Veterans Benefits Administration: Better Collection and Analysis 
of Attrition Data Needed to Enhance Workforce Planning		 
(28-APR-03, GAO-03-491).					 
                                                                 
By the year 2006, the Veterans Benefits Administration (VBA)	 
projects it will lose a significant portion of its		 
mission-critical workforce to retirement. VBA has hired over	 
2,000 new employees to begin to fill this expected gap. GAO was  
asked to review: (1) the attrition rate at VBA, particularly for 
new employees who examine veterans' claims, and the agency's	 
methods for calculating attrition; and (2) the adequacy of VBA's 
analysis of attrition data, including the reasons for attrition. 
To answer these questions, GAO analyzed attrition data from VBA's
Office of Human Resources, calculated attrition rates for VBA and
other federal agencies using a governmentwide database on federal
employment, and interviewed VBA officials about their efforts to 
measure attrition and determine why new employees leave.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-491 					        
    ACCNO:   A06730						        
  TITLE:     Veterans Benefits Administration: Better Collection and  
Analysis of Attrition Data Needed to Enhance Workforce Planning  
     DATE:   04/28/2003 
  SUBJECT:   Attrition rates					 
	     Cost analysis					 
	     Data collection					 
	     Federal agencies					 
	     Federal employees					 
	     Veterans benefits					 
	     Veterans disability compensation			 

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GAO-03-491

Report to the Ranking Democratic Member, Committee on Veterans* Affairs,
House of Representatives

United States General Accounting Office

GAO

April 2003 VETERANS BENEFITS ADMINISTRATION

Better Collection and Analysis of Attrition Data Needed to Enhance
Workforce Planning

GAO- 03- 491

About 16 percent of new examiners hired in fiscal year 2001 left VBA
within 12 months of their hiring date, more than double the 6 percent rate
for all VBA employees who left that year. In general, new hire attrition
tends to exceed the rate for all other employees, and VBA*s 16 percent
rate is similar to the attrition rate for all new federal employees hired
in recent years, when as many as 17 percent left within 12 months of being
hired. VBA does not have adequate data on the reasons why employees,

particularly new employees, choose to leave the agency. VBA has
descriptive data on whether employees leave the agency through
resignation, termination, retirement, or transfer, but does not yet have
comprehensive data on the reasons employees resign. While VBA collects
some data on the reasons for attrition in exit interviews, these data are

limited because exit interviews have not been conducted consistently, and
the data from these interviews are not compiled and analyzed. Without such
data, VBA cannot determine ways to address why employees are leaving.
Furthermore, VBA has not performed analysis to determine whether it can
reduce its staff attrition. Despite recent steps to improve the collection
and analysis of data on the reasons for attrition, an overall strategy for
the collection and analysis of attrition data could help guide workforce
planning and determine the extent to which attrition and its costs could
be reduced.

Percentage of Examiners Who Left Within 2 Years of Their Hiring Date, FY
1998- 2001 0 2

4 6

8 10

12 14

16 18 17.6

4.5 14.7

4.0 16.3 15.8

5.5 1.8

Percentage who left within 12 and 24 months of hiring

Source: OPM's Central Personnel Data File.

1998 1999 2000 2001 Year of hire

0- 12 months 13- 24 months

Note: Data for fiscal year 2001 do not reflect a full 24- month time
period.

By the year 2006, the Veterans Benefits Administration (VBA) projects it
will lose a significant portion of its mission- critical workforce to
retirement. VBA has hired over 2,000 new employees to begin to fill this
expected gap. GAO was asked to review: (1) the

attrition rate at VBA, particularly for new employees who examine
veterans* claims, and the agency*s methods for calculating attrition; and
(2) the adequacy of VBA*s analysis of attrition data, including the
reasons for attrition. To answer these questions, GAO

analyzed attrition data from VBA*s Office of Human Resources, calculated
attrition rates for VBA and other federal agencies using a governmentwide
database on

federal employment, and interviewed VBA officials about their efforts to
measure attrition and determine why new employees leave.

To ensure that VBA collects and analyzes information on the reasons for
attrition, particularly

for new hires, GAO recommends that the Secretary of Veterans Affairs (VA)
direct the Under Secretary for Benefits to develop a strategy for the
systematic collection and analysis of attrition data, including attrition
rates,

reasons for leaving, and cost data; and that VBA integrate the results of
its attrition analysis into its workforce plan. VA concurred with GAO*s
recommendation. www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 491. To view the
full report, including the scope

and methodology, click on the link above. For more information, contact
Cynthia A. Bascetta at (202) 512- 7101 or bascettac@ gao. gov. Highlights
of GAO- 03- 491, a report to the

Ranking Democratic Member, Committee on Veterans' Affairs, House of
Representatives

April 2003

VETERANS BENEFITS ADMINISTRATION

Better Collection and Analysis of Attrition Data Needed to Enhance
Workforce Planning

Page i GAO- 03- 491 Veterans Benefits Administration Letter 1 Results in
Brief 1 Background 3 Attrition at VBA Is Higher for Newly Hired Examiners
Than for the Agency Overall 5 VBA Lacks Adequate Data on Reasons Employees
Leave and

