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Testimony: 

Before the Subcommittee on Federal Workforce, Postal Service, and the 
District of Columbia, Committee on Oversight and Government Reform, 
House of Representatives: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:00 a.m. EDT: 

Wednesday, April 22, 2009: 

Human Capital: 

Sustained Attention to Strategic Human Capital Management Needed: 

Statement of Yvonne D. Jones Director, Strategic Issues: 

GAO-09-632T: 

GAO Highlights: 

Highlights of GAO-09-632T, a testimony before the Subcommittee on 
Federal Workforce, Postal Service, and the District of Columbia, 
Committee on Oversight and Government Reform, House of Representatives. 

Why GAO Did This Study: 

In 2001, GAO identified human capital management as a governmentwide 
high-risk area because federal agencies lacked a strategic approach to 
human capital management that integrated human capital efforts with 
their missions and program goals. Progress has been made. However, the 
area remains high-risk because of a continuing need for a 
governmentwide framework to advance human capital reform. 

The importance of a top-notch federal workforce cannot be overstated. 
The federal government is facing new and growing challenges coupled 
with a retirement wave and the loss of leadership and institutional 
knowledge at all levels. The issues facing agencies are complex and 
require a broad range of technical skills that are also highly sought 
after by the private sector. 

This testimony, based on a large body of completed work issued from 
January 2001 through March 2009, focuses on executive branch agencies’ 
and the Office of Personnel Management’s (OPM) progress in addressing 
strategic human capital management challenges in four key areas: (1) 
leadership; (2) strategic human capital planning; (3) acquiring, 
developing, and retaining talent; and (4) results-oriented 
organizational culture. In prior reports, GAO has made a range of 
recommendations to OPM and agencies in the four areas. GAO is reporting 
on progress in addressing these recommendations and is making no new 
recommendations. 

What GAO Found: 

Congress, executive branch agencies, and OPM have taken action to 
reform federal human capital management, but federal agencies are 
facing new challenges. The recent need to quickly hire staff to carry 
out and oversee the Troubled Asset Relief Program and expanded agency 
responsibilities under the American Recovery and Reinvestment Act of 
2009 point to the need for sustained attention to help ensure that 
agencies have the right people with the right skills to meet new 
challenges. 

Leadership: Top leadership in agencies across the federal government 
must provide committed and inspired attention needed to address human 
capital and related organizational transformation issues. OPM has made 
strides in transforming itself as a strategic partner to help lead 
human capital reform efforts. For example, at the agency level, OPM 
works with the Chief Human Capital Officers council to develop and 
disseminate human capital guidance and relies upon the council members 
to communicate OPM policy and other human capital information 
throughout their agencies. 

Strategic human capital planning: Integrating succession planning and 
management efforts that focus on strengthening both current and future 
organizational capacity to obtain or develop the knowledge, skills, and 
abilities agencies need to meet their missions continues to be 
important. For example, GAO has reported on a challenge in the 
acquisition workforce where the workload and complexity of 
responsibilities have been increasing without adequate attention to the 
workforce’s size, skills and knowledge, and succession planning. 

Acquiring, developing, and retaining talent: Faced with a workforce 
that is becoming more retirement eligible and the need for a different 
mix of knowledge, skills, and competencies, it is important that 
agencies strengthen their efforts and use available flexibilities. 
Agencies have developed strategies to recruit needed talent, including 
turning to older experienced workers to fill knowledge and skills gaps. 
For example, the National Aeronautics and Space Administration has used 
a combination of techniques to recruit workers with critical skills, 
including targeted recruitment activities, educational outreach 
programs, improved compensation and benefits packages, and streamlined 
hiring authorities. 

Results-oriented organizational culture: In addition to promoting high 
performance and accountability to foster results-oriented cultures, it 
is important for agencies to develop and maintain inclusive and diverse 
workforces that reflect all segments of society. Agencies can benefit 
from strategies that offer a diverse pool of talent for selecting the 
agencies’ future leaders and recruiting new employees so that agencies 
can get a wider variety of perspectives and approaches. 

View [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-09-632T] or key 
components. For more information, contact Yvonne D. Jones at (202) 512-
6806 or jonesy@gao.gov 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

Thank you for the opportunity to be here today to discuss the state of 
the federal workforce and challenges in managing today's workforce and 
planning for tomorrow's. The importance of a top-notch federal 
workforce cannot be overstated. The issues facing agencies are complex 
and require a broad range of technical skills that are also highly 
sought after by the private sector. The nation is facing new and more 
complex challenges in the 21st century, including a large and growing 
long-term fiscal imbalance, evolving national and homeland security 
threats, increasing global interdependence, and the need to rethink 
relevant regulatory oversight structures in light of the turmoil in 
worldwide financial markets. The recent need to quickly hire staff to 
carry out and oversee the Troubled Asset Relief Program and expanded 
agency responsibilities under the American Recovery and Reinvestment 
Act of 2009 (Recovery Act) point to the need for sustained attention to 
help ensure that agencies have the right people with the right skills 
to meet new challenges.[Footnote 1] Specifically, the Department of the 
Treasury has the monumental task of managing and overseeing the 
government's efforts to stabilize the nation's financial system and 
restore the functioning of the nation's credit markets, which involves 
expediting the hiring of critical staff needed to carry out and oversee 
the Troubled Asset Relief Program.[Footnote 2] At the same time, the 
federal government faces the challenges of developing guidance and 
overseeing the implementation of the $787 billion Recovery Act, in 
partnership with the states, localities, and territories. 

