities nationwide, 6 of FAA*s 9 regional offices, and FAA
    headquarters. Because of limitations inherent in the relatively small
    sample size, we did not generalize the views and opinions of those
    randomly interviewed to all FAA employees. To augment the views and
    opinions collected from the structured interviews, we obtained and
    analyzed the data available on the

    results of the various initiatives provided by FAA*s Office of the
    Assistant Administrator for Human Resource Management and the lines of
    business 2 and obtained the views of FAA senior managers in the five lines
    of business

    and representatives of employee associations. Finally, we considered FAA*s
    reform effort in light of elements of strategic human capital management

    2 FAA is composed of five separate organizations or lines of business: Air
    Traffic Services, Research and Acquisitions, Regulation and Certification,
    Airports, and Commercial Space Transportation.

    that we developed in 2002 and assessments of human capital management
    efforts and agencies* use of personnel flexibilities that we

    have performed at other agencies. 3 Appendix I contains a more detailed
    description of the scope and methodology of our work. A copy of our
    structured interview questions with selected employee responses is
    provided in appendix II. We conducted our work from November 2001 to
    October 2002 in accordance with generally accepted government auditing

    standards. Results in Brief In its human capital reform effort, FAA
    initiated changes in three broad

    areas* compensation and performance management, workforce management, and
    labor and employee relations* some of which required exemptions from title
    5. In the area of compensation and performance management, FAA introduced
    two initiatives* a new, more flexible pay system in which compensation
    levels are set within broad ranges, called pay bands, and a new
    performance management system intended to improve employees* performance
    through more frequent feedback with no summary rating. Both new systems
    required an exemption from title 5. In

    the area of workforce management, FAA undertook initiatives in workforce
    planning (the process by which an organization plans and manages the size,
    capabilities, diversity, and deployment of its workforce), hiring,
    training, and relocation of employees. While the planning and training
    initiatives generally did not require exemptions from title 5, other
    workforce management initiatives did require exemptions. In particular,
    exemption from title 5 requirements allowed FAA to establish its own
    competitive hiring process and bypass centralized government hiring system
    requirements. Finally, initiatives in the area of labor and employee
    relations included the establishment of new groups to represent unions and
    employees and a new policy initiative to promote diversity and an open
    work environment. Neither initiative required exemption from title 5,
    which continues to govern FAA*s labor relations.

    While FAA has fully implemented some or all initiatives in each of the
    three broad areas of the reform effort it began in 1996, some key
    initiatives have 3 U. S. General Accounting Office, A Model of Strategic
    Human Capital Management, GAO- 02-

    373SP (Washington, D. C., March 15, 2002); U. S. General Accounting
    Office, Human Capital: Effective Use of Flexibilities Can Assist Agencies
    in Managing Their Workforces, GAO- 03- 02 (Washington, D. C.: Dec. 6,
    2002).

    not yet been fully implemented, and the pace and extent of implementation
    have been affected by several factors. In the area of compensation and
    performance management, FAA*s new compensation system has not yet been
    implemented for about one- quarter of the agency*s workforce whose unions
    have not reached a new pay agreement with FAA. FAA*s new performance
    management system had been implemented for about 20 percent of the total
    workforce (15 percent nonunion employees and 5 percent union employees) at
    the time of our review. In the area of workforce management, FAA
    implemented most initiatives in 1996 by allowing managers in the lines of
    business immediate use of new agencywide flexibilities for hiring and
    training employees. While FAA established similar agencywide policies for
    developing workforce plans for staff, this initiative has not been fully
    implemented. In the area of labor and employee relations, FAA implemented
    initiatives establishing new partnership forums for union and nonunion
    employees and a new model work environment program. While we did not
    determine all of the factors that may have affected the pace and extent of
    implementation, FAA*s need to implement initiatives among a workforce with
    a wide range of skills and workplace environments and to negotiate changes
    with 48 bargaining units within FAA*s nine unions were among factors that
    affected the pace and extent of reform implementation. Figure 1 shows
    selected initiatives in each of the three areas of reform, along with
    whether they required exemptions from title 5 and their implementation
    status.

    Figure 1: Implementation Status of Selected Initiatives within the Three
    Areas of FAA*s Personnel Reform That Did or Did Not Require an Exemption
    from Title 5

    FAA had little data with which to assess the effects of its reform effort.
    While FAA human capital officials cited positive effects of FAA*s human
    capital reform effort, the views of managers and employees and union
    representatives were generally less positive. In the area of compensation
    and performance management, FAA had not systematically collected or

    analyzed data to support human resource management officials* view that
    compensation changes had increased the agency*s ability to attract and
    retain employees. At the same time, many FAA managers and employees we
    interviewed were critical of the new compensation system. Nearly twothirds
    (110 out of 176) of those we interviewed disagreed or strongly disagreed
    that the new pay system is fair to all employees. We were able to find
    evidence of specific concerns regarding unfairness in disparities in pay
    for air traffic controllers. In addition, according to representatives of
    FAA*s Office of Labor Relations and employee unions, a general sense of
    unfairness over pay among some FAA employees outside of air traffic
    services has led to increased unionization among FAA employees. The number
    of employees in unions, as a percentage of the workforce, increased from
    63 percent in 1995 to almost 80 percent in 2001. In the area of workforce
    management, human resource management officials provided

    limited data collected only for air marshals to support their view that
    external hiring times had decreased from an average of 6 months to as
    little as 6 weeks. In contrast, only 12 of the 46 managers we interviewed
    said that the speed of hiring has improved. Finally, FAA labor management
    officials

    cited a limited amount of data that indicated that the number of
    grievances filed at the national level by employees represented by unions
    had increased as evidence that new employee- union forums had not improved
    labor management relations. The managers and employees we interviewed had
    mixed views on the impact of labor and employee relations reform
    initiatives.

    FAA*s lack of empirical data on the effects of its human capital
    initiatives is one indication that it has not fully incorporated elements
    that we and others have identified as important to effective human capital
    management into its reform effort. These elements include data collection
    and analysis, performance goals and measures, and linkage of reform goals
    to program goals. Systems to gather and analyze relevant data provide a
    basis against which performance goals and measures can be applied. FAA
    human resource management officials said that the agency should have spent
    more time to develop baseline data and performance measures before
    implementing the broad range of reforms but that establishing these
    elements was a complex and difficult task. They said FAA was under
    significant pressure to rapidly implement reforms and that one impact of

    FAA*s incremental approach to implementing the reforms was that baseline
    measures tended to change as more people were brought under the reformed
    systems. FAA has also not gone far enough in establishing linkage between
    reform goals and overall program goals of the organization, another
    element we have identified as important to effective human capital
    management. We found that the lack of these elements has been pointed out
    repeatedly in evaluations of FAA*s human capital reform effort, but FAA
    has not developed specific steps and time frames by which these elements
    will be established and used for evaluation. Incorporation of these
    elements could also help FAA build accountability into its human capital
    management approach.

    This report makes recommendations designed to enable FAA to develop a more
    strategic approach to its reform effort. By building these elements into
    its approach, FAA will be better able to evaluate the effects of its

    reform initiatives, use the evaluations as a basis for any strategic
    improvements to its human capital management approach, and hold agency
    leadership accountable for the results of its human capital

    management efforts. Doing so would also enable the agency to share its
    results with other federal agencies and Congress. In commenting on the
    draft of this report, the Department of Transportation and FAA generally
    agreed with the report*s recommendations. They emphasized the complexity
    of the reform effort and said they have been making significant progress
    in developing needed elements for measuring the effectiveness of the new
    programs.

    Background The FAA*s mission is to provide a safe and efficient national
    aerospace system. FAA*s key aviation functions include regulating
    compliance with

    civil aviation safety standards and air commerce, operating the national
    air traffic management system, and assisting in the development of
    airports. The achievement of FAA*s mission is dependent in large part on
    the skills and expertise of its workforce. FAA consists of nearly 50,000
    people, organized into 5 lines of business and several staff offices. Its
    workforce

    provides aviation services including air traffic control, maintenance of
    air traffic control equipment, and certification of aircraft, airline
    operations and pilots. FAA*s human resource management office is
    responsible for managing agencywide implementation of personnel reform and
    providing policy and guidance to regional human resource management
    divisions that manage the implementation of personnel reform within their
    areas of responsibility.

    In September 1993, the National Performance Review concluded that federal
    budget, procurement, and personnel rules prevented FAA from reacting
    quickly to the needs of the air traffic control system for new and

    more efficient equipment and flexibilities for attracting and hiring
    staff. In May 1994, building on these concerns, Congress directed the
    Secretary of Transportation to undertake a study of management,
    regulatory, and

    legislative reforms that would enable FAA to provide better air traffic
    control services without changing FAA*s basic organizational structure.
    The resulting FAA report to Congress, issued in August 1995, 4 concluded
    that the most effective internal reform would be to exempt FAA from most
    federal personnel rules and procedures. 5

    In reporting on FAA*s request for these exemptions in October 1995, we
    concluded that, if the Congress decided to provide FAA with new personnel
    authority, the agency could be used to test changes before they were
    applied governmentwide. 6 At that time, we emphasized the importance of
    establishing goals prior to the application of the new authority, noting
    that

    an evaluation of FAA*s efforts after some experience had been obtained
    would be important for determining the success of the effort and its
    governmentwide applicability.

    On November 15, 1995, Congress, in making appropriations for the
    Department of Transportation, directed the FAA Administrator to develop
    and implement a new personnel management system. 7 The law exempted FAA
    from most provisions of title 5 of the United States Code and other

    federal personnel laws. 8 The law required that FAA*s new personnel
    management system address the unique demands of the agency*s 4 Federal
    Aviation Administration, Background Paper: Personnel Management Reform for

    the Federal Aviation Administration (Washington, D. C.: August 1995). 5
    Unless explicitly exempted by law, all federal agencies must follow
    federal personnel rules and regulations under title 5 U. S. C., including
    rules governing how agencies (1) pay and

    reward employees; (2) hire, train, and transfer personnel; and (3) conduct
    labor and employee affairs.

    6 U. S. General Accounting Office, Exempting FAA From Procurement and
    Personnel Rules,

    GAO/ RCED- 96- 27R (Washington, D. C.: Oct. 27, 1995). 7 P. L. 104- 50,
    Fiscal Year 1996 Department of Transportation Appropriations Act.

    8 Congress did not exempt FAA from provisions of title 5 pertaining to
    veterans* preference; antidiscrimination; federal retirement, unemployment
    and insurance coverage; and limitations on the right to strike.

    workforce, and, at a minimum, provide greater flexibility in the
    compensation, hiring, training and location of personnel. Subsequent
    legislation 9 reinstated title 5 requirements related to labor- management
    relations, and the Federal Aviation Reauthorization Act of 1996 placed
    additional requirements on FAA by requiring that any changes made to

    FAA*s personnel management system be negotiated with the agency*s unions.
    Accordingly, compensation levels became subject to negotiations with
    employee unions. On April 1, 1996, FAA introduced its new personnel
    management system.

    In January 2001, we designated strategic human capital management as a
    governmentwide high- risk area. 10 As our January 2001 High- Risk Series
    and Performance and Accountability Series reports make clear, serious
    human capital shortfalls are eroding the ability of many agencies, and
    threatening the ability of others, to economically, efficiently, and
    effectively perform their missions. 11 In 2002, our studies of human
    capital management in the federal government identified a variety of
    elements* critical success factors and practices for effective
    implementation of flexibilities* that are important for consideration of
    federal human capital management efforts. For example, systems to gather
    and analyze data, performance goals and measures, linkage between human
    capital management goals and program goals of the organization, and
    accountability are among the elements that we have identified as essential
    for effective strategic human capital management. Appendix III provides an
    overview of our March 2002 model for strategic human capital management 12
    and key practices for federal agencies* effective use of human capital
    flexibilities we identified in December 2002. 13 Many of these elements
    relate directly to weaknesses we have identified in

    our recent reviews of FAA. For example, in July 2001, we reported that a 9
    P. L. 104- 122, Further Continuing Appropriations, Fiscal Year 1996, March
    29, 1996. 10 U. S. General Accounting Office, High- Risk Series: An
    Update, GAO- 01- 263 (Washington, D. C.: January 2001).

    11 U. S. General Accounting Office, Performance and Accountability Series*
    Major Management Challenges and Program Risks: A Governmentwide
    Perspective, GAO- 01- 241 (Washington, D. C.: January 2001).