Analysis of Staff Attrition 9 Conclusions 14 Recommendation 14 Agency
Comments 14 Appendix I Objectives, Scope, and Methodology 16 Objectives 16
Scope and Methodology 16 Appendix II Comments from the Department of
Veterans Affairs 18

Appendix III GAO Contacts and Staff Acknowledgments 20 GAO Contacts 20
Acknowledgments 20 Related GAO Products 21

General Human Capital Reports 21 Department of Veterans Affairs 21
Veterans Benefits Administration 21 Table

Table 1: Overall Attrition Rates for VBA Examiners, Other VBA, Other
Department of Veterans Affairs, and Other Federal Employees, Fiscal Years
2000- 2002 6 Figures

Figure 1. Examiners Hired by VBA, Fiscal Years 1998- 2002 4 Figure 2:
Percentage of Examiners Who Left VBA within 2 Years of Their Hiring Date,
Fiscal Years 1998- 2001 6 Contents

Page ii GAO- 03- 491 Veterans Benefits Administration Abbreviations

CPDF Central Personnel Data File OMB Office of Management and Budget OPM
Office of Personnel Management SSA Social Security Administration VA
Department of Veterans Affairs VBA Veterans Benefits Administration

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.

Page 1 GAO- 03- 491 Veterans Benefits Administration

April 28, 2003 The Honorable Lane Evans Ranking Democratic Member
Committee on Veterans* Affairs House of Representatives

Dear Mr. Evans: The Veterans Benefits Administration (VBA) projects that
21 percent of its employees who examine veterans* claims and are eligible
to retire will do so by the year 2006. To prevent the potential
disruptions in service to veterans applying for disability compensation
that could result from these retirements, as well as to address a large
claims backlog, VBA hired over 2,000 new examiners between fiscal years
1998 and 2002. While VBA recognizes the importance of retaining its new
employees, until 2001 it was not regularly calculating an attrition rate
for its newly hired employees.

Because of the concern that VBA maintain a sufficient workforce, you asked
us to examine (1) the attrition rate at VBA, particularly for new
employees who examine veterans* claims, and the agency*s methods for
calculating attrition; and (2) the adequacy of VBA*s analysis of attrition
data, including the reasons for attrition.

To do our work, we obtained and analyzed attrition data from VBA*s Office
of Human Resources and interviewed VBA officials. We focused our analysis
on new employees because of the investment in training they need to reach
full productivity. We calculated VBA*s attrition rates and

compared them to those for other federal new hires, using a governmentwide
database on federal civilian employment. We also interviewed Office of
Personnel Management (OPM) officials to identify generally accepted
methods of calculating attrition and to determine how federal agencies
develop and analyze data on attrition and the reasons for attrition. We
conducted our work between October 2002 and February 2003 in accordance
with generally accepted government auditing standards.

Using OPM data for fiscal year 2001, we calculated the attrition rate at
VBA for newly hired examiners at about 16 percent, more than double the 6
percent rate for all VBA employees. The attrition rate for newly hired

United States General Accounting Office Washington, DC 20548

Results in Brief

Page 2 GAO- 03- 491 Veterans Benefits Administration

examiners is similar to the attrition rate for all new federal employees
hired in recent years. Specifically, between fiscal years 1998 and 2001,
as many as 17 percent left within 12 months of being hired. While it is
typical for new hire attrition to exceed overall attrition, the new hire
attrition rate was much higher in certain VBA regional offices located in
major urban areas than it was in other regional offices. For example, in
the Newark regional office, 40 percent of examiners hired in fiscal year
2001 left within the first year of employment, while no newly hired
examiners in Wichita

left. VBA calculates attrition by counting employees who leave the agency
and comparing that number to either total employees or a subgroup of total
employees. The methods VBA uses to calculate attrition are consistent with
those used by OPM and other federal agencies, and VBA*s calculations are
similar to those we used for this report.

While VBA has descriptive data on whether employees leave the agency
through resignation, termination, retirement, or transfer, it does not yet
have adequate analytic data on the reasons why employees, particularly new
examiners, leave the agency. VBA has also not conducted the types of
analysis that would help the agency determine whether its attrition,
particularly for newly hired examiners, is excessive. Efforts to collect
better data on the reasons for attrition, for example by using exit

interviews, are under way, but it will take some time before the results
can be fully analyzed. Without such analysis, VBA cannot determine ways to
address the reasons employees are leaving. Furthermore, VBA has not fully
analyzed the cost implications of its attrition, nor has it performed the
types of analysis, such as comparisons of its own attrition to that of
other federal employees who perform similar work, that would help the
agency determine the significance of its attrition rate, particularly for

newly hired examiners. However, recent requirements approved by the
Department of Veterans Affairs (VA) will begin to provide VBA the
opportunity to enhance the collection and analysis of attrition data. For
example, a VA- wide policy approved in January 2003 requires the use of
attrition data to guide workforce planning.

Because information on staff attrition is essential for effective
workforce planning, we are recommending that the Secretary of Veterans
Affairs direct the Under Secretary for Benefits to develop a strategy for
the systematic collection and analysis of attrition data at VBA.
Furthermore, we recommend that the results be integrated into the agency*s
workforce plan. VA concurred with our recommendation.

