Securities and Exchange Commission:

Improving Personnel Management Is Critical for Agency's Effectiveness

GAO-13-621: Published: Jul 18, 2013. Publicly Released: Jul 18, 2013.

Additional Materials:

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Angela N. Clowers
(202) 512-8678
clowersa@gao.gov

 

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What GAO Found

Based on analysis of views from Securities and Exchange Commission (SEC) employees and previous studies from GAO, SEC, and third parties, GAO determined that SEC’s organizational culture is not constructive and could hinder its ability to effectively fulfill its mission. Organizations with constructive cultures are more effective and employees also exhibit a stronger commitment to mission focus. In describing SEC’s culture, many current and former SEC employees cited low morale, distrust of management, and the compartmentalized, hierarchical, and risk-averse nature of the organization. According to an Office of Personnel Management (OPM) survey of federal employees, SEC currently ranks 19th

SEC has not consistently or fully implemented effective personnel management. SEC has taken some steps, but most of its efforts were in the early stages and could be enhanced. GAO identified four key areas where continued improvement is needed: of 22 similarly sized federal agencies based on employee satisfaction and commitment. GAO’s past work on managing for results indicates that an effective personnel management system will be critical for transforming SEC’s organizational culture.

  • Workforce planning. SEC has not yet developed a comprehensive workforce plan, including how it identifies its future leaders. Although SEC has taken some steps, such as identifying competency gaps and conducting leadership training, these efforts do not reflect all elements of effective workforce planning outlined in OPM guidance. OPM guidance calls on agencies to develop and implement plans to identify workforce needs and develop future leaders. Without fully implementing such practices, SEC will not be able to make well-informed decisions on how to best meet current and future agency needs.
  • Performance management. SEC’s implementation of its performance management system could be improved. SEC staff expressed many concerns about the system, such as an unclear link between their performance and ratings. SEC provided training to supervisors on how to use the system and obtained staff input on aspects of the system. However, SEC has not fully validated the system with its staff. Also, SEC does not have mechanisms in place to monitor supervisors’ use of the system. By not validating all aspects of the system and establishing mechanisms to hold supervisors accountable for appropriately using it, SEC is missing opportunities to enhance the credibility and effectiveness of its performance management system.
  • Communication and collaboration. SEC has made efforts to improve communication and collaboration (such as creating new subunits to facilitate joint work), but has not yet fully addressed barriers. Moreover, these efforts have not yet addressed all of the problems that the Inspector General found contributed to past enforcement failures. GAO has reported on leading practices that SEC could explore, including sustained management attention. Improving communication and collaboration within SEC is critical to its effectiveness.
  • Personnel management assessment. SEC has not implemented an accountability system to monitor and evaluate its personnel management. According to OPM guidance, such a system helps agencies assess whether personnel policies are effective. SEC officials explained that efforts were under way to develop a system. Until such an accountability system is implemented, it will be difficult for SEC to make necessary improvements and help ensure that its personnel management policies and programs align with its mission.

Why GAO Did This Study

Personnel management is important to the mission of federal agencies. Several high-profile enforcement failures have raised concerns about SEC’s personnel management. Section 962 of the Dodd-Frank Wall Street Reform and Consumer Protection Act mandates GAO to report on SEC's personnel management. This report examines (1) SEC’s organizational culture and (2) its personnel management challenges and efforts to address these challenges.

GAO assessed SEC’s personnel management systems against OPM guidance and other criteria related to workforce planning and performance management (which includes appraisals and feedback); reviewed relevant reports; surveyed SEC employees and senior management (with 78 and 74 percent response rates, respectively) to gather their views on SEC’s organizational culture and personnel management practices; and spoke with former employees, the SEC Inspector General, representatives of the employees’ union, financial industry associations, consulting firms, and academics.

What GAO Recommends

GAO makes seven recommendations to improve SEC’s personnel management, including developing comprehensive workforce plans, implementing mechanisms to monitor how supervisors use the performance management system, conducting periodic validations of the system, exploring collaboration practices of leading organizations, and regularly assessing these efforts. SEC agreed with GAO’s recommendations.

