Key Issues > Strategic Management of Human Capital - High Risk Issue
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Strategic Management of Human Capital - High Risk Issue

To address a range of complex and evolving national issues, federal agencies must recruit, develop, train, and retain a talented and engaged workforce. Federal agencies are facing skills gaps in mission-critical occupations.

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This key issue page is related to an area on GAO’s 2017 High Risk Update and will be updated shortly. In the meantime, visit the related High Risk area for the newest information.

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. Certain agencies also face additional challenges, particularly with their unique skills gaps. 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.

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 cause skills gaps to develop and thus adversely impact the ability of agencies to carry out their missions. As shown in the figure below, more than 30 percent of federal employees on board by the end of fiscal year 2014 will be eligible to retire by 2019.

Percentage of Career Permanent Employees on Board as of September 30, 2014, Eligible to Retire by 2019 by Agency

Percentage of Career Permanent Employees on Board as of September 30, 2014, Eligible to Retire by 2019 by Agency

Note: This graphic was posted on 2/1/17 to correct a labeling error on the previous version

Talent Management

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.

Results-Oriented Cultures

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.

Furthermore, there are practices the federal government can adopt to become a model employer for people with disabilities. According to OPM figures, employees with disabilities account for over 14 percent of the federal workforce - and account for an even higher proportion of new hires - as of the end of FY 2015. There is a fundamental need to change the attitudes of hiring managers, supervisors, coworkers, and employees to overcome biases that lead to low expectations for people with disabilities or prevent them from getting hired in the first place.

Agency-Specific Challenges

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.

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