    Government Printing Office: Advancing GPO's Transformation Effort
    through Strategic Human Capital Management (20-OCT-03,
    GAO-04-85).

    The Government Printing Office (GPO) has undertaken the task of
    transforming itself in response to pressing fiscal and other
    realities in the 21st century. This report focuses on actions
    GPO's leaders can take to advance its transformation efforts
    through strategic human capital management and is a part of GAO's
    response to a congressional request that GAO conduct a general
    management review of GPO that focuses on issues related to GPO's
    management and transformation. GAO plans to address other
    management topics, including strategic planning and financial
    management, in a series of reports that may assist GPO in its
    ongoing transformation efforts.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-04-85
        ACCNO:   A08763
      TITLE:     Government Printing Office: Advancing GPO's
    Transformation Effort through Strategic Human Capital Management
         DATE:   10/20/2003
      SUBJECT:   Federal agency reorganization
    	     Financial management
    	     Human resources utilization
    	     Internal controls
    	     Personnel evaluation systems
    	     Strategic planning
    	     General management reviews

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    GAO-04-85

                        United States General Accounting Office

    GAO

    Report to the Subcommittee on

              Legislative Branch, Committee on Appropriations, U.S. Senate

    October 2003

    GOVERNMENT PRINTING OFFICE

    Advancing GPO's Transformation Effort through Strategic Human Capital Management

                                           a

    GAO-04-85

    Highlights of GAO-04-85, a report to the Subcommittee on Legislative
    Branch, Committee on Appropriations, U.S. Senate

    The Government Printing Office (GPO) has undertaken the task of
    transforming itself in response to pressing fiscal and other realities in
    the 21st century. This report focuses on actions GPO's leaders can take to
    advance its transformation efforts through strategic human capital
    management and is a part of GAO's response to a congressional request that
    GAO conduct a general management review of GPO that focuses on issues
    related to GPO's management and transformation. GAO plans to address other
    management topics, including strategic planning and financial management,
    in a series of reports that may assist GPO in its ongoing transformation
    efforts.

    GAO makes many interrelated recommendations that reflect the important
    role of human capital in GPO's ongoing transformation. These
    recommendations provide a framework to reinforce GPO's initial
    transformation efforts and enhance its future efforts.

    We provided a draft of this report in September 2003 to the Public Printer
    for review and comment. GPO's Chief of Staff, Deputy Chief of Staff, and
    Chief Human Capital Officer provided comments orally and by e-mail on
    behalf of GPO generally agreeing with the content, findings, and
    recommendations in the draft report.

    www.gao.gov/cgi-bin/getrpt?GAO-04-85.

    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 mihmj@gao.gov.

    October 2003

    GOVERNMENT PRINTING OFFICE

    Advancing GPO's Transformation Effort through Strategic Human Capital Management

    The Public Printer has demonstrated the leadership commitment that is
    essential to transforming GPO, stating that GPO is going to have to
    reengineer itself to remain relevant and viable for the future. Under the
    Public Printer's direction, GPO has taken several steps that recognize the
    important role strategic human capital management plays in its
    transformation. For example, GPO created and filled the position of Chief
    Human Capital Officer (CHCO), shifted the focus of existing training and
    expanded opportunities for more staff to attend needed training, enhanced
    recruitment strategies, and initiated a process to develop an agency
    strategic plan and an accompanying strategic workforce plan.

    To sustain its transformation efforts, GPO's leadership needs to ensure
    that managers throughout the agency appreciate the importance of their
    role in managing GPO's workforce and helping transform the agency.
    Furthermore, now that GPO has hired a CHCO, it can begin to restructure
    its human resources office to better support its transformation by
    adopting a more strategic view of human capital management and by having
    human resources officials work collaboratively with GPO managers. To
    further support its transformation, GPO should use strategic workforce
    planning to help ensure that its staff has the skills needed to meet
    emerging needs. A workforce plan that includes both an inventory of
    current GPO employees' knowledge and skills and an identification of the
    knowledge and skills GPO needs in the future will best support GPO's
    transformation. Finally, a modern, effective, and credible performance
    management system can help GPO facilitate the transformation process and
    serve as the basis for establishing individuals' roles and accountability
    in the transformation. Performance management can also help GPO achieve
    results, accelerate change, and facilitate two-way communication between
    managers and employees.

    GAO makes numerous recommendations to GPO on the steps it should take to
    strengthen its human capital management in support of its transformation.
    These recommendations can guide GPO as it seeks to meet the changing and
    emerging information needs of its customers. The focus of GAO's
    recommendations is on the following four interrelated areas:

    o  communicating the role of managers in GPO's transformation,

    o  strengthening the role of the human resources office,

    o  	developing a strategic workforce plan to ensure GPO has the skills and
    knowledge it needs for the future, and

    o  using a strategic performance management system to drive change.

    By implementing the recommendations in these four areas, GPO can build the
    strong human capital foundation needed to reinforce the transformation now
    under way.

    Contents

        Letter                                                                  1
                                             Results in Brief                   3
                                                Background                      5
                             Communicating the Role of Managers and Following
                                                  Up on
                            Employees' Stated Concerns Is Vital to GPO's        9
                            Transformation
                               Developing a Strategic Human Capital Office     12
                              Strategic Workforce Planning Can Assist GPO's    19
                                              Transformation
                            Performance Management Can Help GPO Drive Internal
                                                Change and
                                         Achieve External Results              26
                                         Concluding Observations               34
                                             Agency Comments                   35
    Appendix
                Appendix I:         Objective, Scope, and Methodology
                              Table 1: Key Agency Actions to Integrate Human
        Table                                    Capital
                            Approaches with Strategies for Accomplishing
                            Agency
                                                 Missions

    Figures Figure 1:

    Figure 2: Figure 3: Figure 4:

    Figure 5:

    Figure 6: Figure 7:

    The Net Operating Income (Loss) for GPO's Major
    Operations (in Thousands of Dollars) 7
    GPO's Net Operating Income 8
    GPO's New Organizational Structure 16
    Critical Elements to Include in the Workforce Planning
    Process 20
    Examples of Workforce Data That Are Collected and
    Analyzed by Other Federal Agencies 22
    Key Practices for Effective Performance Management 28
    2001 Performance Ratings for Current GPO
    Employees 31

    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. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    A

    United States General Accounting Office Washington, D.C. 20548

    October 20, 2003

    The Honorable Ben Nighthorse Campbell
    Chairman
    The Honorable Richard J. Durbin
    Ranking Minority Member
    Subcommittee on Legislative Branch
    Committee on Appropriations
    United States Senate

    Like other public and private organizations, the Government Printing
    Office (GPO) has undertaken the enormous task of transforming itself in
    response to the pressing fiscal and other realities of the 21st century.
    This
    transformation process will eventually lead the organization to make some
    fundamental program and cultural changes. During his nomination hearing
    on October 3, 2002, the Public Printer emphasized GPO's need to transform
    itself by stating that ". . . like every other manufacturing business in
    America, the GPO is going to have to reengineer itself if it is to remain
    relevant and viable for the future." On several occasions, the Public
    Printer
    has reiterated the need for GPO to move from the 19th century to the 21st
    century by looking at ". . . the changing and emerging information needs
    of
    our customers and develop a deeper understanding of our true strengths so
    that we can plan for and build a new business model that will allow us to
    meet the information demands of our customers." To underscore these
    statements, the Public Printer has taken actions to transform GPO by
    creating a new management structure, launching a major reorganization of
    GPO's divisions, and initiating a demonstration project to allow federal
    agencies more flexibility in contracting for printing services. The Public
    Printer has also taken steps to reduce GPO's persistent financial losses
    by
    closing bookstores1 and reducing staffing levels. Finally, the Public
    Printer
    has initiated a process to develop an agency strategic plan and an
    accompanying strategic workforce plan.

    GPO leadership already recognizes that implementing large-scale
    organizational transformations are not simple endeavors. As we have
    noted, it typically takes at least 5 to 7 years until an organization's
    change
    initiatives are fully implemented, and the related culture is transformed
    in a

    1GPO closed all of its bookstores except for its Washington, D.C.
    bookstore.

    sustainable manner.2 Further, successful transformations require the
    concentrated efforts of both leadership and employees to accomplish the
    organization's new goals.3 To sustain and focus the transformation effort,
    organizations need to concentrate on how effectively they use their
    people, or human capital.

