Human Capital: Status of Efforts to Improve Federal Hiring	 
(07-JUN-04, GAO-04-796T).					 
                                                                 
The executive branch hired nearly 95,000 new employees during	 
fiscal year 2003. Improving the federal hiring process is	 
critical given the increasing number of new hires expected in the
next few years. In May 2003, GAO issued a report highlighting	 
several key problems in the federal hiring process. That report  
concluded that the process needed improvement and included	 
several recommendations to address the problems. Today, GAO is	 
releasing a followup report requested by the subcommittee that	 
discusses (1) the status of recent efforts to help improve the	 
federal hiring process and (2) the extent to which federal	 
agencies are using two new hiring flexibilities--category rating 
and direct-hire authority. Category rating permits an agency	 
manager to select any job candidate placed in a best-qualified	 
category. Direct-hire authority allows an agency to appoint	 
individuals to positions without adherence to certain competitive
examination requirements when there is a severe shortage of	 
qualified candidates or a critical hiring need. 		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-796T					        
    ACCNO:   A10395						        
  TITLE:     Human Capital: Status of Efforts to Improve Federal      
Hiring								 
     DATE:   06/07/2004 
  SUBJECT:   Hiring policies					 
	     Federal agencies					 
	     Testing						 

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GAO-04-796T

United States General Accounting Office

GAO Testimony

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

For Release on Delivery
Expected at 10:00 a.m. CDT HUMAN CAPITAL
Monday, June 7, 2004

                  Status of Efforts to Improve Federal Hiring

Statement of J. Christopher Mihm Managing Director, Strategic Issues

                                       A

GAO-04-796T

Highlights of GAO-04-796T, a testimony before the Subcommittee on Civil
Service and Agency Organization, Committee on Government Reform, House of
Representatives

The executive branch hired nearly 95,000 new employees during fiscal year
2003. Improving the federal hiring process is critical given the
increasing number of new hires expected in the next few years.

In May 2003, GAO issued a report highlighting several key problems in the
federal hiring process. That report concluded that the process needed
improvement and included several recommendations to address the problems.

Today, GAO is releasing a followup report requested by the subcommittee
that discusses (1) the status of recent efforts to help improve the
federal hiring process and (2) the extent to which federal agencies are
using two new hiring flexibilities-category rating and direct-hire
authority. Category rating permits an agency manager to select any job
candidate placed in a best-qualified category. Directhire authority allows
an agency to appoint individuals to positions without adherence to certain
competitive examination requirements when there is a severe shortage of
qualified candidates or a critical hiring need.

The report GAO is issuing today includes no new recommendations, but it
does underscore prior GAO recommendations to which additional attention is
needed.

June 7, 2004

HUMAN CAPITAL

Status of Efforts to Improve Federal Hiring

Congress, the Office of Personnel Management (OPM), and agencies have all
taken steps to improve the federal hiring process. In particular, Congress
has provided agencies with additional hiring flexibilities, OPM has taken
significant steps to modernize job vacancy announcements and develop the
government's recruiting Web site, and most agencies are continuing to
automate parts of their hiring processes. Nonetheless, problems remain
with a job classification process and standards that many view as
antiquated, and there is a need for improved tools to assess the
qualifications of job candidates. Specifically, the report being released
today discusses significant issues and actions being taken to:

o  reform the classification system,

o  improve job announcements and Web postings,

o  automate hiring processes, and

o  improve candidate assessment tools.

In addition, agencies appear to be making limited use of the two new
hiring flexibilities contained in the Homeland Security Act of
2002-category rating and direct-hire authority-that could help agencies in
expediting and controlling their hiring processes. GAO surveyed members of
the interagency Chief Human Capital Officers Council who reported several
barriers to greater use of these new flexibilities. Frequently cited
barriers included (1) the lack of OPM guidance for using the
flexibilities, (2) the lack of agency policies and procedures for using
the flexibilities, (3) the lack of flexibility in OPM rules and
regulations, and (4) concern about possible inconsistencies in the
implementation of the flexibilities within the department or agency.

The federal government is now facing one of the most transformational
changes to the civil service in half a century, which is reflected in the
new personnel systems for Department of Homeland Security and the
Department of Defense and in new hiring flexibilities provided to all
agencies. Today's challenge is to define the appropriate roles and
day-to-day working relationships for OPM and individual agencies as they
collaborate on developing innovative and more effective hiring systems.
Moreover, human capital expertise within the agencies must be up to the
challenge for this transformation to be successful and enduring.

www.gao.gov/cgi-bin/getrpt?GAO-04-796T.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact J. Christopher Mihm at (202)
512-6806 or [email protected].