Page 3 GAO- 03- 491 Veterans Benefits Administration

VBA provides benefits to about 2.7 million veterans and about 579,000
surviving spouses, children, and parents. These benefits and services
include disability compensation and pension, education, loan guaranty, and
insurance. VBA employs about 5,000 examiners, 1 and they represent about
40 percent of the agency*s entire workforce. Most examiners are located at
57 regional offices and are responsible for reviewing and processing
veterans* disability claims. Typically, they begin service at GS- 5 or GS-
7 and can be promoted to GS- 10. 2 Between 1998 and 2002, VBA hired over
2,000 new examiners (see fig. 1). According to VBA officials, this was the
first time VBA had the authority to

hire significant numbers of examiners. These examiners were hired in
anticipation of a large number of future retirements. For example, in
2000, VBA was expecting the retirement of 1,100 experienced examiners in
the subsequent 5 years. The hiring of these new examiners coincided with a
growth in the backlog of claims awaiting decisions. Between 1998 and

2001, the backlog increased by 74 percent from about 241,000 to about
420,000. VBA has since implemented an initiative to reduce this backlog. 3
1 According to VBA, these positions carry the title of Veterans Service
Representative. These positions and similar ones, such as rating
specialists, are classified as job series 996,

veterans claims examiner. For our analysis, we focused on the 996 job
series. For this report, we are referring to jobs in this series as
examiners.

2 According to a VBA official, in some cases, they can also start at GS-
9. In 2003, basic starting salaries for GS- 5 and GS- 7 are about $23,400
and $29,000, respectively, not counting locality pay, and for those hired
at the GS- 9 level, the corresponding starting salary is about $35,500.
VBA is planning to extend competitive promotion potential for this job
series to

GS- 11. 3 VBA began to implement this initiative, called Claims Process
Improvement, at all of its regional offices in July 2002. For more
information, see U. S. General Accounting Office,

Veterans* Benefits: Claims Processing Timeliness Performance Measures
Could Be Improved, GAO- 03- 282 (Washington, D. C.: Dec. 19, 2002).
Background

Page 4 GAO- 03- 491 Veterans Benefits Administration

Figure 1. Examiners Hired by VBA, Fiscal Years 1998- 2002

According to VBA, it takes 2 to 3 years for a newly hired examiner to
become fully productive. After being hired, new examiners receive a
combination of formal training in a central location and on- the- job
training in one of VBA*s regional offices. Once on the job, these workers
perform a

variety of critical tasks, such as compiling medical evidence, assessing
the extent of the disability, determining the level of benefit, handling
payment, and considering appeals. Workforce planning, which can be guided
by different types of data, is a

key component to maintaining a workforce that can carry out the tasks
critical to an agency*s mission. Strategic workforce planning focuses on
developing and implementing long- term strategies* clearly linked to an
agency*s mission and programmatic goals* for acquiring, developing, and
retaining employees. In addition to data on attrition rates and the
reasons

for attrition, data that can guide workforce planning include size and
composition of the workforce, skills inventory, projected retirement
eligibility and retirement rates, and feedback from exit interviews. 4
These

4 For more information, see U. S. General Accounting Office, A Model of
Strategic Human Capital Management, Exposure Draft, GAO- 02- 373SP
(Washington, D. C.: Mar. 15, 2002).

New examiners hired 0 200

400 600

800 1,000

1,200 FY98 FY99 FY00 FY01 FY02

Source: VBA.

Page 5 GAO- 03- 491 Veterans Benefits Administration

data can be analyzed to identify gaps between an agency*s workforce and
its current and future needs. This insight can, in turn, become the basis
for developing strategies to build a workforce that accommodates those
needs.

We calculated the fiscal year 2001 attrition rate for new examiners at VBA
at about 16 percent, more than twice as high as the 6 percent rate for all
employees who left that year. About 16 percent of new examiners hired in
fiscal year 2001 left the agency within 1 year of being hired. According
to human resources experts, it is typical for new employees to leave at
higher rates than all other employees. However, minimizing attrition is
important

because of the high costs of hiring and training new examiners. VBA
calculates attrition by counting employees who leave the agency and
comparing that number to either total employees or a subgroup of total

employees. The methods VBA uses to calculate attrition are consistent with
those used by OPM and other federal agencies.

Attrition rates for new VBA examiners were generally higher than those for
all VBA examiners and other employees. As shown in table 1, in fiscal
years 2000, 2001, and 2002, overall attrition rates for VBA examiners and

other VBA employees ranged from about 4 percent to 8 percent. However,
among all new examiners hired in fiscal year 2001, about 16 percent left
the agency within 12 months, as shown in figure 2. 5 These attrition
rates, for all employees as well as for newly hired examiners, reflect all
types of attrition* including resignation, retirement, and termination. 6
New hire attrition consists predominantly of resignations.

5 Since we issued our statement, Veterans Benefits Administration: Better
Staff Attrition Data and Analysis Needed GAO- 03- 452T (Washington, D. C.:
Feb. 11, 2003), OPM issued 2002 data, which we used to update this
analysis. For further information about our methodology, see appendix I.