    As agreed with your Subcommittee, this report focuses on actions GPO's
    leadership could take to advance its transformation efforts through
    strategic human capital management. To examine GPO's transformation
    efforts, we used our Model of Strategic Human Capital Management released
    in March 20024 as the analytical framework for collecting data and
    reviewing GPO's human capital management. This model is designed to help
    agency leaders effectively use their human capital and determine how well
    they integrate human capital considerations into daily decision making and
    planning for the program results they seek to achieve. We focused our
    review on the human capital issues that are of most immediate concern and
    significance to GPO's transformation initiative, such as the recent hiring
    of a Chief Human Capital Officer (CHCO), the desire to restructure GPO's
    workforce, and the use of a performance management system. We reviewed GPO
    documentation describing its personnel practices and transformation
    initiatives and interviewed numerous GPO managers about GPO's human
    capital practices. For additional information on our scope and
    methodology, see appendix I.

    This report is part of your request that we conduct a general management
    review of GPO that examines GPO's human capital, financial management,
    information management, strategic planning, organizational operations, as
    well as its use of technology in printing and information dissemination.
    The Subcommittee requested that our general management review be done in
    conjunction with another GAO review mandated in the Committee on
    Appropriation's report of legislative branch appropriations for fiscal
    year 2003, which will examine the current state of printing and
    dissemination of

    2U.S. General Accounting Office, Highlights of a GAO Forum: Mergers and
    Transformation: Lessons Learned for a Department of Homeland Security and
    Other Federal Agencies, GAO-03-293SP (Washington, D.C.: Nov. 14, 2002).

    3U.S. General Accounting Office, Results-Oriented Cultures: Implementation
    Steps to Assist Mergers and Organizational Transformations, GAO-03-669
    (Washington, D.C.: July 2, 2003).

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

    federal government information. We plan to address this topic and others
    related to GPO's management as part of a series of reports to be issued
    periodically to assist GPO in its ongoing transformation efforts. For
    example, in the coming months, we plan to issue a report on legislative
    and executive branch printing requirements and views of GPO, which will
    provide GPO with important information it needs to develop its strategic
    plan. In addition, we plan to continue working with GPO leaders
    cooperatively, meeting regularly with them about the progress of their
    transformation initiatives, and at their request, continuing to provide
    them with information on our human capital efforts and related
    initiatives.

    Results in Brief	The Public Printer clearly recognizes strategic human
    capital management as critical to the success of GPO's transformation. To
    strengthen GPO's human capital management, the Public Printer has
    established and recently filled the position of CHCO, shifted the focus of
    training, and enhanced recruitment strategies. GPO can build on these
    important first steps by taking additional actions to further (1) enhance
    communication with senior managers, (2) build a strategic human resources
    office to help drive the transformation, (3) develop strategic workforce
    plans, and (4) implement an individual performance management system that
    aligns organizational goals with day-to-day operations and creates a line
    of sight between individual and organizational performance.

    o 	Communication: As part of their efforts to transform the organization,
    GPO's leadership has shown commitment to improving human capital
    management. To sustain this transformation, GPO's leadership needs to
    ensure that managers throughout the organization appreciate the importance
    of their roles in transforming the organization and managing GPO's
    workforce. To this end, we recommend steps that the Public Printer and
    GPO's CHCO should take to strengthen communications and hold managers
    accountable for effectively managing people and leading change.

    o 	Strategic human capital office: The appointment of the CHCO was a
    critical first step. GPO can now support its transformation by adopting a
    strategic view of human capital management that centers on the
    contributions GPO's Human Resources Office can make to the long-term
    accomplishment of GPO's mission. We recommend numerous steps GPO
    leadership can take to strengthen the role of human capital and ensure
    that it will be integrated with strategies for accomplishing GPO's mission
    and program goals. For example, by involving the CHCO and

    other human capital leaders in strategic planning, GPO can ensure that its
    human capital approaches are integrated with its program strategies. The
    Public Printer and CHCO will need to develop a new human capital
    organization with a strong collaborative focus and culture. The Human
    Resources Office should work in partnership with managers in all of GPO's
    divisions to integrate human capital approaches with GPO's program
    strategies.

    o 	Strategic workforce planning: GPO should use strategic workforce
    planning to integrate its human capital approaches with its programs and
    ensure that it recruits and develops staff needed to meet emerging needs.
    We recommend several steps to assist GPO leadership in preparing for GPO's
    future. Specifically, to implement effective workforce planning, GPO will
    need to analyze workforce skills gaps based on the decisions it is making
    as part of its ongoing efforts to set a strategic direction, develop human
    capital strategies to fill the gaps, build the capability to support
    workforce planning, and evaluate and revise its human capital strategies.
    GPO collects some data on its workforce, including the number of people
    eligible for retirement and the results of employees' performance reviews.
    However, GPO needs to develop a system to collect and analyze data on the
    knowledge and skills of its workforce and develop performance measures for
    its human capital strategies in order to evaluate them.

    o 	Performance management: Effective performance management is one of the
    nine key practices we identified for effective mergers and
    transformations.5 The performance management system can help manage and
    direct the transformation process and serve as the basis for setting
    expectations for individuals' roles in the transformation process. GPO is
    developing a strategic plan and organizational goals that, when completed,
    can serve as the basis for setting individual performance expectations and
    ensuring accountability. However, GPO can begin to use the performance
    management system now to drive its transformation and help achieve
    critical organizational imperatives, such as improving its financial
    condition. We recommend several steps through which GPO can develop a
    performance management system to help achieve results, accelerate change,
    and facilitate two-way communication between managers and employees so
    that discussions

    5GAO-03-669.

    about individual and organizational performance are integrated and
    ongoing.

    We provided a draft of this report in September 2003 to the Public Printer
    for review and comment. GPO's Chief of Staff, Deputy Chief of Staff, and
    Chief Human Capital Officer provided comments orally and by e-mail. The
    GPO officials generally agreed with the content, findings, and
    recommendations of the draft report. The officials also provided minor
    technical clarifications, and we made those changes where appropriate.

    Background	Under the public printing and documents statutes of Title 44,
    United States Code, GPO's mission is to fulfill the needs of the federal
    government for information products and to distribute those products to
    the public.6 GPO was created in 1860 as part of the legislative branch
    primarily to satisfy the printing needs of Congress but eventually became
    the focal point for printing, binding, and information dissemination
    services across the federal government. GPO publishes the Congressional
    Record overnight when Congress is in session and produces the Federal
    Register, the Code of Federal Regulations, and other key federal
    government documents, such as the annual U.S. Budget. In addition,
    approximately 130 federal departments and agencies use GPO's in-plant
    printing facility, electronic information systems, or printing-buying
    operations to produce a variety of government information products, such
    as census and tax forms, U.S. passports, and federal regulations and
    reports. Through its Information Dissemination programs (formerly
    Superintendent of Documents), GPO disseminates these government
    information products via a system of 1,200 depository libraries located
    around the country (the Federal Depository Library Program), its Web site
    (http://www.gpoaccess.gov), telephone and fax ordering, an online ordering
    site, and a bookstore.

    GPO's role as the principal agent for printing and distributing federal
    government information currently faces two major challenges. First, in a
    memorandum dated May 3, 2002, the Office of Management and Budget (OMB)
    recommended that the Federal Acquisition Regulatory Council eliminate
    restrictions mandating the use of GPO as the federal government's single
    source for obtaining printing services and related supplies. After this
    proposed rule change was issued in the Federal

    6These are chapters 1, 3, 5, 7, 9, 11, 13, 15, 17, 19, 39, and 41 of Title
    44, U.S.C..

    Register on November 13, 2002,7 GPO and OMB entered a compact on June 6,
    2003, in which GPO would create a demonstration project designed to
    provide federal agencies flexibility in choosing their own printing
    services. According to GPO, the demonstration project would be a print
    procurement contract, which would function similar to the General Services
    Administration's (GSA) Federal Supply Schedule8 and be tested for 1 year,
    beginning on October 1, 2003, with the Department of Labor serving as the
    federal agency customer. The demonstration project is expected to result
    in GPO adopting the role of registering and qualifying printers to
    participate in the contract as well as offering customer support and in
    federal agencies being able to select qualified printers, using either
    lowest price or best value techniques.