    12 GAO- 02- 373SP. 13 GAO- 03- 02.

    lack of performance measurement, evaluation, and rewards hindered the
    effectiveness of rulemaking reforms. 14 In October 2001, we reported that
    the overall effectiveness of FAA*s training for air traffic controllers
    was uncertain and that FAA had not measured productivity gains from
    changes in controllers* duties. 15 We reported in June 2002 on FAA*s
    difficulties in acquiring and developing staff to meet agency needs
    through air traffic control workforce planning. 16 Most recently, we
    reported in October 2002 on the inability of air traffic control
    management to determine the impact of new relocation policies because of a
    lack of baseline data. 17 FAA Initiated

    Once exempted from most provisions of title 5, FAA initiated a broad set
    of Personnel Changes in

    personnel changes. For the purposes of this report, we grouped them into
    the areas of compensation and performance management, workforce Three
    Broad Areas,

    management, and labor and employee relations. Figure 2 shows some of Some
    of Which

    the major initiatives in each area, as well as whether they required
    Required Exemptions

    exemptions from title 5 personnel rules. from Title 5

    14 U. S. General Accounting Office, Aviation Rulemaking: Further Reform Is
    Needed to Address Long- standing Problems, GAO- 01- 821 (Washington, D.
    C.: July 9, 2001). 15 U. S. General Accounting Office, Air Traffic
    Control: FAA Enhanced the Controller- InCharge Program, but More
    Comprehensive Evaluation Is Needed, GAO- 02- 55 (Washington, D. C.: Oct.
    31, 2001).

    16 U. S. General Accounting Office, Air Traffic Control: FAA Needs to
    Better Prepare for Impending Wave of Controller Attrition, GAO- 02- 591
    (Washington, D. C.: June 14, 2002).

    17 U. S. General Accounting Office, Air Traffic Control: Impact of Revised
    Personnel Relocation Policies Is Uncertain, GAO- 03- 141 (Washington, D.
    C.: Oct. 31, 2002).

    Figure 2: Selected FAA Human Capital Reform Initiatives and Their Need for
    an Exemption from Title 5

    a FAA is not exempt from title 5 requirements governing labor- management
    relations.

    New Compensation and FAA required exemption from title 5 rules in order to
    implement its new, Performance Management

    broadbanded pay structure. Before obtaining that exemption, FAA paid its
    Systems Required Title 5

    employees according to the General Schedule (GS) pay system mandated by
    title 5. 18 In its 1995 report to Congress, FAA stated that the GS pay
    Exemption

    system* which rewarded employees for their length of service, rather than
    for their competencies, skills, or accomplishments* resulted in multiple
    levels of supervisors at the same grade level and pay range, an inability
    to grant pay increases until statutorily mandated time or experience
    requirements were satisfied, and the administrative burden of
    administering about 35 special GS pay rates that were exceptions to
    regular pay ranges. The Office of Personnel Management (OPM) echoed these
    concerns in an April 2002 report. 19 OPM concluded that the GS system*s
    narrow pay ranges, time- based pay progression rules and across- the-
    board

    delivery of annual increases was not effective in promoting
    performancebased pay. 18 The GS pay system, as defined in title 5 U. S. C.
    5332, consists of 15 grades and 10 steps

    within each grade* each grade representing a salary range and each step
    indicating the level of pay an employee receives in that salary range.
    Over time, an employee*s pay increases as the employee progresses through
    the steps within the grade or is promoted. An agency must determine that
    an employee*s performance is at least acceptable (i. e., *fully
    successful*) before the employee is granted the within grade step
    increase.

    19 Office of Personnel Management, A Fresh Start for Federal Pay: The Case
    for Modernization (Washington D. C.: April 2002).

    Once exempted from these provisions of title 5, FAA replaced the
    traditional grade and step pay system with a broadbanded pay structure
    that provides for a wider range of pay and greater managerial flexibility
    to attract, retain, and reward employees. The new pay band system includes
    plans tailored to specific employee segments: a core compensation plan for
    the majority of nonunion employees and negotiated versions of the core
    compensation pay plan for employees represented by unions; a unique pay
    plan for air traffic controllers and air traffic managers; and an
    executive pay plan for nonpolitical executives, managers, and some senior
    professionals.

    To illustrate the pay band system, under core compensation, the GS 15-
    grade pay schedule and step pay increases were replaced with a system in
    which employees are placed in a pay band under nine job categories
    including a specialized category that comprises eight specialized
    occupations. Each career category contains two to five pay bands. Each

    pay band represents a minimum and a maximum range of pay. For example, the
    base pay for a band *D* clerical support employee is at least $23,600 but
    no more than $35,400. Figure 3 shows the distribution of pay

    bands for career level job categories under core compensation. (For a more
    detailed comparison of the GS system and core compensation plan, see app.
    IV.)

    Figure 3: Career Level Pay Bands for Job Categories under Core
    Compensation

    Note: Additional pay bands apply to management levels for all of the job
    categories with the exception of students.

    In its 1995 report to Congress, FAA reported that the federal performance
    management system under title 5 limited the ability of agency managers to
    reward their best employees. After being exempted from this system, FAA
    incorporated performance management elements into the new compensation
    system to encourage results- oriented behavior and to recognize and reward
    performing employees via permanent annual salary increases. For example,
    under its core compensation plan, all employees are eligible for a
    permanent pay increase, called an organizational success increase, based
    on the Administrator*s assessment of the extent to which the entire agency
    has achieved its annual agency goals. In addition, notably

    high- performing individuals may receive an additional permanent pay
    increase, called a superior contribution increase, based on supervisory

    recommendation. 20 FAA has criteria for awarding superior contribution
    increases. These criteria include collaboration, customer service and
    impact on organizational success. Additional criteria may be used by some
    lines of business and staff offices because of their unique needs. FAA is
    not

    required to grant cost of living allowances or locality pay increases but
    elected to continue providing these pay adjustments, which are generally
    applicable to the federal pay system. 21

    FAA*s 1995 report to Congress also stated that the federal performance
    management system limited the ability of agency managers to deal with
    unacceptable performance. FAA*s legislative exemption from title 5 22
    enabled the agency to establish its new performance management system.

    According to human resource management officials, this system focuses on
    human capital development by helping to make individual employees aware of
    their roles and responsibilities in helping the agency achieve its program
    goals and provides ongoing feedback and written evaluations to improve
    individual employee performance. The new performance management system
    incorporates a variety of feedback approaches in addition to traditional
    supervisor- to- employee feedback, including

    performance plans that discuss managers* and employees* agreements
    regarding job expectations and feedback from the employee to the
    supervisor. At the end of the performance evaluation cycle, employees
    receive a narrative performance summary instead of a year- end rating that
    defines employees* performance in specific categories. 23 The performance
    summary reflects an assessment of achievements based on outcomes and
    expectations, while professional competencies such as collaboration and
    customer service are elements of the new compensation system. As a

    result, the performance management system is not directly linked to pay
    for performance elements of FAA*s new compensation system. While FAA*s
    program documentation described union involvement and the use of 20 Under
    core compensation, employees that do not meet minimum requirements do not

    receive either of the permanent pay increases. 21 Cost of living
    allowances are base pay differentials paid to employees working in
    locations outside the contiguous United States that have substantially
    different local economies.

    Federal pay rules provide locality pay for approximately 30 metropolitan
    areas and one area covering the *rest of the United States.* 22 5 U. S. C.
    4302( b) and 5 C. F. R. 430.201. 23 Title 5 requires the development and
    submission of a summary rating; since FAA*s new system does not include a
    summary rating, the agency*s exemption from title 5 enabled FAA management
    to adopt the new system.

    employee focus groups in the development of the system, FAA did not
    systematically validate the final version of the performance management
    system with all employees before beginning implementation in 2002. Human
    resource officials said they planned to validate the new system by

    obtaining employee input through an employee attitude survey in 2003 and
    through continuing negotiations with employee unions and that these would
    allow for continuing refinements.

    Some Workforce Some of FAA*s workforce management reform initiatives
    required

    Management Initiatives exemption from title 5 while others did not. For
    example, FAA*s workforce

    Required Exemption from planning initiative did not require an exemption
    from title 5. On the other Title 5 hand, changes in procedures governing
    hiring and locating staff, as well as

    some training initiatives, such as fee- for- service training programs,
    did require exemptions from title 5.

    In requesting exemption from title 5 requirements governing hiring and
    locating staff in 1995, FAA cited inefficiencies of working through OPM to
    hire and geographically place qualified staff at key facilities or to
    reassign employees in response to changing needs. According to an FAA
    staffing task force, the agency had lost highly qualified candidates
    because

    managers could not fill jobs in a timely manner. FAA estimated that it
    took an average of 6- 8 months to bring a new hire onboard from outside
    the federal service using OPM as a hiring source and that it took, on
    average, 60 days to permanently fill a position internally. FAA also
    considered OPM allocations for executive positions excessively rigid, as
    any increases to the allocation provided had to be supported by the
    Department of Transportation and approved by OPM. 24 Moreover, FAA stated
    that the

    temporary internal movement process (from one FAA location to another),
    also governed by OPM regulation, was equally inflexible because it limited
    the duration of temporary assignments, and imposed onerous processing
    requirements. The movement process required paperwork to be processed

    every 120 days and could require up to seven separate personnel actions
    for a 2- year temporary assignment.

    FAA*s 1995 request for flexibilities in the area of training was based on
    perceived redundancies and inefficiencies in its training programs.
    According to an FAA personnel reform training task force report in 1996,

    24 5 U. S. C. 3392, 3393.

    centralized agency training programs required by title 5 25 provided
    standard training that did not always address specific business needs. FAA
    also requested exemption from title 5 in order to have flexibility to
    provide unfunded or partially funded moves of employees to locations where
    they and their skills are most needed. According to FAA Air Traffic
    Services and human resource management officials, FAA historically
    interpreted title 5 rules as a requirement to fully reimburse all
    Permanent Change of Station (PCS) moves since the agency considered all
    such moves to be in the interest of the federal government.

    After Congress provided FAA with its new flexibilities, FAA developed a
    new framework for workforce planning to guide executive, occupational, and
    managerial/ supervisory workforce planning. This did not require an
    exemption from title 5. With regard to hiring, FAA used its exemption from
    title 5 to establish hiring policies that allow FAA to hire applicants
    directly from outside the government and from other federal agencies
    without

    going through OPM. To do so, FAA established three hiring approaches: (1)
    using centralized registers, (2) announcing vacancies, and (3) authorizing
    on- the- spot hiring. 26 According to FAA human resource management
    officials, the agency also used its exemption from title 5 to streamline
    staffing by decreasing the number of appointment types from 14 to 2
    (temporary and permanent) and hiring authorities from approximately 500 to
    1. 27 FAA also established a flexible system for adjusting the number of
    executive positions in response to shifting agency priorities. This new
    system allows the Administrator to establish new executive positions and
    reassign and select the top management team.

    In the area of training, FAA (1) delegated responsibility for managing
    training funds and programs to its lines of business, (2) allowed users to
    select training from multiple providers, (3) created fee- for- service
    training

    25 5 U. S. C. 4107. 26 FAA uses on- the- spot hiring for specific
    occupations designated as hard- to- fill (such as engineers at certain
    levels) and for special appointing authorities such as outstanding scholar
    and welfare- to- work.

    27 According to the Accompanying Report to the National Performance
    Review, HRM01: Create a Flexible and Responsive Hiring System Office of
    the Vice President, (Washington, D. C.: 1993): the federal hiring *system
    is overly constrained by statute and regulation; over 300 appointing
    authorities provide little useful management information and require
    interpretation by personnel specialists.*

    programs, and (4) provided broader authority to fund degree programs for
    employees. The latter two initiatives required exemptions from title 5. 28

    Another area of workforce management for which FAA used its exemption from
    title 5 requirements was relocating employees. 29 As part of its reform,
    FAA delegated the authority to determine eligibility for and amount of
    benefits to each line of business and provided three PCS funding options:
    (1) full PCS reimbursement, (2) fixed relocation payments, 30 and (3)
    unfunded moves. As before reform, if the move is in the interest of the
    government, FAA will fully reimburse the individual for costs associated
    with the move. 31 Under the new PCS rules, if FAA determines that it will
    derive some benefit from a move, even though the move is not in the

    interest of the government, the agency may offer a fixed relocation
    payment of up to $25, 000. If a move is not in the interest of the
    government and FAA does not determine that it will derive some benefit
    from the move, there is no basis for offering PCS funding. However, as a
    result of FAA*s personnel reform, employees may choose to make unfunded
    moves at their own expense for personal reasons, to gain experience needed
    for professional advancement, or for promotion.

    Most Labor and Employee FAA was ultimately not exempted from title 5
    requirements governing Relations Initiatives Did Not

    labor- management relations. As part of its overall reform effort, it
    Require Exemptions

    undertook several initiatives in the area of labor relations that did not
    require exemption from title 5. For example, FAA and its unions
    established a new forum* the National Labor Management Partnership
    Council* for union representatives and senior management to exchange
    information and ideas. To improve overall employee relations, FAA also
    established a new forum for nonunion employees to facilitate
    communications between employees and FAA management that also did 28 While
    FAA was granted an exemption from title 5 training requirements by
    Congress, the

    President also has the authority to exempt federal agencies from title 5
    training requirements (5 U. S. C. 4102( b)).