6 We did not include in our analysis of new hire attrition staff who left
the examiner position but remained in VBA, nor did we include transfers
within VA. Attrition at VBA Is

Higher for Newly Hired Examiners Than for the Agency Overall

Attrition for New Employees at VBA Is More Than Twice as High as the
Agency*s Overall Rate of About 6 Percent

Page 6 GAO- 03- 491 Veterans Benefits Administration

Table 1: Overall Attrition Rates for VBA Examiners, Other VBA, Other
Department of Veterans Affairs, and Other Federal Employees, Fiscal Years
2000- 2002

VBA Fiscal year Examiners All other employees Agencywide All other VA

All other federal government

2000 4.6 6. 9 6.0 8.2 7. 4 2001 6.0 6. 6 6.4 7.8 7. 0 2002 7.0 8. 1 7.6
7.6 6. 5 Source: OPM*s Central Personnel Data File. Note: GAO performed
these calculations by dividing separations by an average of the total
workforce on board at the beginning and end of each year. The averages
could only be calculated for the years shown. For all categories of
employees shown, attrition rates were calculated based on white- collar
employees only. Figure 2: Percentage of Examiners Who Left VBA within 2
Years of Their Hiring

Date, Fiscal Years 1998- 2001 Note: Data for fiscal year 2001 do not
reflect a full 24- month time period. A comparable analysis could not be
done for fiscal year 2002 because comparable data were not available to
reflect a full 24- month time period.

0 2

4 6

8 10

12 14

16 18 17.6

4.5 14.7

4.0 16.3

15.8 5.5

1.8

Percentage who left within 12 and 24 months of hiring

Source: OPM's Central Personnel Data File.

1998 1999 2000 2001 Year of hire

0- 12 months 13- 24 months

Page 7 GAO- 03- 491 Veterans Benefits Administration

According to human capital experts, in general, new employees tend to
leave at higher rates than all other employees, and some of this attrition
may even be desirable. Higher attrition among new hires has been the
experience for federal agencies historically and, according to our
analysis of OPM*s data, is generally the case governmentwide. The
attrition rate for all federal employees, both new hires and senior staff,
was 7 percent in

fiscal year 2001. 7 However, for all new federal employees* those hired in
fiscal years 1998, 1999, 2000, and 2001* as many as 17 percent left within
12 months of being hired. In some instances, according to a VBA official,
such attrition may even be desirable. For example, a newly hired employee
may turn out not to be a good fit for the agency.

The attrition rates we calculated for VBA*s newly hired examiners are
similar to those that the Social Security Administration (SSA) found among
its own new hires doing comparable work. As part of its own workforce
planning efforts, SSA has collected data on new hire attrition. Of its
employees who examine and process benefit claims, SSA found attrition
rates that ranged from about 15 percent for those hired in 1998 to about
14 percent for those hired in 2000. 8 VBA calculations show, and agency
officials acknowledge, that attrition

for newly hired examiners is particularly high or particularly low in
certain locations. 9 Specifically, VBA found attrition rates of 38 percent
to 49 percent for new examiners hired over a 3- year period at four
regional offices* Baltimore (38 percent), Chicago (39 percent), Newark (41
percent), and New York (49 percent). By contrast, some offices* such as
Phoenix, Louisville, Huntington, and Wichita* experienced no attrition
among new examiners hired during this period.

7 These attrition rates represent employees at all federal agencies except
VA. 8 SSA*s analysis focused on claims representatives, service
representatives, and teleservice representatives. We could not duplicate
this analysis because OPM*s Central Personnel Data File does not break out
job series into the kinds of subcategories that SSA was able to use by
accessing its own records. According to SSA officials, SSA plans to issue
a report including its attrition and other workforce analyses in spring
2003.

9 According to VBA officials, attrition rates could also be calculated for
certain subgroups of newly hired examiners such as veterans or minorities.
VBA has not calculated attrition rates for these subgroups.

Page 8 GAO- 03- 491 Veterans Benefits Administration

The two basic methods VBA uses to calculate attrition are consistent with
methods used by OPM and other federal agencies. Each method, the *annual
calculation* and the *cohort calculation,* compares employees who leave
the agency to either total employees or a subgroup of total employees.
They provide different ways of looking at attrition trends. The annual
calculation indicates broad attrition patterns from year to year. In
contrast, the cohort calculation follows a particular group of employees

over time to see how many leave the agency, and the group or the timeframe
can vary to suit the needs of the analysis. VBA*s calculations using this
method are similar to ours. For example, VBA found that, of all examiners
hired in 2001, 18 percent had left within 2 years of their hiring date,
while our calculations using OPM data showed a corresponding rate of 17.6
percent. The following are the two methods VBA uses:

 Annual calculation. This method calculates attrition by dividing all
employees who left in a given year by an average of employees working at
the agency at the beginning of the year and at the end of the year. 
Cohort calculation. This method calculates attrition by following a

specified group or *cohort* of employees to see how many leave the agency.
The cohort can be defined as all those hired (new hires only) during a
specific timeframe. These new hires are tracked for selected intervals (3
months, 6 months, etc.). This method can be adapted by defining the cohort
differently (e. g., to track attrition among a subgroup of new hires) and
by using different timeframes for the tracking (e. g., 12 months, 18
months, etc.). This calculation differs from the annual calculation in
that it does not use an average of the total workforce. VBA used this
method to determine the attrition rate of certain newly hired examiners
for a presentation in 2001 and for additional, more comprehensive
calculations in 2002. VBA plans to use this method to calculate attrition
rate for new examiners at least annually starting in 2003.