Chairwoman Davis, Mr. Davis, and Members of the Subcommittee:

I appreciate the opportunity to be here today to discuss efforts to
improve the federal hiring process. As you are keenly aware, federal
agencies must have effective hiring processes to compete for talented
people in a highly competitive job market. Given the number of new federal
hires expected in the next few years, improving the government's hiring
process is critical. In fact, the executive branch hired nearly 95,000 new
employees in fiscal year 2003. Still, there has been widespread
recognition that the federal hiring process all too often does not meet
the needs of agencies in achieving their missions, the needs of managers
in filling positions with the right talent, nor the needs of applicants
for a timely, efficient, transparent, and meritbased process. Clearly,
things needed to change.

In May 2003, we issued a report highlighting several key problems in the
federal hiring process.1 That report concluded that the federal hiring
process needed improvements, and we made several recommendations to
address problems with key parts of the hiring process. Specifically, we
recommended that the Office of Personnel Management (OPM) take additional
actions to assist agencies in strengthening the hiring process. Also, we
reported that agencies must take greater responsibility for maximizing the
efficiency and effectiveness of their individual hiring processes within
the current statutory and regulatory framework that Congress and OPM have
provided.

Today, we are issuing a follow-up report, done at the request of the
Chairwoman and Mr. Davis, that focuses on recent governmentwide efforts to
improve the federal hiring process.2 My testimony today summarizes the
work we have done for this report. Specifically, you asked us to (1)
provide information on the status of recent efforts to help improve the
federal hiring process and (2) determine the extent to which federal
agencies are using new hiring flexibilities authorized by the Homeland
Security Act of 2002.3 Our work to address these objectives was based on
interviews with

1U.S. General Accounting Office, Human Capital: Opportunities to Improve
Executive Agencies' Hiring Processes, GAO-03-450 (Washington, D.C.: May
30, 2003).

2U.S. General Accounting Office, Human Capital: Additional Collaboration
Between OPM and Agencies Is Key to Improved Federal Hiring, GAO-04-797
(Washington, D.C.: June 7, 2004).

3These hiring flexibilities are contained in the Chief Human Capital
Officers Act of 2002, Title XIII of the Homeland Security Act of 2002.
Pub. L. No. 107-296 (Nov. 25, 2002).

officials from OPM and the interagency Chief Human Capital Officers (CHCO)
Council, the results of our survey of 22 of the 23 agency members serving
on the CHCO Council,4 and our review of OPM documents as well as data from
OPM's central database of governmentwide personnel information. We
conducted our work in accordance with generally accepted government
auditing standards, during March through May of this year.

In summary, we found the following:

o 	Congress, OPM, and agencies have recognized that federal hiring has
needed reform, and they have all undertaken efforts to do so. In
particular, Congress has provided agencies with additional hiring
flexibilities, OPM has taken significant steps to modernize job vacancy
announcements and develop the government's recruiting Web site, and most
agencies are continuing to automate parts of their hiring processes.
Nonetheless, problems remain with a job classification process and
standards that many view as antiquated, and there is a need for improved
tools to assess the qualifications of job candidates.

o 	Agencies appear to be making limited use of the two new hiring
flexibilities contained in the Homeland Security Act of 2002. One of these
hiring flexibilities, known as category rating, permits an agency to
select any job candidate placed in a best-qualified category rather than
being limited to three candidates under the "rule of three." The other
hiring flexibility, often referred to as direct hire, allows an agency to
appoint people to positions without adherence to certain competitive
examination requirements when there is a severe shortage of qualified
candidates or a critical hiring need.

The report we are issuing today includes no new recommendations, but it
does underscore our prior recommendations to which we believe additional
attention is needed. In response to a draft of the report we are issuing
today, OPM said that it has done much to assist agencies to improve hiring
and increase agency officials' knowledge about the hiring flexibilities
available to them. OPM stressed that agencies themselves must rise to the
challenge, provide consistent leadership at the senior level, take
advantage

4The CHCO Council member from the Central Intelligence Agency (CIA) did
not respond to the survey because his representative said the agency was
an excepted service agency and thus the survey questions were not
relevant.

of the training opportunities offered by OPM, and make fixing the hiring
process a priority.

  OPM and Agencies Are Taking Steps to Improve the Hiring Process

OPM and agencies are continuing to address the problems with the key parts
of the hiring process we identified in our May 2003 report. Significant
issues and actions being taken include the following.

Reforming the classification system. In our May 2003 report on hiring, we
noted that many regard the standards and process for defining a job and
determining pay in the federal government as a key hiring problem because
they are inflexible, outdated, and not applicable to the jobs of today.
The process of job classification is important because it helps to
categorize jobs or positions according to the kind of work done, the level
of difficulty and responsibility, and the qualifications required for the
position, and serves as a building block to determine the pay for the
position. As you know, defining a job and setting pay in the federal
government has generally been based on the standards in the Classification
Act of 1949, which sets out the 15 grade levels of the General Schedule
system.