    29 5 U. S. C. 5724 and 5724a. 30 For a more detailed discussion of FAA*s
    use of PCS benefits, see GAO- 03- 141. 31 Under title 5 rules, federal
    agencies may elect to pay for the expenses of transportation of immediate
    family and of household goods and personal effects to and from the
    assignment location for a PCS move when it is in the interest of the
    federal government.

    not require an exemption from title 5. 32 Similarly, in consultation with
    union and nonunion employee groups, FAA developed a new policy promoting a
    Model Work Environment to create and maintain an effective working
    environment for its employees by managing diversity and practicing equal

    employment opportunity and affirmative action. In addition, on July 1,
    1998, FAA established an Accountability Board to standardize procedures to
    insure management's uniform and effective handling of sexual harassment
    allegations and related misconduct of a sexual nature. In July 2000, the
    scope of the Board was expanded to include harassment and other misconduct
    that creates or may create an intimidating, hostile or offensive work
    environment based on race, color, religion, gender, sexual orientation,
    national origin, age and disability. The establishment of the Board did
    not require exemption from title 5. FAA required exemption from title 5 to
    establish the Guaranteed Fair

    Treatment Program, an alternative dispute resolution method in which a
    three- person review panel adjudicates employee grievances. FAA intended
    the new program to be the only method by which employees not covered by a
    union agreement could seek administrative reviews of grievances and

    to replace the traditional approach under title 5 rules involving the
    Merit Systems Protection Board. 33 (As discussed later, FAA was later
    required by Congress to reinstate the traditional title 5 process and now
    offers employees the choice of the two processes for resolving disputes.)

    Key Elements of While FAA has completed many of the initiatives that
    required changes to

    Personnel Reform policy and procedures, it has not yet completed
    implementation of some of

    the more complex elements of the personnel reform it began in 1996, Have
    Not Yet Been

    specifically compensation and performance management systems and Fully
    Implemented workforce planning initiatives (see fig. 4). FAA officials
    said that the diversity of skills and duties of FAA*s workforce as well as
    negotiations with unions that represented a large number of employees has
    slowed somewhat the pace and extent of implementation of compensation and
    performance management initiatives.

    32 5 C. F. R. 251. 33 OPM has recognized the need to reduce costly and
    time- consuming formal complaints and grievances and encourages federal
    agencies to resolve disputes at the lowest possible level through a
    variety of alternative dispute resolution methods (60 Federal Register
    47039, September 11, 1995).

    Figure 4: Implementation Status of Selected FAA Personnel Reform
    Initiatives

    According to the Assistant Administrator for Human Resource Management,
    FAA*s implementation strategy was to establish a broad policy framework
    and then focus incrementally on individual elements of

    reform to eventually achieve full implementation. Between April 1996 and
    October 1998, for certain workforce management and labor and employee
    relations initiatives, FAA defined the new flexibilities available through
    agencywide *corporate* policies and then empowered the individual lines of
    business to adapt and make use of the new tools as appropriate. According
    to human resource management officials, these initiatives

    helped FAA *jump- start* its reform effort, while other reform
    initiatives, such as compensation, required varying incremental degrees of
    development because of the diverse characteristics of FAA*s workforce.
    Human resource management officials said other initiatives, such as
    workforce planning, were considered to be of a lower priority in terms of
    implementation.

    Most Employees Are Paid As of September 30, 2002, FAA had fully
    implemented its broadbanded

    Under New Compensation compensation plans, including the performance
    incentive increases, for

    Systems, but about three- quarters of the agency*s workforce. About 8,000
    nonunion Implementation of the New

    employees are paid under the core compensation plan, all senior executives
    (about 180) are paid under the executive compensation plan, Performance
    Management

    and about another 9,000 employees represented by three of FAA*s nine 34
    System Has Been Limited unions are paid under negotiated versions of the
    core compensation plan. Because the performance incentive elements of the
    new system were not

    incorporated until late 2001, fiscal year 2002 will be the first year in
    which all employees under core compensation experience a full cycle with
    all the elements of its reformed compensation system fully in place. 35 In
    addition, more than 19, 000 air traffic controllers are paid according to
    a specialized, negotiated pay plan that includes pay banding 36 and
    superior contribution increases. The remainder of FAA*s workforce (about
    13,000), 37 most notably those union employees whose union has not reached
    a new agreement with FAA, continues to be compensated under the
    traditional GS grade and step

    system under title 5 rules, as shown in figure 5. 34 Nine different unions
    represent various employee segments at FAA. Bargaining units within each
    union represent a specific employee segment based on profession or
    technical area. For example, NATCA has a bargaining unit called NATCA- AT
    for air traffic controllers, as well as five separate bargaining units
    collectively known as NATCA- AF, which represents engineers and architects
    that manage the maintenance of equipment at air traffic control facilities
    and perform other air traffic- related operations. In total, there are 48
    different bargaining units at FAA.

    35 The research and acquisition organization and the office of the chief
    information officer participated in a pilot of the complete Core
    Compensation Plan, which included assessment and payout under the
    organizational and individual performance- based pay elements.

    36 Air traffic control pay bands are based on the amount of air traffic
    and complexity of airspace controlled by its field facilities, rather than
    solely on the roles and responsibilities of the air traffic control
    position description.

    37 In addition, approximately 330 FAA employees are paid under a
    prevailing rate, locality- based system similar to that applicable to
    federal blue- collar employees.

    Figure 5: Compensation Systems Applicable to FAA*s Workforce

    Note: *Other* includes the wage grade plan for employees paid by the hour.

    The implementation of FAA*s new performance management system has not yet
    been completed for most FAA employees. In 1995, prior to its reform effort
    and in response to new performance management regulations issued by OPM,
    38 FAA decided to establish a separate way of managing performance. At
    this time, it uncoupled its performance management system from its
    compensation system, based performance appraisals on a two- tiered
    evaluation (* meets expectations* or *does not meet expectations*) of
    employees* performance against performance standards, provided for year-
    end summary ratings, and established supplemental criteria (such as making
    a significant contribution to the efficiency, economy, or improvement of
    government operations) to use as a basis for merit pay. In 1999, as part
    of its reform effort, FAA began development of a new performance
    management system. This new system consists of a narrative evaluation of
    employees* performance against performance standards combined with
    feedback and coaching. The new performance

    38 Office of Personnel Management, Deregulation of Performance Management
    and Incentive Awards: Final Rule, 5 C. F. R. 430 et al., 60 Federal
    Register 43936, August 23, 1995.

    management system does not provide for a year- end summary rating or a
    basis for merit pay. Instead, the new compensation system includes
    criteria that are separate and distinct from the performance management
    system

    (such as collaboration, customer service, and impact on organizational
    success) for awarding merit- based pay raises, which are called superior
    contribution increases. FAA implemented this new performance management
    system on October 1, 2001, for the Office of Human Resource Management,
    the Office of Regions and Center Operations, and the Regulation and
    Certification line of business. Since October 2001, additional staff in a
    variety of FAA organizations have been placed under the new performance
    management system, bringing the total under the system to about 20 percent
    of FAA*s total workforce. As with the compensation system, the new
    performance management system must be included in the negotiated
    agreements with FAA*s employee unions.

    While Most Workforce FAA implemented most workforce management initiatives
    in 1996 by

    Management Initiatives defining the flexibilities available through
    agencywide *corporate*

    policies 39 and empowering the individual lines of business to adapt and
    Have Been Completed,

    make use of the new tools as appropriate for their staff. The individual
    lines Workforce Planning Is in

    of business adapted agencywide policies detailing the flexibilities
    available Progress for hiring, training, and relocating employees by
    issuing parallel policies to

    guide their respective workforces and address any applications unique to
    their staff. While FAA established similar agencywide corporate policies
    and guidance for developing workforce plans for three staff levels*
    executive, managerial and supervisory, and occupational* this initiative
    is still under way. 40 FAA began its executive workforce planning in
    November 2000. Development of Individual Development Plans for executives*
    the final element of the executive workforce planning effort* was
    originally scheduled to be finalized in August 2001 but was still under
    way at the time of our review. FAA has not yet initiated its managerial
    and supervisory workforce planning effort. This effort is set to begin in
    fiscal

    39 Agencywide policies governing travel were published in 1998. 40
    Workforce planning is the process by which an organization plans and
    manages the size, capabilities, diversity, and deployment of its
    workforce. It should include developing strategies for integrating hiring,
    recruiting, training, and other human capital activities in a manner that
    meets the agency*s long- term objectives to ensure that appropriately
    skilled employees are available when and where they are needed to meet an
    agency*s mission. Workforce plans should include the collection of valid
    and reliable data on such indicators as distribution of employee skills,
    retention rates, and retirement eligibility by occupation and
    organizational unit.

    year 2003. FAA*s occupational workforce planning, which was originally
    scheduled to be completed in September of 2001, was still under way at the
    time of our review. Human resource management officials said that four of
    the five lines of business* Airports, Air Traffic Services, Regulation and
    Certification, and Research and Acquisitions* had completed their

    occupational workforce plans, and the remaining line of business*
    Commercial Space Transportation* was still developing a plan. Labor and
    Employee

    FAA announced a series of agencywide policies governing labor and
    Relations Initiatives Have

    employee relations in 1996 that established the National Labor Been
    Implemented

    Management Partnership Council, the National Employees Forum, the
    Guaranteed Fair Treatment Program, and a policy promoting a Model Work
    Environment. FAA required less time to develop and implement these changes
    because comparable labor and employee representative groups were already
    in place prior to the reform effort and FAA had existing appeal processes
    and workplace improvement policies that served as a basis for the
    Guaranteed Fair Treatment Program and Model Work

    Environment. Characteristics of FAA*s

    The variety of skills and areas of technical expertise represented in
    FAA*s Workforce and the Need to

    workforce has affected the implementation of the agency*s new Negotiate
    Changes Have

    compensation plan. For example, the agency has a unique pay plan for air
    Affected the Pace and

    traffic controllers in the field based on the complexity of the facility,
    while FAA*s new core compensation plan is based on the duties and Extent
    of Reform

    responsibilities of 16 different types of positions (ranging from students
    to Implementation

    pilots to physicians). The schedule for implementing changes in
    compensation and performance management has been dictated, in part, by the
    timing of negotiations with employee unions and the ability of FAA and its
    unions to reach agreement on the new systems. For example, because FAA*s
    contract with the National Air Traffic Controllers Association (NATCA),
    the organization representing FAA*s largest group of unionized employees,
    had expired, management had to negotiate a new agreement in 1998 before it
    had completed development of its new core compensation pay plan. While the
    air traffic pay plan, like the core compensation plan, is intended to
    include annual pay increases based on individuals* performance, these
    performance- based increases have not been implemented as intended due to
    an unresolved dispute between NATCA and FAA management over the details of
    implementation. As a result, the air traffic pay plan distributed annual
    performance- based

    incentive pay equally among all union members for fiscal years 1999, 2000,
    and 2001, unlike the core compensation plan developed for the rest of the
    agency in which only higher performing individuals may receive
    performance- based incentive pay. At the time of our review, FAA and the

    air traffic controllers union had not yet determined how fiscal year 2002
    and future years* incentive pay increases would be allotted.

    According to human resource management officials, the new core
    compensation has not been negotiated for union employees that represent
    about 30 percent of FAA*s total workforce, and the need to negotiate the
    incorporation of compensation and performance management initiatives into
    union contracts has increased the length of time needed to negotiate some
    contracts. For example, before 1996, FAA and the Professional Airways
    System Specialists union took from 3 to 14 months to negotiate an
    agreement, but the negotiation time more than doubled to 29 months for the
    latest agreement. FAA and the National Association of Air Traffic
    Specialists have been attempting to negotiate a new contract since 1997,
    and the parties had not yet reached agreement at the time of our review.
    Labor relations officials attributed increases in negotiation times to the
    expanded scope of contract negotiations, which now includes negotiating
    compensation that historically was not negotiated. The performance
    management system has also not yet been implemented for most of the
    unionized segments of the agency*s workforce. According to FAA officials,
    2,324 union employees in FAA*s Office of Regions and Center Operations and
    Office of Public Affairs, representing only about 5 percent of FAA*s total
    workforce represented by unions, were under the new system at the time of
    our review.

    FAA Had Little Data on FAA had little or no data on the effects of many of
    the reform initiatives.

    Human resource management officials cited positive effects of the reform
    Reform*s Effects, and

    initiatives in the areas of compensation 41 and workforce management,
    Views of FAA Officials while in the area of labor and employee relations,
    labor management

    Often Differed from officials provided a limited amount of data suggesting
    that labor relations

    Views of Managers and had not improved. Managers and employees with whom
    we spoke in our

    interview effort generally cited less positive views on the effects of
    reform Employees We initiatives. Interviewed

    FAA Lacked Data on Effects FAA had not systematically collected or
    analyzed data to determine

    of Compensation Changes; whether the new compensation system had achieved
    its objective of

    Officials Said Compensation increasing the agency*s ability to attract and
    retain employees. Human

    Changes Increased resource management officials said the new compensation
    system had

    Flexibility, While Managers achieved this objective. They said the
    initiative had made the agency more competitive in hiring because FAA can
    now offer higher starting salaries

    and Employees Perceived within the wider- range of pay afforded by the pay
    bands. In addition, air

    Inequities in the New Pay traffic officials we spoke with said that the
    air traffic control pay plan has

    System made it easier to staff hard- to- fill positions at busier air
    traffic facilities.

    They noted, however, that they did not have a definition for hard- to-
    fill positions and had not tracked the extent to which positions they
    might consider hard to fill had been filled more or less quickly since the
    new pay plan was instituted.

