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entitled 'Post-hearing Questions Related to the Department of Defense's 
National Security Personnel System' which was released on Apri 29, 2005.

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April 29, 2005:

The Honorable George V. Voinovich:
Chairman:
The Honorable Daniel K. Akaka:
Ranking Member:
Subcommittee on Oversight of Government Management,
the Federal Workforce, and the District of Columbia:
Committee on Homeland Security and Governmental Affairs:
United States Senate:

Subject: Post-hearing Questions Related to the Department of Defense's 
National Security Personnel System:

On March 15, 2005, I testified before your Subcommittee at a hearing 
entitled "Critical Mission: Ensuring the Success of the National 
Security Personnel System."[Footnote 1] This report responds to 
requests from each of you that I provide answers to questions for the 
record from the hearing. The questions, along with my responses, follow.

Question from Chairman Voinovich:

What recommendations or suggestions do you have for the Department of 
Defense and the Office of Personnel Management in order for them to 
earn employee acceptance of NSPS?

Human capital reform is a critical element in the Department of 
Defense's (DOD) overall business transformation effort. Therefore, top 
DOD leadership must play a direct and continuing role in this effort. 
Appropriate presidential appointees need to take the lead in selected 
meetings and communications. This will be necessary in order to assure 
that top union and other officials also participate in key activities 
(e.g., selected meet and confer sessions).

As we noted in our statement, the active involvement of employees and 
employee representatives will be critical to the success of DOD's 
National Security Personnel System (NSPS). We have reported that the 
involvement of employees and their representatives both directly and 
indirectly is crucial to the success of new initiatives, including 
implementing a pay-for-performance system. 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. This involvement must be early, active, and continuing 
if DOD employees are to gain a sense of understanding and ownership of 
the changes that are being made through NSPS. Further, we believe that 
this involvement needs to be meaningful, not just pro forma.

Implementing large-scale change management initiatives, such as the 
Department of Homeland Security's (DHS) new personnel system and DOD's 
NSPS, are not simple endeavors and require the direct involvement and 
concentrated efforts of both leadership, including top political 
leadership, and employees to realize intended synergies and to 
accomplish new organizational goals. People are at the center of any 
serious change management initiative. People define the organization's 
culture, drive its performance, and embody its knowledge base. 
Experience shows that failure to adequately address--and often even 
consider--a wide variety of people and cultural issues is at the heart 
of unsuccessful transformations. Recognizing the "people" element in 
these two initiatives and implementing strategies to help individuals 
maximize their full potential in the new organization, while 
simultaneously managing the risk of reduced productivity and 
effectiveness that often occurs as a result of the changes, is the key 
to a successful transformation.[Footnote 2]

We have found that because people are the drivers of any 
transformation, it is vital to monitor their attitudes. Especially at 
the outset of the transformation, 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. While monitoring employee attitudes 
provides good information, it is most important for employees to see 
that top leadership not only listens to their concerns, but also takes 
action and makes appropriate adjustments to the transformation in a 
visible way. By not taking appropriate follow-up action, negative 
attitudes may translate into actions, such as employee departures, 
among other things, that could have a detrimental effect on the 
transformation.[Footnote 3] According to the Office of Personnel 
Management (OPM), alternative personnel systems require employee buy-in 
to be effective.[Footnote 4] Thus, DOD employees and their 
representatives should be involved from the beginning, and without 
early consultation with DOD employees and their representatives, NSPS 
buy-in probably will not occur.

Questions from Senator Akaka:

1. The Government Accountability Office (GAO) has often reported on the 
importance of employee buy-in for any reorganization to be successful. 
However, the four largest unions at the Department of Homeland Security 
have filed a lawsuit to stop implementation of the new personnel 
system, and, based on testimony from Mr. Gage and Mr. Junemann, 
employees are not supportive of the new National Security Personnel 
System (NSPS) either. In your opinion, can either of these systems be 
successful given the lack of employee support?

Active and ongoing engagement and communication is critical for the 
successful development and implementation of both DHS's new personnel 
management system and DOD's human resources management system. Like 
DHS, DOD's efforts to date to involve labor unions have not been 
without controversy. In fact, 10 federal labor unions also have filed 
suit alleging that DOD failed to abide by the statutory requirements to 
include employee representatives in the development of DOD's new labor 
relations system authorized as part of NSPS.[Footnote 5] Since these 
suits currently are pending in federal court, I do not believe it would 
be appropriate to comment further on them at this time.