    Second, the demand from federal agencies for ink-on-paper printing has
    declined in recent years because the public has increasingly accessed
    government information through the Internet and obtained GPO's products
    through electronic publishing technologies. This trend has affected all of
    GPO's programs, reducing the production, procurement, and sales of printed
    products. As a result, over the past 5 fiscal years, GPO has sustained
    losses in all of its major operations except for its in-house printing. As
    shown in figure 1, since 1998, in-house printing, which includes the
    Federal Register and Code of Federal Regulations, has raised $39,814,000
    in income; purchased printing, which includes most of the printing done
    for federal agencies, lost $12,299,000; the sales program, which includes
    sales from the recently closed bookstores, as well as online and telephone
    sales, lost $48,275,000; and agency distribution services, which
    distributes executive branch publications, lost $274,000.

    767 Fed. Reg. 68,914-68,918 (2002).

    8Under the Federal Supply Schedule Program, GSA enters into contracts with
    commercial firms to provide supplies and services at stated prices for
    given periods. Orders are placed directly with the schedule contractor and
    deliveries are made directly to the customer.

    Figure 1: The Net Operating Income (Loss) for GPO's Major Operations (in
    Thousands of Dollars)

    Source: GAO.

    As shown in figure 2, GPO's losses for its major operations during the
    5-year period were $21 million, with the greatest net loss at
    approximately $17 million from operations in fiscal year 2002.

    Figure 2: GPO's Net Operating Income

    Dollars in thousands

                                      4,000 3,133

    2,000 0 2,000

    4,000

    6,000

    8,000

    10,000

    12,000

    14,000

    16,000 18,000

                                        -16,997

                                1998 1999 2000 2001 2002

    Fiscal year

    Source: GAO.

                                 5-year total: -$21,034

    Note: Net operating income before eliminations.

    The decline in the demand for GPO's ink-on-paper products and the shift
    toward using its electronically disseminated products has led to a decline
    in GPO's workforce. Over the past 6 years, GPO's total number of full-time
    equivalent (FTE) employees has declined by 13 percent, from 3,430 FTEs in
    1998 to 2,978 FTEs in 2003. The workforce will experience additional
    decreases through GPO's retirement separation incentive program, which was
    announced on April 29, 2003. The program, based on authority provided in
    the Legislative Branch Appropriations Act, 1999, as amended, seeks to
    generate payroll savings by reducing GPO's existing staffing levels by
    approximately 300 employees.9

    GPO's current workforce represents a diverse set of skills, ranging from
    electricians to printing machinists to information technology specialists.
    About 47 percent of GPO's employees are in blue-collar occupations, such
    as platemakers and electricians, which are represented by 16 different
    unions. As of August 2003, almost half of GPO's workforce was eligible for

    944 U.S.C. 305 note.

    retirement, while about 5 percent of the workforce was under the age of
    30. As we have reported before,10 it is important to consider the number
    and type of employees an agency will lose to retirement because retirees
    often represent an agency's most experienced and knowledgeable staff.

    In January 2003, the Public Printer initiated a process to develop a
    strategic plan and an accompanying strategic workforce plan. The process
    includes a year of data gathering to assess GPO's current status; a year
    to develop and write the plan, which will include input from employees,
    Congress, customers, and other stakeholders; and 3 to 5 years to fully
    implement the plan. Currently, GPO is in the data-gathering phase of its
    strategic planning process.

    Communicating the Role of Managers and Following Up on Employees' Stated
    Concerns Is Vital to GPO's Transformation

    Creating an effective, ongoing communication strategy is essential when
    defining and implementing any transformation effort. More specifically,
    for GPO it is important to communicate the role that managers should play
    in managing people and implementing human capital initiatives in the
    agency's transformation. A comprehensive communication strategy that
    reaches out to employees, unions, Congress, customers, and stakeholders
    and seeks to engage them in the transformation process could help GPO's
    leaders convey an understanding of the purpose of planned changes and
    build trust, cultivating a strong relationship with management and gaining
    employee ownership for the transformation. Additionally, communication
    should facilitate a two-way honest exchange between managers and employees
    and allow for constructive feedback from employees.

    This communication is central to forming the effective partnerships that
    are crucial to the success of any organization. Because an organization's
    people are the drivers of any transformation, it is vital to solicit their
    input and monitor their attitudes. Obtaining employees' attitudes through
    pulse surveys, focus groups, or confidential hotlines can serve as a quick
    check of how employees are feeling about the large-scale changes that are
    occurring and the new organization as a whole. Most important, employees
    should see that top leadership not only listens to their concerns, but
    also takes action and makes appropriate adjustments to the transformation
    effort based on them.

    10U.S. General Accounting Office, Federal Employee Retirements: Expected
    Increase Over the Next 5 Years Illustrates Need for Workforce Planning,
    GAO-01-509 (Washington, D.C.: Apr. 27, 2001).

    Status of GPO's Communication and Follow-up Efforts

    GPO's leaders have demonstrated that they are committed to a strategic
    human capital approach and understand that implementing a large-scale
    management initiative, such as GPO's transformation, requires the
    concentrated efforts of both leadership and employees. GPO leadership has
    communicated to employees the need for a transformed GPO through several
    channels, including holding town hall meetings with question and answer
    sessions for all employees. In addition, GPO has established an Employee
    Communications Office to disseminate information to the employees
    regarding GPO's ongoing changes through a recently created intranet site,
    newsletters, and mailings to employees' homes. Overall, managers say that
    communication has improved dramatically since the arrival of GPO's new
    leadership team.

    To indicate his commitment to GPO's human capital, the Public Printer has

    o 	shifted the focus of existing training and expanded opportunities for
    more staff to attend needed training;

    o 	instituted a new time-off awards program, the first such program
    instituted at GPO in a decade;

    o 	implemented a new executive development program, demonstrating GPO's
    investment in its future leaders; and

    o 	initiated an employee climate survey to get GPO employees' views on
    issues requiring management attention.

    Although GPO leadership demonstrated commitment to communication and human
    capital, we found that GPO's managers did not consistently understand the
    roles they should play in the transformation. For example, some managers
    expressed the need to have additional details about the direction of their
    units within the context of GPO's transformation and were unclear about
    what training requests they should accept. A key factor in the success of
    any strategic human capital initiative is the sustained attention of
    senior leaders and managers at all levels of the agency to valuing and
    investing in their employees. As GPO's leadership communicates with
    employees regarding its transformation efforts, it also needs to inform
    managers about their roles in managing people and in monitoring and
    refining human capital initiatives. Establishing a performance expectation
    that holds managers accountable for the effective management of people can
    help clarify the roles of managers and further demonstrate leadership's
    commitment to human capital management.

    Follow-up action on GPO's employee climate survey, conducted in February
    2003, has been slow. Planned focus groups with employees to discuss the
    findings and develop actions that could be taken to address some of the
    issues raised by the survey results were delayed until the new CHCO was
    hired to ensure that the follow-up and the implementation of any
    recommendations resulting from the survey received the appropriate level
    of attention. Moreover, while GPO's employee climate survey identified
    several issues for immediate attention, such as communications,
    performance management, and training, managers we interviewed, both within
    the Human Resources Office and in other areas of GPO, said they did not
    believe that it was their responsibility to address issues identified in
    the employee survey. To address these issues, all GPO managers should have
    performance expectations making them responsible and accountable for
    taking actions to change GPO's work environment. While monitoring employee
    attitudes provides good information, it is most important that employees
    see that top leadership not only listens to their concerns but also takes
    action on them.

    Recommended Next Steps	GPO's leaders have communicated a clear message
    about the need to transform GPO. To build on their progress by
    strengthening two-way communications and employee involvement, the Public
    Printer should take the following actions:

    o 	Communicate with managers about their roles in strengthening GPO's
    human capital management in support of mission needs. GPO leadership
    should continue to hold town hall meetings and use the Employee
    Communication Office to reach out to employees and engage them in a
    two-way exchange so that they understand how they may be able to help with
    the transformation.

    o 	Ensure that managers are held accountable, through GPO's performance
    management system and other mechanisms, for effectively managing people
    and leading change.