    In contrast, many FAA managers and employees we interviewed were critical
    of the new compensation system. Nearly two- thirds of those responding to
    our structured interview (110 of 176) disagreed or strongly disagreed that
    the new pay system is fair to all employees. 42 While we did not attempt
    to evaluate the concerns raised during interviews, we did find some
    evidence that helps explain these perceptions of unfairness. For

    example, concerns about air traffic controller pay disparities are
    supported 41 Because 2001 was the first year of implementation for the new
    performance management system, we did not obtain views on its effects. 42
    In our interview, we did not specifically ask whether managers* and
    employees* perception of the fairness of the new compensation system was
    based on its treatment of protected categories such as sex or race, but no
    interviewees mentioned this issue in their elaboration

    of their views.

    by a Department of Transportation Inspector General report. This report
    found that FAA*s initial implementation of the new compensation system led
    to inequities in pay between air traffic managers, supervisors, and
    specialists in field facilities, who are covered by the air traffic pay
    plan that FAA negotiated with NATCA in October 1998, and a much smaller
    group of air traffic managers and supervisors in regional and headquarters
    locations, who (together with other FAA managers and employees) are
    covered by the new core compensation plan. Because of differences between
    the two

    plans, managers and employees transferring from regional and headquarters
    locations to field facilities were not eligible for the same pay increases
    as those who were already assigned to field facilities in October 1998.

    To address this situation, FAA issued new guidance in July 2001 that
    established consistent rules for setting pay when employees move within
    and among the various pay systems in FAA, including movements between
    field positions and positions in regional offices and headquarters. Even
    so, perceptions of unfairness persist. According to the President of the
    FAA

    Conference Manager*s Association (FAACMA), the new guidance created the
    perception among some managers and employees of a financial disincentive
    for air traffic controllers to move from field facilities to regional
    offices or headquarters to gain supervisory and managerial experience.
    Further, the FAACMA President, as well as some controllers with whom we
    spoke, stated that such a move would result in a significant loss of pay*
    generally about $10,000 to $20,000. *Because of pay discrepancies,* one
    regional air traffic manager said, *we can*t get highly paid employees to
    move over to management positions.* Human resource management officials
    said that, while some field employees who move to positions in regional
    offices or headquarters would see a pay reduction of $10,000 or $20, 000,
    not all such moves would result in such a pay reduction.

    According to our review of FAA*s July 29, 2001, guidance, an unfair
    disparity in pay between air traffic controllers would be created only
    when managers and employees were paid above or below established pay
    bands. At our request, FAA analyzed the salaries of its air traffic
    control staff and determined that 327, or fewer than 2 percent, of about
    20,000 controllers

    (including supervisors, managers, and employees) were paid above current
    pay band maximums. (FAA*s analysis did not identify any staff being paid
    below established pay band minimums for their positions.)

    When we compared the distribution of 2002 base pay for all air traffic
    controllers in field facilities and in regional and headquarters
    facilities, we

    found that the regional and headquarters controllers are generally paid
    less under core compensation than the field controllers are paid under the
    air traffic pay plan. As shown in figure 6, the percentage of controllers
    paid between $100,000 and $130,000 is smaller in the regions and in
    headquarters than in the field. This is consistent with FAA*s goal of

    providing higher levels of pay to controllers in an operational
    environment. In addition, the percentage of controllers paid between
    $60,000 and $80,000 is greater in the regions and in headquarters than in
    the field.

    Figure 6: Compensation of Air Traffic Controllers in Field Facilities and
    Regional and Headquarters Offices, 2002

    According to human resource management officials, the pay rates of many
    field employees and supervisors can be accommodated within the pay ranges
    of regional office and headquarters management positions, as shown above.
    Thus, they said that pay discrepancies should not affect the ability to
    entice field employees to move into management positions. However, it is
    understandable that some air traffic managers and controllers perceive a
    financial disincentive for moving from the field to a regional office or
    headquarters because, although the range of pay under

    both systems is comparable, the number of higher paid positions is greater
    in the field than in the regional offices or headquarters. To the extent
    that these perceptions persist, FAA may find it more difficult to place
    its most experienced air traffic managers in regional offices and
    headquarters. However, this disparity is consistent with FAA*s goal of
    basing pay on the

    operational environment and is explicitly stated in FAA*s July 2001 pay
    plan for air traffic managers and controllers. A general perception of
    unfairness regarding FAA*s new compensation system has led to increased
    unionization among FAA employees outside of the air traffic services line
    of business as well as within it, according to both internal and external
    sources. FAA human resource officials said that considerable unionization
    began before such systems as core compensation were implemented and that
    most concerns cited during unionization efforts were of uncertainty and
    loss of guarantees, not of unfairness. However, the introduction of the
    pay system corresponded with an acceleration in the increase in employees
    seeking union representation after FAA began its reform effort. For
    example, employees represented by unions (as a percentage of FAA*s total
    workforce) increased from 63 percent prior to the reform in 1995 to 66
    percent in 1998 and to 79 percent

    by 2001. FAA labor relations officials and FAA spokespersons for new
    unions at FAA told us that a perceived inequity regarding pay was the
    prime reason new unions were formed. A 1999 study by the National Academy
    of Public Administration (NAPA) also found that real and perceived
    inequities in levels of pay were *major contributors to the view among a
    growing number of [FAA] employees that you must belong to a union to get
    your fair share.* 43 A more recent FAA study in 2001 likewise acknowledged
    that the new pay system *may be one possible explanation* for the increase
    in unionization. 44 Between 1998* when FAA began testing and implementing
    its new pay system* and 2001, the number of employees choosing
    representation by unions increased nearly 20 percent (from about 32,800 to
    more than 38,800 employees). Figure 7 shows the number of FAA employees
    represented by unions from 1991 through 2001.

    43 Personnel Reform in the Federal Aviation Administration, National
    Academy of Public Administration, August 1999. 44 Phase II Evaluation: A
    Snapshot of Core Compensation Plan Implementation in FAA,

    Assistant Administrator for Human Resource Management Evaluation Staff,
    FAA, September 2001.

    Figure 7: Number of FAA Employees Represented by Unions, 1991- 2001

    Because FAA had not completed a full appraisal cycle for staff under its
    new performance management system at the time of our review, FAA had
    little data, and we were not able to obtain the views of managers and
    employees on the effects of the new system. We noted that FAA*s
    performance management approach does not use a multi- tiered rating system
    to rate performance. We have previously raised concerns that such
    approaches may not provide enough meaningful information and

    dispersion in ratings to recognize and reward top performers, help
    everyone attain their maximum potential, and deal with poor performers.
    According to human resource management officials, the compensation

    system provides a means of recognizing and rewarding top performers
    through separate assessments not directly linked to performance
    assessments under the performance management system.

    The measurable element related to performance management is the number of
    employees that receive superior contribution increases under FAA*s new
    compensation system. About 20 percent of employees are to receive the
    highest superior contribution increases (1.8 percent addition to base pay)
    and 45 percent are to receive the next highest level of superior
    contribution increases (0.6 percent increase in base pay).

    Human Resource Whereas human resource management officials provided some
    limited data

    Management Officials Had to support their views that reform initiatives
    had improved the agency*s Limited Data to Support

    flexibility in hiring and relocating employees, the managers we spoke with
    Their Views that Workforce

    were less likely to see positive results. According to human resource
    management officials, FAA*s use of the new hiring flexibilities, though
    Management Initiatives Had restricted by hiring freezes, has reduced
    external hiring times from an Increased Flexibility, While average of 6
    months to as little as 6 weeks. They said the examples they Some FAA
    Managers Were provided for air marshal hiring were intended to provide an
    illustration that

    Less Positive the policies allow positions to be filled quickly, even in
    the case of large

    recruitment efforts. However, the Department of Transportation*s Office of
    Inspector General, when reviewing FAA*s personnel reform in 1998,
    questioned FAA*s ability to support this assertion in the absence of data.
    45 (See fig. 8.)

    Figure 8: Inspector General*s Comments on the Effects of Personnel Reform
    on Hiring Times

    Throughout our review, we asked FAA officials from both the human resource
    management office and lines of business for any documentation or data to
    support the reduction in hiring times and they were unable to provide any
    such data. At the close of our review, however, human resource management
    officials cited some limited data resulting from the Federal Air Marshal
    Program. According to FAA human resource management officials, the program
    following the terrorists* attacks on September 11, 2001, was one of the
    largest recruitment efforts ever undertaken by FAA. (FAA received and
    processed more than 200,000 applications.) According to FAA officials, it
    would not have been possible to fill the air marshal positions in the
    numbers and time frames required without the flexibilities available under
    FAA*s personnel system. They provided data reflecting a sample of
    approximately 1,000 candidates for the

    45 Department of Transportation, Office of Inspector General, Personnel
    Reform: Recent Actions Represent Progress But Further Effort Is Needed To
    Achieve Comprehensive Change, Sept. 30, 1998.

    air marshal positions. Of those candidates hired, about 30 percent (140)
    were hired and placed within 6 weeks. In total, 70 percent (333) were
    hired and placed within 8 weeks. 46

    In contrast to the positive views of human resource management officials,
    FAA managers had less positive views on the effects of hiring reforms,
    while employees, who are less involved in the hiring process, had mixed
    views. Among the 46 managers we interviewed, only about a third (15)
    agreed or strongly agreed that the initiatives have improved the ability
    of their line of business or staff office to fill job vacancies.
    Furthermore, only 12 of the 46 managers believed the speed of hiring has
    improved. These opinions, while not necessarily representative of all FAA
    managers today, are similar to the views expressed by FAA managers in
    1998. 47 According to

    a survey FAA conducted then, 34 percent of managers responding said that
    FAA*s streamlined staffing procedures had made it easier to fill vacancies
    in their organization, and 32 percent said the speed of hiring had
    improved.

    Human resource management officials also said that new policies governing
    the relocation of employees had given managers more flexibility in
    relocating employees and employees more flexibility in making career
    decisions. Under these new policies, FAA may provide fixed relocation
    payments as well as full funding for PCS moves, and it allows unfunded

    moves, which were not allowed under FAA's prior policy. Figure 9 shows
    that the majority of moves between field offices for managers from fiscal
    year 1999 through 2001 (the only years and type of moves for which data
    were available) were unfunded.

    46 GAO is conducting a separate review of the hiring and recruitment
    program for federal air marshals. 47 FAA Personnel Reform: Implementation
    Status Report, prepared for FAA by the Human

    Resources Research Organization, January 1998.

    Figure 9: Funding Alternatives Used for Managers* PCS Promotional Moves
    between Field Facilities, Fiscal Years 1999- 2001

    In contrast to the positive views of FAA human resource management
    officials, FAACMA representatives raised concerns about the impact of the
    new policies in the air traffic services line of business, suggesting that
    they might have unintended consequences, including a reduction in the
    number of qualified applicants, a reduction in the diversity of potential
    applicant pools and subsequent discrimination in filling positions, and a
    negative impact on employee morale if fluctuations in the annual funding
    for relocation payments led to disparities in the payments for comparable
    moves over time. 48 Air traffic officials said they were still reviewing
    these concerns and planned to comment in the near future. 49 48 FAACMA,
    Legislative Briefing Book, 107th Congress- Second Session, March 2002.

    49 For more information about FAA*s new PCS policies and FAACMA*s
    concerns, see GAO- 03- 141.

    FAA Had Some Data Although FAA*s Office of Labor Relations did not have
    historical,

    Suggesting Mixed Effects of agencywide data to quantify an increase in
    grievances, FAA labor

    management officials said the number of grievances 50 filed at the
    national Labor and Employee

    level by employees represented by unions had increased and this increase
    Relations Initiatives, While

    was a sign that the initiatives had not achieved the reform objective of
    Officials, Managers, and

    establishing a collaborative labor- management relations environment that
    Employees Held a Variety of

    would minimize the traditional adversarial relationship. They said that
    the Views number of grievances filed began to increase following personnel
    reform

    changes the agency had made. For example, they noted that in 1999, the
    core compensation plan was implemented and grievances increased. However,
    human resource officials said that grievances by union employees could not
    have pertained to implementation of the compensation pilot because the
    pilot test only applied to nonunion employees, not to union employees. The
    Office of Labor Relations

    implemented a new system for tracking grievance data in October 2001 and
    began systematically collecting information on the sources (such as
    headquarters, regions, and unions) and subject (such as compensation, use
    of leave, and discipline) of grievances filed across the agency.