To address these challenges, it will be important for federal agencies 
to change their cultures and create the institutional capacity to 
become high-performing organizations. This includes recruiting and 
retaining employees able to create, sustain, and thrive in 
organizations that are flatter, results-oriented, and externally 
focused and that collaborate with other governmental entities as well 
as with the private and nonprofit sectors to achieve desired outcomes. 
It will also be important for federal agencies to focus attention on 
management practices that increase the level of employee engagement as 
they seek to improve their operations within budget constraints and to 
compete for talent with the private sector. 

In 2001, we identified human capital management as a governmentwide 
high-risk area because federal agencies lacked a strategic approach to 
human capital management that integrated human capital efforts with 
their missions and program goals.[Footnote 3] Progress has been made. 
However, the area remains high-risk because of a continuing need for a 
governmentwide framework to advance human capital reform.[Footnote 4] 
This framework is vital to avoid further fragmentation within the civil 
service, ensure management flexibility as appropriate, allow a 
reasonable degree of consistency, provide adequate safeguards, and 
maintain a level playing field among agencies competing for talent. 

Today and in the near term, the federal workforce is facing a variety 
of a capacity challenges that could affect the ability of agencies to 
cost-effectively carry out their missions. For example, the federal 
government is facing a retirement wave and with it the loss of 
leadership and institutional knowledge at all levels. Governmentwide, 
about one-third of federal employees on board at the end of fiscal year 
2007 will become eligible to retire by 2012. Proportions of workers 
eligible to retire are projected to be especially high in certain 
occupations--some are mission critical, such as customs and border 
protection agents--as well as in key leadership positions. About 64 
percent of career executives may be eligible to retire by 
2012.[Footnote 5] In the current economic situation, projections of how 
many federal workers will actually retire upon becoming eligible remain 
unclear; however, these workers will eventually retire and the federal 
government needs to have the right people in the right jobs at the 
right time to meet the challenges it faces. 

Congress and the executive branch have taken steps to address the 
federal government's human capital shortfalls. For example, Congress 
provided agencies across the executive branch with additional human 
capital flexibilities, such as specific hiring authorities. While much 
progress has been made in the last few years to address human capital 
challenges, ample opportunities continue to exist for agencies to 
improve their strategic human capital management and for the Office of 
Personnel Management's (OPM) continued leadership in fostering and 
guiding improvements in these areas. 

My remarks today will focus on executive branch agencies' and OPM's 
progress in addressing strategic human capital management challenges in 
four key areas: (1) leadership; (2) strategic human capital planning; 
(3) acquiring, developing, and retaining talent; and (4) results- 
oriented organizational culture. This testimony is based on a large 
body of our completed work issued from January 2001 through March 2009. 
We conducted our work in accordance with all sections of GAO's Quality 
Assurance Framework that were relevant to the objectives of each 
engagement.[Footnote 6] 

Sustained Leadership Is Essential to Successful Human Capital 
Management: 

Top leadership in agencies across the federal government must provide 
committed and inspired attention needed to address human capital and 
related organizational transformation issues. Leaders must not only 
embrace reform, they must integrate the human capital function into 
their agencies' core planning and business activities. Senior executive 
leadership is especially key today as the federal government faces 
significant efforts to transform to address key challenges. OPM's 2008 
Federal Human Capital Survey results showed that the government needs 
to establish a more effective leadership corps.[Footnote 7] 
Specifically, of the employees responding to the survey, a little over 
half reported a high level of respect for their senior leaders and a 
little less than half are satisfied with the information they receive 
from management on what is going on in the organization. The percentage 
of positive results for these questions has increased slightly since 
the last survey was conducted in 2006. 

OPM plays a key role in fostering and guiding improvements in all areas 
of strategic human capital management in the executive branch. As part 
of its key leadership role, OPM can assist in--and, as appropriate, 
require--the building of infrastructures within agencies needed to 
successfully implement and sustain human capital reforms and related 
initiatives. OPM can do this in part by encouraging continuous 
improvement and providing appropriate assistance to support agencies' 
efforts in areas such as acquiring, developing, and retaining talent. 
We have reported that OPM has made commendable efforts in transforming 
itself from less of a rule maker, enforcer, and independent agent to 
more of a consultant, toolmaker, and strategic partner in leading and 
supporting executive agencies' human capital management 
systems.[Footnote 8] However, OPM has faced challenges in its internal 
capacity to assist and guide agencies' readiness to implement change, 
such as the certification process for the senior executive performance- 
based pay system, and will need to address these challenges. 
Specifically, in October 2007, we reported that OPM has strategies in 
place, such as workforce and succession management plans, that are 
aligned with selected leading practices relevant to the agency's 
capacity to fulfill its strategic goals.[Footnote 9] However, at the 
time, OPM lacked a well-documented agencywide evaluation process of 
some of its workforce planning efforts. In response to our 
recommendation, OPM recently developed an automated tracking system to 
monitor training so that agency officials could target it on priority 
areas. 

