Strategic Management of Human Capital - High Risk Issue
Federal agencies face a number of challenges as they attempt to build a workforce, ensure effective leadership, strategically manage critical skills gaps, and manage employee performance. The skills gaps within individual federal agencies and government-wide are of particular concern because they can lead to costly, less-efficient government.
Because skills gaps within individual federal agencies—as well as across the federal workforce—can lead to costly, less-efficient government, the issue has been identified as the focus of the Strategic Human Capital Management GAO high-risk area since February 2011. Effective talent management, agency leadership, and performance management are all part of how agencies can ensure they have the right mix of skills to accomplish their missions.
Strategic Workforce Planning
Federal agencies must address critical skills shortages across the government, such as cybersecurity, acquisition management, and foreign language capabilities. Moreover, if not carefully managed, anticipated retirements could widen skills gaps or open new ones, adversely affecting agencies’ capabilities. As shown in the figure below, more than 34 percent of federal employees on board by the end of fiscal year 2015 will be eligible to retire by 2020.
Notes: Our calculations include permanent employees in the competitive service, the excepted service, and the senior executive service with all work schedules (e.g. full time, part time, seasonal, and intermittent). Retirement eligibility is not affected by work schedule. Temporary and term employees are excluded.
“Eligible to retire” is defined as the year in which a person is first eligible for retirement with unreduced annuity.
Data are from the OPM Enterprise Human Resources Integration (EHRI) database.
EHRI covers federal civilian employees at most Executive Branch agencies and some Legislative Branch agencies. Among those agencies excluded from EHRI are the Central Intelligence Agency and other intelligence organizations; the U.S. Postal Service; Tennessee Valley Authority; and the White House Office.
The total number of employees included in our calculations on Jan. 17, 2017 is 1,712,547.
Federal agencies need a hiring process that is applicant-friendly, flexible, and meets policy requirements, such as hiring on the basis of merit. The federal classification system (the GS system) was designed to (among other things) uphold the merit system principle of equal pay for equal work. However, the GS system has not kept pace with the government’s evolving requirements—it must modernize and become more effective at meeting the needs of the workforce.
Additionally, employee engagement can translate into higher levels of organizational performance. There are six drivers of federal employee engagement that can help strengthen engagement levels, such as support for constructive performance conversations, career development and training, and work-life balance.
Federal agencies must also train staff in accordance with key priorities. Cost-effective training programs can help develop necessary skills (particularly for federal leaders).
Human Capital Leadership
Federal agency leaders can support human capital management by implementing leading practices in areas such as strategic workforce planning, training, performance management, recruitment and hiring, and diversity management. Moreover, given the budgetary and long-term fiscal challenges facing the nation, agencies must identify options to meet their missions with fewer resources, such as strengthening coordination to address a fragmented human capital community and creating more agile talent management to address inflexibilities in the current system.
There are a number of tools that can help build a results-oriented culture within the federal government. For example, an effective employee performance management system—one that creates a clear link between individual performance and organizational results (particularly for federal leadership)—can drive internal change and achieve desired results. However, developing modern, credible, and effective employee performance management systems and dealing with poor performers have been long-standing challenges for federal agencies.
While many human capital issues apply to the whole federal government, others are unique to particular agencies. For example, the Department of the Interior should explore the expanded use of existing authorities, such as recruitment and retention incentives, to ensure that it has a sufficient number of geologists, petroleum engineers, and geophysicists to oversee oil and gas resources. Additionally, the Veterans Health Administration needs to evaluate the training of its recruiters to ensure an adequate and qualified nurse workforce, and the Small Business Administration should develop workforce assessments to reflect the reorganization of key loan processing functions.
GAO-16-521: Published: Aug 2, 2016. Publicly Released: Sep 1, 2016.
A hiring authority is the law, executive order, or regulation that allows an agency to hire a person into the federal civil service. Of the 105 hiring authorities used in fiscal year 2014, agencies relied on 20 for 91 percent of the 196,226 new appointments made that year. Office of Personnel Management (OPM) officials said they do not know if agencies rely on a small number of authorities because...
GAO-15-585: Published: Jul 14, 2015. Publicly Released: Jul 15, 2015.
From 2006 through 2014, government-wide engagement levels—as measured by the Office of Personnel Management's (OPM) Employee Engagement Index (EEI)—increased to an estimated high of 67 percent in 2011 and then declined to an estimated 63 percent in 2014. This decline is attributable to several large agencies—including the Department of Defense—bringing down the government-wide average. The...
GAO-15-191: Published: Feb 6, 2015. Publicly Released: Mar 9, 2015.
Federal agencies have three avenues to address employees' poor performance:Day-to-day performance management activities (such as providing regular performance feedback to employees) can produce more desirable outcomes for agencies and employees than dismissal options. However, supervisors do not always have effective skills, such as the ability to identify, communicate, and help address employee p...
GAO-15-223: Published: Jan 30, 2015. Publicly Released: Jan 30, 2015.