    While limited data suggested that FAA*s introduction of an alternative
    dispute resolution program for employees not represented by unions did
    reduce the processing times for resolving appeals, employees* reactions to
    the new system suggest that many employees did not see this initiative as
    an improvement. FAA introduced its internal alternative dispute resolution
    approach* the Guaranteed Fair Treatment Program* in April 1996 in an
    effort to streamline the appeals process. This approach met with
    resistance from employees and led Congress, in 2000, to reinstate the
    traditional title 5 process that uses the Merit Systems Protection Board.
    51 As a result, FAA

    now offers employees the choice of using either the guaranteed fair
    treatment program or the traditional title 5 process. The only data human
    resource officials were able to provide on appeals dated back to fiscal
    year 1997. Although these data are old, they indicated that for fiscal
    year 1997, appeals went through the guaranteed fair treatment process more
    quickly (5 to 7 months) than through the Protection Board process (10
    months). Even so, the Deputy Assistant Administrator for Labor Relations
    said that employees, who have been able to choose between the two
    processes, have

    50 Grievances are concerns expressed by an employee or the union about a
    condition of employment or an allegation that a contract has not been
    properly interpreted and applied. 51 P. L. 106- 181, sec. 307.

    generally not chosen to use the guaranteed fair treatment process. He said
    that one reason employees have not used the guaranteed fair treatment
    process is because its potential benefits, such as the employee*s right to
    help select the arbitrator, have not been effectively communicated to
    them. In addition, according to the Deputy Assistant Administrator, both
    FAA managers and union leaders have complained about having to pay the
    cost of the arbitrator, while employees have complained about having to
    pay their own legal fees for attorneys regardless of the outcome of the
    appeal. FAA reimburses an employee*s legal fees if the employee wins his/
    her

    appeal when using the Protection Board's process. Most FAA managers and
    employees we interviewed said that labor and employee relations had
    changed in the last 5 years. For example, 130 of the 176 managers and
    employees we interviewed agreed or strongly agreed

    that labor- management relations had changed in the last 5 years. Of those
    130, 75 said that labor- management relations had declined. Similarly, 130
    of the 176 managers and employees we interviewed said employee morale had
    changed in the last 5 years, and of those 130, 99 said that employee
    morale

    had declined. While employees* perceptions regarding the changes in labor
    and employee relations cannot be linked directly to FAA*s personnel
    reform, some employees cited specific reform initiatives, such as
    compensation and the Model Work Environment established to improve
    employee relations, when discussing the decline of labor- management
    relations and morale.

    Union representatives for three of FAA*s nine unions said that a complaint
    filed against FAA by the Federal Labor Relations Authority (FLRA) in March
    2001 had reduced collaboration between labor and management.

    FLRA charged FAA with bargaining in bad faith because it had refused to
    sign an agreement negotiated with the American Federation of State, County
    and Municipal Employees, a union that represents employees at FAA
    headquarters. FAA management did not sign the agreement and submitted it
    instead to the Office of Management and Budget (OMB) for review. OMB
    subsequently disapproved some portions of the contract. Following an
    investigation of the circumstances, FLRA directed FAA management and the
    union to sign and implement the contract. However, in September 2002, an
    administrative law judge recommended that FLRA

    dismiss the union's complaint, finding that FAA clearly gave notice to the
    union of the OMB approval condition and that the union agreed to that
    condition.

    In the area of employee relations, FAA provided us with some data that may
    support the views of FAA officials that the Model Work Environment has had
    a positive effect. A recent decline in the number of equal employment
    opportunity (EEO) complaints may, to an unknown extent, reflect the
    effects of FAA*s Model Work Environment. These complaints are concerns
    expressed by employees about legally prohibited discrimination on the
    basis of race, color, religion, sex, national origin, age, or handicap.

    An analysis by FAA*s Office of Civil Rights of data it had collected on
    the number and types of formal EEO complaints showed that while such
    complaints increased in the years immediately following the implementation
    of the Model Work Environment in 1996, they began to decline 3 years
    later. As figure 10 shows, the number of EEO complaints

    increased from 412 in 1996 to 635 in 1998 and then declined to 485 in
    2001.

    Figure 10: Number of Formal EEO Complaints by Year

    Note: The most frequently filed complaints between 1997 and 2001 were for
    promotion/ nonselection and nonsexual harassment, followed by complaints
    about terms or conditions of employment, assignment of duties, and
    training.

    About three- quarters of the FAA managers and employees we interviewed
    (134 of 176) agreed or strongly agreed that they understood the goals of
    the Model Work Environment. These goals include reflecting diversity and
    eliminating discrimination and harassment in the workplace, which are
    common causes of equal employment opportunity complaints. While some
    employees cited positive effects of the program, other employees were

    skeptical of its impact. Figure 11 illustrates FAA employees* divergent
    views on the Model Work Environment.

    Figure 11: FAA Employees* Views on the Model Work Environment

    Note: Quotations are from an FAA employee in headquarters and an air
    traffic employee in a regional office, respectively.

    Even though the decrease in the number of EEO complaints cannot be
    directly linked to the Model Work Environment initiative, the availability
    of data and analysis on EEO complaints could provide one objective basis
    for FAA to discuss the effects and assess the efficacy of this policy and
    address the concerns of those employees who view its impact less
    positively.

    FAA Has Not Fully FAA*s lack of empirical data on the reform effort*s
    effects is one indication Incorporated Elements

    that it has not fully incorporated elements that we and others have
    identified as important to effective human capital management into its
    Needed for Effective

    reform effort. Systems to gather and analyze relevant data provide a basis
    Human Capital

    against which performance goals and measures can be applied. FAA human
    Management

    resource management officials said that the agency should have spent more
    time to develop baseline data and performance measures before implementing
    the broad range of reforms but that establishing these elements was a
    complex and difficult task. They said FAA was under significant pressure
    to rapidly implement reforms and that one impact of FAA*s incremental
    approach to implementing the reforms was that baseline measures tended to
    change as more people were brought under the

    reformed systems. FAA also has not gone far enough in establishing linkage
    between reform goals and program goals of the organization, another
    element we have identified as important to effective human capital
    management. We found that the lack of these elements has been pointed out
    repeatedly in evaluations of FAA*s human capital reform effort, but FAA
    has not developed specific steps and time frames by which these elements
    will be established and used for evaluation. Incorporation of these
    elements could also help FAA build accountability into its human capital
    management.

    FAA*s Human Capital The lack of baseline and comparative data for analysis
    and the lack of Reform Effort Lacks

    performance goals and measures has made it difficult to objectively Needed
    Data Collection and

    evaluate the effects or success of FAA*s reform effort. Systems to gather
    Analysis, Performance

    and analyze relevant data provide a basis against which performance goals
    and measures can be applied. FAA human resource management officials Goals
    and Measures, and

    agreed that the agency should have spent more time to develop baseline
    Linkage of Reform Goals to

    data and performance measures before implementing the broad range of
    Program Goals of the reforms but said that establishing measures and goals
    and reaching

    Organization consensus on their use was a complex and difficult task with
    which all

    federal agencies struggle. They said the agency was under significant
    pressure to rapidly implement reforms, and that one impact of FAA*s
    incremental approach to implementing the reforms was that baseline
    measures tended to change as more people were brought under the reformed
    systems. Human resource management officials also said that, while FAA has
    not

    systematically collected data and analyzed results to identify the
    benefits of all of the reform initiatives, the Office of Human Resource
    Management has taken a number of steps since 1998 to increase evaluation
    and measurement of some human resource management activities and outputs.
    Actions they cited (in addition to the previously discussed evaluations of
    compensation implementation) included meeting with consultants, human
    resource managers and intergovernmental groups and providing briefings to
    FAA management. While we were in the final stages of our review, they
    prepared, in response to our request, an informal report 52 that described

    the type of measures they were planning to, or had recently begun to apply
    as part of a *Balanced Scorecard* approach 53 to assessing human resource
    management activities. The measures in the scorecard approach are based on
    existing sources of data* customer surveys conducted by the Department of
    Transportation and FAA employee attitude surveys* as well as new data
    related to the hiring process, such as the *Time to Fill* (a vacancy)
    questionnaire, results from employment selection feedback

    questionnaires, a survey for new recruits and, since December 1999, a
    separation survey for employees leaving the agency. Human resource

    52 Office of the Assistant Administrator for Human Resources Management,
    *An Informal Discussion of the FAA*s Human Resource Management Balanced
    Scorecard* August 21, 2002.

    53 A scorecard approach is a framework for measuring and managing
    performance also used by OMB and OPM to track how well departments and
    agencies are executing management initiatives.

    officials said they had been *strategically refining* the employee
    attitude survey since 1995 to address key human capital issues, such as
    clarity of performance expectations and workforce planning.

    Our work on strategic human capital management in the federal government
    has found that many federal agencies have difficulties in defining goals
    and measures and developing and using performance information to evaluate
    the effectiveness of human capital management efforts but that high-
    performing organizations do so. In cases where evaluations show that
    sufficient progress is not being made, highperforming organizations use
    data to identify opportunities for improvement. Similarly, the National
    Association of Public Administration (NAPA) has reported the need for
    performance data, goals, and evaluation

    to determine progress, make midcourse corrections, and assign
    accountability for achieving the desired outcomes in federal human capital
    management efforts. 54 NAPA reported that, in the absence of such
    systematic evaluation information, the human capital management process

    will be driven by anecdotal information that may, or may not, reflect the
    condition of human capital management in the organization.

    Elements we have identified 55 as facilitating the success of improvement
    initiatives include establishing

     clear goals and objectives for the improvement initiative,  concrete
    management improvement steps that will be taken,  key milestones that
    will be used to track the implementation status, and  cost and
    performance data that will be used to gauge overall progress. In addition
    to the lack of performance data, the performance goals and measures for
    personnel reform in FAA*s human resource management and strategic mission
    plans are qualitative and do not consistently lend

    themselves to measurement or assessment, as they are not specific, 54
    National Academy of Public Administration, Implementing Real Change in
    Human Resources Management: The Case for Transforming Public- Sector Human
    Resources Management, July 2000.

    55 U. S. General Accounting Office, Management Reform: Elements of
    Successful Improvement Initiatives, GAO/ T- GGD- 00- 26 (Washington, D.
    C.: Oct. 15, 1999).

    measurable, and time- based. For example, the goal related to reform in
    FAA*s 1999 human resource management strategic plan is to *ensure that FAA
    has the right people doing the right work at the right time at the right
    cost* and has the following measures associated with it:

     increased flexibility to pay competitive salaries;  increased ability
    to attract and retain high performers;  increased managerial flexibility
    to assign, locate, and manage the

    performance of employees more effectively; and  decreased hire cycle
    time. This goal and its associated measures do not lend themselves to
    specific, quantitative, and time- based evaluation. For example, while
    *decrease hire cycle time* implies that hire cycle time will be measured
    as part of evaluating the achievement of this goal, it does not establish
    a quantitative basis for assessment or specify a period of assessment. A
    more specific, quantitative, and time- based measure might be to *decrease
    median or

    average hire cycle time by September 2003 by X percent (from median or
    average cycle time for fiscal year 2002) for Y percent of all new hires.*

    We reported on FAA*s weaknesses in developing and using performance
    information in our report on the results of governmentwide surveys of
    performance management issues in May 2001. 56 In that report, we found
    that FAA managers we surveyed reported they did not consistently use
    performance measures or data and that FAA was worse than the rest of the
    federal government on multiple aspects of performance measurement and the
    use of performance information. For example, we found that the agency was
    statistically significantly lower than the rest of the government in the
    percentage of managers who reported that they had outcome, customer
    service, or quality performance measures; and in the percentage of
    managers who reported that they used performance information to set
    program priorities, allocate resources, adopt new approaches, or
    coordinate program efforts.

    56 U. S. General Accounting Office, Managing For Results: Federal
    Managers* Views on Key Management Issues Vary Widely Across Agencies, GAO-
    01- 592, (Washington, D. C. May 25, 2001).

    At the time of our review, human resource management officials were still
    in the process of developing baseline data, performance goals and measures
    and were still working to identify potential linkages between its human
    capital management reforms and program goals of the organization. The
    types of data and measures proposed by human resource management officials
    are comparable to those that have been historically suggested* many of
    them since FAA initiated development of its personnel reform in 1995* and
    their implementation is an important effort. However, the balanced
    scorecard measurement approach proposed by human resource management
    officials focuses primarily on the work environment and processes within
    the Office of Human Resource Management and the hiring

    process rather than on the many other human capital management reform
    initiatives being implemented across the agency. According to FAA human
    resource management officials, the office had been working for more than a
    year to expand the scope of the scorecard to incorporate measures with
    wider implications for all of FAA in response to discussions with human
    resource managers and based on information from FAA customers and
    employees. Table 1 provides an overview of the balanced scorecard measures
    proposed by the human resource management office, highlighting those that
    focus on the activities and output of the Office of Human Resource
    Management. An expanded overview of these performance measures that
    includes areas of measurement and proposed data sources is provided in
    appendix V. Table 1: Overview of Human Resource Management Office*s
    Balanced Scorecard

    Performance Measures Measurement perspectives Performance measures

    Customer Human Resource Human Resource

    Human Resource Management Office

    Management Office Management Office service excellence

    consultation and innovation and expertise valued

    leadership Performance Human Resource

    Efficient use Of Human Improved practices

    Management Office Resource Management

    within Lines of results meet goals Office resources

    Business Internal

    Consistent human Effective labor

    Attract and retain processes resourcemanagement

    management high caliber

    policy interpretation relationships

    employees Human Resource

    Empowered Human Satisfied Human

    Rewarding Human Management

    Resource Resource Management

    Resource Office employee

    Management Office Office employees

    Management Office employees

    work environment

    (Continued From Previous Page)

    Measurement perspectives Performance measures

    Learning and Capitalize on Human

    Increase Human Leverage Human growth Resource

    Resource Management Resource Management Office

    Office capacity to Management Office talent

    improve data/ information Source: FAA. Note: Shaded areas indicate
    measures focused internally on the Office of Human Resource Management.