    In addition, the CHCO should follow up on the completed employee climate
    survey by holding focus groups that work to develop recommended solutions
    to issues raised in the survey results, including adjustments to GPO's
    transformation and human capital approaches.

    Developing a Strategic
    Human Capital Office

    Our work and that of others has shown that over the past decade,
    high-performing organizations have increasingly adopted a strategic view
    of human capital management in helping to achieve organizational missions
    and program goals.11 This new strategic view centers on the contributions
    that human capital management can make to the long-term accomplishment of
    the agency's mission. As such, the function traditionally called personnel
    or human resources needs to be fundamentally transformed, from being a
    strictly support function involved in managing personnel processes and
    ensuring compliance with rules and regulations to designing and
    implementing human capital approaches that are aimed at supporting the
    agency's strategic goals. Human capital professionals must have the
    appropriate preparation not just to provide effective support services,
    but also to consult effectively with line managers in tailoring human
    capital strategies to the unique needs of the agency.

    In April 2003, we reported on key actions that selected agencies had taken
    to integrate their human capital approaches with their strategies for
    accomplishing organizational missions and to shift the focus of their
    Human Resources Office from performing primarily compliance activities to
    performing consulting activities.12 These actions can be particularly
    instructive to GPO as it strengthens the role of human capital in support
    of its transformation. Table 1 identifies the actions taken and who within
    each agency initiated them.

                              11GAO-03-446. 12 GAO-03-446.

         Table 1: Key Agency Actions to Integrate Human Capital Approaches with
                      Strategies for Accomplishing Agency Missions

    Action initiators Description of action

    Agency leaders  o  Agency leaders included human capital leaders in key
    agency decision-making. For example, United States Coast Guard's (USCG)
    agency leadership has engaged its human capital organization earlier in
    the strategic planning and decision-making process by appointing its
    Assistant Commandant for Human Resources as a member of the agency's
    senior management team and a full partner in the development of key USCG
    management decisions.

    o  Agency leaders also established entities, such as human capital
    councils, accountable for integrating human capital approaches with
    strategies for achieving programmatic goals. The groups' members include
    both program leaders and human capital leaders. For example, the GSA
    created a Human Capital Council to ensure, among other objectives, that
    the agency's human capital strategic plan was integrated within GSA's
    strategic plan and supported the agency's program strategies.

    Human capital leaders

    o  Human capital leaders are establishing and communicating clear human
    capital strategic visions. For example, GSA's Chief People Officer's
    vision is for GSA's Chief People Office (CPO) to become a partner in GSA's
    business success. To do so, she explained that CPO must deliver products
    and services that enable its customers to focus on their core business.
    Similarly, Internal Revenue Service's (IRS) former Chief Human Resource
    Officer's vision is for the human capital professionals in IRS to become
    more proactive in providing human capital strategies and solutions that
    directly enhance the agency's performance.

    o  Human capital leaders are restructuring their human capital
    organizations to improve their alignment with their vision. For example,
    IRS's restructured human capital management function includes, as one of
    three major components, a national headquarters strategic human resources
    organization.

    o  Human capital leaders are using technological advances to provide
    opportunities to free organizational resources that can be redeployed for
    strategic purposes. For example, the United States Geological Survey
    (USGS) partnered with QuickHire, a commercial off-the-shelf software
    developer, to develop an on-line automated recruitment system (OARS) that
    allows USGS's human capital staff to enter job vacancies into a
    centralized database and develop rating and ranking criteria by selecting
    and weighting questions from an extensive question library organized by
    job series. According to USGS, as the agency continues to gain experience
    and efficiencies using OARS, it hopes to divert an increasing number of
    human capital staff members to other strategic efforts.

    o  Human capital leaders are promoting a more strategic role for human
    capital professionals and are investing in the development of new
    competencies for human capital professionals to support their increased
    strategic engagement. For example, in response to the changing role and
    functions of its human capital community, GSA has developed new core
    competencies needed by its human capital staff. Included in these
    competencies are the new skills GSA's Chief People Officer believes the
    agency's human capital staff members must develop to become business
    partners.

    Agency leaders  o  Jointly, agency leaders and human capital leaders are
    having human capital professionals and agency line and human managers
    share the accountability for successfully integrating strategic human
    capital approaches into the capitalleaders planning and decision making of
    the agency. For example, Federal Emergency Management Agency's (FEMA)

    human capital leaders and program officials have implemented an innovative
    employee staffing effort. According to

    FEMA officials, this greatly enhanced the agency's emergency response
    capability by providing the human capital

    staff and the line managers the ability to collaborate in identifying
    available deployment candidates for assignment

    as soon as federal disasters are declared.

    Source: GAO.

    Status of GPO's Efforts to Create a Strategic Human Capital Function

    GPO's new leaders recognize that its Human Resources Office has been
    characterized by the following weaknesses:

    o 	Lacking a strategic focus. Managers in both the Human Resources Office
    and GPO's program divisions acknowledged the need to improve collaboration
    in support of agency goals and the transformation and indicated that
    efforts should be more proactive. One official in the Human Resources
    Office indicated the need for the new CHCO to dramatically improve
    communication with GPO program managers so that the Human Resources Office
    can better understand and anticipate their needs.

    o 	Viewing human capital as costs to be cut rather than as assets needed
    to achieve results. Managers told us that the Human Resources Office had
    been used to reduce and control salary costs by restricting promotions,
    denying managers requests to increase the grade levels of positions so
    that they would reflect increased responsibilities, and downgrading vacant
    positions. Managers said that these actions contributed to good employees
    leaving GPO for positions in other federal agencies where they had more
    opportunities for advancement.

    o 	Focusing more on processing transactions rather than strategically
    managing human capital to help achieve results. Program managers viewed
    the Human Resources Office's assistance in such efforts as filling
    recruitment needs and providing requested employee data as positive but
    very limited and falling far short of their expectations for assistance.

    o 	Being an obstacle to rather than supporting manager's needs. For
    example, we were told that the Human Resources Office has not provided
    adequate assistance or guidance to managers in writing position
    descriptions needed to fill critical vacancies or get positions
    reclassified. A few managers told us that, as a result, they found the
    hiring process took longer than necessary and caused significant
    frustration and rework, taking attention away from other higher
    priorities.

    GPO's Human Resources Office faces substantial challenges resulting from
    the many changes accompanying GPO's transformation. For example, the
    Information Dissemination Division, formerly the Superintendent of
    Documents Division, is undergoing a major reorganization to better
    position it to address GPO's increasing emphasis on electronic information

    dissemination. This divisional reorganization has created four major
    sections within the division, which will require the Human Resources
    Office to perform additional work reclassifying positions, developing
    position descriptions, and recruiting people for new positions. GPO
    managers expressed concerns about the Human Resources Office's ability to
    respond to the increased demands for support due to other divisional
    reorganizations and transformation-related initiatives on the horizon. In
    addition, some managers questioned whether the Human Resources Office had
    sufficient staff with the competencies needed to effectively serve as
    advisors to and partners with senior leaders and managers.

    As an important first step in changing the role of the Human Resources
    Office at GPO, the Public Printer created a new organizational structure
    that establishes the position of CHCO, equivalent to the heads of the
    other administrative and operating divisions. (See fig. 3.) This structure
    is consistent with executive branch agencies, many of which have now
    established CHCO positions. The creation of the Human Resources Office
    establishes accountability for the cross-functional area of human capital
    management within GPO and may help GPO use resources driven by the Public
    Printer's strategic vision more efficiently.

                      Figure 3: GPO's New Organizational Structure

                                      Source: GAO.

    GPO's new CHCO has the opportunity to transform GPO's Human Resources
    Office into one that integrates GPO's human capital approaches with
    strategies for achieving programmatic results. The new CHCO realizes that
    this transformation is critical to the success of GPO's strategic human
    capital efforts and told us that his vision for the Human Resources Office
    includes human capital professionals working strategically with GPO's line
    managers to integrate the human capital function throughout the agency.

    As the CHCO begins his efforts, he can build on the Human Resources
    Office's ongoing efforts to streamline operations and employ technology to
    meet customer needs and free organizational resources that can be
    redeployed for strategic purposes. GPO's Human Resources Office is
    streamlining and moving its payroll functions from within GPO to the
    National Finance Center, which handles payroll functions for many federal
    agencies. The Human Resources Office has also developed an automated
    system that alerts managers when employees under their supervision are due
    in-grade promotions and is working to convert employee performance ratings
    into an online/automated format. GPO managers have viewed these efforts
    positively and have indicated that there may be other opportunities to
    further automate and streamline human capital processes.

