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United States Government Accountability Office: 


For Release on Delivery Expected at 10:00 a.m. EDT: 
Tuesday, June 27, 2006: 

Before the Subcommittee on Oversight of Government Management, the 
Federal Workforce, and the District of Columbia, Committee on Homeland 
Security and Governmental Affairs, U.S. Senate: 

Office of Personnel Management: 

OPM Is Taking Steps to Strengthen Its Internal Capacity for Leading 
Human Capital Reform: 

Statement of David M. Walker: 
Comptroller General of the United States: 


GAO Highlights: 

Highlights of GAO-06-861T, a testimony before the Subcommittee on 
Oversight of Government Management, the Federal Workforce, and the 
District of Columbia, Committee on Homeland Security and Governmental 
Affairs, U.S. Senate 

Why GAO Did This Study: 

General recognition exists of a need to continue to develop a 
governmentwide framework for human capital reform to enhance 
performance, ensure accountability and position the nation for the 
future. Potential governmentwide human capital reform and likely 
requirements that the Office of Personnel Management (OPM) assist, 
guide, and ultimately certify agencies’ readiness to implement reforms, 
raise important questions about OPM’s capacity to successfully fulfill 
its central role. 

This testimony addresses management challenges that could affect OPM’s 
ability to lead governmentwide human capital reform efforts. To assess 
these challenges, GAO analyzed OPM’s 2002 and 2004 Federal Human 
Capital Survey (FHCS) results, data from its 2005 follow-up focus group 
discussions, OPM’s May 2006 action plans to address employee concerns, 
and OPM’s associate directors’ fiscal year 2006 executive performance 
contracts. GAO also conducted interviews with OPM senior officials and 
Chief Human Capital Officers (CHCO) and human resource directors from 
CHCO Council agencies. 

In commenting on a draft of this statement, the OPM Director said that 
OPM has addressed many of the challenges highlighted from the 2004 FHCS 
and achieved many meaningful and important results. GAO agrees and 
believes OPM should continue to build upon its progress to date. 

What GAO Found: 

OPM has made commendable efforts towards transforming itself to being a 
more effective leader of governmentwide human capital reform. It can 
build upon that progress by addressing challenges that remain in the 
following areas: 

Leadership. OPM Federal Human Capital Survey responses and the fall 
2005 follow-up focus group discussions suggests that information from 
OPM leadership does not cascade effectively throughout the organization 
and that many employees do not feel senior leaders generate a high 
level of motivation and commitment in the workforce. Agreement with 
leaders ability was lowest in one of OPM’s key divisions—a unit vital 
to successful human capital reform. OPM is working to address employee 
concerns and improve perceptions of senior leaders. 

Talent and resources. To align talent and resources to support its 
reform role, OPM has made progress in assessing current workforce needs 
and developing leadership succession plans. However, OPM’s workforce 
planning has not sufficiently identified future skills and competencies 
that may be necessary to fulfill its role in human capital reform. 

Customer focus, communication, and collaboration. OPM can improve its 
customer service to agencies and create more opportunities for 
dialogue. According to key officials in executive agencies, OPM 
guidance to agencies is not always clear and timely, OPM’s human 
capital officer structure is often a barrier to efficient customer 
response, and greater opportunities exist to collaborate with agency 
leaders. OPM recognizes these shortcomings and has identified 
improvement actions to address. However, more can be done such as 
strategically using partnerships it has available to it, like the CHCO 

Performance culture and accountability. OPM has made progress in 
creating a “line of sight” or alignment and accountability across 
Senior Executive Service (SES) expectations and organizational goals. 
It needs to build on this progress and effectively implement new 
performance standards for all employees to support the recently issued 
agency strategic and operational plan and ensure all employees receive 
the necessary training. 

To meet OPM’s current and future challenge to lead governmentwide human 
capital reform, Director Springer has shown leadership commitment to 
OPM’s transformation by initiating a number of action plans to address 
employee concerns. While the steps taken by OPM demonstrate progress in 
achieving its transformation, it must continue on this path by closely 
monitoring and communicating with its employees and customers, 
expanding its workforce and succession planning efforts, and continuing 
to create a “line of sight” throughout the organization. 


To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Brenda S. Farrell at 
(202) 512-6806 or 

[End of Section] 

Chairman Voinovich, Senator Akaka, and Members of the Subcommittee: 

I appreciate the opportunity to be here today to discuss the capacity 
of the U.S. Office of Personnel Management (OPM) to lead and implement 
governmentwide human capital reform. Potential governmentwide human 
capital reform, and likely requirements that OPM assist, guide, and 
ultimately certify agencies' readiness to implement reforms, raise 
important questions about its capacity to successfully fulfill its 
central role. Director Springer and her leadership team clearly 
recognize that strategic human capital management is a pervasive 
challenge facing agencies across the federal government, and overcoming 
this challenge will require vigorous and sustained leadership from 
multiple parties--OPM as well as other key human capital players, such 
as the President; the Office of Management and Budget (OMB); Congress; 
and department and agency leaders. Since designating strategic human 
capital management as a high-risk area in January 2001,[Footnote 1] our 
work and the work of others continue to show that agencies need and 
want greater leadership from OPM in helping them to address their human 
capital challenges. 

As we have noted in our 21ST Century Challenges report, people are 
critical to any agency's successful transformation.[Footnote 2] 
Transformations have enormous implications for the federal government's 
"people" policies and procedures, as well as cultures of government 
organizations. Strategic human capital management is at the centerpiece 
of this transformation and last fall I testified that OPM should play a 
key leadership and oversight role in helping individual agencies work 
towards overcoming a broad range of human capital challenges.[Footnote 

I have testified previously that a governmentwide framework for 
advancing human capital reform is needed to avoid further fragmentation 
within the civil service, ensure management flexibility as appropriate, 
allow a reasonable degree of consistency, provide adequate safeguards 
within the overall civilian workforce, and help maintain a level 
playing field among federal agencies competing for talent. Within the 
human capital community, there is general recognition of a need to 
continue to develop a governmentwide framework for human capital reform 
that Congress and the administration can implement to enhance 
performance, ensure accountability, and position the nation for the 
future.[Footnote 4] Nevertheless, how it is done, when it is done, and 
on what basis it is done can make all the difference. 

I know from my conversations with Director Springer that she agrees 
that OPM needs to continue and even augment the internal transformation 
effort underway, and she is putting in place a concerted effort to make 
that happen. In 2003, we reported that OPM was undergoing its own 
transformation--from less of a rulemaker, enforcer, and independent 
agent to more of a consultant, toolmaker, and strategic partner in 
leading and supporting executive agencies' human capital management 
systems.[Footnote 5] At that time, OPM had taken a number of important 
steps and had several initiatives underway or planned to improve its 
overall mission and management performance. For example, OPM has 
exerted greater human capital leadership through its Human Capital 
Scorecard of the President's Management Agenda to assist agencies in 
improving strategic management of their human capital. OPM also 
developed the governmentwide Federal Human Capital Survey (FHCS) to 
assist agencies and OPM in better understanding specific and 
governmentwide agency workforce management conditions and practices in 
the areas of leadership, performance culture, and talent. Most 
recently, Director Springer announced OPM's television campaign to 
promote federal employment and has undertaken a greater focus on 
succession planning to respond to the forthcoming federal retirement 
wave and undertaken steps to further reduce the length of time for the 
federal hiring process. 