According to OPM officials, the annual method is a generally accepted
method used to calculate attrition by federal agencies. OPM officials also
recognized the value of the cohort method for calculations that require

specific time frames or groups of employees and added that tracking the
attrition of new employees is an important practice. OPM does not mandate
the use of a particular method for the calculation of attrition, but
officials said that any method used should be clearly explained. VBA Uses
Accepted

Methods to Calculate Attrition

Page 9 GAO- 03- 491 Veterans Benefits Administration

While VBA has descriptive data on whether employees leave the agency
through resignation, termination, retirement, or transfer, it does not yet
have adequate information to analyze the reasons why employees,
particularly new employees who examine veterans* claims, leave the agency.
While efforts to collect these data* for example, through an automated
exit interview process* are under way, it will take some time before the
results can be fully analyzed. Furthermore, VBA has not performed the
types of analysis on its data, such as an analysis of the costs of
attrition, that would help the agency determine whether its attrition,
particularly for new examiners, is excessive. VBA is taking steps to
ensure that attrition data will be available to guide its workforce
planning.

While VBA systematically collects descriptive data on whether employees
leave the agency through resignation, termination, retirement, or
transfer, the data on the reasons employees leave have not been
systematically collected or analyzed. Without such analysis, VBA cannot
determine the extent to which its attrition of newly hired examiners could
be reduced. As at other federal agencies, when employees leave VBA, a
standard federal *Form 52* is filled out. 10 This form records whether the
employee is leaving due to a resignation, termination, retirement, or
transfer. Because this information appears on the form in discrete fields,
VBA human resources staff can easily enter it into the agency*s computer
system to aggregate information on the types of separations.

The Form 52 also includes a blank space for narrative comments on the
reasons for leaving. This space is primarily intended to be used in the
case of resignation, and its use is optional on the part of the employee.
According to VBA officials, this area is frequently left blank. When this
area is filled out, it is up to a human resources employee to decide how
to label an employee*s reason for leaving in the computer system. Several
*quit codes* exist to help in this labeling process. For example, reasons
for leaving can be coded as relating to pay and benefits, supervisory
relationship, opportunity for advancement, or personal reasons, including
family responsibilities, illness, or household relocation. All forms are
sent to one of four human resource centers to be entered into the agency*s
computer system. Human resources employees in these centers are instructed
to code the reasons for leaving to the best of their ability. However,
these staff members cannot clarify reasons when the

10 The Form 52, Request for Personnel Action, is used by all federal
agencies, including VBA. VBA Lacks Adequate Data on Reasons

Employees Leave and Analysis of Staff Attrition

VBA Collects Some Data on Types of Separations, but Data on Reasons Are
Limited

Page 10 GAO- 03- 491 Veterans Benefits Administration

information is blank or ambiguous because they do not have access to
either the separated employee or the regional human resources staff who
actually processed the employee*s separation. Therefore, VBA officials do
not consider the Form 52 to be a complete or reliable source of
information on the reasons employees resign from VBA.

Another source of information on reasons why examiners leave VBA is exit
interviews. However, according to VBA officials, exit interviews have not
been consistently conducted for all separating employees. VBA

officials said that the downsizing of human resources staff in regional
offices is at least partly responsible for the inconsistency with which
exit interviews have been conducted in the past. In addition, the data
from the

interviews that were conducted have not been forwarded to national
headquarters to be aggregated and analyzed. Existing VA policy has
recognized the importance of exit interviews for determining the reasons
an employee leaves, but it has not explicitly required the department to
conduct them. To ensure more systematic collection of information about
the reasons employees leave, as of February 2003, VA planned to change
existing policy to require the department to offer exit surveys to
separating employees, according to a VA official. Both VA and VBA told us
they have plans to require that exit surveys be offered by spring 2003.

Some offices and staff members within VBA have made special efforts to
compile or collect information on the reasons examiners leave the agency
by producing special studies or reports. These include the following:

 High- Performing Young Promotable Employees (HYPE). In September 2002, a
group of employees, representing six regional offices, prepared a report
based on 72 exit interviews conducted at seven regional offices. The exit
interviews had been conducted over 3 fiscal years: 1999, 2000, and 2001.
The report included recommendations that the agency develop a
comprehensive strategic plan to address attrition and retention and
improve and centralize its exit interview process.

 Loss of New Hires in Veterans Service Centers. At the request of the
head of VBA, the newly organized Office of Performance Analysis and
Integrity (OPAI) issued a report in September 2002 that examined new hire
attrition rates for regional offices individually. The report also looked
at reasons for leaving, based on interviews with the directors of two
regional offices.