    Recommended Next Steps	GPO's hiring of a CHCO, concurrent with its efforts
    to begin developing an overall agency strategic plan and a complementary
    strategic workforce plan, creates the opportunity for GPO leadership and
    human capital leaders to work together to strengthen the role of human
    capital and ensure that it will be integrated with strategies for
    accomplishing GPO's mission and program goals. To effectively support
    GPO's overall transformation efforts, the CHCO will need to develop a new
    human capital organization with a strong collaborative focus and culture.
    This may involve a number of steps, such as establishing a strategic
    vision for the Human Resources Office and ensuring that human capital
    professionals have the competencies needed to collaborate with GPO's
    managers. The final result should be a Human Resources Office that helps
    integrate human capital approaches with GPO's program strategies
    throughout the organization by working in partnership with managers of all
    divisions.

    To enhance the role of strategic human capital in support of GPO's
    transformation efforts, the Public Printer should take the following
    actions:

    o 	Include human capital leaders in agency strategic planning and decision
    making. Involving these leaders as full partners would acknowledge

    both the commitment of the Public Printer to strategically managing GPO's
    people and create the expectation that human capital professionals will
    contribute to organizational success.

    o 	Establish an entity, such as a human capital council, that is
    accountable for integrating human capital approaches with strategies for
    achieving programmatic goals. The group's members should include both
    program managers and human capital professionals. As GPO develops and
    implements its strategic plan and human capital plan, the group can help
    ensure that the plans are integrated.

    o 	Communicate clearly that the CHCO should create a Human Resources
    Office that is not solely focused on routine processing and compliance
    issues but is also focused on strategic human capital planning and
    management.

    To further the integration of human capital with GPO's strategies for
    transformation and mission accomplishment, the CHCO should take the
    following actions:

    o 	Establish a human capital strategic vision, and a mission for the Human
    Resources Office, and define goals and expectations for human capital
    professionals as well as the Human Resources Office that can be used to
    hold human capital professionals accountable.

    o 	Strengthen communication between human capital officials and program
    managers to enhance the understanding of how they can work together to
    achieve organizational goals. As a key part of strengthening
    communication, the CHCO should routinely solicit the feedback of GPO
    managers to identify how the Human Resources Office can best meet
    managers' needs and help them uphold federal merit principles.

    o 	Consider how to organize the Human Resources Office to align it with
    the strategic vision and best achieve integration of GPO's human capital
    approaches and mission strategies. One potential approach used
    successfully in other federal agencies is to integrate human capital
    professionals throughout the agency's operational divisions. Each of these
    human capital professionals reports to a particular operating division
    leader and is tasked with implementing and customizing human capital
    policies, procedures, and strategies to fit the division's unique needs.

    o 	Ensure that human capital professionals have the skills needed to
    implement the Human Resources Office's mission, thereby helping to achieve
    the goals of the Human Resources Office and the agency as a whole. This
    will include providing necessary training for current human capital
    professionals and hiring new human capital professionals with the
    appropriate skills to help implement the Human Resources Office's mission.

    o 	Further explore how technological advances can provide opportunities to
    better serve managers and free organizational resources that can be
    redeployed for strategic purposes.

    Together, the Public Printer and the CHCO should clearly define and
    communicate to the human capital professionals, as well as throughout GPO,
    that the role of the Human Resources Office is to partner with the other
    units within GPO to achieve the agency's mission. The town hall meetings
    initiated by the Public Printer are one forum in which this type of
    communication can happen. It should be made clear that agency and human
    capital leaders, human capital professionals, and line managers share
    responsibility for advancing agency programmatic and human capital goals.

    Strategic Workforce Planning Can Assist GPO's Transformation

    A key factor in successfully transforming GPO and sustaining high
    performance is the effective integration and alignment of GPO's human
    capital approaches with its strategies for achieving mission and
    programmatic goals and results. GPO should use strategic workforce
    planning to integrate and align its human capital approaches with its
    mission strategies. Strategic workforce planning focuses on developing
    long-term strategies for acquiring, developing, and retaining an
    organization's workforce to meet future needs. It is an essential element
    of GPO's management infrastructure, which is needed to ensure that its
    human capital program addresses workforce issues in a manner that is
    clearly linked to achieving the agency's mission and goals.

    The goal of strategic workforce planning is to ensure that the right
    people with the right skills are in the right place at the right time.
    Agency approaches to workforce planning can vary with their particular
    needs and missions. Nevertheless, looking across existing successful
    public and private organizations, certain critical elements recur as part
    of a successful workforce plan and workforce planning process. Although
    fluid, this process starts with an organization setting a strategic
    direction that

    includes program goals and strategies to achieve those goals. The process
    consists of five critical elements that frame successful workforce
    planning efforts. Figure 4 uses a simple model to show these critical
    elements and their relationships to the agency's overall strategic
    direction and goals.

    Figure 4: Critical Elements to Include in the Workforce Planning Process

    Source: GAO.

    These five elements may be helpful to GPO in developing its plan:

    o 	involve top management, employees, and other stakeholders in
    developing, communicating, implementing, and evaluating the strategic
    workforce plan;

    o 	determine workforce gaps by identifying the critical skills and
    competencies that will be needed to achieve the future programmatic

    results, inventorying the skills and competencies of the existing
    workforce, and analyzing the gaps;

    o 	develop strategies to address gaps in number, deployment, and the
    alignment of human capital approaches that enable and sustain the
    contributions of all critical skills and competencies;

    o 	build the capability needed to address administrative, educational, and
    other requirements important to support workforce strategies; and

    o 	monitor and evaluate the agency's progress toward its human capital
    goals and the contribution that human capital results have made toward
    achieving programmatic goals.

    Additionally, collecting and analyzing data is a fundamental building
    block for measuring the effectiveness of human capital approaches in
    support of the mission and goals of an agency. Having complete and
    reliable data is particularly important to doing a workforce gap analysis.
    Early development of the data provides a baseline by which an agency can
    identify current workforce problems, and regular updating of the data
    enables agencies to plan for improvements, manage changes in the programs
    and workforce, and track the effects of changes on achieving program
    goals. As shown in figure 5, agencies can collect and analyze a variety of
    information to support their workforce planning efforts.

    Figure 5: Examples of Workforce Data That Are Collected and Analyzed by
    Other Federal Agencies

    0M	Actual and projected attrition rates (including retirements) showing
    how many people have left the agency in the past and the estimated number
    who will leave in the future.

    0M	Exit surveys or interviews with departing employees to better
    understand the reasons that people leave.

    0M Knowledge, skills, and experiences of the current workforce.

    0M	Size and shape of the workforce including information such as, the
    distribution of employees by pay level and ratio of managers to employees.

    0M	Dispersal of performance appraisal ratings, such as the mean, mode, and
    standard deviation of scores.

    0M Number of performance awards and their distribution among divisions and
    offices.

    0M Total human capital cost in dollars and as a percentage of total
    operating budget.

    0M Average period required to fill vacancies, and trends over time.

    0M Acceptance rates among job candidates to whom positions are offered.

    0M Costs of promotion, grade increase, and within-grade increases.

                                      Source: GAO.

    Status of GPO's Workforce Planning Efforts

    GPO leaders have shown that they understand the benefits of involving
    managers and employees in developing human capital initiatives and have
    the opportunity to continue this practice to support GPO's workforce
    planning efforts. GPO has included both managers and employees in newly
    created task forces that are examining the training needed for the new
    Information Dissemination Division, exploring the creation of a
    gainsharing program, and making decisions to implement the time off awards
    program. GPO managers and labor leaders told us that they view
    participation in these efforts favorably and want more specific
    information about the role that they could play in GPO's transformation.
    GPO leadership can build on its experiences in using management and
    employee task forces and on the interest and support shown by these
    managers and employees by involving them in workforce planning. Involving
    GPO

    employees in strategic workforce planning can build support and foster a
    clear understanding of how managers and employees can contribute to the
    overall transformation of GPO by doing their part to help develop and
    implement human capital approaches.