OPM also faces challenges in modernizing the paper-intensive processes 
and antiquated information systems it uses to support the retirement of 
civilian federal employees through the retirement modernization 
program. This modernization program is important because OPM estimates 
a growing volume of retirement processing over the next several years 
given projected retirement trends. In January 2008, we reported that 
the agency's management of this initiative in areas that are important 
to successful deployment of new systems had not ensured that components 
would perform as intended.[Footnote 10] For example, at that point in 
time, OPM had not addressed weaknesses in its approaches to testing 
system components and managing system defects to ensure that the new 
system components will perform as intended. In addition, OPM had yet to 
develop a reliable program cost estimate and the measurement baseline 
against which program progress can be determined. To date, the agency 
continues to have retirement modernization planning and management 
shortcomings that need to be addressed. The results of our most recent 
review of the modernization program are expected to be released by the 
end of April 2009. 

To help support federal agencies with expanded responsibilities under 
the Recovery Act, OPM has provided information, tools, and training to 
federal agencies to help address these new human capital challenges and 
ensure that agencies acquire the talent they need. For example, in 
March 2009, OPM held an interagency forum on approaches to meet the 
Recovery Act's human capital management support requirements. At that 
event, OPM provided information on the various human capital 
flexibilities available to agencies for hiring the necessary employees, 
such as 30-day emergency appointments, and on how OPM can provide 
assistance. In addition, OPM has begun facilitating coordination with 
the Federal Executive Boards across the nation to share agency plans 
and activities for the Recovery Act implementation. Areas of 
coordination include shared approaches to filling human capital needs 
and ensuring coordination of agency programs to avoid duplication. 

Congress also recognized that increased attention to strategic human 
capital management was needed in federal agencies. In 2002, Congress 
created the chief human capital officer (CHCO) position in 24 agencies 
to advise and assist the head of the agency and other agency officials 
in their strategic human capital management efforts.[Footnote 11] The 
CHCO Council--chaired by the OPM Director--advises and coordinates the 
activities of members' agencies, OPM, and the Office of Management and 
Budget (OMB) on such matters as the modernization of human resources 
systems, improved quality of human resources information, and 
legislation affecting human resources operations and organizations. The 
council, which has been in operation for nearly 6 years, has organized 
itself to address key current and emerging human capital issues. For 
example, in its fiscal year 2008 annual report to Congress, the council 
identified three emerging issues: (1) managing the public expectations 
of the federal response to highly complex issues, (2) building and 
sustaining federal employee leadership, and (3) transforming the human 
resources profession to meet challenges. Its subcommittee structure is 
intended to align with the overarching strategic human capital 
initiatives affecting the federal government and includes subcommittees 
on hiring and succession planning, the human capital workforce, and 
human resources line of business. 

OPM works with the CHCO Council to develop and disseminate human 
capital guidance and relies upon the council members to communicate OPM 
policy and other human capital information throughout their 
agencies.[Footnote 12] For example, we recently reported that inquiries 
from the council about how to request a waiver to rehire annuitants 
without reducing their salaries led OPM officials to develop a template 
for agencies to use in submitting these requests. OPM officials see 
their relationship with the council and the agencies it represents as a 
partnership and shared responsibility to ensure that the latest 
guidance and practices are disseminated throughout the agencies. In 
addition to the council meetings, the CHCO Council Training Academy is 
a forum for CHCOs and other agency officials to discuss human capital 
issues and share best practices. OPM has invited all levels of agency 
officials--not just CHCOs--to attend the academy sessions when relevant 
topics were featured. For example, over the last 2 years, the council 
has held several academy sessions related to Senior Executive Service 
(SES) performance management and pay systems and lessons learned from 
the governmentwide SES survey results. 

Strategic Human Capital Planning Is Critical to Addressing Workforce 
Challenges: 

Strategic human capital planning that is integrated with broader 
organizational strategic planning is critical to ensuring that agencies 
have the talent and skill mix they need to address their current and 
emerging human capital challenges, especially as the federal government 
faces a retirement wave.[Footnote 13] Agencies must determine the 
critical skills and competencies necessary to achieve programmatic 
goals and develop strategies that are tailored to address any 
identified gaps. Further, agencies are to develop strategic human 
capital plans with goals, objectives, and measures and report their 
progress toward these goals and objectives in annual reports to OPM as 
required by OPM's Human Capital Assessment and Accountability 
Framework. 

