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.

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Angela N. Clowers
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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: In response to GAO's recommendations, as of the end of 2013, SEC has established and staffed a workforce and succession planning function within its Office of Human Resources. The three staff members were responsible for providing tools, systems, and reports for analyzing SEC's workforce supply and demand to determine gaps and risks. Specifically, as of May 2014, SEC has developed a succession planning framework, which provides a specific path for employees who are interested in leadership roles within SEC. SEC has a corrective action plan to complete all elements of GAO's recommendations, including timeframe and resources required to develop a comprehensive workforce plan. When implemented, this plan will address the intent of GAO's recommendation.

    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: In response to GAO's recommendations, SEC has developed workforce analysis for current and projected human resource needs for all mission-critical, managerial and executive positions. SEC also made progress in identifying and closing competency gaps. Its Succession Planning Program describes the key leadership competencies for each employee's grade level. To assess leadership competency gaps, SEC has begun using the 360 degree (upward feedback) assessment tool for its managers. As of April, 2014, about 80 percent of SEC managers have completed the assessment. SEC also has produced quarterly reports to monitor competency gaps by using a tracking and reporting mechanism since June, 2012. In addition, SEC has made efforts to institute a fair and transparent process to identify high-potential leaders by launching the Executive Potential program which provides the opportunity for SEC managers to be competitively selected for the Excellence in Government Fellows program. SEC plans to follow Office of Personnel Management guidance as it develops a formal action plan to identify and close competency gaps, fill supervisory position, and institute a fair and transparent process for identifying high-potential leaders from within the agency. When implemented, this plan will address the intent of GAO's recommendation.

    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: Open

    Comments: SEC agreed with this recommendation. We will continue to monitor the agency's actions taken.

    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: In response to GAO's recommendations, as of May 2014, SEC was reviewing the FY 2012 and 2013 performance management cycles to determine if changes are needed for the FY 2015 cycle. The analysis included examining the extent to which rating narratives supported the ratings and the appropriate use of "Not Available" ratings, the use of Individual Development Plans (for staff development), and the extent to which ratings were completed. SEC plans to use the results of this analysis to work with its union to develop a new 4-tier performance rating system, but has not yet determined a timeframe for completion for this new system. Moreover, SEC has not yet determined how it will solicit periodic staff input regarding its performance management system.

    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: Open

    Comments: In response to GAO's recommendations, as of April 2014, SEC began an agencywide cultural change initiative called "All Invested." One of the initiative's goals was to encourage managers for supporting employees' ability to collaborate and participate in teams, projects or activities across the agency. In addition, SEC has made progress in its efforts to recognize and award teamwork. For example, SEC sponsors a "People Management" intranet portal to provide supervisors and managers with tools and resources for management activities, such as recruiting, employee relations, and performance management. As part of the culture change initiative, SEC provided ideas for connecting and enhancing employee appreciation, such as organizing team outings, hosting lunch seminars, holding appreciation breakfasts, picnics, ice-cream socials, offering open office hours, and sponsoring team building events. The initiative also encourages senior managers to formally recognize employees' success within the division through awards or recognition events. However, SEC has not yet elaborated on its plans to set formal expectations for supervisors to foster a collaborative environment and to recognize and reward teamwork.

    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: In response to GAO's recommendations, as of April 2014, SEC began an agencywide cultural change initiative designed to bring management and staff together toward common goal to make SEC the best place to work in the government. The initiative aims to reinforce SEC's mission and values; create an engaging and empowering workplace; and enable executives, managers, and supervisors to foster an environment of trust, transformation, and openness. However, SEC has not yet elaborated on its efforts in exploring communication and collaboration best practices and implementing those practices that could most benefit SEC.

    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: Open

    Comments: In response to GAO's recommendations, as of May 2014, SEC has drafted its first Human Capital Accountability System Plan. The Office of Personnel Management(OPM) is in the process of reviewing the plan. The plan establishes recurring internal self-assessments of SEC's human capital programs to help ensure that the agency's practices are consistent with statutory and regulatory requirements, Merit System Principles, and negotiated agreements, and will demonstrate how SEC will measure the implementation of OPM's Human Capital Accountability Framework. When implemented, this plan will address the intent of GAO's recommendation.

    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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