    Clearly linking an agency*s overall human capital management strategy to
    its program goals is another element we have identified as key to
    effective human capital management. In a 1997 review of FAA*s personnel
    reform, the Volpe National Transportation Systems Center highlighted this
    issue of linkage, as shown in figure 12. 57

    Figure 12: Volpe Center*s Views on Importance of Linkage

    While FAA has taken some steps to link its human capital reform
    initiatives to its program goals, these steps do not go far enough to help
    the agency measure the reform*s success. Specifically, FAA incorporated
    various aspects of personnel reform into its 1999 strategic human resource
    management plan, 58 which stated that performance measurement was to focus
    on attaining organization goals but did not establish the measures with
    which to do so. Similarly, FAA*s 2001 strategic plan, prepared under the
    Government Results and Performance Act, includes a goal for the agency to
    *fundamentally change the way it operates by implementing personnel
    reform* but does not explicitly link this goal for personnel

    reform to organizational program goals of aviation safety and system
    efficiency. Human resource management officials said that organizational
    and individual incentive goals established under the compensation system

    57 Volpe National Transportation Center, FAA Personnel Reform Evaluability
    Assessment,

    April 1997. 58 Federal Aviation Administration, Human Resources Strategic
    Plan 1999- 2002, April 1999.

    explicitly linked individual performance to agency goals including safety
    and system efficiency and that the standards for performance under FAA*s
    new performance management system directly reflect agency and
    organizational programmatic goals. Nonetheless, linkage between FAA*s
    personnel reform goals and the agency*s programmatic goals continues to be
    weakened by a lack of specific, quantitative, and time- based measures and
    goals.

    FAA*s lack of relevant data, analysis, and performance goals and measures
    has been repeatedly articulated since 1995 by other internal and external
    reviews of the reform effort. While these reviews have called for FAA to
    incorporate these elements into its reform effort, and several recent
    studies have also highlighted the issue of linkage, FAA has not
    established and carried out a plan with specific steps and time frames for
    doing so. A chronology of these studies is provided in table 2.

    Table 2: Chronology of Internal and External Evaluations of FAA*s
    Personnel Reform Date Evaluation Result

    October 1995 Exempting FAA From Procurement and In reporting on FAA*s
    request for legislative flexibilities, GAO emphasized

    Personnel Rules, U. S. General the importance of establishing goals prior
    to the application of the new

    Accounting Office authority, noting that an evaluation of FAA*s efforts
    after some experience

    had been obtained would be important for determining the success of the
    effort and its governmentwide applicability. December 1995 Best Practices
    in HRM: Briefing to FAA

    An evaluation briefing prepared for FAA*s personnel reform task forces
    Personnel Reform Task Forces, FAA identified measurement of human resource
    practices and processes as an essential element for creating a strategic
    context for personnel reform. March 1996 Proposed Personnel Reform
    Evaluation

    This report identified evaluation measures for FAA*s personnel reform and
    Strategy, FAA strategies for engaging stakeholders in measuring the
    results of reform initiatives. April 1997 FAA Personnel Reform
    Evaluability

    The Center conducted an assessment to evaluate potential performance

    Assessment, Volpe National indicators for measuring the effectiveness of
    reform efforts and concluded

    Transportation Systems Center that reform principles were not stated in
    terms of tangible outcomes that

    could be easily measurable and there was no clear sense of priority among
    them. September 1997 The FAA Human Resource Management

    This study linked the reform initiatives with proposed indicators of
    reform System Evaluation Plan: Interim Report,

    implementation, and potential intermediate and final outcomes to
    facilitate Human Resources Research

    program evaluation. Organization

    January 1998 FAA Personnel Reform: Implementation

    This report identified a lack of baseline set of data and concluded *there

    Status Report, Human Resources has been no effort to establish systematic
    measurement systems over the

    Research Organization remaining course of personnel reform implementation.
    Without baseline

    data and the ability to measure current status it is difficult to assess
    whether or not objectives are being met.*

    (Continued From Previous Page)

    Date Evaluation Result

    September 1998 Personnel Reform: Recent Actions

    This report concluded that FAA had not identified the specific results it

    Represent Progress But Further Effort Is

    expects to achieve from these programs or established outcome goals and

    Needed to Achieve Comprehensive measures to accurately demonstrate that
    its personnel reform initiatives

    Change, Department of Transportation were effective in resolving the
    original problems that led to reform. Office of Inspector General

    September 1998 The FAA Personnel Reform Evaluation

    This report presented a general framework for evaluation of personnel

    Plan, Human Resources Research reform initiatives and concluded, ** it is
    critical for the agency to develop Organization

    and implement evaluation and measurement systems to assess the results and
    success of these large- scale HRM [human resource management] change
    efforts.*

    April 1999 FAA Manager Satisfaction with This study recommended that FAA
    develop a strategy for personnel reform Personnel Reform Implementation
    and

    to identify long- term objectives and outcomes, address how reforms would

    HR Customer Service, Human support accomplishment of mission goals, assess
    the current status of

    Resources Research Organization implementation, develop performance
    measures, and develop a

    comprehensive schedule for implementing reform initiatives. July 1999
    Personnel Reform Evaluation Database:

    This report provides a framework for the development of a database to

    Baseline Report, FAA evaluate personnel reform measures. August 1999
    Personnel Reform in the Federal

    The Academy concluded that the lack of baseline data and specific

    Aviation Administration: Three Year

    measures to assess the effectiveness of personnel reform and establish a

    Status Report, National Academy of basis for continuous improvement was a
    major issue for FAA that *must be

    Public Administration resolved if personnel reform is to achieve its full
    potential.*

    November 1999 A Communication Strategy for Improved This report provides a
    framework for encouraging the evaluation and

    HRM Evaluation and Measurement, FAA measurement of human resource
    management programs and services and cultivating, understanding, and using
    evaluation tools, data, reports and recommendations to improve the quality
    of human resources products and services.

    January 2002 Human Resource Performance

    This briefing recommends expanding the focus of the Office of Human

    Measures for the FAA, Booz- Allen Resource Management*s balanced scorecard
    to additional measures

    Hamilton dealing with attracting and retaining a talented workforce, as
    well as linking

    the outputs/ outcomes of human resource initiatives to the agency*s
    mission goals.

    September 2002 Federal Aviation Administration: Five

    This most recent study of the agency*s progress in personnel reform found
    Year Review of Personnel Reform and

    that the reform effort had suffered from a shortage of baseline data and

    Strategies for the Future, Deloitte & metrics to measure the impact of
    various initiatives on agency operation

    Touche, LLP and strategic objectives. Accordingly, the report recommended
    that the

    Office of Human Resource Management expand the collection of hard data and
    the use of objective metrics to evaluate the effectiveness of personnel
    reform initiatives. Source: GAO.

    Several of these studies also attributed problems related to a lack of
    ownership for the reform effort or a lack of accountability for
    implementation or results. For example, in 1999, the National Academy of

    Public Administration identified the lack of ownership for personnel
    reform as a challenge that must be resolved. 59 (See fig. 13.)

    Figure 13: Study*s Views on FAA*s Implementation of Personnel Reform

    As shown in figure 14, a 1998 departmental review found that FAA had not
    clearly established accountability for implementation of the reform
    initiatives. 60

    Figure 14: Inspector General*s Views on FAA*s Implementation of Personnel
    Reform

    According to the most recent assessment of the status of FAA*s personnel
    reform, published by a consultant in September 2002 and shown in figure
    15, a lack of ownership and inconsistent support for personnel reform by
    FAA*s executive management team has impaired reform implementation
    efforts. 61

    59 National Academy of Public Administration, Personnel Reform in the
    Federal Aviation Administration: Three Year Status Report, August 1999. 60
    Department of Transportation, Office of Inspector General, Personnel
    Reform: Recent Actions Represent Progress But Further Effort Is Needed To
    Achieve Comprehensive

    Change, Sept. 30, 1998. 61 Deloitte & Touche, LLP, Federal Aviation
    Administration: Five- Year Review of Personnel Reform and Strategies for
    the Future, (McLean, VA., Sept. 2002.) p. 6.

    Figure 15: Consultant*s Views on FAA*s Implementation of Personnel Reform

    Our work on effective human capital management at federal agencies has
    found that building accountability into an agency*s human capital approach
    is important to the effective use of human capital flexibilities.
    Furthermore, we have found that in high performing organizations, managers
    are held accountable for achieving strategic goals, and clearly defined
    performance expectations are in place to hold employees and teams at all
    levels accountable. Establishing systems for gathering performance data
    and incorporating specific, time- based performance measures and goals
    that are linked to the agency*s program goals into the reform effort would
    improve the agency*s ability to set more meaningful strategic goals for
    its human capital reform effort and more clearly defined performance
    expectations for its human capital management. Together, this would help
    the agency build accountability into the reform effort and its overall
    human capital management approach.

    Conclusions Congress granted FAA flexibilities in its human capital
    management so that the agency could more effectively manage its workforce
    and achieve its

    mission. Yet, more than 7 years after the agency received broad exemptions
    from laws governing federal civilian personnel management, it is not clear
    whether and to what extent these flexibilities have helped FAA to do so.
    It is clear that FAA has faced significant challenges in implementing its
    human capital reform initiatives and evaluating the success of its effort.
    Challenges, including implementing reform initiatives throughout its
    workforce with a wide range of skills and negotiating agreements with
    employee unions, reflect difficulties that may be faced by other federal
    agencies that seek to implement human capital management flexibilities.

    FAA is not able to determine the effectiveness of its human capital reform
    initiatives because it has not incorporated key elements of effective
    human capital management into its effort thus far. While FAA has
    established preliminary linkages between its reform goals and the agency*s
    program

    goals, the lack of explicit linkage will make it difficult to assess the
    effects of the reform initiatives on the program goals of the organization
    even after data, measurable goals, and performance measures for human
    capital management efforts are established. FAA has acknowledged the
    importance of establishing these elements. It has repeatedly said that it
    is working to collect and analyze data and develop performance goals and
    measures, but it has not completed these critical tasks, nor has it
    established specific steps and time frames by which it will do so. As FAA
    moves forward, a more strategic approach to its reform effort would allow
    it to better evaluate the effects of its reform initiatives, use the
    evaluations as a basis for any strategic improvements to its human capital
    management approach, and hold agency leadership accountable for the
    results of its human capital management efforts. Doing so would also
    enable the agency to share its results with other federal agencies and
    Congress.

    Recommendations In order to acquire the information needed to make more
    informed strategic human capital decisions and better ensure that FAA*s
    personnel

    reforms achieve their intended results in a timely fashion, we recommend
    that the Secretary of Transportation direct the FAA Administrator to
    develop empirical data and establish specific, measurable, time- based
    goals and performance measures related to these goals; and use them to

    evaluate the effects of the reforms on the agency*s human capital
    management, programs, and mission so that the agency can make any needed
    improvements. Developing these evaluation tools is particularly urgent for
    those initiatives, such as FAA*s new compensation system for air traffic
    employees, for which possible negative effects have been raised by
    employees; and FAA*s new performance management system.

     define and describe explicit linkages between human capital management
    reform initiatives and program goals of the organization.  establish time
    frames by which data will be collected and analyzed and

    by which goals, performance measures, and explicit linkage will be
    established and used to evaluate the success of the reform initiatives and
    hold agency leadership accountable for the results of its human capital
    management efforts.

    Agency Comments and We provided a draft of this report to the Department
    of Transportation for

    Our Evaluation its review and met with Department of Transportation
    officials, including

    FAA's Assistant Administrator for Human Resource Management, to obtain
    their comments. The department officials generally agreed with the
    report's recommendations and indicated that the findings presented in the
    audit report would be useful as FAA moves forward with its human capital
    reforms. They also noted issues in three areas.

    First, these officials emphasized that implementing a new human capital
    system within an existing workforce presented FAA with a significant
    challenge, given the size of FAA's workforce, the large unionized
    population, and the variety of occupations and functions within the
    agency. Second, while these officials agreed that establishing more
    definitive

    measures and baseline data, as identified in our recommendations, are
    important in determining the effectiveness of the new human capital
    programs, they stated that they have been making significant progress in
    developing those measures.