    GPO leaders acknowledge the importance of strategic workforce planning,
    including workforce gap analysis, to help GPO transform itself. They
    understand that they need to identify, in greater detail, the new skills
    and competencies that GPO will need and develop an inventory of the skills
    and competencies of its existing workforce to analyze workforce gaps. GPO
    leadership has told us that, currently, it is difficult for leaders to
    identify all of the specific skills and competencies GPO will need because
    they are still working to better define GPO's future mission and
    strategies as part of its recently initiated strategic planning effort.
    Although uncertainty about GPO's future may complicate the identification
    of future workforce needs, GPO may find it useful to begin producing an
    inventory of its employees' skills and competencies and work with its
    senior managers to identify some obvious gaps and establish a more
    systematic process for analyzing workforce gaps as it develops its
    strategic plan.

    More specifically, although GPO leadership has not systematically
    determined the specific skills it will need to effectively carry out its
    shifting role, it has indicated that GPO's emphasis will increasingly
    shift from printed information dissemination to more electronic
    dissemination, and in some areas GPO has begun to identify some potential
    skills gaps. For example, the Superintendent of Documents said that the
    skills needed to complete GPO's document cataloging function are changing
    rapidly as the number of electronic documents increases. Cataloging now
    requires Internet searching skills and greater sophistication to locate
    documents that are available on agency Web sites. While GPO currently
    lacks a fact-based systematic approach to define the critical skills and
    competencies required to meet its strategic program goals, it can use
    available information about skills gaps as a starting point for its
    workforce planning activities.

    To help meet its skills gaps, GPO has begun by strengthening its ability
    to recruit and develop staff. GPO formed a strategic partnership with
    leading universities in the areas of printing and graphic communications
    and initiated a recruiting drive to attract graduates in other
    disciplines, such as business administration and electrical, mechanical,
    and chemical engineering. Also, GPO hired experts who possess skills and
    competencies for addressing immediate needs, such as developing new sales
    and

    marketing strategies, to serve in temporary positions. To develop its
    existing workforce, GPO has shifted the focus of existing training and
    expanded opportunities for more staff to attend needed training.

    Recent actions by GPO's leaders demonstrate an understanding of the need
    to consider workforce skills and knowledge when making business decisions
    and implementing human capital approaches. For example, GPO made the
    business decision that it needed to decrease its staff by about 300 people
    to reduce its costs. To achieve this reduction, GPO initiated a retirement
    separation incentive program, which included an approach to ensure that
    GPO retained employees with critical knowledge and skills. This approach
    involved GPO's executive committee screening employees to separate early
    retirement applicants into two groups, priority 1 and priority 2. Priority
    1 applicants held positions that would not be filled because the positions
    were no longer necessary. Priority 2 applicants held positions that would
    be filled by other GPO employees, who would leave positions that would not
    be filled. Thus, GPO took a step toward stemming its operating losses
    while ensuring the retention of needed knowledge and skills.

    Workforce planning includes building the capability to support workforce
    strategies by addressing administrative, educational, and other
    requirements. For example, it is important for GPO to educate managers on
    the use of available human capital flexibilities, such as the time-off
    awards program recently introduced at GPO. Educating managers and
    employees on the availability and use of such flexibilities is one way for
    GPO to integrate human capital approaches throughout the organization.
    Managers and supervisors can be more effective in using time off awards
    and other authorities if they are properly trained on when they can be
    used and how to ensure consistency, fairness, and transparency for their
    use.

    GPO collects some data on its workforce, including the number of people
    eligible for retirement and the results of employees' performance reviews.
    However, GPO lacks information necessary to evaluate the effectiveness of
    its workforce strategies. Attention to the development and collection of
    workforce data could help ensure that GPO's human capital approaches are
    supporting its strategies for achieving results and transforming the
    organization.

    GPO's managers can use human capital data like those shown in figure 5 to
    help them identify human capital challenges, develop strategies to address
    them, and create measures to assess the strategies' success. For example,

    exit interviews can help GPO develop effective workforce strategies to
    address the reasons why top performing staff leave. Although overall
    attrition may not be a problem for GPO given its current downsizing
    efforts, it is important for GPO to retain top performers who have the
    skills it needs in the future. Some managers told us that high-performing
    staff have left GPO for comparable positions at other federal agencies
    because GPO's promotion possibilities were limited, often resulting from
    difficulties in reclassifying these positions. However, GPO has not
    conducted interviews with its departing employees to confirm their reasons
    for leaving. Without comprehensive data on why people leave GPO, it cannot
    determine what types of actions it should take, if any, to retain top
    performers.

    Recommended Next Steps	To ensure that human capital strategies are
    integrated throughout the agency, GPO should develop a strategic workforce
    plan that can guide its transformation and support mission accomplishment.
    The Public Printer and the CHCO should take the following actions:

    o 	Involve staff in all phases of workforce planning to help improve the
    quality of the plan and build support needed to successfully implement it.
    Specifically, GPO should (1) ensure that top management sets the overall
    direction and goals of workforce planning, (2) involve employees and other
    stakeholders in developing, implementing, and evaluating future workforce
    strategies, and (3) establish a communication strategy to create shared
    expectations, promote transparency, and report progress.

    o 	Complete a workforce gap analysis to identify critical skills and
    competency gaps that could affect GPO's ability to achieve its mission and
    transform the organization. The workforce gap analysis should include (1)
    an analysis of the current workforce to develop an inventory of employees'
    skills and competencies and (2) a systematic identification of the new
    skills and competencies that GPO will need in the future so that it can
    pinpoint any gaps that could affect its mission accomplishment and
    transformation.

    o 	Develop strategies to address any identified workforce gaps and move
    from the current to the future workforce needed to achieve GPO's mission
    and transformation. These strategies, consistent with recent efforts at
    GPO, should include the programs, policies, and practices that will enable
    an agency to recruit, develop, and retain critical staff.

    o 	Build the capability to support workforce strategies by addressing
    administrative, educational, and other requirements. To this end, managers
    and employees need training to understand how to use available human
    capital authorities and flexibilities effectively so that they are
    implemented equitably and their strategic purpose is fulfilled.

    o 	Evaluate the results of current human capital strategies and make any
    needed revisions to ensure that the strategies work as intended and
    support the transformation. This will provide a baseline by which to
    evaluate these strategies to ensure alignment with its mission and
    transformation efforts.

    o 	Develop performance measures for GPO's human capital strategies. Such
    measures are a first step in holding managers accountable for their
    management of human capital and provide valuable data for future workforce
    planning efforts. GPO could benchmark its human capital data against the
    data of high-performing organizations.

    o 	Periodically survey managers and employees regarding human capital
    strategies to ensure that they are being implemented fairly, observing
    federal merit principles, and being used appropriately.

    Performance Management Can Help GPO Drive Internal Change and Achieve
    External Results

    In July 2003, we reported that an organization's performance management
    system can be a vital tool for aligning the organization with desired
    results and creating a "line of sight" showing how team, unit, and
    individual performance can contribute to overall organizational results.
    The performance management system can help manage and direct the
    transformation process. The system serves as the basis for setting
    expectations for individuals' roles in the transformation process.13
    Effective performance management systems are not merely used for once-or
    twice-yearly individual expectation setting and rating processes, but are
    tools to help the organization manage day to day. These systems are used
    to achieve results, accelerate change, and facilitate two-way
    communication throughout the year so that discussions about individual and
    organizational performance are integrated and ongoing.

    13 GAO-03-669.

    In March 2003, we reported on key practices for federal agencies to
    consider when developing modern, effective, and credible performance
    management systems.14 While it is important that organizations develop
    performance management systems that reflect their specific structures,
    priorities, and cultures, these systems also reinforce individual
    accountability for results, and therefore, can strengthen overall agency
    performance. Figure 6 lists nine key practices for effective performance
    management that GPO may find instructive as it develops a more robust
    performance management system.

    14 U.S. General Accounting Office, Results-Oriented Cultures: Creating a
    Clear Linkage between Individual Performance and Organizational Success,
    GAO-03-488 (Washington, D.C.: Mar. 14, 2003).

              Figure 6: Key Practices for Effective Performance Management

    1. Align individual performance expectations with organizational goals. An
    explicit alignment of daily activities with broader results helps
    individuals see the connection between their daily activities and
    organizational goals and encourages individuals to focus on their roles
    and responsibilities to help achieve those goals.