For more information, contact A. Nicole Clowers at (202) 512-8678 or clowersa@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: While SEC plans to conduct a competency assessment for the remaining occupations not included in its July 2016 workforce plan, until the assessment and resulting workforce plan for fiscal year 2019+ is completed and we have reviewed it, this recommendation remains open. However, a comprehensive assessment of occupations should always be part of the workforce planning cycle to identify the resources needed to meet mission requirements. SEC should be doing a yearly review of needs to include attrition modeling, budget costs, and staffing (i.e., staff distribution across all locations, promotion needs, hiring requirements for all areas (mission and mission support)).

    Recommendation: To help SEC address identified personnel management challenges, and to enhance SEC's ability to strategically hire and retain the appropriate number of staff with the requisite skill sets for today and in the future, the Chairman of SEC should direct the Office of the Chief Operating Officer (COO) and Office of Human Resources (OHR) to prioritize efforts to expeditiously develop a comprehensive workforce plan, including a succession plan, and establish time frames for implementation and mechanisms to help ensure that the plans are regularly updated.

    Agency Affected: United States Securities and Exchange Commission

  2. Status: Open

    Comments: While SEC plans to conduct a succession needs survey that will be used as part of its holistic gap analysis and used to inform the next workforce plan for fiscal year 2019+, until the needs survey and resulting workforce plan is completed and we have reviewed it, this recommendation remains open. However, as part of succession planning, division managers should already know, or should have been provided, retirement eligibility information, attrition estimates, and knowledge of their staff skill sets. They need this information for succession planning purposes to determine if they need to hire, or use promotions as a way to fill potential staff losses.

    Recommendation: To help SEC address identified personnel management challenges, and to enhance SEC's ability to strategically hire and retain the appropriate number of staff with the requisite skill sets for today and in the future, the Chairman of SEC should direct the Office of the COO and OHR to incorporate OPM guidance as it develops its workforce and succession plans, by developing a formal action plan to identify and close competency gaps, and fill supervisory positions; and institute a fair and transparent process for identifying high-potential leaders from within the agency.

    Agency Affected: United States Securities and Exchange Commission

  3. Status: Closed - Implemented

    Comments: In December 2016, we found that SEC had implemented mechanisms to monitor how supervisors use the performance management system. First, SEC took steps to monitor the performance feedback supervisors provide to employees. Consistent with OPM guidance, SEC now monitors whether supervisors are providing the required feedback by reviewing a random sample of 5 percent of performance work plans each fiscal year; these work plans contain documentation that the supervisor provided the interim and final performance feedback to the employee. Second, SEC implemented mechanisms to monitor how supervisors recognize and reward performance. SEC's accountability group in the Office of Human Resources took steps to monitor how awards were being distributed to SEC employees, which were consistent with OPM guidance. Third, SEC implemented mechanisms to monitor supervisor practices to address unacceptable performance. Consistent with OPM guidance and federal regulations, SEC supervisors are now required to gather relevant information regarding unacceptable performance of employees they supervise. SEC's Office of General Counsel is responsible for ensuring that supervisors are taking the required steps to address performance issues.

    Recommendation: To help SEC address identified personnel management challenges, and to help enhance the credibility of its performance management system, the Chairman of SEC should direct the COO and OHR to create mechanisms to monitor how supervisors use the performance management system to recognize and reward performance, provide meaningful feedback to staff, and effectively address poor performance; for example, by requiring ongoing feedback discussions with higher-level supervisors.

    Agency Affected: United States Securities and Exchange Commission

  4. Status: Open

    Comments: SEC has yet to conduct a validation of its performance management system for its entire staff. In fiscal year (FY) 2016, SEC introduced a new pilot performance management program and engaged OPM to assess the effectiveness of it, but this new program was only initiated with non-bargaining staff. This assessment included OPM facilitated focus groups and an OPM survey soliciting anonymous participant feedback. According to SEC, stakeholders were engaged in the development and implementation phases of the pilot program. Additionally, OPM hosted a training session at the midpoint of the FY 2016 pilot for supervisors to help them communicate performance expectations and feedback. In 2017, SEC expanded the pilot performance management program to bargaining unit staff. SEC has briefed the National Treasury Employees Union (NTEU) prior to each phase in the performance management process and incorporated feedback into the program. The Office of Human Resources (OHR) has provided program-specific training to both employees and supervisors for each phase of the performance cycle and has collaborated with NTEU on all messaging to employees. SEC is now working with OPM to determine the best approach to assess the effectiveness of the FY 2017 pilot. According to SEC, subsequent to OPM's assessment of the FY 2017 pilot, SEC will work with NTEU to determine how to proceed with the program. OHR has also agreed in advance to share the FY 2017 performance rating data with NTEU so they may use it in their own assessment of the 2017 pilot.