Under Director Springer's leadership this past year, OPM has continued 
to transform itself by undertaking a number of internal management 
initiatives to build a results-oriented culture. The results of OPM's 
2004 FHCS showed that OPM employees expressed a number of concerns 
regarding perceptions of agency leadership; talent and resources; 
customer focus, communication and collaboration; and performance 
culture and accountability. The FHCS was administered before Director 
Springer began her term. Also, according to OPM, about half of the 
senior leadership started after the survey was administered. However, 
we used these results, among other things, to assess some of the issues 
that could impede OPM's capacity to lead federal human capital reform. 
I call attention to some of these relevant questions throughout my 
testimony. We found that OPM is taking actions to address these 
concerns in a number of areas. For example, in fall 2005, OPM conducted 
a series of employee focus groups in response to its FHCS results to 
further understand specific issues underlying the decline and identify 
actions it could take to help improve the overall agency work 
environment. In May 2006, OPM issued a series of federal human capital 
action plans to address employee concerns raised during those focus 
group discussions. In addition, in March of this year, OPM issued its 
Strategic and Operational Plan, 2006-2010, and identified a number of 
activities that OPM plans to implement to improve employee 

As you know, the Senate Committee on Homeland Security and Governmental 
Affairs and your Oversight of Government Management, the Federal 
Workforce, and the District of Columbia Subcommittee requested that we 
conduct a review of OPM to identify management challenges that could 
affect its ability to lead human capital reform efforts. In March 2006, 
we briefed your staff on our preliminary observations. My remarks today 
are based on that briefing. Our forthcoming report will provide 
additional information and recommendations to OPM on opportunities to 
improve its internal management capacity. We analyzed OPM's 2006-2010 
Strategic and Operational Plan to identify activities related to 
internal transformation. We analyzed OPM's associate directors' fiscal 
year 2006 Senior Executive Service (SES) performance contracts to 
identify alignment of strategic goals and individual executive 
performance. We also reviewed OPM's most currently available workforce 
and succession plans to examine issues related to talent and resources. 
We analyzed OPM's 2002 and 2004 FHCS agency results, the most recently 
available data that OPM is using to identify employee concerns. In 
addition, we reviewed OPM's analysis of its 2004 FHCS results. (For 
more information regarding the methodology related to OPM's 
administration of the FHCS and our analysis of OPM's survey results, 
see app. I). We also reviewed the results from a series of employee 
focus groups conducted by OPM in fall 2005 to follow up on its agency 
2004 FHCS results, as well as analyzed OPM's May 2006 action plans to 
address issues raised by the 2004 FHCS and employee focus groups. 

We interviewed OPM's five associate directors and other senior-level 
staff to obtain their views of agency management. We interviewed 21 of 
the 23 members of the Chief Human Capital Officers Council and their 
corresponding agency human resource (HR) directors to gain a customer 
perspective of OPM's products and services and their views of OPM 
management challenges. Finally, we reviewed our ongoing work and 
previous recommendations to OPM on a range of issues related to human 
capital and other management challenges. We conducted our work from 
June 2005 to June 2006 in accordance with generally accepted government 
auditing standards. 

We provided a draft of this statement to Director Springer for her 
comment. The Director expressed concern that the basis for GAO's 
observations relied heavily on outdated information, specifically from 
the results of the FHCS administered in 2004. She noted that in many 
instances, OPM has addressed the challenges highlighted from the 2004 
FHCS and achieved many meaningful and important results. We wish to 
point out that OPM has also relied heavily on the results of the 2004 
FHCS and conducted focus groups in fall 2005 to understand the factors 
contributing to employees' responses on selected items on the 2004 FHCS 
and to obtain employees' ideas for addressing top priority improvement 
areas. Further, OPM used the results from 2004 FHCS and 2005 focus 
group discussions--the most recent data available--and this information 
was used to form the basis for its recently released (May 2006) action 
plans to address these issues. 

Today, I would like to highlight that OPM has made commendable efforts 
towards transforming itself to being a more effective leader of 
governmentwide human capital reform. OPM's recently issued "Strategic 
and Operational Plan" is a significant accomplishment. While the plan's 
strength is in its definition of clear, tangible goals and 
deliverables, it is not clear if the plan adheres to the goals for a 
strategic plan as contained in the Government Performance and Results 
Act of 1993.[Footnote 6] We will analyze compliance of the plan with 
GPRA and present the results of our analysis in our forthcoming report. 
We will examine the extent to which the plan's operational steps are 
consistently linked to a larger strategic vision and set of clearly 
articulated outcomes. Importantly, in the future, OPM should revisit 
its organizational structure to ensure it is aligned with the goals and 
objectives in its plan and make any necessary changes. Doing so will 
help OPM to improve economy, efficiency, effectiveness, and 
responsiveness while enhancing flexibility and improving 
accountability. My statement today addresses how OPM can build upon the 
progress it has made with its strategic and operational plan by 
addressing challenges that remain in four key areas: 

Leadership. OPM 2004 employee survey responses and the more recent OPM 
employee focus group discussions suggest that information from OPM top 
leadership does not cascade effectively throughout the organization. 
Survey and focus group data also suggest that many employees do not 
feel their senior leaders generate a high level of motivation and 
commitment in the workforce. Agreement with leaders' ability to 
generate motivation and commitment were lowest in the Human Capital 
Leadership and Merit System Accountability (HCLMSA) division, one of 
OPM's key divisions--a unit responsible for partnering with agencies 
and vital to successful human capital reform efforts. 

Talent and resources. In an effort to align talent and resources to 
support its reform role, OPM has made progress in its assessment of 
current workforce needs and developing leadership succession plans. 
However, if OPM is to lead governmentwide human capital reform it 
should identify the skills and competencies of the new OPM, determine 
any skill and competency gaps, and develop specific steps to fill such 

Customer focus, communication, and collaboration. Agency views, survey 
results, and our previous work show that OPM can improve its customer 
service and communication with agencies. Our recent work shows that 
guidance to agencies is not always clear and timely, the human capital 
officer structure is often a barrier to efficient customer response, 
and there are greater opportunities to dialogue and collaborate with 
Chief Human Capital Officers (CHCO) and human resource directors. 
Communication and collaboration are key aspects of OPM's ability to 
support agency efforts at human capital reform and establish a 
consistent reform message. OPM has recognized these shortcomings and 
has identified improvement actions to address some of them. However, 
more can be done such as strategically using the partnerships it has 
available to it, like the CHCO Council and others, as well as 
developing a culture of collaboration, information sharing, and working 
with customers to understand what they will need from the agency. 

Performance culture and accountability. OPM has made progress in 
creating a "line of sight" or alignment and accountability across 
leader expectations and organizational goals. Performance expectations 
of senior leaders are clearly aligned with the goals of OPM's strategic 
and operational plan. Success in achieving reform objectives will rest, 
in part, on OPM's ability to align performance and consistently support 
mission accomplishment for all employees of the organization. 


The OPM 2004 FHCS results and OPM's 2005 follow-up focus group 
discussions suggest that information is not cascading effectively from 
top leadership throughout the organization. Further, according to the 
summary reports of OPM's follow-up focus group discussions, overall 
communication was selected by employees as one of the most important 
areas to address. Some focus group participants said that managers and 
employees were unaware of what is going on in the organization due to a 
lack of internal and cross-divisional communication. Focus group 
participants also described not knowing where the agency is heading and 
not having a clear understanding of how their activities aligned with 
the overall vision and mission of the agency. 

As figure 1 shows, fewer employees below the SES level at OPM as well 
as the rest of government reported being satisfied with the information 
they receive. Further there were significantly fewer employees at OPM, 
especially in the GS-1 to GS-12 range, reporting "satisfaction with the 
information they receive from management on what's going on in the 
organization" when compared with the rest of the government. On the 
other hand, significantly more SES employees at OPM indicated 
satisfaction with the "information they were receiving from management" 
than SES employees at all the other government agencies participating 
in the 2004 FHCS. 

Figure 1: Employee Responses to Selected 2004 Federal Human Capital 
Survey Questions Related to Leadership: 

[See PDF for image]

Source: GAO analysis. 

[End of Figure].

A similar gap between OPM SES and GS-level employees, as well as for 
their relative counterparts from the rest of government, is evident 
when employees were asked if they agreed that "managers promote 
communication among different work units." 

OPM employees also expressed concerns regarding their views of senior 
leaders. As shown in figure 1, roughly two-thirds of OPM employees, as 
well as employees in the rest of government, indicated that their 
immediate supervisors or team leaders are doing a good or very good 
job. Employee perceptions of senior level leadership were not as 
positive, however. When survey respondents were asked if they agreed 
with the statement "I have a high level of respect for my 
organization's senior leaders," nearly twice as many OPM SES employees 
agreed with this statement as compared with OPM GS-level employees. 
Survey respondents were also asked if they were "satisfied with the 
policies and practices of your senior leaders" and OPM SES employees 
also agreed with this statement more than twice the level of OPM GS- 
level employees. For both items, the percent of OPM GS-level 
respondents agreeing with these statements tends to be lower than for 
their counterparts in the rest of government. A similar pattern of OPM 
SES and OPM GS-level response can be seen in Figure 1 for the percent 
of employees agreeing with the statement "leaders generate high levels 
of motivation and commitment in the workforce." OPM's analysis of 
responses to this question by its divisions and offices show that the 
Human Capital Leadership and Merit System Accountability (HCLMSA) 
division had the lowest positive and largest negative response of any 
division at about 28 percent and 51 percent respectively. This issue of 
leaders generating motivation and commitment was selected by all six of 
the HCLMSA focus groups as one of the most important issues that OPM 
needs to address. Because the HCLMSA division is OPM's frontline 
organization that partners with agencies to achieve human capital 
success by providing oversight and leadership to agencies, it will play 
a key role in OPM initiatives to implement human capital reform--so it 
will need effective leadership to guide its transformation. 