By including employees and their representatives in the planning 
process, organizations can increase their acceptance of organizational 
goals as well as improve motivation and morale.[Footnote 6] For NSPS to 
be a successful transformation, it must involve DOD employees and their 
representatives from the beginning of the process to gain their 
ownership for the changes that are occurring within the department. 
Employee involvement strengthens the transformation process by 
including frontline perspective and experiences. Further employee 
involvement helps to create the opportunity to establish new networks 
and break down existing organizational silos, increase employees' 
understanding and acceptance of organizational goals and objectives, 
gain ownership for new policies and procedures, and reduce related 
implementation risks.

Our prior work also indicates that engaging employee unions is a key 
practice to help involve employees and is crucial to achieving 
success.[Footnote 7] Thus, obtaining DOD union cooperation and support 
through effective labor-management relations can help achieve consensus 
on the planned changes, avoid misunderstandings, and more expeditiously 
resolve problems that occur. Organizations we studied involved unions 
and incorporated their input before finalizing decisions in such areas 
as redesigning work processes, changing work rules, or developing new 
job descriptions.

We have found that organizations undergoing a transformation should 
establish a communications strategy that creates shared expectations 
and seeks to genuinely involve stakeholders in the process. As we have 
noted in our prior testimonies on DHS's personnel management system and 
DOD's human resources management system,[Footnote 8] both departments 
will face multiple implementation challenges that include establishing 
overall communications strategies and involving employees in 
implementing the new systems. We believe that one of the most relevant 
implementation steps is for DHS and DOD to enhance two-way 
communication between employees, employee representatives, and 
management, including enhancing communication between top political 
appointees and labor leaders. Frequent and timely communication 
cultivates a strong relationship with management and helps gain 
employee ownership for a transformation like NSPS. But communication is 
not about just "pushing the message out" or seeking information without 
any meaningful response. It should facilitate a two-way honest exchange 
with and allow feedback from employees, employee representatives, 
customers, and stakeholders. Once employee feedback is received, it is 
important to acknowledge, consider, and use it to make any appropriate 
changes to the implementation of the transformation.

2. Mr. Junemann's written testimony proposes that GAO audit the 
training program for managers and employees for the performance 
appraisal process. What is your opinion of this recommendation, and 
would GAO be open to auditing the performance management training 
offered by all agencies?

The recommendation that GAO audit the training program for managers and 
employees has merit. GAO is willing to entertain a congressional 
request to evaluate DOD's training plan for the implementation and 
operations of NSPS. As part of our ongoing reviews of agencies' efforts 
to address their human capital challenges, we developed a framework to 
serve as a flexible and useful guide in assessing how agencies plan, 
design, implement, and evaluate effective training and development 
programs.[Footnote 9] We believe that these guides could prove helpful 
to DOD as it develops its NSPS training and development program.

For additional information on our work on human capital issues at DOD, 
please contact me on (202) 512-5500 or Derek B. Stewart, Director, 
Defense Capabilities and Management, on (202) 512-5559 or [Hyperlink, 
stewartd@gao.gov]. For further information on governmentwide human 
capital issues, please contact Eileen R. Larence, Director, Strategic 
Issues, at (202) 512-6510 or [Hyperlink, larencee@gao.gov].

Signed by:

David M. Walker:
Comptroller General of the United States:

(350706):

FOOTNOTES

[1] GAO, Human Capital: Preliminary Observations on Proposed DOD 
National Security Personnel System Regulations, GAO-05-432T 
(Washington, D.C.: Mar. 15, 2005).

[2] GAO, Results-Oriented Cultures: Implementation Steps to Assist 
Mergers and Organizational Transformations, GAO-03-669 (Washington, 
D.C.: July 2, 2003).

[3] GAO-03-669.

[4] OPM, Demonstration Projects and Alternative Personnel Systems: HR 
Flexibilities and Lessons Learned (Washington, D.C.: September 2001).

[5] See American Federation of Government Employees, AFL-CIO et al v. 
Rumsfeld et al, No. 1:05cv00367 (D.D.C. filed Feb. 23, 2005).

[6] GAO, Human Capital: Practices that Empowered and Involved 
Employees, GAO-01-1070 (Washington, D.C.: Sept. 14, 2001).

[7] GAO, A Model of Strategic Human Capital Management, GAO-02-373SP 
(Washington, D.C.: Mar. 15, 2002).

[8] GAO, Human Capital: Observations on Final DHS Human Capital 
Regulations, GAO-05-391T (Washington, D.C.: Mar. 2, 2005) and GAO-05-
432T.

[9] GAO, Human Capital: A Guide for Assessing Strategic Training and 
Development Efforts in the Federal Government, GAO-04-546G (Washington, 
D.C.: March 2004) and Human Capital: Selected Agencies' Experiences and 
Lessons Learned in Designing Training and Development Programs, GAO-04-
291 (Washington, D.C.: Jan. 30, 2004).