To aid agencies in dealing with the rigidity of the federal classification
system, OPM has revised the classification standards of several job series
to make them clearer and more relevant to current job duties and
responsibilities. In addition, as part of the effort to create a new
personnel system for the Department of Homeland Security (DHS), OPM is
working with DHS to create broad pay bands for the department in place of
the 15grade job classification system that is required for much of the
federal civil service. Still, OPM told us that its ability to more
effectively reform the classification process is limited under current law
and that legislation is needed to modify the current restrictive
classification process for the majority of federal agencies. As we note in
the report we are issuing today, 15 of the 22 CHCO Council members
responding to our recent survey reported that either OPM (10 respondents)
or Congress (5 respondents) should take the lead on reforming the
classification process, rather than the agencies themselves.

Improving job announcements and Web postings. We pointed out in our May
2003 report that the lack of clear and appealing content in federal job
announcements could hamper or delay the hiring process. Our previous
report provided information about how some federal job announcements were
lengthy and difficult to read, contained jargon and acronyms, and appeared
to be written for people already employed by the

government. Clearly, making vacancy announcements more visually appealing,
informative, and easy to access and navigate could make them more
effective as recruiting tools.

To give support to this effort, OPM has continued to move forward on its
interagency project to modernize federal job vacancy announcements,
including providing guidance to agencies to improve the announcements. OPM
continues to collaborate with agencies in implementing Recruitment
One-Stop, an electronic government initiative that includes the USAJOBS
Web site (www.usajobs.opm.gov) to assist applicants in finding employment
with the federal government. As we show in the report we are issuing
today, all 22 of the CHCO Council members responding to our recent survey
indicated that their agencies had made efforts to improve their job
announcements and Web postings. In the narrative responses to our survey,
a CHCO Council member representing a major department said, for example,
that the USAJOBS Web site is an excellent source for posting vacancies and
attracting candidates. Another Council member said that the Recruitment
One-Stop initiative was very timely in developing a single automated
application for job candidates.

Automating hiring processes. Our May 2003 report also emphasized that
manual processes for rating and ranking job candidates are time consuming
and can delay the hiring process. As we mentioned in our previous report,
the use of automation for agency hiring processes has various potential
benefits, including eliminating the need for volumes of paper records,
allowing fewer individuals to review and process job applications, and
reducing the overall time-to-hire. In addition, automated systems
typically create records of actions taken so that managers and human
capital staff can easily document their decisions related to hiring.

To help in these efforts, OPM provides to agencies on a contract or
fee-forservice basis an automated hiring system, called USA Staffing,
which is a Web-enabled software program that automates the steps of the
hiring process. These automated steps would include efforts to recruit
candidates, use of automated tools to assess candidates, automatic
referral of high-quality candidates to selecting officials, and electronic
notification of applicants on their status in the hiring process.
According to OPM, over 40 federal organizations have contracted with OPM
to use USA Staffing. OPM told us that it has developed and will soon
implement a new Webbased version of USA Staffing that could further link
and automate agency hiring processes. As we mention in the report we are
issuing today, 21 of the 22 CHCO Council members responding to our recent
survey reported

that their agencies had made efforts to automate significant parts of
their hiring processes.

Improving candidate assessment tools. We concluded in our May 2003 report
that key candidate assessment tools used in the federal hiring process can
be ineffective. Our previous report noted that using the right assessment
tool, or combination of tools, can assist the agency in predicting the
relative success of each applicant on the job and selecting the relatively
best person for the job. These candidate assessment tools can include
written and performance tests, manual and automated techniques to review
each applicant's training and experience, as well as interviewing
approaches and reference checks.

In our previous report, we noted some of the challenges of assessment
tools and special hiring programs used for occupations covered by the
Luevano consent decree.5 Although OPM officials said they monitor the use
of assessment tools related to positions covered under the Luevano consent
decree, they have not reevaluated these assessment tools. OPM officials
told us, however, that they have provided assessment tools or helped
develop new assessment tools related to various occupations for several
agencies on a fee-for-service basis. Although OPM officials acknowledged
that candidate assessment tools in general need to be reviewed, they also
told us that it is each agency's responsibility to determine what tools it
needs to assess job candidates. The OPM officials also said that if
agencies do not want to develop their own assessment tools, then they
could request that OPM help develop such tools under the reimbursable
service program that OPM operates. As we state in the report we are
issuing today, 21 of the 22 CHCO Council members responding to our recent
survey indicated that their agencies had made efforts to improve their
hiring assessment tools.