OPM is clearly aware of the most critical issues for its agency leaders 
to address, such as the lack of overall and cross-divisional 
communication, issues related to employee views of senior management, 
and obtaining employee input to individual work plans linked to the 
agency strategic plan. Based on OPM's May 2006 action plans, the agency 
is planning to improve communication through such means as "visits to 
OPM field locations, brown bag lunches with the Director, an email box 
where employees can make suggestions on more efficient and effective 
ways of doing business, Web Casts, and employee meetings." According to 
the May 11, 2006 memo from OPM's CHCO to Director Springer, OPM has 
released several messages to employees regarding steps that it will be 
taking to improve communications agencywide and to address each of the 
specific critical issues within individual organizations of the agency. 
OPM officials told us that many of these actions have already occurred, 
such as senior executives visiting field locations. To improve its 
cross-divisional communication, OPM has developed and posted a 
functional organization directory on its internal website, which it has 
accomplished almost a month ahead of schedule. To address employee 
concerns regarding views of senior leaders, OPM is establishing a 
process in all divisions to solicit employee input on various 
initiatives and setting aside "open door" time for employees to speak 
with their managers. Furthermore, OPM has created an action plan to 
help employees better understand how their work fits into the overall 
mission of the agency by providing a mechanism to increase employee 
input to work plans related to its strategic plan. 

As I have testified on many occasions, in recent years GAO has learned 
a great deal about the challenges and opportunities that characterize 
organizational transformation. Several such lessons are of particular 
relevance to today's discussion. For example, GAO has recognized that 
soliciting and acting on internal feedback such as that obtained 
through employee surveys, provides a key source of information on how 
well an organization is developing, supporting, using and leading 
staff, as well as how internal operations are functioning and meeting 
employee needs as they carry out their mission. OPM's practices in this 
area are based in part on GAO's experience and include efforts to gain 
insight into employee perceptions of leadership and explicit follow-up 
activities to address identified concerns. OPM's planned actions are 
important steps in the right direction. Moving forward, as OPM 
implements its action plans to address issues of communication and 
motivation, it is important that it frequently communicate with 
employees on the progress of each of its planned actions and how these 
changes will affect them. OPM should also communicate any challenges or 
delays faced in its planned actions as soon as possible and the reasons 
why any changes to plans might be made. The 2006 FHCS deployed just 
last month, will provide an initial indication of the extent to which 
the new initiatives are responding to employee concerns. 

Talent and Resources: 

A high-performance organization needs a dynamic, results-oriented 
workforce with the requisite talents, multidisciplinary knowledge, and 
up-to-date skills to ensure that it is equipped to accomplish its 
mission and achieve its goals. We have reported that acquiring and 
retaining a workforce with the appropriate knowledge and skills demands 
that agencies improve their recruiting, hiring, development, and 
retention approaches so that they can compete for and retain talented 
people.[Footnote 7] Similar to other agencies, OPM faces challenges in 
recruiting and retaining a high-quality, diverse workforce and these 
challenges could limit OPM's capacity to accomplish its current 
mission, which includes in part leading other agencies in addressing 
their own recruitment and retention challenges. Further, if OPM is to 
lead governmentwide human capital reform and transition from less of a 
rulemaker, enforcer, and independent agent to more of a consultant, 
toolmaker, and strategic partner, it should identify the skills and 
competencies of the new OPM, determine any skill and competency gap, 
and develop specific steps to fill that gap. 

The FHCS shows that OPM employees identified several issues related to 
its current workforce: 

* Workforce skills. Some OPM employees were concerned about a lack of 
skills among OPM's current workforce. Our analysis of the 2004 FHCS 
shows that 67 percent of OPM employees agreed that "the workforce has 
the job relevant knowledge and skills necessary to accomplish 
organizational goals" compared with 74 percent of employees from the 
rest of government. Among OPM's divisions, HCLMSA had the lowest rate 
of agreement and highest rate of disagreement with the above statement 
at, respectively, 25 percent and 59 percent. This division provides 
leadership to agencies in their human capital transformation efforts. 
If HCLMSA lacks the knowledge and skills necessary to accomplish OPM's 
current organizational goals, the division may have difficulty managing 
the additional responsibilities of leading and implementing future 
governmentwide human capital reform. 

Agencies are also concerned with OPM's current workforce capacity. We 
spoke with agency CHCOs, HR directors, and their staffs about OPM's 
current capacity, and they expressed concern about whether OPM has the 
technical expertise needed to provide timely and accurate human capital 
guidance and advice. For example, agency officials said that the 
perceived lack of federal human resource expertise among some OPM Human 
Capital Officers (HCO) makes it difficult for them to assist agencies 
when communicating policy questions to appropriate OPM employees. For 
example, an HR director told us that their agency contacted the 
responsible HCO about the Outstanding Scholars Program and did not get 
a response from OPM for two to three weeks. When OPM finally responded, 
they said each agency was deciding how to administer the 
program.[Footnote 8] In the end, the agency's General Counsel Office 
had to contact another agency to learn how they administered the 

Many CHCOs and human resource directors told us they believed that 
OPM's expertise has declined over the last decade, while noting that 
OPM is facing many of the same personnel issues as all federal agencies 
regarding the loss of federal human capital talent and institutional 

OPM's ability to lead and oversee human capital management policy 
changes that result from potential human capital reform legislation 
could be affected by its internal capacity and ability to maintain an 
effective leadership team, as well as, an effective workforce. CHCOs 
and human resource directors expressed concern about the loss of OPM 
employees with technical expertise that will be needed to effectively 
assist agencies with future human capital efforts. One CHCO believed 
OPM's capacity is dependent upon a few key employees, in particular in 
the area of innovative pay and compensation approaches, adding that the 
potential loss of these employees could create a tipping point that 
severely damages OPM's capacity. Moreover, agencies believed that the 
Departments of Defense (DOD) and Homeland Security human capital reform 
efforts severely taxed OPM technical resources, specifically pay and 
compensation employees. 

Building the skills and knowledge of its workforce provides OPM with an 
opportunity to streamline decision making to appropriate organization 
levels. The FHCS includes one question on employee empowerment. The 40 
percent of OPM employees who had a "feeling of personal empowerment 
with respect to work processes" was close to the response of 43 percent 
from the rest of government. Although these results do not differ 
markedly from those in the rest of government, this item was selected 
by a majority of participants in the focus groups as one of the most 
important issues that OPM needs to address. Some participants said 
decision making is too centralized at the top without delegating 
authority to managers, supervisors, and employees. Taken together, 
these survey and focus group results suggest that the majority of OPM 
employees do not feel empowered to accomplish their tasks. Having 
delegated authorities gives employees the opportunity to look at 
customer needs in an integrated way and effectively respond to those 
needs and can also benefit agency operations by streamlining processes. 
Furthermore, such delegation to frontline employees gives managers 
greater opportunities to concentrate on systematic, cross-cutting, 
problems or policy-level issues. In April 2006, OPM began taking steps 
to delegate more authority to lower-level employees, and Associate 
Directors are now currently reviewing redelegations within their 

* Recruiting. Similar to most federal agencies, OPM may have difficulty 
recruiting new talent. For example, 47 percent of OPM employees who 
perform supervisory functions agreed with the statement that their 
"work unit is able to recruit people with the right skills," which is 
similar to the 45 percent of supervisors from the rest of government. 
The OPM CHCO told us that HR specialist positions are difficult to fill 
now. The work of HR specialists ranges across policy development, 
consultation and agency outreach, and operational recruitment and 
staffing activities. This is noteworthy because we identified HR 
specialist as a mission-critical occupation among the 24 Chief 
Financial Officer Act agencies in our 2001 report.[Footnote 9] HR 
specialist was also listed as a mission-critical occupation in OPM's 
2003 human capital plan. 