We have found that leading organizations go beyond a succession 
planning approach that focuses on simply replacing individuals and 
instead engage in broad, integrated succession planning and management 
efforts that focus on strengthening both current and future 
organizational capacity to obtain or develop the knowledge, skills, and 
abilities they need to carry out their missions.[Footnote 14] For 
example, we recently reported on the Social Security Administration's 
(SSA) use of information technology in projecting future retirements 
and identifying the necessary steps to fill these gaps.[Footnote 15] 
Specifically, SSA developed a complex statistical model that uses 
historical data to project who is likely to retire, and SSA uses these 
projections to estimate gaps in mission-critical positions and to 
identify what components of the agency could be most affected by the 
upcoming retirements. With these estimates, the agency develops action 
plans focused on hiring, retention, and staff development. As a result 
of using these models, SSA has developed targeted recruitment efforts 
that extend to a broad pool of candidates. To create this pool, SSA is 
also beginning to reach out to older workers in order to achieve one of 
its diversity goals--attracting a multigenerational workforce--by 
developing recruiting material featuring images of older and younger 
workers and offering a phased retirement program, among other things. 

An example of the federal government's strategic human capital planning 
challenges involves its acquisition workforce. In 2007, we testified 
that much of the acquisition workforce's workload and complexity of 
responsibilities have been increasing without adequate attention to the 
workforce's size, skills and knowledge, and succession 
planning.[Footnote 16] Over the years, a strategic approach had not 
been taken across government or within agencies to focus on workforce 
challenges, such as creating a positive image essential to successfully 
recruit and retain a new generation of talented acquisition 
professionals.[Footnote 17] In addition, we recently reported that the 
Department of Defense (DOD) lacks critical departmentwide information 
to ensure its acquisition workforce is sufficient to meet its national 
security mission.[Footnote 18] As a result, we made several 
recommendations to DOD aimed at improving DOD's management and 
oversight of its acquisition workforce, including the collection of 
data on contractor personnel. The challenges agencies are facing with 
managing acquisitions, including sustaining a capable and accountable 
acquisition workforce, contributed to GAO's designation of the 
management and use of interagency contracting as a governmentwide high- 
risk area in 2005.[Footnote 19] Further, in our most recent high-risk 
update, acquisition and contract management remains a high-risk area at 
three agencies--DOD, the Department of Energy, and the National 
Aeronautics and Space Administration (NASA)--as does DOD's weapon 
system acquisition. Addressing these challenges will require sustained 
management attention and leadership at both the agency level and from 
organizations such as OMB and its Office of Federal Procurement Policy. 

In May 2008, we reported that the Centers for Disease Control and 
Prevention (CDC) had made improvements in its strategic human capital 
planning, but the agency should take a more strategic view of its 
contractor workforce--more than one-third of its workforce.[Footnote 
20] For example, CDC conducted a preliminary workforce analysis to 
determine the skills and competencies needed to achieve the agency's 
mission and goals, including identifying skill and competency gaps. 
While the agency had not completed its analyses of skill and competency 
gaps for the occupations it deemed most critical when the strategic 
human capital management plan was developed, at the time of our report, 
the agency was completing these analyses. CDC's strategic human capital 
management plan did not address the challenge of managing a blended 
workforce with a large percentage of contractors working with federal 
staff. We reported that without addressing this challenge CDC's plan 
would not give the agency a strategic view of its governmental and 
contractor workforce and thus might not be as useful as it could be in 
assisting the agency with strategic human capital planning for its 
entire workforce. In response to our recommendation to address this 
challenge in its plan, CDC's most recent update to its strategic human 
capital management plan includes an effort to develop, implement, and 
evaluate strategies to address management of contractors as part of a 
blended workforce. 

Acquiring, Developing, and Retaining Talent Remains a Federal Workforce 
Challenge: 

Faced with a workforce that is becoming more retirement eligible and 
the need for a different mix of knowledge, skills, and competencies, it 
is important that agencies strengthen their efforts and use of 
available flexibilities from Congress and OPM to acquire, develop, 
motivate, and retain talent. For years it has been widely recognized 
that the federal hiring process all too often does not meet the needs 
of (1) agencies in achieving their missions; (2) managers in filling 
positions with the right talent; and (3) applicants for a timely, 
efficient, transparent, and merit-based process. In short, the federal 
hiring process is often an impediment to the very customers it is 
designed to serve in that it makes it difficult for agencies and 
managers to obtain the right people with the right skills, and 
applicants can be dissuaded from public service because of the complex 
and lengthy procedures. 

In recent years, Congress and OPM have taken a series of important 
actions to improve recruiting and hiring in the federal sector. For 
example, Congress has provided agencies with enhanced authority to pay 
recruitment bonuses and with the authority to credit relevant private 
sector experience when computing annual leave amounts.[Footnote 21] In 
addition, Congress has provided agencies with hiring flexibilities that 
(1) permit agencies to appoint individuals to positions through a 
streamlined hiring process where there is a severe shortage of 
qualified candidates or a critical hiring need, and (2) allow agency 
managers more latitude in selecting among qualified candidates through 
category rating.[Footnote 22] 

As the federal government's central personnel management agency, OPM 
has a key role in helping agencies acquire, develop, retain, and manage 
their human capital. In the areas of recruiting and hiring, OPM has, 
for example, done the following. 