Although we agree that OPM has provided assistance to agencies in
improving their candidate assessment tools and has collected information

5The Luevano consent decree is a 1981 agreement that settled a lawsuit
alleging that a written test, Professional and Administrative Careers
Examination (PACE), had an adverse impact on African Americans and
Hispanics. See Luevano v. Campbell, 93 F.R.D. 68 (D.D.C. 1981). The
consent decree called for the elimination of PACE and required replacing
it with alternative examinations. In response to the consent decree, OPM
developed the Administrative Careers with America examination. The consent
decree also established two special hiring programs, Outstanding Scholar
and Bilingual/Bicultural, for limited use in filling former PACE
positions.

on agencies' use of special hiring authorities, we believe that major
challenges remain in this area. OPM can take further action to address our
prior recommendations related to assessment tools. OPM could, for example,
actively work to link up agencies having similar occupations so that they
could potentially form consortia to develop more reliable and valid tools
to assess their job candidates.

  Agencies Appear to Be Making Limited Use of New Hiring Flexibilities

Despite agency officials' past calls for hiring reform, agencies appear to
be making limited use of category rating and direct-hire authority, two
new hiring flexibilities created by Congress in November 2002 and
implemented by OPM in June of last year. Data on the actual use of these
two new flexibilities are not readily available, but most CHCO Council
members responding to our recent survey indicated that their agencies are
making little or no use of either flexibility (see fig. 1). OPM officials
also confirmed with us that based on their contacts and communications
with agencies, it appeared that the agencies were making limited use of
the new hiring flexibilities. The limited use of category rating is
somewhat unexpected given the views of human resources directors we
interviewed 2 years ago. As noted in our May 2003 report, many agency
human resources directors indicated that numerical rating and the rule of
three were key obstacles in the hiring process. Category rating was
authorized to address those concerns.

Figure 1: CHCO Council Members' Responses on the Extent to Which Their
Agencies Are Using Category Rating and Direct Hire

Number of agencies

14

12

10

8

6

4

2

0 Little or Some Moderate Great Very great No basis/ no extent extent
extent extent extent not applicable

Category rating

Direct hire

Source: CHCO Council members' responses to GAO questionnaire.

The report we are issuing today also includes information about barriers
that the CHCO Council members believed have prevented or hindered their
agencies from using or making greater use of category rating and direct
hire. Indeed, all but one of the 22 CHCO Council members responding to our
recent survey identified at least one barrier to using the new hiring
flexibilities. Frequently cited barriers included

o  the lack of OPM guidance for using the flexibilities,

o  the lack of agency policies and procedures for using the flexibilities,

o  the lack of flexibility in OPM rules and regulations, and

o 	concern about possible inconsistencies in the implementation of the
flexibilities within the department or agency.

  Our Prior Recommendation Calls Attention to Additional Action Needed

In a separate report we issued in May 2003 on the use of human capital
flexibilities, we recommended that OPM work with and through the new CHCO
Council to more thoroughly research, compile, and analyze information on
the effective and innovative use of human capital flexibilities.6 We noted
that sharing information about when, where, and how the broad range of
personnel flexibilities is being used, and should be used, could help
agencies meet their human capital management challenges. As we recently
testified, OPM and agencies need to continue to work together to improve
the hiring process, and the CHCO Council should be a key vehicle for this
needed collaboration.7 To accomplish this effort, agencies need to provide
OPM with timely and comprehensive information about their experiences in
using various approaches and flexibilities to improve their hiring
processes. OPM-working through the CHCO Council-can, in turn, help by
serving as a facilitator in the collection and exchange of information
about agencies' effective practices and successful approaches to improved
hiring. Such additional collaboration between OPM and agencies could go a
long way to helping the government as a whole and individual agencies in
improving the processes for quickly hiring highly qualified candidates to
fill important federal jobs.

In conclusion, the federal government is now facing one of the most
transformational changes to the civil service in half a century, which is
reflected in the new personnel systems for DHS and the Department of
Defense and in new hiring flexibilities provided to all agencies. Today's
challenge is to define the appropriate roles and day-to-day working
relationships for OPM and individual agencies as they collaborate on
developing innovative and more effective hiring systems. Moreover, for
this transformation to be successful and enduring, human capital expertise
within the agencies must be up to the challenge.

Madam Chairwoman and Mr. Davis, this completes my statement. I would be
pleased to respond to any questions that you might have.

6U.S. General Accounting Office, Human Capital: OPM Can Better Assist
Agencies in Using Personnel Flexibilities, GAO-03-428 (Washington, D.C.:
May 9, 2003).

7U.S. General Accounting Office, Human Capital: Observations on Agencies'
Implementation of the Chief Human Capital Officers Act, GAO-04-800T
(Washington, D.C.: May 18, 2004).

  Contacts and Acknowledgments

(450293)

For further information on this testimony, please contact J. Christopher
Mihm, Managing Director, Strategic Issues, (202) 512-6806 or at
[email protected]. Individuals making key contributions to this testimony
include K. Scott Derrick, Karin Fangman, Stephanie M. Herrold, Trina
Lewis, John Ripper, Edward Stephenson, and Monica L. Wolford.

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