Mr. Chairman, as you know, longstanding concerns exist regarding DOD's 
personnel security clearance program. In fact, we declared DOD's 
program a high-risk area in January 2005. We testified last month 
before this subcommittee on concerns that slow the process of personnel 
clearances.[Footnote 10] OPM continues to experience problems with its 
investigative workforce, a problem we first identified in February 2004 
when we found that OPM and DOD together needed approximately 3,800 
additional full-time-equivalent investigators to reach their goal of 
8,000. Although OPM reports that it has reached its goal, it still 
faces performance problems due to the inexperience of its domestic 
investigative workforce. While OPM reports that it is making progress 
in hiring and training new investigators, the agency notes it will take 
a couple of years for the investigative workforce to reach desired 
performance levels. 

* Training. OPM employees cited strengths as well as concerns with 
employee development and training, as well as not feeling empowered to 
accomplish their tasks. As we have reported, agencies must develop 
talent through education, training, and opportunities for growth, such 
as delegating authorities to the lowest appropriate level.[Footnote 11] 
In the 2004 FHCS, 62 percent of OPM employees agreed that "supervisors/ 
team leaders in [their] work unit support employee development" which 
is close to the agreement level of employees from the rest of 
government at 65 percent. OPM employees were not as close to the 
employees in the rest of government in agreeing that "I receive the 
training I need to perform my job." Fifty-three percent of OPM 
employees agreed with this statement as compared with 60 percent of 
employees from the rest of government. In the follow-up employee focus 
groups, some participants selected this item as one of the most 
important issues for OPM to address. Some focus group participants said 
OPM's culture does not support training and employees do not have time 
to attend training classes. Further, an OPM executive told us that it 
can be a struggle to convince managers that people should attend 
training. Some focus group participants also said that managers are not 
given sufficient and timely training budgets. OPM officials believe 
that limited funding for training is an issue at OPM, and added that 
OPM is also working to provide managers with more timely training 
budgets. In 2003, we reported that OPM was using rotational 
assignments, special projects, and details to broaden the skills of 
employees.[Footnote 12] OPM officials also told us the agency is taking 
steps to address training concerns by offering more online training 
courses. In 2004, 57 percent of employees agreed with the statement 
that they have electronic access to learning and training programs 
readily available at their desk. Although still below the 71 percent 
agreement level for the rest of government, this was an 8 percentage 
point increase from the 49 percent of employees who agreed with this 
statement on the 2002 FHCS. OPM can build upon its current training 
initiatives, such as online courses and rotational assignments, to 
leverage the available training resources. 

* Critical resources. OPM employees have indicated concerns regarding 
the availability of critical resources. Although responses from OPM 
employees overall are similar to employees from the rest of government, 
we noted one group of OPM employees whose responses are not as close to 
their counterparts in the rest of government. Among all OPM employees, 
51 percent agreed with the statement that they have "sufficient 
resources (for example, people, materials, budget) to get my job done" 
as did 49 percent of employees from the rest of government. For 
employees performing supervisory functions, however, the agreement rate 
was 35 percent at OPM and 42 percent for the rest of government. 
Participants in the follow-up focus groups selected this item as one of 
the most important issues OPM needs to address to make the agency a 
better place to work. Focus group participants said the lack of 
administrative staff and essential equipment causes specialized 
employees to waste time performing administrative functions. This 
suggests that OPM needs to take additional steps to ensure that it has 
aligned its available resources with its mission needs. 

OPM Has Engaged in Workforce and Succession Planning, but Different 
Workforce Skills May Be Needed to Meet Future Needs: 

OPM's workforce and succession planning efforts may be sufficient for 
maintaining the organization's current capacity, but OPM may need more 
collaborative workforce skills to lead and implement human capital 
reform. We have reported that strategic workforce planning addresses 
two critical needs: (1) aligning an organization's human capital 
program with its current and emerging mission and programmatic goals, 
and (2) developing long-term strategies for acquiring, developing, and 
retaining staff to achieve programmatic goals.[Footnote 13] 

Almost half (about 46 percent) of OPM's workforce will be eligible to 
retire as of September 30, 2010, as compared with 33 percent 
governmentwide, according to information in the Central Personnel Data 
File (CPDF). Further, about two-thirds (66 percent) of the OPM SES 
employees will be eligible to retire at the same time--about the same 
as the governmentwide eligibility of 68 percent. We have reported that 
without careful planning, SES separations pose the threat of an 
eventual loss in institutional knowledge, expertise, and leadership 
continuity.[Footnote 14] In light of the impending retirements among 
its SES workforce, OPM has engaged in succession planning to ensure 
that it has the leadership talent in place to effectively manage OPM's 
transformation, as well as ensure that the workforce skill mix is 
appropriate to meet its future challenges and transition to more of a 
strategic consultant role. This effort is important because leading 
organizations engage in broad, integrated succession planning efforts 
that focus on strengthening both current and future organizational 
capacity. OPM officials told us that the agency has identified 142 key 
leadership positions within the SES and GS-15 grade levels that are 
classified for succession planning in the near future. Currently, OPM's 
succession planning efforts are only focused on SES and GS-15 
positions. I understand that OPM is now planning to expand the scope of 
its succession management program to include all supervisory, 
managerial, and executive positions throughout the agency-- 
approximately 240 additional positions. I would encourage them to 
undertake this broader succession planning effort, given the importance 
of maintaining, and in many cases augmenting, critical skills 
throughout the organization, as well as the consideration of the future 
skills it may need to achieve its own transformation to lead the 
executive branch's overall human capital reform effort. 

As I noted earlier, in 2003, we reported that OPM's overarching 
challenge today is to lead agencies in shaping their human capital 
management systems while also undergoing its own transformation. Given 
its governmentwide leadership responsibilities, it is particularly 
important that OPM seeks to "lead by example" with its own human 
capital practices. Leading organizations go beyond simply backfilling 
vacancies, and instead focus on strengthening both current and future 
organizational capacity. Thus, it is critical that OPM assesses its 
mission-critical workforce skills relative to the human capital reform 
competencies and needs of the future. OPM officials said they will be 
issuing the agency's updated strategic human capital plan later this 
summer to include such items as its human capital focus, workforce 
plan, leadership and knowledge management, workforce analysis, and 
performance goals, among other things. Director Springer has noted that 
she envisioned the OPM of the future as having a greater emphasis on 
collaboration and consulting capabilities. Given the greater emphasis 
on collaboration and consulting skills, I believe that OPM's 
forthcoming strategic human capital plan should include thoughtful 
strategies for how the agency plans to recruit, train, develop, 
incentivize, and reward employees with this important skill set. 

Customer Focus, Communication, and Collaboration: 

During a transformation, we have reported that a communication strategy 
is especially crucial in the public sector where policy making and 
program management demand transparency and a full range of stakeholders 
and interested parties are concerned not only with what results are to 
be achieved, but also which processes are to be used to achieve those 
results.[Footnote 15] Our work on high-performing organizations and 
successful transformations has shown that communication with customers 
and stakeholders should be a top priority and is central to forming the 
partnerships needed to develop and implement an organization's 
transformation strategies. Specifically, an appropriate customer 
communication strategy would include consistency of message and 
encourage two-way communication. 

A majority of CHCOs and human resource (HR) directors told us that OPM 
could improve the clarity, consistency, and timeliness of its guidance 
to agencies. Several agency officials commented that OPM conveyed a 
"we'll know it, when we see it" method of communicating expectations. 
This method of communicating expectations and lack of clear and timely 
communications and guidance was clearly illustrated as agencies 
conveyed their experiences with the SES performance management system 
certification process. In November 2003, Congress authorized a new 
performance-based pay system for members of the SES. Under this 
authority, SES members are to no longer receive automatic annual across-
the-board or locality pay adjustments with the new pay system. Agencies 
are to base pay adjustments for SES members on individual performance 
and contributions to the agency's performance by considering such 
things as the unique skills, qualifications, or competencies of the 
individual and their significance to the agency's mission and 
performance, as well as the individual's current responsibilities. 
Congress also authorized agencies to raise the maximum rate of pay for 
senior executives if their SES performance appraisal system is 
certified by OPM and OMB as making meaningful distinctions in relative 

We asked agency CHCOs and HR directors to provide us with their 
experiences with OPM's administration of the SES pay-for-performance 
process to identify parallel successes and challenges that OPM could 
face in a certification role for the implementation of human capital 
reforms. We heard a number of concerns from agencies regarding OPM's 
ability to communicate expectations, guidance, and deadlines to 
agencies in a clear and consistent manner. For example, one official 
said, while OPM tries to point agencies in the right direction, it will 
not give agencies discrete requirements. This leads to uncertainty 
about what agencies must and should demonstrate to OPM. Some CHCOs and 
HR directors also told us that, in some cases, OPM changed expectations 
and requirements midstream with little notice or explanation. 