* Authorized governmentwide direct-hire authority for veterinarian 
medical officer positions given the severe shortage of candidates for 
these positions. Recently, we reported that despite a growing shortage 
of veterinarians, the federal government does not have a comprehensive 
understanding of the sufficiency of its veterinarian workforce for 
routine program activities.[Footnote 23] In response to our findings, 
OPM granted direct-hire authority for these positions governmentwide. 

* Launched an 80-day hiring model to help speed up the hiring process, 
issued guidance on the use of hiring authorities and flexibilities, and 
developed a Hiring Tool Kit to assist agency officials in determining 
the appropriate hiring flexibilities to use given their specific 
situations. 

* Established standardized vacancy announcement templates for common 
occupations, such as secretarial, accounting, and accounting technician 
positions, in which agencies can insert summary information concerning 
their specific jobs prior to posting for public announcement. 

* Developed a guide called Career Patterns that is intended to help 
agencies recruit a diverse, multigenerational workforce. This guide 
presents career pattern scenarios that characterize segments of the 
general labor market according to career-related factors, such as 
commitment to a mission and experience, and lists characteristics of 
the work environment that some cohorts may find particularly attractive 
and related human capital policies that agencies could use to recruit 
and retain potential employees. 

* Updated and expanded its report Human Resources Flexibilities and 
Authorities in the Federal Government, which serves as a handbook for 
agencies in identifying current flexibilities and authorities and how 
they can be used to address human capital challenges. 

Individual federal agencies have also taken actions to meet their 
specific needs for acquiring the necessary talent, while other agencies 
have faced difficulties. For example, NASA has used a combination of 
techniques to recruit workers with critical skills, including targeted 
recruitment activities, educational outreach programs, improved 
compensation and benefits packages, professional development programs, 
and streamlined hiring authorities.[Footnote 24] Many of NASA's 
external hires have been for entry-level positions through the 
Cooperative Education Program, which provides NASA centers with the 
opportunity to develop and train future employees and assess the 
abilities of potential employees before making them permanent job 
offers. 

Further, the Nuclear Regulatory Commission (NRC) has endeavored to 
align its human capital planning framework with its strategic goals and 
identified the activities needed to achieve a diverse, skilled 
workforce and an infrastructure that supports the agency's mission and 
goals.[Footnote 25] NRC has used various flexibilities in recruiting 
and hiring new employees, and it has tracked the frequency and cost 
associated with the use of some flexibilities. While there was room for 
further improvement, NRC has been effective in recruiting, developing, 
and retaining a critically skilled workforce. 

We have reported in recent years on a number of human capital issues 
that have hampered the Department of State's (State) ability to carry 
out U.S. foreign policy priorities and objectives, particularly at 
posts central to the war on terror.[Footnote 26] In August 2007, we 
testified that State has made progress in addressing staffing shortages 
over the last few years, but it remains a problem. To help address the 
shortages, State has implemented various incentives particularly at 
critical hardship posts, including offering extra pay to officers who 
serve an additional year at these posts and allowing employees to 
negotiate shorter tours of duty. Further, State has made progress in 
increasing its foreign language capabilities, but significant language 
gaps remain. In response to our recommendations to enhance the language 
proficiency of State's staff, officials told us that the department has 
placed an increased focus on language training in critical areas. State 
has also implemented a new initiative that would provide additional pay 
incentives for staff if they chose to be reassigned to use existing 
Arabic language skills. 

The Partnership for Public Service (Partnership) recently reported that 
governmentwide, agencies were not using the student intern hiring 
flexibility to the full extent possible.[Footnote 27] Governmentwide, 
agencies have the authority to hire student interns through the Student 
Career Experience Program with the option of a noncompetitive 
conversion to the competitive service upon a student's satisfactory 
completion of diploma, degree, or certificate of program requirements 
and work experience.[Footnote 28] In its recent interagency forum on 
human capital management under the Recovery Act, OPM highlighted this 
hiring flexibility as a useful tool for bringing potential employees on 
board. The Partnership found that about 7 percent of student interns 
employed by federal agencies in 2007 were hired into permanent 
jobs.[Footnote 29] The Partnership suggested that the federal 
government should, among other things, prioritize student internships 
as key talent sources for entry-level jobs and then recruit accordingly 
and provide adequate resource to these programs; and collect data 
enabling a clear evaluation of all intern programs and ensure that 
agencies are making the best use of their authority to build their 
critical workforce pipelines. 

Further, agencies have a variety of options to tap older, experienced 
workers to fill workforce needs, including retaining workers past 
initial retirement eligibility, hiring new older workers, and bringing 
back retired federal annuitants. Recently, we reported on selected 
federal agencies' approaches to using older workers to address future 
critical gaps in leadership, skills, and institutional 
knowledge.[Footnote 30] For example, the United States Agency for 
International Development tends to bring back its retirees, many of 
whom have specialized knowledge and skills, as contractors to fill 
short-term job assignments and to help train and develop the agency's 
growing number of newly hired staff. 