    Third, in responding to our concern that FAA is not able to determine the
    effectiveness of its human capital reform initiatives because it has not
    incorporated key elements of effective human capital management into its
    effort, these officials told us that FAA used the results of its pilot
    testing and phased implementation approach to modify systems to ensure
    effectiveness before full implementation and that subsequent assessments
    were conducted to determine whether the programs were accomplishing the
    intended goals. They said that FAA already has substantial information

    to indicate that its new programs and initiatives are on the right track
    and should be effective in meeting the reform effort*s intent. As
    examples, they referred to reviews by NAPA and the consulting firm
    Deloitte & Touche, which they said had characterized FAA*s human capital
    reforms as *stateof- the- art.* The officials stated that FAA*s design
    process had been characterized in the NAPA review as yielding high-
    quality policies, and

    FAA*s reform effort had been characterized in the NAPA review as heading
    in the right direction and as *a change management issue that is
    unparalleled in the federal sector.* They further stated that Deloitte &
    Touche*s review had found that the guiding principles and objectives of
    FAA*s personnel reform were sound, and that some programs have already
    been largely successful, such as streamlined recruitment and staffing
    processes. Notwithstanding the characterizations in these assessments,

    both NAPA and Deloitte & Touche raised concerns about issues we found in
    our review, particularly FAA*s lack of baseline data and specific

    performance measures to assess the effectiveness of its reform effort and
    establish a basis for continuous improvement.

    Department officials also said that FAA*s new human capital system is
    consistent with the President*s Management Agenda and the Administration*s
    Human Capital Plan, and that other federal officials have touted the types
    of programs FAA developed and implemented as the wave of the future for
    the rest of the federal government. FAA emphasized that its agency is
    unique among federal agencies in implementing a performance- based and
    market- based pay system applicable to both nonunion and union employees,
    which clearly links annual pay

    adjustments to key agency programs and to individual employee performance
    and contributions. We agree that other federal agencies considering human
    capital reform may find FAA*s programs and experiences useful to consider,
    as FAA was granted human capital

    flexibilities in 1995 and has been working since to implement its human
    capital reform effort. In fact, we feel that this increases the importance
    of FAA*s efforts to effectively evaluate its reform. However, based on our
    prior work on human capital management, we found in our review that FAA*s
    efforts to link its human capital reform initiatives to its program goals
    do not go far enough to help the agency measure the reform*s success and
    that

    linkage between FAA*s personnel reform goals and the agency*s programmatic
    goals continues to be weakened by a lack of specific, quantitative, and
    time- based measures and goals. FAA also provided technical
    clarifications, which we included in the report where appropriate. We are
    sending copies of this report to the Administrator, Federal Aviation
    Administration. We also will make copies available to others upon request.
    In addition, the report will be available at no charge on the GAO Web site
    at

    http:// www. gao. gov.

    If you or your staff have any questions about this report, please call me
    at (202) 512- 3650. Key contacts and major contributors to this report are
    listed in appendix VII.

    Gerald L. Dillingham, Ph. D. Director, Physical Infrastructure Issues

    Appendi Appendi xes x I

    Scope and Methodology To determine the human capital changes that FAA
    initiated after being granted broad flexibilities in 1995 and the extent
    to which these reform initiatives required exemptions from title 5, we
    reviewed federal personnel management requirements under title 5, agency
    documents identifying personnel reform initiatives, and reports by OPM on
    personnel

    management flexibilities already available under title 5. We also
    discussed the changes with officials from FAA*s Office of the Assistant
    Administrator for Human Resource Management and OPM. To determine the
    status of implementation of FAA*s personnel reform and factors that have
    affected reform implementation, we collected and analyzed internal and
    external evaluations* including those conducted by the Department of
    Transportation*s Office of Inspector General and NAPA* of different
    aspects of FAA*s personnel reform and the available data on the results.
    We also discussed the status of, and barriers to, implementation of
    personnel reform initiatives with FAA human resource management officials
    and representatives from the lines of business.

    To determine the views of FAA managers and employees on the effects of
    FAA*s personnel reform initiatives we conducted a series of structured
    interviews with 176 randomly selected FAA managers and employees. Our
    structured interview included questions about how the agency manages its
    employees, compensation and performance management, and labor and employee
    relations. We discussed the design of these questions with officials from
    FAA and with representatives from FAA*s five largest unions* the National
    Air Traffic Controllers Association (about 19,500 members), the
    Professional Airways Systems Specialists (about 11,600 members), the
    National Association of Air Traffic Specialists (about 2,300 members), the
    American Federation of State, County and Municipal Employees (about 2,000
    members), and the American Federation of Government Employees (about 1,500
    members). We then pre- tested the structured interview with managers and
    employees in FAA*s Southern Region and made appropriate revisions.

    To maximize our chances of obtaining the views of managers and employees
    across the different segments of FAA*s workforce, we applied a judgmental
    stratification to our random sample (therefore, it may not be
    representative of the actual composition of FAA*s workforce): 25 percent
    managers, and 75 percent employees; and 60 percent Air Traffic Services/
    air traffic control staff, 40 percent from the rest of FAA. In addition,
    for non- headquarters respondents, we selected 70 percent of our

    respondents from field facilities and 30 percent from regional offices.
    Our

    respondents were randomly selected from electronic lists of names provided
    by FAA.

    We conducted our structured interviews at FAA headquarters in Washington,
    D. C.; FAA*s Mike Monroney Aeronautical Center in Oklahoma City, Oklahoma;
    and field facilities and regional offices in six of FAA*s nine geographic
    regions, including offices in the immediate vicinity of Anchorage, Alaska;
    Atlanta, Georgia; Chicago, Illinois; Dallas, Texas; Los Angeles,
    California; and New York City, New York. Field facilities we visited
    included air traffic control towers, en route centers, automated flight
    service stations, terminal radar approach control centers, airports
    district

    offices, and flight standards district offices. A total of 176 FAA staff
    participated in our survey throughout the months of May, June, July, and
    August 2002. The information obtained through this survey pertains to only
    these 176 respondents and cannot be generalized to any other population.
    However, because we selected interview respondents at random, we have

    increased the chances of capturing the breadth of opinions across the
    agency. A copy of our structured interview and the summary results for our
    close- ended questions is provided in appendix II. To augment the views
    and opinions collected from the structured interviews, we also obtained
    the views of FAA senior managers or representatives of all five lines of
    business and representatives of employees* associations.

    To determine the extent to which FAA management and employees* views were
    supported by data, we examined the results from FAA*s employee attitude
    surveys conducted between 1997 and 2000, as well as other internal surveys
    of executives, managers, and supervisors related to various aspects of
    FAA*s personnel reform effort. In addition, we collected available data
    from FAA*s Office of Human Resource Management and Office of Civil Rights.

    To determine how FAA*s experiences compared with our findings from our
    human capital management work at other agencies, we reviewed our human
    capital management audit work that focused on federal agencies* efforts to
    implement improvement initiatives and human capital

    flexibilities, as well as work conducted by other organizations involved
    in assessing federal agencies* reform efforts including OPM and NAPA, and
    we compared our findings on FAA*s experiences with these findings. We
    conducted our work in accordance with generally accepted government
    auditing standards from November 2001 through October 2002.

    Structured Interview Form and Selected

    Appendi x II

    Results STRUCTURED INTERVIEW FORM AND SELECTED RESULTS

    ATC (A)/ Non- ATC (NA): ________ Regional Office (RO)/ Field Office (FO):
    ________ Manager or Supervisor (MS)/ Employee (E): ________ Location (AT,
    AN, CH, DA, NY, LA)/ ID Number:________

    Thank you for meeting with us today. We work with the General Accounting
    Office in Washington DC and we*ve been asked by Congress to see how the
    personnel reforms at FAA are going. One of the ways we*re doing that is by
    asking FAA employees like you to tell us about how the personnel reforms
    here are affecting you, your ability to perform your work, and your unit*s
    ability to achieve its mission- in both good and bad ways. We*re going to
    several different regions and talking to many employees- we selected your
    name at random and appreciate your willingness to talk to us. I will be
    asking you a series of questions, some you can answer from a range of
    standard responses like strongly agree to strongly disagree, and others
    will give you an opportunity to provide a little bit more specific
    information. ____ will be taking notes to be sure that we capture all you
    have to say. Your responses are confidential- we won*t report your name
    with anything you say here and we*ll report our results as a summary of
    what everyone tells us. The entire interview should take about 30 minutes.
    Do you have any questions before we begin?

    (Personnel reform includes: hiring, training, compensation, performance
    management, labor and employee relations, among others.)

    1. To start with, how knowledgeable are you about FAA s personnel reform
    efforts? Which reform( s) do you know most about? Least about?

    Section A

    The first set of questions I ll ask deal with how FAA manages its
    workforce. For the next question and others throughout the survey, I d
    like you to use this scale for your answer- please tell me if you strongly
    agree ( SA) , agree ( A) , disagree ( D) or strongly disagree ( SD) .

    2. I receive the training I need to do my job effectively. Circle
    response: SA A D SD NA/ Don t know

    _ _ _ _

    Strongly Agree

    Disagree Strongly

    NA/ Don t Agree

    N N

    Disagree Know

    N N

    N Total42933083

    Managers 11 29 5 0 1 Employees 31 64 25 8 2

    ATC20481342 Non- ATC 22 45 17 4 1

    Field Office 27 51 14 3 2 Regional

    15 42 16 5 1 Office

    3. Could you give me more detail about that ? How has the fact that the
    lines of business are responsible for funding and managing training
    affected the amount and/ or quality of training you ve received?

    4. What, if any, training do you need that your line of business ( or
    staff office) has not provided?

    5. Using the scale again: The ability of my line of business ( or staff
    office) to efficiently and effectively fill job vacancies has improved in
    the last 5 years.

    Circle response: SA A D SD NA/ Don t know _ _ _ _

    Strongly Agree Disagree Strongly

    NA/ Don t Agree

    Disagree Know

    Total1235554727 Managers 3 12 18 10 3 Employees923373724

    ATC71526318 Non- ATC 5 20 29 16 19

    Field Office922222915 Regional

    313331812 Office

    6. Has the speed of hiring improved? How? { Pause for response} Has the
    quality of candidates improved? How?

    Section B

    The next set of questions I ll ask deal with the new pay and performance
    management systems including the new pay bands and pay- for- performance
    system, as well as, the meets/ does not meet standards performance rating
    system implemented in 1996.

    . 7. Using the scale again: I am better off under the new pay band system
    than under

    the grade and step pay system. Circle response: SA A D SD NA/ Don t know

    _ _ _ _ Strongly

    Agree Disagree Strongly NA/ Don t

    Agree Disagree

    Know Total4045283231

    Managers 7 18 9 7 5 Employees 33 27 19 25 26

    ATC362091210 Non- ATC 4 25 19 20 21

    Field Office 38 18 10 13 18 Regional

    227181913 Office

    8. Using the scale again: I think the new pay system is fair to all
    employees. Circle response: SA A D SD NA/ Don t know

    _ _ _ _ Strongly

    Agree Disagree Strongly NA/ Don t

    Agree Disagree

    Know Total1637585213

    Managers 0 7 18 20 1 Employees 16 30 40 32 12

    ATC152124234 Non- ATC 1 16 34 29 9

    Field Office 16 23 26 21 11 Regional

    01432312 Office

    9. What do you like about the new pay system? Is there anything you don t
    like about the new pay system?

    10. Using the scale again: Separating cash awards from performance
    appraisals has made the appraisal process more fair.

    Circle response: SA A D SD NA/ Don t know _ _ _ _

    Strongly Agree Disagree Strongly

    NA/ Don t Agree

    Disagree Know

    Total1446492344 Managers 4 16 12 7 7 Employees 10 30 37 16 37

    ATC102325821 Non- ATC 4 23 24 15 23

    Field Office 10 24 23 11 29 Regional

    422261215 Office

    11. Using the scale again: The way my most recent formal performance
    appraisal was handled gave me useful information for improving my
    performance.

    Circle response: SA A D SD NA/ Don t know _ _ _ _

    Strongly Agree Disagree Strongly

    NA/ Don t Agree

    Disagree Know

    Total1656573314 Managers 3 15 21 6 1 Employees 13 41 36 27 13

    ATC82831173 Non- ATC 8 28 26 16 11

    Field Office 10 28 30 19 10 Regional

    62827144 Office

    12. Using the scale again: Awards and recognition more appropriately
    reflect employees performance today than 5 years ago.

    . Circle response: SA A D SD NA/ Don t know

    _ _ _ _ Strongly

    Agree Disagree Strongly NA/ Don t

    Agree Disagree

    Know Total1440712823

    Managers 3 14 19 7 3 Employees 11 26 52 21 20

    ATC92629167 Non- ATC 5 14 42 12 16

    Field Office927301714 Regional

    51341119 Office

    13. Using the scale again: FAA s process for promotion better targets
    qualified people now than it did 5 years ago.

    Circle response: SA A D SD NA/ Don t know _ _ _ _

    Strongly Agree Disagree Strongly

    NA/ Don t Agree

    Disagree Know

    Total 0 34 65 43 34 Managers 0 13 15 12 6 Employees021503128

    ATC013352514 Non- ATC 0 21 30 18 20

    Field Office018292822 Regional

    016361512 Office

    14. To what extent have managers and supervisors become more ( or less)
    accountable for achieving agency goals in the last 5 years?