The late issuance of certification submission guidance to agencies was 
especially problematic for agencies and they appeared to have responded 
to this circumstance in two different ways. Because OPM did not issue 
guidance for calendar year 2006 submissions until January 5, 2006, some 
agencies were unable to deliver their submissions to OPM before the 
beginning of the calendar year. Further, OPM clarified this guidance in 
a January 30, 2006, memorandum to agencies, telling agencies that SES 
performance appraisal systems would not be certified for calendar year 
2006 if the performance plans did not hold executives accountable for 
achieving measurable business outcomes. As a result, agencies had to 
revise their submissions, where necessary, to meet OPM's additional 
requirements. Some agencies indicated that OPM's late issuance of 
guidance also creates an uneven playing field among agencies, as those 
that choose to wait until OPM issues guidance before applying for 
certification are unable to give their SES members higher pay, while 
their counterparts who did not wait for OPM's guidance, could get 
certified sooner. Some human resource directors we spoke with expressed 
concern that OPM is not certain about their expectations of agencies' 
submissions and said they would like more clarity from OPM on the 
certification process. For example, one agency director of executive 
resources said agencies ended up relying on each other rather than OPM 
during the 2004 SES certification process. They said OPM provided 
agencies with mixed messages on what would be required for SES 
certification. One human resource director requested that, at the very 
least, agencies should be given the certification process guidelines 
before the end of the calendar year, so they can plan adequately. OPM 
officials we spoke with about this agreed that they need to be able to 
provide clear and consistent guidance to agencies and said they are 
working to improve this. Further, they said their evaluation of 
agencies' submissions is evolving as their understanding of the SES 
certification criteria is increasing. 

In the past, we have reported concerns with OPM's communications 
pertaining to their leadership in implementing governmentwide human 
capital initiatives and have recommended ways in which OPM could 
improve its guidance to federal agencies. For example, in 2003 we 
reported that an initial lack of clarity in telework guidance for 
federal agencies from OPM led to misleading data being reported on 
agencies' telework programs.[Footnote 16] As one of the lead agencies, 
along with the General Service Administration (GSA), for the federal 
government's telework initiative, OPM issued telework guidance to 
agencies in 2001 that did not define a statement that was included in 
their guidance that told agencies that eligible employees who wanted to 
participate in telework must be allowed that opportunity. As a result, 
we found that agencies interpreted this statement differently and 
subsequently reported incomparable data to OPM. After discussing this 
issue with OPM officials, OPM reacted promptly by issuing new telework 
guidelines within weeks that addressed our initial concerns. We 
concluded that the steps taken by OPM in response to our findings 
showed a ready willingness to address issues that were hindering 
implementation of this important human capital initiative. We also 
recommended to OPM and GSA that they should use their lead roles in the 
federal telework initiative to identify where more information and 
additional guidance, guidelines, and technical support could assist 
agencies in their implementation of telework. 

In May 2006, we reported that communications problems between OPM and 
DOD may be limiting governmentwide efforts to improve the personnel 
security clearance--an area of high-risk concern that I noted 
earlier.[Footnote 17] For example, DOD officials asserted--and OPM 
disagreed--that OPM had not officially shared its investigator's 
handbook with DOD until recently. DOD adjudicators had raised concerns 
that without knowing what was required for an investigation by the 
investigator's handbook, they could not fully understand how 
investigations were conducted and effectively use the investigative 
reports that form the basis for their adjudicative decisions. OPM 
indicated that it is revising the investigator's handbook and is 
obtaining comments from DOD and other customers. 

More recently, our review of oversight of Equal Employment Opportunity 
(EEO) related requirements and guidance, found little evidence of OPM 
coordination with Equal Employment Opportunity Commission (EEOC) 
because an insufficient understanding of their mutual roles, authority, 
and responsibilities resulting in lost opportunity to realize 
consistency, efficiency, and public value in federal EEO and workplace 
diversity human capital management practice.[Footnote 18] Further, a 
majority of human capital and EEO officials responding to a survey we 
did for that review, reported that OPM's feedback on their agencies' 
programs and the guidance they received from OPM was not useful. 

Helping to achieve EEO and workplace diversity is another area where 
opportunities exist for OPM to increase its coordination and 
collaboration with EEOC. Over 80 percent of the respondents to our 
survey of federal human capital and EEO officials said that more 
coordination between OPM and EEOC would benefit their agency, adding 
that the lack of such coordination resulted in added requirements on 
them and detracted from the efficiency of their won work. Moreover, in 
2005, OMB recommended to OPM that it develop a regular/formal working 
relationship with EEOC with respect to those programs where it shares 
oversight responsibility with EEOC in order to improve overall 
government efficiency. 

As changes in governmentwide human capital initiatives begin to address 
the changing needs of the 21ST century federal workforce, it will be 
especially critical that OPM develops clear and timely guidance for 
agencies that can be consistently and easily implemented. 

OPM's HCO Structure Is Viewed as a Barrier to Meeting Customer Needs: 

CHCOs and human resource directors informed us that, while OPM's HCO 
structure is good in theory, it is often a barrier to obtaining timely 
technical guidance. Within the HCMLSA division, OPM assigns one HCO as 
the main point of contact to each agency of the President's Management 
Council and one to each cluster of small agencies. HCOs act as liaisons 
and consultants communicating with an agency's human capital 
leadership. CHCOs and human resource directors commented that their HCO 
has become an advocate for their agencies and has been helpful for 
troubleshooting and resolving issues that did not require detailed 
technical assistance. However, problems arose for many agencies when 
technical questions and issues had to be communicated via their HCO to 
the policy experts at OPM. For example, one human resource officer told 
us they asked their HCO if they could talk directly to OPM experts on 
Voluntary Separation Incentive Pack and Voluntary Early Retirement 
Authority, but the HCO insisted on relaying the information to the 
agency. The agency official said their HCO was relatively new, so there 
were numerous policy nuances that were lost during this process. 

One CHCO stated that, while the HCOs at OPM have provided one-stop 
shopping for agencies, having the HCO as the only point of contact can 
be restrictive. Several human resource directors conveyed instances 
where technical nuances of a particular issue, such as the Voluntary 
Early Retirement Authority, were lost in the translation between the 
HCOs and policy experts at OPM, as the HCO often did not have federal 
HR experience or expertise. As one official described it, while the HCO 
is helpful, time and context are lost in having to go through the HCO 
to obtain technical assistance. Human resource directors expressed a 
desire to communicate directly with OPM's policy experts for technical 
guidance and some use their personal contacts at OPM for technical 
guidance and assistance instead of going through their HCO. 

Human resources directors also said that they sometimes received mixed 
messages on the SES certification process from OPM, and it appeared 
that answers would change depending on with whom an official was 
working. From their perspective, agencies thought that OPM did not 
effectively communicate among its internal divisions and that OPM could 
greatly improve its customer service by clarifying its internal 
structure and making it more customer-oriented. Human resource 
directors commented about the lack of a formal mechanism, such as a 
survey instrument, to provide feedback to OPM on their guidance and 
assistance to agencies. We asked an executive within the HCLMSA 
division about this and were told that while OPM does not have a formal 
feedback mechanism, they talk to agencies all the time, so OPM does not 
feel that a formal mechanism is needed. 

Employee responses to FHCS questions relating to OPM's customer focus 
show employees are also concerned about the service OPM provides to 
agencies. OPM's results for the two FHCS questions relating to customer 
focus show a decline from 2002 to 2004 in its employee's satisfaction 
with OPM's focus on customer needs. In 2002, 66 percent of OPM 
employees agreed that "products and services in their work unit are 
improved based on customer/public input." However in 2004, 53 percent 
of OPM employees agreed with the same statement, a 13 percentage point 
decline. A similar decline occurred in response to a FHCS question 
concerning performance rewards. In 2002, 51 percent of OPM employees 
agreed that "employees are rewarded for providing high quality products 
and services to customers," whereas in 2004, 35 percent of OPM 
employees agreed with the same statement, a decline of 16 percentage 

While the employee focus group discussions did not directly address 
customer focus, some participants raised concerns during their 
discussions that could affect OPM's client focus. Focus group 
participants from HCLMSA said OPM provides poor service to external 
customers due to unnecessary delays and a lack of communication. They 
said the HCO structure makes it difficult to connect customers with OPM 
employees who can provide them with accurate information and advice. 
The HCO structure was introduced in 2003, therefore it could have 
contributed to the decline in positive responses to the customer focus 
questions in the 2004 FHCS. 