    2. Connect performance expectations to crosscutting goals. High-performing
    organizations use their performance management systems to strengthen
    accountability for results, specifically by placing greater emphasis on
    fostering the necessary collaboration, interaction, and teamwork across
    organizational boundaries to achieve these results.

    3. Provide and routinely use performance information to track
    organizational priorities. High-performing organizations provide objective
    performance information to individuals to show progress in achieving
    organizational results and other priorities and help them manage during
    the year, to identify performance gaps, and to pinpoint improvement
    opportunities.

    4. Require follow-up actions to address organizational priorities.
    High-performing organizations require individuals to take follow-up
    actions based on performance information available to them. By requiring
    and tracking such follow-up actions on performance gaps, these
    organizations underscore the importance of holding individuals accountable
    for making progress on their priorities.

    5. Use competencies to provide a fuller assessment of performance.
    High-performing organizations use competencies, which define the skills
    and supporting behaviors that individuals need to effectively contribute
    to organizational results, and are based on valid, reliable, and
    transparent performance management systems.

    6. Link pay to individual and organizational performance. High-performing
    organizations seek to create pay, incentive, and reward systems that link
    employee knowledge, skills, and contributions to organizational results.

    7. Make meaningful distinctions in performance. Effective performance
    management systems seek to achieve three key objectives to help make
    meaningful distinctions in performance. First, they strive to provide
    candid and constructive feedback to help individuals maximize their
    contribution and potential in understanding and realizing the goals and
    objectives of the organization. Second, they seek to provide management
    with the objective and fact-based information it needs to reward top
    performers. Third, they provide the necessary information and
    documentation to deal with poor performers.

    8. Involve employees and stakeholders to gain ownership of performance
    management systems. High-performing organizations have found that actively
    involving employees and stakeholders in developing the performance
    management systems and providing ongoing training on the systems helps
    increase their understanding and ownership of the organizational goals and
    objectives.

    9. Maintain continuity during transitions. High-performing organizations
    recognize that because cultural transformations take time, they need to
    reinforce accountability for organizational goals.

                                      Source: GAO.

    Analysis of GPO's Performance Management Efforts

    GPO has begun to make progress on two of the key practices for effective
    performance management. GPO has taken a first step toward aligning
    individual performance expectations with organizational goals by beginning
    to develop an agency strategic plan and complementary workforce plan. GPO
    is also beginning to explore the use of competencies to provide a fuller
    assessment of performance. The other seven key practices present
    opportunities for GPO to strengthen its performance management system. For
    example, GPO presently does not make meaningful distinctions in
    performance or link pay to individual and organizational performance. As
    GPO explores actions to strengthen its performance management, it has the
    opportunity to involve employees and stakeholders so that they gain
    ownership of the performance management system.

    An explicit alignment of daily activities with broader results is one of
    the defining features of effective performance management systems in
    high-performing organizations. These organizations use their performance
    management systems to improve performance by helping individuals see the
    connection between their daily activities and organizational goals and
    encouraging individuals to focus on their roles and responsibilities to
    help achieve these goals. Such organizations continuously review and
    revise their performance management systems to support their strategic and
    performance goals, as well as their core values and transformational
    objectives.

    Currently, GPO requires that supervisors set annual performance
    expectations for all staff that are linked to employees' position
    descriptions rather than unit goals. Once GPO's strategic plan and
    organizational goals are established, GPO can use them as the basis for
    setting individual performance expectations and ensuring related
    accountability. However, GPO can begin to use the performance management
    system now to drive its transformation and hold individuals accountable
    for helping to achieve critical organizational priorities, such as
    improving GPO's financial condition and customer service. For example, we
    were told that employees in GPO's Information Dissemination Division lack
    basic sales techniques, like matching customer needs with available
    products. GPO could create a performance expectation for its sales staff
    related to their knowledge of GPO products. The performance expectation
    could help GPO improve its financial condition and customer service as
    staff become more familiar with the types of products GPO offers and
    matching these products to customers' needs.

    Further, GPO could help staff achieve organizational goals by requiring
    that managers take follow-up actions to address performance gaps. For
    example, GPO could routinely collect and analyze information from its
    customers to determine their views on the quality and timeliness of the
    products and services GPO provides as well as their current and future
    needs. Through the performance management system, managers in GPO's
    in-house printing operation could be required to use this information to
    follow up on recurring issues and plan for its customers' future needs.

    High-performing organizations use competencies to examine how the
    performance of individual employees contributes to the organization's
    results. Competencies, which define the skills and supporting behaviors
    that individuals are expected to exhibit to carry out their work
    effectively, can provide a fuller picture of an individual's performance.
    Because GPO is developing its agency strategic plan and related workforce
    plan, identifying core competencies for employees will necessarily lag.
    However, some GPO managers have started to identify critical competencies
    for employees in their units. For example, one manager in the Human
    Resources Office plans to revise the performance expectations for her
    staff to include a focus on customer service in order to improve the
    collaboration between her staff and managers throughout GPO. More
    generally, GPO is identifying competencies for senior managers to be
    included in their performance contracts.

    Effective performance management requires the organization's leadership to
    make meaningful distinctions between acceptable and outstanding
    performance of individuals and to appropriately reward those who perform
    at the highest level. In doing so, performance management systems in
    high-performing organizations typically seek to achieve three key
    objectives: (1) they strive to provide candid and constructive feedback to
    help individuals maximize their contribution and potential in
    understanding and realizing the goals and objectives of the organization,
    (2) they seek to provide management with the objective and fact-based
    information it needs to reward top performers, and (3) they provide the
    necessary information and documentation to deal with poor performers.

    GPO's performance management system does not make meaningful distinctions
    among employees' performance in the performance appraisal process.
    Managers told us that attention given to preparing individual performance
    ratings had decreased over the past decade due to the lack of performance
    awards. In addition, they said that since the ratings were not used as the
    basis for employee recognition, there was little incentive for

    mangers to make distinctions among their employees' performance when
    rating their staff. As a result, managers said that they rated large
    numbers of their staff as outstanding to boost morale and to avoid
    employee complaints. Figure 7 shows that over 94 percent of the employees
    who were rated in 2001 received an overall rating of outstanding or
    excellent.

    Figure 7: 2001 Performance Ratings for Current GPO Employees

    100%

    2,283 employeesa

    Source: GPO.

    Note: Data are 2001 ratings of on-board employees as of August 7, 2003.
    Data for 2002 are not yet available.

    aThis number is less than GPO's current number of staff, or 2,928, because
    it does not include employees hired since 2001 and those not rated because
    they were not covered by performance standards for a minimum of 90 days.

    The lack of identified distinctions among employee's performance
    compromises GPO's ability to select among employees for development and
    advancement opportunities. In the absence of objective and fact-based
    performance information, managers rely on their personal knowledge of
    employee performance and employees' reputations. Having objective and
    fact-based information and related documentation on which to justify
    personnel decisions is fundamental to ensuring that managers can
    effectively fulfill their responsibilities to uphold federal merit system
    principles. Further, without this information, managers lack the basic
    tools to motivate and reward staff for their performance.

    Seniority rather than performance is the basis for most pay decisions by
    GPO managers, and financial awards are not used to reward GPO's top
    performers. However, GPO's leadership recognizes the need to strengthen
    incentives for individual and organizational performance and has taken
    some actions to stimulate higher performance. On February 10, 2003, GPO
    instituted a time-off awards program to recognize outstanding effort by
    rewarding productivity, dedication, creativity, and superior
    accomplishment. Before the time-off awards program was introduced, GPO had
    been without any mechanism to recognize and reward outstanding performance
    since 1992 when funding for its incentive awards and recognition system
    was removed due to financial constraints and equity concerns. While the
    time-off awards program represents an improvement in GPO's rewarding of
    employees for good performance, several managers told us that GPO needs to
    do more to reward performance through financial mechanisms. Consistent
    with this view, GPO leadership recently formed a task force to determine
    the feasibility of developing a gainsharing program modeled after the
    program at the Bureau of Engraving and Printing, which rewards employees
    for meeting organizational goals. Under the program, all employees share
    in the gains from proven savings according to predetermined standards and
    payout formulas.