    Section C

    The next set of questions I ll ask deal with labor relations and employee
    relations. 15. Using the scale again: FAA s employee unions have had a
    positive impact on

    implementing personnel reform in the agency. Circle response: SA A D SD
    NA/ Don t know

    _ _ _ _ Strongly

    Agree Disagree Strongly NA/ Don t

    Agree Disagree

    Know Total3155502515

    Managers 4 9 15 14 4 Employees 27 46 35 11 11

    ATC23301996 Non- ATC 8 25 31 16 9

    Field Office 25 34 19 8 11 Regional

    62131174 Office

    16. Do you think labor- management relations have changed in the last 5
    years? ( As applicable) How? What specifically has driven this change?

    17. Do you think employee morale has changed in the last 5 years? ( As
    applicable) How? What specifically has driven this change?

    18. Using the scale again: FAA employees had sufficient opportunities to
    provide input for personnel reform policies and initiatives before they
    were finalized and implemented.

    Circle response: SA A D SD NA/ Don t know _ _ _ _

    Strongly Agree Disagree Strongly

    NA/ Don t Agree

    Disagree Know

    Total 9 52 44 36 35 Managers 2 13 16 12 3 Employees739282432

    ATC623202216 Non- ATC 3 29 24 14 19

    Field O ffice631201723 Regional

    321241912 Office

    19. Using the scale again: I understand the goals of the Model Work
    Environment. Circle response: SA A D SD NA/ Don t know

    _ _ _ _ Strongly

    Agree Disagree Strongly NA/ Don t

    Agree Disagree

    Know Total 34 100 30 4 8

    Managers 19 23 3 1 0 Employees 15 77 27 3 8

    ATC19501323 Non- ATC 15 50 17 2 5

    Field Office 17 57 17 1 5 Regional

    17 43 13 3 3 Office

    20. Please describe the effect Model Work Environment has had ( if any) on
    employee morale.

    21. Using the scale again: I have received sufficient and timely
    information on personnel reform changes that affect my job.

    Circle response: SA A D SD NA/ Don t know _ _ _ _

    Strongly Agree Disagree Strongly

    NA/ Don t Agree

    Disagree Know

    Total 10 101 41 17 7 Managers 2 25 16 3 0 Employees87625147

    ATC5452296 Non- ATC 5 56 19 8 1

    Field Office 6 57 19 11 4 Regional

    4442263 Office

    22. What personnel reforms have been particularly well communicated? Which
    method( s) of communication work( s) best or would work best? Worst?

    Section D

    The last set of questions deal with the overall result of personnel
    reforms at FAA. 23. Using the scale again: Personnel reform has made FAA a
    better place to work. Circle response: SA A D SD NA/ Don t know

    _ _ _ _ Strongly

    Agree Disagree Strongly NA/ Don t

    Agree Disagree

    Know Total1160583215

    Managers 3 12 23 7 1 Employees848352514

    ATC73327137 Non- ATC 4 27 31 19 8

    Field O ffice838271311 Regional

    32231194 Office

    24. Using the scale again: Personnel reform will make FAA a better place
    to work.

    Circle response: SA A D SD NA/ Don t know _ _ _ _

    Strongly Agree Disagree Strongly

    NA/ Don t Agree

    Disagree Know

    Total1484342519 Managers 6 26 7 5 2 Employees858272017

    ATC840191010 Non- ATC 6 44 15 15 9

    Field O ffice851141311 Regional

    63320128 Office

    25. What are the 3 most positive outcomes of FAA s personnel reform
    efforts? 26. What are the 3 most negative outcomes of FAA s personnel
    reform efforts? 27. What kinds of comments have you heard about the
    personnel reforms we ve been

    discussing today from your co- workers? 28. Do you have any suggestions
    for improving FAA s implementation of personnel

    reform? Okay, although we won t be using your name with this information,
    I would like to ask just a couple of questions about your position here.

    29. How long have you worked at FAA? _ _ _ _ _ . Median Mean Standard

    Deviation Total 16.0 16.4 9.6

    Managers 20.0 20.7 9.2 Employees 15.0 14.9 9.4

    ATC 19.0 18.2 8.1 Non- ATC 14.0 14.7 10.7

    Field Office 17.0 15.7 8.8 Regional Office 15.0 17.3 10.6

    30. Are you a bargaining unit employee? Circle response: Yes No

    Yes No Total 111 65

    Managers 5 41 Employees 106 24

    ATC 57 30 Non- ATC 54 35

    Field Office 74 23 Regional

    37 42 Office

    ( If the answer is yes) Which one? _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ % of
    Total

    AFGE AFSCME NAGE NAATS NATCA PAACE PASS Don t Population

    Know Total 1 22 1 3 55 2 20 7

    Managers 0 2 1 0 0 0 2 0 Employees 1 20 0 3 55 2 18 7

    ATC 041147031 Non- ATC 1 18 0 2 8 2 17 6

    Field 1012452176

    Office Regional

    0220110031 Office

    Thank you very much for answering my questions today. We really appreciate
    your time, and the feedback we get from you will help FAA and Congress
    make future decisions about personnel reform.

    Elements for Effective Human Capital

    Appendi x III

    Management In March 2002, we issued a model for strategic human capital
    management that incorporates lessons learned in our reviews of other
    agencies* human capital management practices, as well as our own
    experiences. 62 The model identifies eight critical success factors and
    highlights some of the steps agencies can take to make progress in
    managing human capital

    strategically. These eight factors, shown in figure 16, are organized in
    pairs to correspond with the four governmentwide high- risk human capital
    challenges that our work has shown are undermining agency effectiveness.

    62 U. S. General Accounting Office, A Model of Strategic Human Capital
    Management, GAO- 02- 373SP (Washington, D. C.: March 15, 2002).

    Figure 16: Eight Critical Success Factors Corresponding with the Four
    High- Risk Human Capital Challenges That Can Help Agencies Manage Human
    Capital Strategically In November 2002, we issued a report that identified
    six key practices for

    federal agencies* effective use of human capital flexibilities that
    incorporate the concepts and critical factors of our model. 63 Based on
    our

    interviews with human resource management directors from across the
    federal government, we identified the following key practices that
    agencies should implement to use human capital flexibilities effectively,
    as shown in Figure 17.

    Figure 17: Six Key Practices for Effective Use of Human Capital
    Flexibilities

    63 U. S. General Accounting Office, Human Capital: Effective Use of
    Flexibilities Can Assist Agencies in Managing Their Workforces, GAO- 03-
    02, (Washington, D. C.: Nov. 2002).

    Core Compensation Pay Bands and Grade

    Appendi x IV Conversion for 2002

    Notes: Does not include locality pay. Blank cells indicate no old grade
    equivalent to new pay band for manager levels.

    FAA Human Resource Management Office*s

    Appendi x V

    Balanced Scorecard Performance Measures Performance measures Measurement

    Areas of measurement perspectives

    (proposed data sources)

    Customer Human Resource Management Human Resource Management Office Human
    Resource Management Office

    Office service excellence consultation and expertise valued

    innovation and leadership Customer perceptions regarding Customer
    perceptions regarding

    Customer perceptions regarding personnel reform human resource management
    human resource management office

    Human resource management office office service quality and consultation &
    staff expertise

    & line of business human capital timeliness

    (employee surveys)

    management efforts (employee surveys)

    (employee surveys)

    Performance Human Resource Management Efficient use of Human Resource
    Improved practices within Lines of

    Office results meet goals Management Office resources

    Business Percentage of human resource Human resource management office
    Knowledge transfer management office projects

    spending Improved line of business processes completed on time

    (budget & accounting data)

    & practices Human resource management office Meet unique needs

    (human resources office

    labor distribution

    reporting system)

    (cost accounting system) (employee surveys)

    Internal Consistent human resource

    Effective Labor- Management Attract and retain high caliber

    processes management policy interpretation Relationships

    employees Consolidation in bargaining units

    Timeliness of Partnership Council meeting

    automated/ nonautomated selections (Personnel management

    attendance Percentage of voluntary & involuntary

    evaluations, human resource

    attrition

    management office policy training

    (data on grievances and evaluations)

    unauthorized labor practices) (Selecting official interview data)

    Human Empowered Human Resource Satisfied Human Resource Office

    Rewarding Human Resource Resource Management Office employees Management
    employees

    Management Office work environment Management

    Human Resource Management Human Resource Management Office Office employee

    Human Resource Management Office employee perceptions of job employee
    perceptions regarding Office employee perceptions of

    satisfaction and perceptions communication empowerment regarding
    commitment to service

    Performance rewarded (employee surveys)

    (employee surveys) (employee surveys)

    Learning and Capitalize on Human Resource

    Increase Human Resource Leverage Human Resource growth Management
    Management

    Management Office data/ information Office talent Office capacity to
    improve

    Availability and quality of data Identify and close skill gaps

    Increase in professional credentials (human resource management

    (skills/ training assessment for

    (skills/ training assessment for office information system audit)

    human resources office) Human Resource Management Timeliness and
    responsiveness to Implement Human Resource

    Office) internal Human Resource Management Office workforce

    Percentage of personnel, Management Office requests planning compensation,
    and benefits funding

    (employee survey) (human resource management

    spent on training office reporting system)

    (budget & accounting data) Source: FAA.

                                           A

    Note: Shaded areas indicate measures focused internally on the Office of
    Human Resource Management.

    a

    GAO United States General Accounting Office

    In 1996, FAA initiated human capital reform initiatives in three broad
    areas, some of which required exemption from title 5, and some of which
    have been fully implemented. FAA has not yet completed implementation of
    some key initiatives. For example, FAA*s new compensation system remains
    unimplemented for about one- quarter of the agency*s workforce* those
    staff whose unions have not reached agreements with FAA. FAA*s need to
    implement initiatives among a workforce with a wide range of skills and to
    negotiate changes with multiple unions were among factors that affected
    the pace and extent of reform implementation.

    Selected Initiatives within the Three Areas of FAA*s Reform, Including
    Whether an Exemption from Title 5 Was Required and Implementation Status
    FAA had little data with which to assess the effects of its reform effort.

    While FAA human capital officials cited positive effects of FAA*s reform
    effort, the views of managers and employees GAO interviewed were generally
    less positive.

    FAA*s lack of empirical data on the effects of its human capital
    initiatives is one indication that it has not fully incorporated elements
    that are important to effective human capital management into its overall
    reform effort. These elements include data collection and analysis,
    performance goals and measures, and linkage of reform goals to program
    goals. FAA human resource management officials said that the agency should
    have spent more time to develop baseline data and performance measures
    before implementing the broad range of reforms but that establishing these
    elements was a complex and difficult task. FAA has also not gone far
    enough in establishing linkage between reform goals and overall program
    goals of the organization. GAO found that the lack of these elements has
    been pointed out repeatedly in evaluations of FAA*s human capital reform
    effort, but FAA has not developed specific steps and time frames by which
    these elements will be established and used for evaluation. Incorporation
    of these elements could also help FAA build accountability into its human
    capital management approach.

    HUMAN CAPITAL MANAGEMENT

    FAA*s Reform Effort Requires a More Strategic Approach

    www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 156. To view the full report,
    including the scope and methodology, click on the link above. For more
    information, contact Gerald Dillingham, Ph. D., at (202) 512- 2834 or

    dillinghamg@ gao. gov. Highlights of GAO- 03- 156, a report to the

    Chairman, Subcommittee on Aviation, House Committee on Transportation and
    Infrastructure; Chairman, House Committee on Government Reform; and
    another requester February 2003

    In 1996, the Federal Aviation Administration (FAA) undertook a human
    capital reform effort under one of the most flexible human capital
    management environments in the federal government, including broad
    exemptions from title 5 laws governing federal civilian personnel
    management. GAO was asked (1) to examine the

    changes FAA initiated in its reform effort, including whether they
    required an exemption from title 5

    and their implementation status; (2) determine the effects of the reform
    effort according to available data and the views of FAA officials,
    managers, and employees; and (3) assess the extent to which FAA*s reform
    effort incorporated elements that are important to effective human capital

    management. This report makes recommendations to enable FAA to develop a
    more strategic approach to its reform effort. By building elements that
    are important to effective human capital

    management into its approach, FAA will be better able to evaluate the
    effects of its initiatives, use the evaluations as a basis for any
    strategic improvements, and hold agency leadership accountable. FAA will
    also be better able to

    share its results with other federal agencies and Congress.

    The Department of Transportation and FAA officials generally agreed with
    our recommendations.

    Page i GAO- 03- 156 Human Capital Management

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    Appendix I

    Appendix I Scope and Methodology

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    Appendix II

    Appendix II Structured Interview Form and Selected Results

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    Appendix II Structured Interview Form and Selected Results

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    Appendix II Structured Interview Form and Selected Results

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    Appendix II Structured Interview Form and Selected Results

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    Appendix II Structured Interview Form and Selected Results

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    Appendix II Structured Interview Form and Selected Results

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    Appendix II Structured Interview Form and Selected Results

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    Appendix II Structured Interview Form and Selected Results

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    Appendix II Structured Interview Form and Selected Results

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    Appendix III

    Appendix III Elements for Effective Human Capital Management

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    Appendix III Elements for Effective Human Capital Management

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    Appendix IV

    Appendix IV Core Compensation Pay Bands and Grade Conversion for 2002

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    Appendix V

    Appendix V FAA Human Resource Management Office*s Balanced Scorecard
    Performance Measures

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    Appendix VI

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