In an OPM briefing to GAO, officials described OPM's structure in 
support of strategic human capital management, and part of that 
structure includes "targeting capability to implement strategic 
management of human capital on an agency-by-agency basis" through its 
HCLSMA division. According to OPM documents, each agency center in 
HCLMSA has staff to provide human resources technical assistance to 
agencies. OPM has a number of goals and activities in its Strategic and 
Operational Plan intended to improve its customer service and focus on 
customer needs. For example, OPM plans to develop performance standards 
for OPM common services by July 2006, and implement them by October 

As OPM works to address its customer issues, it should consider other 
ways to more quickly respond to inquires from agencies for specific 
technical expertise. In addition, OPM should develop a customer 
feedback survey to identify issues related to timeliness, customer 
needs, satisfaction, and take action accordingly. 

OPM Needs to Take Full Advantage of Opportunities to Collaborate and 
Facilitate Information Sharing with the CHCO Council and Agency Human 
Resource Directors: 

Our prior work has found that high-performing organizations strengthen 
accountability for achieving crosscutting goals by placing greater 
emphasis on collaboration, interaction, and teamwork, both within and 
across organizational boundaries, to achieve results that often 
transcend specific organizational boundaries. In addition, we have 
found that high-performing organizations strategically use partnerships 
and that federal agencies must effectively manage and influence 
relationships with organizations outside of their direct control. An 
effective strategy for partnerships includes establishing knowledge-
sharing networks to share information and best practices. 

To collaborate and share information, CHCOs said that OPM could make 
better use of the CHCO Council. Human resource directors said that OPM 
could facilitate more communities of practice at the implementation 
level among them. We have reported often on the need to collaborate and 
share information as a way to improve agency human capital approaches, 
processes, and systems. Specifically, we have made several 
recommendations to OPM to work more closely with the CHCO Council to 
(1) share information on the effective use of retirement flexibilities, 
(2) act as a clearinghouse of information for the innovative use of 
alternative service delivery for human capital services, and (3) more 
fully serve as a clearinghouse in sharing and distributing information 
about when, where, and how the broad range of human capital 
flexibilities are being used to help agencies meet their human capital 
management needs.[Footnote 19] Further, we have recommended that OPM, 
in conjunction with the CHCO Council, help facilitate the coordination 
and sharing of leading practices related to efficient administration of 
the student loan repayment program by conducting additional forums, 
sponsoring training sessions, or using other methods.[Footnote 20] For 
example, our work on the federal hiring process identified areas where 
OPM could target its efforts.[Footnote 21] OPM has since taken a number 
of actions to help agencies improve their hiring processes. With 
respect to improving agency hiring processes and use of human capital 
flexibilities, we reported that the CHCO Council should be a key 
vehicle for this needed collaboration. For example, OPM, working 
through the CHCO Council, can serve as a facilitator in the collection 
and exchange of information about agencies' effective practices and 
successful approaches to improved hiring.[Footnote 22] To address the 
federal government's crosscutting strategic human capital challenges, 
we have testified that an effective and strategic CHCO Council is 
vital. We have also reported that using interagency councils, such as 
the Chief Financial Officers' and Chief Information Officers' Councils, 
has emerged as important leadership strategy in both developing 
policies that are sensitive to information concerns and gaining 
consensus and consistent follow-through within the executive 
branch.[Footnote 23] 

Agency officials overwhelmingly reinforced a need for OPM to do more to 
collaborate and facilitate information sharing with the CHCO Council 
and HR directors. A former department-level CHCO described the CHCO 
Council as "a lost opportunity with little opportunity for dialogue." 
Another CHCO stated that the Council has rarely been used to debate new 
human capital policies and has been excluded from major policy debates. 
Although, some CHCOs and HR directors pointed to OPM's successful 
collaborative efforts through the CHCO Council, such as its assistance 
to agencies in the aftermath of Hurricane Katrina, they told us that 
OPM misses opportunities to more effectively partner with agencies. 
While some human resource directors believed the CHCO Council did 
provide a means of sharing information, which is especially useful for 
the CHCOs who lack human resources backgrounds, several officials 
described ways in which OPM could more effectively use the Council. 

A majority of human resource directors we met with told us they would 
like to see OPM facilitate the sharing of information and best 
practices among HR professionals, as well as CHCOs. Some officials said 
that OPM frequently communicates with agencies via fax and e-mail, but 
does not bring agencies together as often to share information. Some 
CHCOs said they would like to see the CHCO Council interact more with 
other governmentwide interagency councils. Also, most HR directors, as 
well as, several CHCOs, responded positively to more involvement of 
agency HR directors on the CHCO Council. Director Springer said that 
membership on the CHCO Council has been expanded to include a deputy 
CHCO position. The inclusion of deputies is an important step toward 
building a collegial environment for sharing best practices. 

Several agency officials used the SES performance management system 
certification process to illustrate what they considered a missed 
opportunity for OPM to facilitate agency sharing of information and 
best practices, particularly during the certification application 
submission process. However, an OPM official told us that it does not 
provide agencies with examples of "best practice" certification 
submissions because OPM does not want to convey to agencies that there 
is only one "right" way to become certified. While OPM is certainly 
correct about no one right way, several agencies nevertheless indicated 
having difficulty understanding OPM's expectations for agency 
certification submissions. In response, one CHCO took the initiative to 
use one of the CHCO Academy[Footnote 24] meetings to engender 
information sharing among agencies with the application process. 

Collaboration and information sharing will be critical as human capital 
reforms begin to take hold across government. If OPM is to successfully 
lead reform, it will need to strategically use the partnerships it has 
available to it, such as the CHCO Council and others, as well as 
develop a culture of collaboration, information sharing, and working 
with customers to understand what they will need from the agency. 

OPM's Strategic and Operational Plan Includes a Number of Efforts 
Intended to Improve Its Customer Focus: 

It is clear from the OPM Strategic and Operational Plan, 2006-2010 that 
issues of customer satisfaction and timeliness in the provision of OPM 
common services is an important and compelling customer need. OPM 
management has indicated that operational goals and activities are 
organized as steps in its internal activities or processes to better 
support external products and services for its customers and 
stakeholders. For instance, OPM intends to develop and implement a new 
common services methodology, to employ performance standards for 
measuring the delivery of common services to customers, and to operate 
under a fully implemented set of internal delegated authorities and 
protocols by the end of fiscal year 2006. OPM management has pointed 
out that these activities are also presented in a timeline tracking 
sheet that is used to make "real time" changes through continual update 
of accomplishments. It is OPM's intent to then inform customers of the 
agency's success in meeting the stated customer goals found in the plan 
within two weeks of each success, thereby establishing a means of 
transparency and accountability. OPM officials told us that to date, 
the agency is meeting this intent. 

Successful organizations establish a communication strategy that allows 
for the creation of common expectations and reports on related 
progress. Activities intended to provide for better means of 
communication and collaboration are also clearly found in the OPM plan. 
As noted earlier, OPM is taking steps to improve its internal 
communication by recently developing and posting a functional 
organization directory on its internal website. OPM also plans to 
redesign its public website to improve communication and customer focus 
by the close of fiscal year 2006. The OPM plan further states, as a 
strategic objective, that OPM "will have constructive and productive 
relationships with external stakeholders," such as Congress, veterans, 
unions, media and employee advocacy groups. 

To better meet external client needs, OPM has an ongoing key related 
effort to modernize its retirement systems program. Through this 
program, OPM expects to reengineer the various processes that provide 
services to retirement program participants that include about 5 
million federal employees and annuitants. One of OPM's objectives is to 
standardize applications for coverage and eligibility determinations 
and benefits calculations, making them specific to customer needs and 
accessible to federal agencies and program participants. OPM's 
Strategic and Operational Plan contains operational goals related to 
this modernization effort. We believe that such a modernization effort 
is clearly needed. At the same time, as we have noted in our prior 
work, OPM has lacked needed processes for developing and managing 
requirements and related risks, while providing sound information to 
investment decision makers in order to effectively complete 
modernization of this program.[Footnote 25] We made recommendations to 
OPM regarding establishment of management processes needed for 
effective oversight of the program. OPM agreed that the processes we 
identified were essential and noted it is taking steps to address our 
recommendations to strengthen these processes. 