 Review of attrition data at certain regional offices. At least two
regional offices have investigated the reasons for attrition in their own

Page 11 GAO- 03- 491 Veterans Benefits Administration

offices. For example, in October 2002, senior management at the Newark
regional office compiled information on the attrition of examiners over a
3- year period and the reasons these examiners left. This study was
prompted by concern about high attrition rates at the Newark office.
Portland did a similar review in September 2001. These special efforts had
several common findings. For example, three

reported that inadequate opportunity for training was one of the reasons
examiners left VBA. Two reported dissatisfaction with workload or
employees* descriptions of the job as too difficult as reasons for
leaving. Two also identified instances in which examiners resigned as a
result of pending termination for poor performance or conduct. Reports
associated with these efforts touched on other reasons for resignation,
including inadequate opportunity for full utilization of skills and
various personal reasons.

The other source of information on reasons examiners left VBA was
anecdotal information provided by regional and other senior human
resources officials. For example, senior human resources officials said
that reasons for leaving included factors such as inadequate work space
and computer equipment as well as insufficient pay. According to a VBA
official, certain regional offices are aware of the types of employers
with whom they are competing. For example, some regional offices report
losing employees to a range of employers in both the public sector,
including other federal agencies (such as SSA and the Department of
Labor), and the private sector, including information technology firms. In
addition, these officials reported that some newly hired examiners left
when they discovered that the job tasks were not what they had expected.
Certain regional offices have taken steps to respond to some of these

findings. For example, some have offered job candidates opportunities to
observe the work place before being hired.

While all of these sources of information provide examples of reasons why
examiners left VBA, no comprehensive analysis of the reasons for attrition
has yet been conducted, due in large part to the inconsistency with which
exit interviews have been conducted and the fact that data on reasons for
leaving have not been compiled nationwide. Without such analysis, VBA
cannot yet determine the extent to which attrition among newly hired
examiners involves reasons that could be addressed by the agency, such as
work environment, or the reasons the agency cannot control, such as
personal reasons and market conditions. As a result, VBA has lacked
important information that could help the agency determine the extent to
which attrition could be reduced.

Page 12 GAO- 03- 491 Veterans Benefits Administration

VBA has not performed the types of analysis on its data that would help
the agency determine the extent to which an attrition problem may exist.
To better understand its own attrition, an agency can take advantage of a
range of analyses. These include the following:  Comparisons. To
understand the degree to which its attrition is a

problem, an agency can compare its own attrition to the attrition of other
federal agencies, especially to the attrition of agencies with employees
who do similar work. While one of VBA*s special reports did some broad
comparisons of VBA*s attrition to the attrition at other federal agencies,
VBA has not compared the attrition of newly hired examiners to the
attrition of employees in other parts of the federal government with
comparable job series, nor has it coordinated with other agencies to share
attrition data.

 Attrition modeling. To understand the degree to which attrition is a
problem, an agency can estimate the attrition rates it expects in the
future, providing a baseline against which to measure the actual attrition
it experiences. 11 This allows officials to determine if attrition rates
are higher or lower than expected. While VBA has projected retirement
rates for planning purposes, according to VBA officials, there was no
formal or informal process to estimate the expected attrition rates of the
examiners who joined the agency since 1998. In 2002, VA projected future
attrition trends for examiners in a restructuring plan submitted to the
Office of Management and Budget (OMB), and officials expect to compare
these projections to actual attrition rates for examiners in the future.

 Cost analysis. To understand the degree to which attrition is a problem,
an agency can estimate the cost of recruiting and training new employees
who leave and the cost of recruiting and training their replacements.
While VBA*s Office of Human Resources conducted a partial estimate of
attrition costs in 2001, this estimate did not include all associated
costs. For

11 For more information on attrition modeling, see 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). For additional
information on how attrition data can be used by federal agencies, see
Human Capital: A Self- Assessment for Agency Leaders, GAO/ OCG- 00- 14G
(Washington, D. C.: Sept. 2000) and, for the importance of valid

and reliable data in assessing an agency*s workforce requirements, see A
Model of Strategic Human Capital Management, Exposure Draft, GAO- 02-
373SP (Washington, D. C.: Mar. 15, 2002). VBA Has Not Fully

Analyzed Data to Determine Whether Attrition Is Excessive

Page 13 GAO- 03- 491 Veterans Benefits Administration

example, the investment lost when a trained employee leaves was not
included, although it is one of the most important and potentially
expensive costs.  Labor market analysis. To understand the degree to
which its attrition is

a problem, an agency can evaluate labor market conditions in locations
where it operates. Such an evaluation can provide context for
understanding if an attrition rate is higher than might be expected in
those locations. Using general labor market data, VBA has identified
several locations where it faces significant competition from other
employers, both public and private. This information could be used to
better understand its attrition rate in those locations in the future.
However, this information is not based on the actual employment plans of
separating employees, and VBA does not routinely collect or document this
information. According to a VBA official, collecting data on where VBA*s
separating employees find employment after VBA would be useful for
developing a more accurate understanding of the employers with whom VBA is
competing.