    Recommendation: To help SEC address identified personnel management challenges, and to help enhance the credibility of its performance management system, the Chairman of SEC should direct the COO and OHR to conduct periodic validations (with staff input) of the performance management system and make changes, as appropriate, based on these validations.

    Agency Affected: United States Securities and Exchange Commission

  5. Status: Closed - Implemented

    Comments: SEC has taken action to close this recommendation. We reported in GAO-17-65 that while SEC had created some incentives to support communication and collaboration across divisions, as of December 2016, barriers to cross-divisional communication and collaboration still remained. Specifically, SEC had added performance expectations for 53 percent of supervisors to encourage communication and collaboration, including promoting and maintaining an environment of cooperation and proactively sharing relevant information. But these expectations were not present for the remaining 47 percent of supervisors across divisions and occupations. In October 2016, SEC revised its fiscal year 2017 performance expectations for all supervisors across divisions and occupations. These performance expectations now include performance elements that all supervisors will be rated on, including encouraging communication and collaboration, promoting and maintaining an environment of cooperation, and proactively sharing relevant information. This change, along with what we reported in GAO-17-65 related to actions SEC had taken to provide incentives and procedures for staff to communicate and collaborate warrant closing out this recommendation. For example, we reported that SEC had an annual agency-wide awards program that recognized outstanding teams and a tracking system that facilitated collaboration on interdivisional memorandums. In addition, one division (the Division of Economic and Risk Analysis) created an electronic system that allowed other divisions to request data it collected and another division (the Division of Enforcement) created formal liaisons that other divisions and offices could contact.

    Recommendation: To help SEC address identified personnel management challenges, and to build on SEC's efforts to enhance intra-agency communication and collaboration, the Chairman should direct the COO to identify and implement incentives for all staff to support an environment of open communication and collaboration, such as setting formal expectations for its supervisors to foster such an environment, and recognizing and awarding exceptional teamwork efforts.

    Agency Affected: United States Securities and Exchange Commission

  6. Status: Open

    Comments: As of November 2017, SEC had not demonstrated the use of best practices to improve communication and collaboration within and across SEC divisions and offices. In June 2017, SEC commenced the new Operations Steering Committee, which consists of the Acting Chief Operating Officer (COO) as the Chair, and the Managing Executives of the mission critical divisions and Office of Compliance Inspections and Examinations (OCIE). This group meets on a monthly basis. During the September 2017 meeting, the Acting COO presented two proposed approaches, based on best practices, to address GAO's findings to improve communication and collaboration: 1. Emphasize communication and collaboration, and associated initiatives, within the new Strategic Plan. 2. Work with the Labor Management Forum - NTEU. Until we see how SEC operationalizes these proposed approaches, this recommendation remains open.

    Recommendation: To help SEC address identified personnel management challenges, and to build on SEC's efforts to enhance intra-agency communication and collaboration, the Chairman should direct the COO to explore communication and collaboration best practices and implement those that could benefit SEC.

    Agency Affected: United States Securities and Exchange Commission

  7. Status: Closed - Implemented

    Comments: In December 2016, we found that SEC had designed and implemented a human capital accountability system, including an underlying plan and standard operating procedures. The system is designed to facilitate regular assessments of SEC's personnel management program. SEC's accountability system requires that staff in the Office of Human Resources review programs, recommend corrective actions, and provide an annual assessment of the progress, consistent with the Office of Personnel Management's (OPM) Human Capital Assessment and Accountability Framework (HCAAF). In addition, the results of SEC's human capital accountability system have informed agency human capital goals and spending priorities, consistent with OPM's HCAAF.

    Recommendation: To help SEC address identified personnel management challenges, and to increase accountability of SEC's personnel management system, the Chairman of SEC should direct the COO and OHR to prioritize and expedite efforts to develop and implement a system to monitor and evaluate personnel management activities, policies, and programs, including establishing and documenting the steps necessary to ensure completion of the system.

    Agency Affected: United States Securities and Exchange Commission

 

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