As for retention, in many ways, the federal government is well 
positioned to retain the people it needs to carry out its diverse roles 
and responsibilities. Importantly, federal employment offers rewards, 
such as interesting work and opportunities to make a difference in the 
lives of others, as well as a variety of tangible benefits and work- 
life flexibilities that make an organization an employer of choice. We 
have stated that agencies need to reexamine the flexibilities provided 
to them under current authorities--such as monetary recruitment and 
retention incentives; special hiring authorities, including student 
employment programs; and work-life programs, including alternative work 
schedules, child care assistance, telework opportunities, and transit 
subsidies--and identify those that could be used more extensively or 
more effectively to meet their workforce needs.[Footnote 31] In using 
telework and other flexibilities, it is important for agencies to have 
clear goals so that they can assess their programs and develop and 
implement changes necessary to improve their success.[Footnote 32] 

We have found instances where agency officials cited their telework 
programs as yielding positive work-life and other benefits.[Footnote 
33] For example, according to U.S. Patent and Trademark Office (USPTO) 
management officials, one of the three most effective retention 
incentives and flexibilities is the opportunity to work from remote 
locations.[Footnote 34] In fiscal year 2006, approximately 20 percent 
of patent examiners participated in the agency's telework program, 
which allows patent examiners to conduct some or all of their work away 
from their official duty station 1 or more days per week. In addition, 
USPTO reported in June 2007 that approximately 910 patent examiners 
relinquished their office space to work from home 4 days per week. The 
agency believes its decision to incorporate telework as a corporate 
business strategy and for human capital flexibility will help 
recruitment and retention of its workforce, reduce traffic congestion 
in the national capital region, and, in a very competitive job market, 
enable USPTO to hire approximately 6,000 new patent examiners over the 
next 5 years. 

Results-Oriented Organizational Culture Is Key to Successful 
Transformations: 

Leading organizations have found that to successfully transform 
themselves they must often fundamentally change their cultures so that 
they are more results-oriented, customer-focused, and collaborative in 
nature. An effective performance management system is critical to 
achieving this cultural transformation. Having a performance management 
system that creates a "line of sight" showing how unit and individual 
performance can contribute to overall organizational goals helps 
individuals understand the connection between their daily activities 
and the organization's success. Similarly, in its September 2008 report 
on employee engagement, the Merit Systems Protection Board recommended 
that managers establish a clear line of employee-to-agency sight as a 
means to increase employee engagement, recognizing that employees are 
more engaged if they find more meaning in their work.[Footnote 35] 

The federal government's senior executives need to lead the way in 
transforming their agencies' cultures. Credible performance management 
systems that align individual, team, and unit performance with 
organizational results can help manage and direct this process. The 
performance-based pay system for members of the SES, which seeks to 
provide a clear and direct linkage between individual performance and 
organizational results as well as pay, is an important step in 
governmentwide transformation. In November 2008, we reported that 
selected agencies had designed their SES performance appraisal systems 
to address OPM's and OMB's certification requirements of aligning 
individual performance expectations with organizational goals and 
factoring organizational performance into senior executive performance 
appraisal decisions.[Footnote 36] For example, in setting expectations 
for individual performance plans, the Department of Energy requires 
senior executives and supervisors to identify key performance 
requirements with metrics that the executive must accomplish in order 
for the agency to achieve its strategic goals. Weighted at 60 percent 
of the summary rating, the performance requirements are to be specific 
to the executive's position and described in terms of specific results 
with clear, credible measures (e.g., quality, quantity, timeliness, 
cost-effectiveness) of performance, rather than activities. For each 
performance requirement, the executive is to identify the applicable 
strategic goal in the performance plan. While many agencies across the 
government are doing a good job overall of aligning executive 
performance plans with agency mission and goals, according to OPM, some 
of the plans do not fully identify the measures used to determine 
whether the executive is achieving the necessary results, which can 
affect the executive's overall performance appraisal. This challenge of 
explicitly linking senior executive expectations to results-oriented 
organizational goals is consistent with findings from our past work on 
performance management.[Footnote 37] 

In addition to promoting high performance and accountability to foster 
results-oriented cultures, leading organizations develop and maintain 
inclusive and diverse workforces that reflect all segments of society. 
Such organizations typically foster a work environment in which people 
are enabled and motivated to contribute to continuous learning and 
improvement as well as mission accomplishment and provide both 
accountability and fairness for all employees. As with any 
organizational change effort, having a diverse top leadership corps is 
an organizational strength that can bring a wider variety of 
perspectives and approaches to bear on policy development and 
implementation, strategic planning, problem solving, and decision 
making. We recently reported on the diversity of the SES and the SES 
developmental pool, from which most SES candidates are selected, noting 
that the representation of women and minorities in the SES increased 
governmentwide from October 2000 through September 2007, but increases 
did not occur in all major executive branch agencies.[Footnote 38] 