VBA is taking steps to ensure that attrition data will be available to
guide workforce planning. First, according to a VBA official, VBA
developed a workforce plan, following a workforce policy approved by VA in
January 2003. 12 In a related document, VA stated its expectation that, in
the current economy, attrition among examiners may stabilize. However, VBA
cannot test that assumption without continued monitoring of attrition
rates and improved data on reasons for attrition. Second, VBA has recently

designated an official to head strategic planning efforts. While these
efforts will address attrition and other human capital issues, a VBA
official told us that its Office of Human Resources is expected to assume
primary responsibility for human capital issues and to coordinate with the
strategic planning office. Third, VA*s new automated exit survey, which VA
officials expect to be available in spring 2003, has the potential to aid
VBA in its attrition data gathering and analysis. Separating employees
will be able to answer a series of questions about the reasons they
decided to leave the agency. The survey will provide confidentiality for
the employee, potentially allowing for more accurate responses. The survey
will also facilitate electronic analysis that could be broken down by type
of job and

12 The new VA policy requires workforce plans from all three of VA*s
administrations* VBA, the Veterans Health Administration, and the National
Cemetery Administration. VA first identified the need for a workforce
policy following a workforce analysis required of all executive branch
agencies by OMB in May 2001.

Page 14 GAO- 03- 491 Veterans Benefits Administration

region. As of March 2003, VBA had created and filled a new position
intended to help VBA implement the automated exit survey, among other
responsibilities.

VBA*s ability to effectively serve veterans hinges on maintaining a
sufficient workforce through effective workforce planning. While attrition
data are just one part of workforce planning, the data are important
because they can be used to anticipate the number of employees and the
types of skills that need to be replaced. While VBA officials told us
about

plans under way to better manage new hire attrition, the agency currently
lacks useful analysis of the reasons new employees leave. Furthermore,
while it is typical for new hires to leave their jobs at higher rates than
other employees, and this phenomenon is not unique to VBA, VBA has not yet
analyzed whether its new hire attrition is excessive, nor has it analyzed
the cost implications of such attrition to the agency. Such analysis can

help an agency determine the extent to which attrition could be reduced.
Sustained attention to both attrition rates and reasons for attrition,
particularly for new employees, can help VBA conduct more effective
workforce planning. Understanding the reasons for attrition could also
help the agency minimize the investment in training lost when a new
employee leaves.

To ensure that VBA collects and analyzes information on the reasons for
attrition, particularly for new employees, we recommend that the Secretary
of Veterans Affairs direct the Under Secretary for Benefits to develop a
strategy for the systematic collection and analysis of attrition data.
This could include the calculation of attrition rates, analysis of the
reasons for leaving, and estimation of the costs associated with new hire
attrition. Furthermore, we recommend that VBA integrate the results of its
attrition analysis into its workforce plan.

In its written comments on a draft of this report (see app. II), VA agreed
with our findings and conclusions and concurred with our recommendation.
VBA is targeting July 1, 2003 for the implementation of an exit survey
process to develop data on reasons for employee turnover and the costs of
new hire attrition. VBA is also in the process of developing its workforce
plan as part of overall departmental efforts. This should better position
VBA to integrate the results of its analysis of attrition into its
workforce plan. Conclusions

Recommendation Agency Comments

Page 15 GAO- 03- 491 Veterans Benefits Administration

As agreed with your office, unless you publicly release its contents
earlier, we will make no further distribution of this report until 10 days
after its issue date. At that time, we will send copies of this report to
the Secretary of the Department of Veterans Affairs, appropriate
congressional committees, and other interested parties. We will also make
copies of this report available to others on request. The report will also
be available at no charge on GAO*s Web site at http:// www. gao. gov.

If you or your staff have any questions about this report, please call me
at (202) 512- 7101. Other contacts and contributors to this report are
listed in appendix III.

Sincerely yours, Cynthia A. Bascetta Director, Education, Workforce,

and Income Security Issues

Appendix I: Objectives, Scope, and Methodology

Page 16 GAO- 03- 491 Veterans Benefits Administration

The objectives of our review were to determine: (1) the attrition rate at
the Veterans Benefits Administration (VBA), particularly for new employees
who examine veterans* claims, and VBA*s methods for calculating attrition;
and (2) the adequacy of VBA*s analysis of attrition data, including the
reasons for attrition. We conducted our work between October 2002

and February 2003 in accordance with generally accepted government
auditing standards.

To determine the attrition rate for newly hired veterans claims examiners
at VBA, we analyzed data from the Office of Personnel Management*s (OPM)
Central Personnel Data File (CPDF). Using the CPDF data, we identified the
newly hired veterans claims examiners and followed them over time to see
how many left VBA. We identified all new hires for fiscal

years 1998 through 2002 by using personnel action codes for accessions and
conversions to career or career conditional positions. Accessions include
new hires and hires of individuals returning to the government.
Conversions are primarily temporary federal government employees whose
positions are made permanent. Next, we determined whether these
individuals had personnel actions indicating they had separated from VBA.
Separation (attrition) included resignations, retirements, terminations,
and deaths. We did not include a small percentage of individuals with

inconsistent data such as multiple or different hiring or separation
dates. The small percentage of employees with inconsistent data is
congruent with the generally reliable data in the CPDF we have reported
previously. (See U. S. General Accounting Office, OPM*s Central Personnel
Data File: Data Appear Sufficiently Reliable to Meet Most Customer Needs,