Performance Culture and Accountability: 

Leading organizations have recognized that a critical success factor in 
fostering a results-oriented culture is an effective performance 
management system that creates a "line of sight" showing how unit and 
individual performance can contribute to overall organizational goals 
and helping them understand the connection between their daily 
activities and the organization's success.[Footnote 26] Effective 
performance management systems can drive organizational transformation 
by encouraging individuals to focus on their roles and responsibilities 
to help achieve organizational outcomes. Our analysis shows that OPM's 
executive performance management system aligns the performance 
expectations of OPM's top leaders with the organization's goals. OPM 
sets forth the organization's goals in its 2006-2010, Strategic and 
Operational Plan and directly connects these goals to the performance 
expectations of top leaders using performance contracts. Clearly 
defined organizational goals are the first step toward developing an 
effective performance management system. 

OPM uses performance contracts to link organizational goals to 
performance expectations for senior leaders and holds them accountable 
for achieving results. As we have reported, high performing 
organizations understand that they need senior leaders who are held 
accountable for results, drive continuous improvement, and stimulate 
and support efforts to integrate human capital approaches with 
organizational goals and related transformation issues.[Footnote 27] 
These organizations can show how the products and services they deliver 
contribute to results by aligning performance expectations of top 
leadership with organizational goals and then cascading those 
expectations down to lower levels. We assessed how well OPM is creating 
linkages between executive performance and organizational success by 
reviewing the performance contracts (Fiscal Year 2006 Executive 
Performance Agreements) of the five associate directors of OPM's major 
divisions. We evaluated these performance contracts by applying 
selected key practices we have previously identified for effective 
performance management.[Footnote 28] We chose these practices because 
they are especially relevant to OPM's current strategic management 
efforts. These practices, collectively with others we have identified 
in prior work, create a "line of sight" showing how unit and individual 
performance can contribute to overall organizational goals. 

We found that OPM has implemented several key practices to develop an 
effective performance management system for its senior executives: 

* Align individual performance expectations with organizational goals. 
An explicit alignment of daily activities with broader results is one 
of the defining features of effective performance management systems in 
high-performing organizations. OPM executive performance contracts 
explicitly link individual performance commitments with organizational 
goals. Executives are evaluated on their success toward achieving goals 
that are drawn directly from the OPM Strategic and Operational Plan. 
Measures of these achievements account for 75 percent of executives' 
annual performance ratings. For example, one associate director's 
performance contract includes a commitment to achieve OPM's operational 
goal of having "80 percent of initial clearance investigations 
completed within 90 days." 

* Connect performance expectations to crosscutting goals. High- 
performing organizations use their performance management systems to 
strengthen accountability for results, specifically by placing greater 
emphasis on collaboration to achieve results. OPM's executive 
performance contracts achieve this objective by making executives 
accountable for OPM-wide goals. In addition to specific divisional 
goals, each executive performance contract includes a common set of 
"corporate commitments" that transcend specific organizational 
boundaries and that executives must work together to achieve. These 
commitments are directly linked to the OPM Strategic and Operational 
Plan. For example, each executive contract includes a commitment to 
"Implement an employee recognition program at OPM by July 1, 2006." 

* Provide and routinely use performance information to track 
organizational priorities. High-performing organizations provide 
objective performance information to executives to show progress in 
achieving organizational results and other priorities.[Footnote 29] OPM 
is taking a tactical approach to implementing its Strategic and 
Operational Plan. Activities supporting the strategic objectives are 
listed on an "Operational Timeline" or tracking sheet that OPM uses, 
and "real time" changes are made through continual updates of 
accomplishments. According to Director Springer, each OPM division has 
a tracking sheet for the specific goals for which they are accountable. 
She told us that OPM leadership meets monthly to review the timeline 
and to determine if goals have been met or what progress OPM is making 
toward achieving their objectives. 

* Require follow-up actions to address organizational priorities. High- 
performing organizations require individuals to take follow-up actions 
based on the performance information available to them. OPM's 
performance contracts include commitments for executives to respond to 
results from the FHCS. Each associate director is committed to 
"Implement [an] action plan to ensure OPM is rated in the top 50% of 
agencies surveyed in the 2006 FHCS and the top five agencies in the 
2008 FHCS." To achieve this goal, each associate director developed a 
FHCS action plan for their division to address employee concerns 
identified in the 2004 FHCS and the follow-up focus group discussions. 

* Use competencies to provide a fuller assessment of performance. High- 
performing organizations use competencies, which define the skills and 
supporting behaviors that individuals need to effectively contribute to 
organizational results. Each OPM executive performance contract 
includes core competency requirements for effective executive 
leadership, which account for 25 percent of annual performance ratings. 
For example, executives are responsible for building "trust and 
cooperative working relationships both within and outside the 

OPM's executive performance contracts incorporate these key practices 
of performance management, and the agency must build on this progress 
and ensure that its SES performance management system is used to drive 
organizational performance. 

OPM Can Build upon Strong Accountability to Address Employee Concerns 
with its Performance Culture: 

OPM can build on its strong system of executive accountability to 
address employee concerns with its overall performance culture, as well 
as support its internal transformation. OPM has plans to implement new 
performance elements and standards for all OPM employees to support the 
new agency Strategic and Operational Plan. As we have reported, high- 
performing organizations use their performance management systems to 
strengthen accountability for results.[Footnote 30] In the 2004 FHCS, 
the percent of OPM employees who agreed that "I am held accountable for 
achieving results" was 81 percent; essentially the same as the 80 
percent of employees in the rest of the government agreeing with this 
statement. OPM employees' positive view of "being held accountable for 
achieving results" can be used to help address employee concerns 
regarding its performance culture. For example, a significant decrease 
occurred between OPM's 2002 and 2004 FHCS results on a question that 
measures employee perceptions of management's focus on organizational 
goals. The percentage of OPM employees who agreed that "managers review 
and evaluate the organization's progress toward meeting its goals and 
objectives," declined by 17 percentage points from 2002 (69 percent) to 
2004 (52 percent). This question was only discussed in a few of the 
focus groups, so it is unclear why fewer employees agreed with this 
statement in 2004. Although limited, these discussions suggest that 
some employees do not feel their performance appraisal is a fair 
reflection of their performance due to inadequate goals and performance 
standards, and a lack of alignment between employee goals and OPM's 

OPM plans to address these employee performance concerns to ensure 
there is a clear linkage between the OPM Strategic Operational Plan, 
Division/Office Plans, and individual employee-level work plans. By 
July 2006, OPM plans to implement new performance elements and 
standards for all employees that support the OPM Strategic and 
Operational Plan. Already underway, is an OPM beta site (the HCLMSA 
division) to test its performance management system to link pay to 
performance. OPM officials informed us that as of June 1, 2006, all 
HCLMSA employees are now working under new performance plans, 
consistent with the OPM beta site requirements. 

To maximize the effectiveness of a performance management system, high 
performing organizations recognize that they must conduct frequent 
training for staff members at all levels of the organization.[Footnote 
31] OPM plans to develop and implement a core curriculum for 
supervisory training to ensure all managers and supervisors are trained 
in performance management. Also, OPM is developing a proposal to 
enhance the relationships between the human resources function and 
managers to assist them in dealing with their human resource issues. If 
effectively implemented, these actions should address many of the 
concerns raised by focus group participants. 

Concluding Remarks: 

OPM faces many challenges as it seeks to achieve its organizational 
transformation and become a high-performing organization. To meet its 
current and future challenge to lead human capital across government, 
Director Springer has shown leadership commitment to its transformation 
by initiating a number of action plans to address employee concerns. 
While the steps taken by OPM demonstrate progress in achieving its 
transformation, it must continue on this path by closely monitoring and 
communicating with its employees and customers, expanding its workforce 
and succession planning efforts, and continuing to improve its 
performance culture and accountability for results. As I have testified 
on many occasions, in recent years GAO has learned a great deal about 
the challenges and opportunities that characterize organizational 
transformation. From both our own experiences and from reviewing 
others' efforts, I look forward to working closely with Director 
Springer and assisting Congress as it moves toward the implementation 
of governmentwide human capital reform. 