In helping to ensure diversity in the pipeline for appointments to the 
SES as well as recruitment at all levels, it is important that agencies 
have strategies to identify and develop a diverse pool of talent for 
selecting the agencies' potential future leaders and to reach out to a 
diverse pool of talent when recruiting. For example, to recruit diverse 
applicants, agencies will need to consider active recruitment 
strategies such as widening the selection of schools from which to 
recruit, building formal relationships with targeted schools to ensure 
the cultivation of talent for future applicant pools, and partnering 
with multicultural organizations to communicate their commitment to 
diversity and to build, strengthen, and maintain 
relationships.[Footnote 39] We reported, for example, that NASA 
developed a strategy for recruiting Hispanics that focuses on 
increasing educational attainment, beginning in kindergarten and 
continuing into college and graduate school, with the goal of 
attracting students into the NASA workforce and aerospace community. 
NASA said it must compete with the private sector for the pool of 
Hispanics qualified for aerospace engineering positions, which is often 
attracted to more lucrative employment opportunities in the private 
sector in more preferable locations.[Footnote 40] NASA centers 
sponsored, and its employees participated in, mentoring, tutoring, and 
other programs to encourage Hispanic and other students to pursue 
careers in science, engineering, technology, and mathematics. 

Mr. Chairman and Members of the Subcommittee, this completes my 
prepared statement. I would be pleased to respond to any questions you 
or others may have at this time. 

Contacts and Acknowledgments: 

For further information regarding this statement, please contact Yvonne 
D. Jones, Director, Strategic Issues, at (202) 512-6806 or 
jonesy@gao.gov. Contact points for our Offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
statement. Individuals making key contributions to this testimony 
include Belva Martin, Assistant Director; Karin Fangman; Janice 
Latimer; and Jessica Thomsen. 

[End of section] 

Footnotes: 

[1] Pub. L. No. 111-5, 23 Stat. 115 (Feb. 17, 2009). 

[2] GAO, Troubled Asset Relief Program: March 2009 Status of Efforts to 
Address Transparency and Accountability Issues, GAO-09-504 (Washington, 
D.C.: Mar. 31, 2009). 

[3] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-01-263] (Washington, D.C.: January 
2001). 

[4] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: January 
2009). 

[5] GAO, Older Workers: Enhanced Communication among Federal Agencies 
Could Improve Strategies for Hiring and Retaining Experienced Workers, 
[hyperlink, http://www.gao.gov/products/GAO-09-206] (Washington, D.C.: 
Feb. 24, 2009). 

[6] The framework requires that we plan and perform each engagement to 
obtain sufficient and appropriate evidence to meet our stated 
objectives and to discuss any limitations in our work. We believe that 
the information and data obtained, and the analyses conducted, provided 
a reasonable basis for the findings and conclusions in each report. 

[7] Office of Personnel Management, 2008 Federal Human Capital Survey: 
Results from the 2008 Federal Human Capital Survey (Washington, D.C.: 
Jan. 8, 2009). 

[8] GAO, Office of Personnel Management: Key Lessons Learned to Date 
for Strengthening Capacity to Lead and Implement Human Capital Reforms, 
[hyperlink, http://www.gao.gov/products/GAO-07-90] (Washington, D.C.: 
Jan. 19, 2007). 

[9] GAO, Office of Personnel Management: Opportunities Exist to Build 
on Recent Progress in Internal Human Capital Capacity, [hyperlink, 
http://www.gao.gov/products/GAO-08-11] (Washington, D.C.: Oct. 31, 
2007). 

[10] GAO, Office of Personnel Management: Improvements Needed to Ensure 
Successful Retirement Systems Modernization, [hyperlink, 
http://www.gao.gov/products/GAO-08-345] (Washington, D.C.: Jan. 31, 
2008). 

[11] Chief Human Capital Officers Act of 2002, Title XIII of the 
Homeland Security Act of 2002. Pub. L. No. 107-296 (Nov. 25, 2002). 

[12] [hyperlink, http://www.gao.gov/products/GAO-09-206]. 

[13] For more information, see GAO, Human Capital: Key Principles for 
Effective Strategic Workforce Planning, [hyperlink, 
http://www.gao.gov/products/GAO-04-39] (Washington, D.C.: Dec. 11, 
2003). 

[14] GAO, Human Capital: Succession Planning and Management Is Critical 
Driver of Organizational Transformation, [hyperlink, 
http://www.gao.gov/products/GAO-04-127T] (Washington, D.C.: Oct. 1, 
2003). 

[15] [hyperlink, http://www.gao.gov/products/GAO-09-206]. 

[16] GAO, Federal Acquisitions and Contracting: Systemic Challenges 
Need Attention, [hyperlink, http://www.gao.gov/products/GAO-07-1098T] 
(Washington, D.C.: July 17, 2007). 

[17] GAO, Highlights of a GAO Forum: Federal Acquisition Challenges and 
Opportunities in the 21st Century, [hyperlink, 
http://www.gao.gov/products/GAO-07-45SP] (Washington, D.C.: Oct. 6, 
2006). 