GAO/ GGD- 98- 199 (Washington, D. C.: Sept. 30, 1998)). By subtracting the
hire date from the separation date, we determined how long individuals
worked before separating. We also noted those individuals who had not
separated within specific time periods such as 0 to 12 months and 13 to 24
months. We calculated the attrition rate for a specific time period by

dividing the number of individuals who left within that time period by the
total number of new hires tracked for that time period. Since we issued
our statement, 1 OPM issued 2002 data, which we used to update this
analysis. The additional year of data resulted in a small number of
additional employees who had multiple, different separation dates. Because
we excluded all instances of employees with multiple records and because
some of these instances corresponded to records previously

1 GAO- 03- 452T. Appendix I: Objectives, Scope, and Methodology

Objectives Scope and Methodology

Appendix I: Objectives, Scope, and Methodology

Page 17 GAO- 03- 491 Veterans Benefits Administration

included in our original analysis, the additional year of data resulted in
some revisions to our original analysis.

To determine overall attrition rates for veterans claims examiners at VBA
(not just new hires), we analyzed data from the CPDF for fiscal years 2000
through 2002. For each fiscal year, we counted the number of permanent
employees with personnel actions indicating they had separated from VBA.
We divided the total number of separations for each fiscal year by

the average of the number of permanent employees in the CPDF as of the
last pay period of the fiscal year before the fiscal year of the
separations and the number of permanent employees in the CPDF as of the
last pay period of the fiscal year of separations. To place the overall
attrition rates

for VBA claims examiners in context, we compared VBA*s rates to those for
employees in other occupations and agencies (all other white- collar VBA
employees, all other white- collar employees in the Department of Veterans
Affairs, and all other white- collar employees in the executive branch of
the federal government).

To determine VBA*s methods for calculating attrition, we interviewed VBA
officials and reviewed VBA*s calculations. We also interviewed OPM
officials to identify generally accepted methods of calculating attrition.
To determine the adequacy of VBA*s data on the reasons for attrition and
its

analysis of attrition data, we reviewed VBA reports with information about
the reasons for attrition, interviewed VBA officials to determine how VBA
collects data on the reasons employees leave the agency, and interviewed a
VA official about a new initiative to develop and implement an automated
exit survey. To determine the adequacy of VBA*s analysis of its attrition,
we reviewed VBA efforts to analyze attrition, interviewed VBA officials,
and interviewed OPM officials and relied on our prior reports on federal
human capital issues to determine how federal agencies develop and analyze
data on attrition and the reasons for attrition.

Appendix II: Comments from the Department of Veterans Affairs

Page 18 GAO- 03- 491 Veterans Benefits Administration Appendix II:
Comments from the Department of Veterans Affairs

Appendix II: Comments from the Department of Veterans Affairs Page 19 GAO-
03- 491 Veterans Benefits Administration

Appendix III: GAO Contacts and Staff Acknowledgments

Page 20 GAO- 03- 491 Veterans Benefits Administration

Irene Chu, (202) 512- 7102 Chris Morehouse, (202) 512- 7214

In addition to those named above, others who made key contributions to
this report are Ronald Ito, Grant Mallie, Corinna Nicolaou, and Gregory
Wilmoth. Appendix III: GAO Contacts and Staff

Acknowledgments GAO Contacts Acknowledgments

Related GAO Products Page 21 GAO- 03- 491 Veterans Benefits Administration

High- Risk Series: Strategic Human Capital Management. GAO- 03- 120.
Washington, D. C.: January 2003.

Human Capital: Effective Use of Flexibilities Can Assist Agencies in
Managing Their Workforces. GAO- 03- 2. Washington, D. C.: December 6,
2002.

Air Traffic Control: FAA Needs to Better Prepare for Impending Wave of
Controller Attrition. GAO- 02- 591. Washington, D. C.: June 14, 2002.

A Model of Strategic Human Capital Management, Exposure Draft.

GAO- 02- 373SP. Washington, D. C.: March 15, 2002.

Federal Employee Retirements: Expected Increase Over the Next 5 Years
Illustrates Need for Workforce Planning. GAO- 01- 509. Washington, D. C.:
April 27, 2001.

Human Capital: A Self- Assessment Checklist for Agency Leaders. GAO/ OCG-
00- 14G. Washington, D. C.: September 2000.

Major Management Challenges and Program Risks: Department of Veterans
Affairs. GAO- 03- 110. Washington, D. C.: January 2003.

High- Risk Series: An Update. GAO- 03- 119. Washington, D. C.: January
2003.

Veterans* Benefits: Claims Processing Timeliness Performance Measures
Could Be Improved. GAO- 03- 282. Washington, D. C.: December 19, 2002.

Veterans* Benefits: Despite Recent Improvements, Meeting Claims Processing
Goals Will Be Challenging. GAO- 02- 645T. Washington, D. C.: April 26,
2002.

Veterans* Benefits: Training for Claims Processors Needs Evaluation.

GAO- 01- 601. Washington, D. C.: May 31, 2001.

Veterans Benefits Administration: Problems and Challenges Facing
Disability Claims Processing. GAO/ T- HEHS/ AIMD- 00- 146. Washington, D.
C.: May 18, 2000. Related GAO Products

General Human Capital Reports

Department of Veterans Affairs

Veterans Benefits Administration

(130206)

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