    High-performing organizations have found that actively involving employees
    and stakeholders, such as unions or other employee associations, when
    developing results-oriented performance management systems helps improve
    employees' confidence and belief in the fairness of the system and
    increases their understanding and ownership of organizational goals and
    objectives. Effective performance management systems depend on
    individuals', their supervisors', and management's common understanding,
    support, and use of these systems to reinforce the connection between
    performance management and organizational results. These organizations
    recognize that they must conduct frequent training for staff members at
    all levels of the organization to maximize the effectiveness of the
    performance management systems.15 Overall, employees and supervisors share
    the responsibility for individual performance management. Both are
    actively involved in identifying how they can contribute to organizational
    results and are held accountable for their contributions.

    15U.S. General Accounting Office, Human Capital: Practices That Empowered
    and Involved Employees, GAO-01-1070 (Washington, D.C.: Sept. 14, 2001).

    GPO leadership has demonstrated that it understands the importance of
    working with employees at all levels of the organization to implement
    human capital changes. As GPO moves forward to make additional needed
    changes to its performance management system, it is vital that leaders
    work to further strengthen the involvement of employees and stakeholders
    such as GPO's unions and employee associations. GPO cannot successfully
    improve its performance management system without the support and
    commitment of its many unions, which have substantial influence over GPO's
    human capital policies because of their right to bargain for wages. Given
    that union leaders and GPO's leadership agree that GPO's performance
    management system is ineffective, common ground exists from which GPO,
    GPO's employees, and the employees' elected representatives can begin a
    dialogue about how best to change the system. The constructive
    relationship that currently exists between GPO's union leaders and GPO
    management can facilitate this dialogue.

    Recommended Next Steps	Public sector organizations both in the United
    States and abroad have used their performance management systems to create
    a clear linkage-"line of sight"-between individual performance and
    organizational success and, thus, transform their cultures to be more
    results-oriented, customer-focused, and collaborative. GPO can obtain
    similar benefits by adopting the practices of leading organizations'
    performance management systems. Specifically, the Public Printer, in
    conjunction with the CHCO should take the following actions:

    o 	Align the individual performance expectations with organizational
    goals, which helps individuals identify the connection between their daily
    activities and organizational goals.

    o 	Connect performance expectations to crosscutting organizational goals,
    which would foster the necessary collaboration, interaction, and teamwork
    across organizational boundaries to achieve these results.

    o 	Provide and routinely use performance information to track
    organizational priorities, which would help GPO identify performance gaps
    and pinpoint improvement opportunities.

    o 	Require individuals to take follow-up actions on identified performance
    gaps to address organizational priorities, which underscores the
    importance of holding individuals accountable for making progress on their
    priorities.

    o 	Use competencies, which define the skills and supporting behaviors that
    individuals are expected to exhibit, to provide a fuller assessment of
    performance.

    o 	Link employee pay and awards to individual and organizational
    performance, which establishes incentives for high performance.

    o 	Make meaningful distinctions in performance, which provides a basis for
    constructive feedback, rewarding top performers, and dealing with poor
    performers.

    o 	Involve employees and stakeholders in the development of the
    performance management system which helps increase their ownership of the
    organizational goals and objectives.

    o 	Maintain continuity during leadership transitions by focusing on a
    broad set of programmatic priorities.

    Concluding 	Realizing the importance of effective human capital
    management, the new Public Printer has taken several important steps to
    establish the foundation

    Observations	needed to successfully transform GPO. However, there are
    additional opportunities for GPO to strengthen human capital management to
    support its progress into the 21st century.

    We found that, although GPO's leadership recognizes the importance of
    human capital management in GPO's transformation, it must ensure that
    managers appreciate the importance of their roles in order to make the
    entire workforce accountable for results. To achieve this transformation,
    GPO will need to strengthen the role of human capital management and
    ensure that it will be integrated with strategies for accomplishing GPO's
    mission and program goals. In addition, to ensure that GPO's workforce has
    the correct mix of skills and competencies for the future, GPO leadership
    will need to establish a strategic workforce planning process. Finally, to
    make GPO's units and workforce accountable for results, GPO will need to
    strengthen its current performance management systems. GPO's future
    success will depend largely on how well it is able to build and strengthen
    its capacity to effectively manage human capital in support of results.

    Agency Comments	We provided a draft of this report in September 2003 to
    the Public Printer for his review and comment. GPO's Chief of Staff,
    Deputy Chief of Staff, and Chief Human Capital Officer provided comments
    orally and by e-mail on behalf of GPO generally agreeing with the content,
    findings, and recommendations of the draft report. They also provided
    minor technical clarifications, and we made those changes where
    appropriate.

    The officials stated that GPO is committed to implementing the
    recommendations that we made to strengthen its human capital management
    and that the recommendations were fully consistent with the direction in
    which GPO is already moving. The officials stated that they look forward
    to continuing to work cooperatively with us throughout GPO's
    transformation effort and that our ongoing work on legislative and
    executive branch printing requirements will be an important input into
    GPO's ongoing strategic planning efforts.

    Unless you announce its contents earlier, we plan no further distribution
    of this report until 7 days after its issuance date. At that time, we will
    send copies to the Public Printer, GPO, as well as the Joint Committee on
    Printing, and the House Appropriations Legislative Subcommittee, Senate
    Committee on Rules and Administration, and House Committee on
    Administration. We will also make copies available to others upon request.
    In addition, the report will be available at no charge on GAO's Web site
    at http://www.gao.gov.

    If you have any questions about this report, please contact me or Steven
    Lozano on (202) 512-6806 or on mihmj@gao.gov and lozanos@gao.gov. Major
    contributors to this report were William Reinsberg, Benjamin Crawford,
    Masha Pastuhov-Pastein, and Carole Cimitile.

    J. Christopher Mihm Director, Strategic Issues

    Appendix I

                           Objective, Scope, and Methodology

    The objective of our review was to describe the Government Printing
    Office's (GPO) actions and plans for strategically managing its workforce
    and recommend next steps for GPO as it transforms. To identify strategic
    human capital practices and recommend next steps, we reviewed our models,
    guides, reports, and other products on strategic planning and performance
    measurement, strategic human capital management, transformation efforts,
    and other related areas. We used our Model of Strategic Human Capital
    Management to guide our initial analysis. From that analysis, we
    identified a set of human capital issues that could benefit GPO if
    addressed in the short term. These issues include the role of GPO's Human
    Resources Office and the Chief Human Capital Officer (CHCO), the desire to
    restructure GPO's workforce as part of its transformation, and the use of
    performance management systems. In order to address these immediate
    issues, we narrowed our review to focus on five of the eight critical
    success factors in our model:

    o  leadership's commitment to human capital management,

    o  the role of the human capital function,

    o  integration and alignment,

    o  data-driven human capital decisions, and

    o  unit and organizational performance linked to organizational goals.

    To assess GPO's actions and plans related to these critical success
    factors, we reviewed statements by the Public Printer; individual
    performance standards, position descriptions, and vacancy announcements;
    GPO policies and procedures; results from GPO's employee climate survey
    taken in March 2003; studies of GPO human capital issues conducted by the
    Office of Personnel Management and Booz-Allen and Hamilton; organizational
    charts; information from GPO's intranet; and other relevant documentation.

    To obtain additional information and perspectives on GPO's human capital
    issues, we interviewed key senior GPO officials, including the Deputy
    Public Printer; Chief of Staff; Deputy Chief of Staff; Superintendent of
    Documents; Managing Director of Plant Operations; Managing Director of

    Appendix I
    Objective, Scope, and Methodology

    Customer Services; the CHCO; former Personnel Director;1 Acting Personnel
    Director; Director, Office of Employee and Labor Relations; General
    Counsel; and Comptroller. We also interviewed GPO officials at the next
    level of management responsible for human capital, information
    dissemination, and customer service and union leaders. In addition, we
    visited GPO headquarters in Washington, D.C., and a distribution center in
    Laurel, Maryland, to talk with frontline managers about their
    responsibilities and the responsibilities of their employees.

    We developed the recommended next steps by referring to our models,
    guides, reports, and other products on strategic human capital management
    and identifying additional practices that were associated with and would
    further complement or support current GPO efforts. We performed our work
    from March through September 2003 in accordance with generally accepted
    government auditing standards.

                  1 GPO's Personnel Director retired on July 3, 2003.

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