[18] GAO, Department of Defense: Additional Actions Are Needed to 
Effectively Manage and Oversee DOD's Acquisition Workforce, [hyperlink, 
http://www.gao.gov/products/GAO-09-342] (Washington, D.C.: Mar. 25, 
2009). 

[19] [hyperlink, http://www.gao.gov/products/GAO-09-271]. 

[20] GAO, Centers for Disease Control and Prevention: Human Capital 
Planning Has Improved, but Strategic View of Contractor Workforce Is 
Needed, [hyperlink, http://www.gao.gov/products/GAO-08-582] 
(Washington, D.C.: May 28, 2008). 

[21] Federal Workforce Flexibility Act of 2004, Pub. L. No. 108-411 
(Oct. 30, 2004). 

[22] Pub. L. No. 107-296. 

[23] GAO, Veterinarian Workforce: Actions Are Needed to Ensure 
Sufficient Capacity for Protecting Public and Animal Health, 
[hyperlink, http://www.gao.gov/products/GAO-09-178] (Washington, D.C.: 
Feb. 4, 2009). 

[24] GAO, NASA: Progress Made on Strategic Human Capital Management, 
but Future Program Challenges Remain, [hyperlink, 
http://www.gao.gov/products/GAO-07-1004] (Washington, D.C.: Aug. 8, 
2007). 

[25] GAO, Human Capital: Retirements and Anticipated New Reactor 
Applications Will Challenge NRC's Workforce, [hyperlink, 
http://www.gao.gov/products/GAO-07-105] (Washington, D.C.: Jan. 17, 
2007). 

[26] GAO, State Department: Staffing and Foreign Language Shortfalls 
Persist Despite Initiatives to Address Gaps, [hyperlink, 
http://www.gao.gov/products/GAO-07-1154T] (Washington, D.C.: Aug. 1, 
2007), and Department of State: Staffing and Foreign Language 
Shortfalls Persist Despite Initiatives to Address Gaps, [hyperlink, 
http://www.gao.gov/products/GAO-06-894] (Washington, D.C.: Aug. 4, 
2006). 

[27] Partnership for Public Service, Leaving Talent on the Table: The 
Need to Capitalize on High Performing Student Interns (Washington, 
D.C.: April 2009). 

[28] 5 C.F.R. 213.3202 (b). 

[29] The Partnership analyzed data from two student intern programs-- 
Student Career Experience Program and Student Temporary Experience 
Program. The temporary program is not designed for student conversion 
to permanent government employment, in which the majority of the 
interns in this study were enrolled. 

[30] [hyperlink, http://www.gao.gov/products/GAO-09-206]. 

[31] GAO, Human Capital: Transforming Federal Recruiting and Hiring 
Efforts, [hyperlink, http://www.gao.gov/products/GAO-08-762T] 
(Washington, D.C.: May 8, 2008), and GAO, Human Capital: Effective Use 
of Flexibilities Can Assist Agencies in Managing Their Workforces, 
[hyperlink, http://www.gao.gov/products/GAO-03-2] (Washington, D.C.: 
Dec. 6, 2002). 

[32] GAO, Human Capital: Telework Programs Need Clear Goals and 
Reliable Data, [hyperlink, http://www.gao.gov/products/GAO-08-261T] 
(Washington, D.C.: Nov. 6, 2007). 

[33] [hyperlink, http://www.gao.gov/products/GAO-08-261T]. 

[34] GAO, U.S. Patent and Trademark Office: Hiring Efforts Are Not 
Sufficient to Reduce the Patent Application Backlog, [hyperlink, 
http://www.gao.gov/products/GAO-07-1102] (Washington, D.C.: Sept. 4, 
2007). 

[35] Merit Systems Protection Board, The Power of Federal Employee 
Engagement (Washington, D.C.: September 2008). 

[36] GAO, Results-Oriented Management: Opportunities Exist for Refining 
the Oversight and Implementation of the Senior Executive Performance- 
Based Pay System, [hyperlink, http://www.gao.gov/products/GAO-09-82] 
(Washington, D.C.: Nov. 21, 2008). 

[37] GAO, Human Capital: Senior Executive Performance Management Can Be 
Significantly Strengthened to Achieve Results, [hyperlink, 
http://www.gao.gov/products/GAO-04-614] (Washington, D.C.: May 26, 
2004). 

[38] GAO, Human Capital: Diversity in the Federal SES and Processes for 
Selecting New Executives, [hyperlink, http://www.gao.gov/products/GAO-
09-110] (Washington, D.C.: Nov. 26, 2008). 

[39] GAO, Diversity Management: Expert-Identified Leading Practices and 
Agency Examples, [hyperlink, http://www.gao.gov/products/GAO-05-90] 
(Washington, D.C.: Jan. 14, 2005). 

[40] GAO, The Federal Workforce: Additional Insights Could Enhance 
Agency Efforts Related to Hispanic Representation, [hyperlink, 
http://www.gao.gov/products/GAO-06-832] (Washington, D.C.: Aug. 17, 
2006).

[End of section] 

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