Lessons learned from initial efforts to try to close skills gaps could strengthen future approaches. For example, the Chief Human Capital Officer (CHCO) Council Working Group (Working Group) identified skills gaps in six government-wide occupations, such as cybersecurity and auditors. Although this effort was an important step forward, GAO's work has identified skills gaps in nearly two dozen occu...
GAO-14-677: Published: Jul 31, 2014. Publicly Released: Sep 2, 2014.
GAO's analysis of subject matter specialists' comments, related literature, and interviews with Office of Personnel Management (OPM) officials identified a number of important characteristics for a modern, effective classification system, which GAO consolidated into eight key attributes (see table below). GAO's analysis shows that in concept the current General Schedule (GS) classification system'...
GAO-17-233: Published: Apr 27, 2017. Publicly Released: Apr 27, 2017.
The Nuclear Regulatory Commission has reduced its staff since 2011after expected growth in the nuclear industry did not occur. However, we found that the agency hasn't used certain key practices that could improve how effectively it manages its workforce. Without using these practices, the NRC may not know what the appropriate size and composition of its workforce should be, now or in the future. ...
GAO-16-880T: Published: Sep 29, 2016. Publicly Released: Sep 29, 2016.
Employees 39 years of age and younger represented approximately 45 percent of the United States employed civilian labor force and about 30 percent of the civilian federal workforce in fiscal year 2014. This group includes the millennial generation. The percent of millennials within the federal workforce varies by agency and agencies that have high rates of retirement eligibility also tend to have...
GAO-16-384: Published: Mar 24, 2016. Publicly Released: Mar 24, 2016.
The Federal Protective Service (FPS)—which protects about 9,500 federal facilities—developed a Strategic Human Capital Plan ( Plan ) and engaged in related efforts that generally align with most key principles GAO identified for strategic workforce planning. Specifically, FPSsolicited input from key stakeholders, such as its employees and the National Protection and Programs Directorate (NPPD)...
GAO-15-529T: Published: Apr 16, 2015. Publicly Released: Apr 16, 2015.
GAO's ongoing work indicates that the recent government-wide decline in engagement, as measured by the Office of Personnel Management's (OPM) Employee Engagement Index (EEI) masks the fact that the majority of federal agencies either sustained or increased employee engagement levels during the same period. Government-wide, engagement has declined 4 percentage points from an estimated 67 percent in...
GAO-15-252: Published: Dec 29, 2014. Publicly Released: Jan 5, 2015.
Agencies' use of reemployed annuitants has increased, with the number of on-board retired uniformed and civil service annuitants increasing from over 95,000 in fiscal year 2004 to around 171,000 in fiscal year 2013 (from about 5 percent to 8 percent of the federal workforce). This is inclusive of reemployed annuitants with and without dual compensation waivers. The Department of Defense (DOD) acco...
GAO-14-565: Published: Jul 9, 2014. Publicly Released: Jul 9, 2014.
The Department of Defense's (DOD) Fiscal Year 2013-2018 Strategic Workforce Plan addressed or partially addressed 27 of the 32 statutory reporting requirements and did not address 5 of the requirements. The statute requires DOD, for example, to conduct assessments of critical skills and competencies, to assess gaps in the workforce, and to assess the appropriate mix of civilian, military, and cont...
GAO-14-168: Published: May 7, 2014. Publicly Released: Jun 6, 2014.
GAO convened a forum of chief human capital officers (CHCO) who described a number of difficulties their agencies face in maintaining the capacity to meet their missions during lean fiscal times. GAO's analysis identified three broad recurring human capital challenges and strategies to address them. While these challenges were not new nor exclusively a result of constrained budgets, reduced resour...
GAO-14-215: Published: Jan 29, 2014. Publicly Released: Jan 29, 2014.
From 2004 to 2012, the federal non-postal civilian workforce grew by 258,882 employees, from 1.88 million to 2.13 million (14 percent). Permanent career employees accounted for most of the growth, increasing by 256,718 employees, from 1.7 million in 2004 to 1.96 million in 2012 (15 percent). Three agencies--the Departments of Defense (DOD), Homeland Security (DHS), and Veterans Affairs (VA)--accou...
GAO-13-470: Published: May 29, 2013. Publicly Released: May 29, 2013.
Since fiscal year 2001, the Department of Defense's (DOD) military and civilian workforces peaked in fiscal year 2011 at 3.1 million personnel combined, and is projected to decrease over the next five years to below the fiscal year 2001 level of 2.9 million. Comparable historical data on DOD's contractor workforce are not available. In fiscal year 2011, DOD reported that it contracted for services...
GAO-13-282: Published: Mar 15, 2013. Publicly Released: Mar 15, 2013.
The U.S. Department of Housing and Urban Development (HUD) reports that it is moving forward with strategic human capital and workforce planning efforts after several years of delays. HUD's most recent workforce plan expired in 2009 and since then HUD has launched several planning efforts. According to HUD, these efforts were preempted by other important priorities, such as responding to the econo...