Chairman Voinovich, Senator Akaka, and Members of the subcommittee, 
this completes my prepared statement. I would be pleased to respond to 
any questions that you may have. 

Contact and Acknowledgments: 

For further information regarding this statement, please contact Brenda 
S. Farrell, Acting Director, Strategic Issues, at (202) 512-6806 or Individuals making key contributions to this 
statement include Julie Atkins, Thomas Beall, Carole Cimitile, William 
Colvin, S. Mike Davis, Charlene Johnson, Trina Lewis, and Katherine H. 

[End of section] 

Appendix I: 

Federal Human Capital Survey, Focus Groups, and Action Plans: 

We used the Federal Human Capital Survey (FHCS) and summaries of the 
Office of Personnel Management (OPM) focus groups to assess employee 
views of OPM's organizational capacity. OPM conducted the FHCS during 
fall 2004. The survey sample included 276,000 employees and was 
designed to be representative of the federal workforce. OPM had 1,539 
respondents to the survey. The survey included 88 items that measured 
federal employee perceptions about how effectively agencies are 
managing their workforces. For more information about the 2004 FHCS 
survey see We reviewed OPM's analysis of 
its 2004 FHCS results and conducted our own analyses of survey results 
using 2002 and 2004 FHCS datasets provided to us by OPM. On the basis 
of our examination of the data and discussions with OPM officials 
concerning survey design, administration and processing, we determined 
that the data were sufficiently reliable for the purpose of our review. 

In fall 2005, OPM contracted with Human Technology, Inc. to conduct 
focus groups to understand factors contributing to employees' responses 
on selected items from the 2004 FHCS and to obtain employees' ideas for 
addressing top priority improvement areas. Employees were randomly 
selected to participate in 33 focus groups with participants from all 
major divisions, headquarters and the field, employees and supervisors, 
and major OPM installations. The participants in each focus group 
decided which topics to discuss by voting for the FHCS questions that 
"are most important for OPM to address in order to make the agency a 
better place to work." Questions were divided into three categories: 
leadership, performance culture, and other dimensions. Participants 
voted for three questions in each category and the questions that 
received the most votes were discussed by the group. We analyzed 
summaries of these focus groups and used the participant comments to 
illustrate employee perspectives. We also analyzed recently issued 
action plans developed by OPM to address issues identified in the focus 
groups. These action plans were approved by OPM's Director in May 2006 
and they list specific actions OPM and each internal division will take 
along with suggested due dates for completion. 

[End of Section]


[1] GAO, High-Risk Series: An Update, GAO-01-263 (Washington, D.C.: 
January 2001). 

[2] GAO, 21ST Century Challenges: Reexamining the Base of the Federal 
Government, GAO-05-325SP (Washington, D.C.: Mar. 4, 2005). 

[3] GAO, Human Capital: Preliminary Observations on the 
Administration's Draft Proposed "Working for America Act," GAO-06-142T 
(Washington, D.C.: Oct. 5, 2005). 

[4] GAO, Human Capital: Principles, Criteria, and Processes for 
Governmentwide Federal Human Capital Reform, GAO-05-69SP (Washington, 
D.C.: Dec. 1, 2004). 

[5] GAO, Major Management Challenges and Program Risks, Office of 
Personnel Management, GAO-03-115, (Washington, D.C.: January 2003). 

[6] The Government Performance and Results Act of 1993 (GPRA) requires 
federal agencies to focus on achieving results and to provide 
objective, performance-based information intended to improve 
congressional and agency decision-making by providing comprehensive and 
reliable information on the extent to which federal programs are 
fulfilling their statutory intent. 

[7] GAO, High-Risk Series: Strategic Human Capital Management, GA0-03- 
120 (Washington D.C.: January 2003). 

[8] The Outstanding Scholars Program is a special hiring authority for 
GS-5 and GS-7 positions that allows agencies to appoint college 
graduates with high grade point averages or class standing. The use of 
the authority is currently being litigated before the Merit Systems 
Protection Board. 

[9] GAO, Federal Employee Retirements: Expected Increases Over the Next 
5 Years Illustrates Need for Workforce Planning, GAO-01-509 
(Washington, D.C.: Apr. 27, 2001). 

[10] GAO, DOD Personnel Clearances: New Concerns Slow Processing of 
Clearances for Industry Personnel, GAO-06-748T (Washington, D.C.: May 
17, 2006). 

[11] GAO, Human Capital: A Self-Assessment Checklist for Agency 
Leaders, GAO/OCG-00-14G (Washington, D.C.: September 2000); GAO, Human 
Capital: Practices That Empowered and Involved Employees, GAO-01-1070 
(Washington, D.C.: Sep. 14, 2001). 

[12] GAO-03-115. 

[13] GAO, Human Capital: Key Principles for Effective Strategic 
Workforce Planning, GAO-04-39 (Washington, D.C.: Dec.11, 2003). 

[14] GAO, Human Capital: Insights for U.S. Agencies from Other 
Countries' Succession Planning and Management Initiatives, GAO-03-914 
(Washington, D.C.: Sep. 15, 2003). 

[15] GAO, Highlights of a GAO Forum: Mergers and Transformation: 
Lessons Learned for a Department of Homeland Security and Other Federal 
Agencies, GAO-03-293SP (Washington, D.C.: Nov. 14, 2002). 

[16] GAO, Human Capital: Further Guidance, Assistance, and Coordination 
Can Improve Federal Telework Efforts, GAO-03-679 (Washington, D.C.: 
Jul. 18, 2003). 

[17] GAO-06-748T. 

[18] GAO, Equal Employment Opportunity: Improved Coordination Needed 
between EEOC and OPM in Leading Federal Workplace EEO, GAO-06-214 
(Washington, D.C.: Jun. 16, 2006). 

[19] GAO, Human Capital: Agencies Are Using Buyouts and Early Outs with 
Increasing Frequency to Help Reshape Their Workforces, GAO-06-324 
(Washington, D.C.: Mar. 31, 2006); GAO, Human Capital: Selected 
Agencies' Use of Alternative Service Delivery Options for Human Capital 
Activities, GAO-04-679 (Washington, D.C.: Jun. 25, 2004); GAO, Human 
Capital: OPM Can Better Assist Agencies in Using Personnel 
Flexibilities, GAO-03-428 (Washington, D.C.: May 9, 2003). 

[20] GAO, Federal Student Loan Repayment Program: OPM Could Build on 
Its Efforts to Help Agencies Administer the Program and Measure 
Results, GAO-05-762 (Washington D.C.: Jul. 22, 2005). 

[21] GAO, Human Capital: Opportunities to Improve Executive Agencies' 
Hiring Processes, GAO-03-450 (Washington, D.C.: May 30, 2003). 

[22] GAO, Human Capital: Additional Collaboration Between OPM and 
Agencies Is Key to Improved Federal Hiring, GAO-04-797 (Washington, 
D.C.: Jun. 7, 2004). 

[23] GAO, Human Capital: Building on the Current Momentum to Transform 
the Federal Government, GAO-04-976T (Washington, D.C.: Jul. 20, 2004).

[24] The CHCO Academy was established as a forum for Council members 
only, to discuss human resources issues, learn from one another in an 
informal setting, and share best practices in the strategic management 
of human capital. Academy sessions are scheduled throughout the year on 
the third Thursday of the month at the Office of Personnel Management. 

[25] GAO, Office of Personnel Management: Retirement Systems 
Modernization Program Faces Numerous Challenges, GAO-05-237 
(Washington, D.C.: Feb. 28, 2005).  

[26] GAO, Results-Oriented Cultures: Using Balanced Expectations to 
Manage Senior Executive Performance, GAO-02-966 (Washington, D.C.: Sep. 
27, 2002). 

[27] GAO, Human Capital: Senior Executive Performance Management Can Be 
Significantly Strengthened to Achieve Results, GAO-04-614 (Washington, 
D.C.: May 2004). 

[28] GAO, Results-Oriented Cultures: Creating a Clear Linkage between 
Individual Performance and Organizational Success, GAO-03-488, 
(Washington, D.C.: Mar. 14, 2003). 

[29] GAO-04-614.

[30] GAO-03-488. 

[31] GAO-03-488

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