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
(202) 512-8678
clowersa@gao.gov

 

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What GAO Found

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

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

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

Why GAO Did This Study

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

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

What GAO Recommends

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

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

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Priority recommendation

    Comments: In fiscal year 2019, SEC began to implement new, more comprehensive workforce and succession planning processes that address weaknesses we had identified in our 2013 and 2016 reports, such as the lack of a comprehensive skills gap analysis to help ensure that employees across all occupations have the skills necessary to fulfill SEC's mission. SEC provided a copy of its Fiscal Year 2019-2022 Workforce Planning Strategy, which outlines these new processes and provides for mechanisms to ensure that workforce plans for SEC divisions and offices are updated annually. SEC addressed a weakness we had identified by conducting an agency-wide competency assessment survey in 2018 to identify potential skill gaps across all SEC occupations rather than just a subset. To help managers use the results of this skills gap analysis, SEC created a Workforce Capability Dashboard, which is an interactive software tool that allows SEC managers to easily review and analyze the data from this analysis. In fiscal year 2019, in accordance with its new workforce planning strategy, SEC divisions and offices each held a human capital review meeting at which division and office managers met with Office of Human Resources staff to discuss workforce needs and priorities and inform their operating plans and budget requests. These annual human capital review meetings have helped to address another weakness we identified by helping SEC to link its workforce planning to its budget requests. In addition, SEC's new strategy includes enhancements to its succession planning process. For example, the Office of Human Resources created and implemented a standardized template that managers in each division and office use to identify key leadership positions and candidate pools. The Office of Human Resources also tracks senior-level turnover to determine the level of attrition at senior leadership levels and to determine whether SEC is filling these positions internally or externally. SEC also surveyed employees to gauge their interest in progressing to higher levels of management responsibility. Finally, in 2020, SEC is planning to launch a new program to centralize the process for screening and selecting a cohort of high-potential leaders who will be certified and available to fill senior officer positions as they become vacant. Taken together, SEC's efforts to strengthen its workforce and succession planning efforts will help ensure that it is able to make well-informed decisions about how to best meet its current and future workforce needs.

    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: Closed - Implemented

    Priority recommendation

    Comments: In fiscal year 2019, SEC began to implement new, more comprehensive workforce and succession planning processes that address OPM guidance, including by incorporating elements of OPM guidance that were not met by its previous workforce and succession plans that we reviewed for our 2016 report. For example, our 2016 report found that SEC had not conducted a comprehensive skills gap analysis to help ensure that employees across all occupations have the skills necessary to fulfill SEC's mission, as recommended by OPM guidance. SEC addressed this weakness by conducting an agency-wide competency assessment survey in 2018 to identify potential skill gaps across all SEC occupations rather than just a subset. To help managers use the results of this skills gap analysis, SEC created a Workforce Capability Dashboard, which is an interactive software tool that allows SEC managers to easily analyze the data from this analysis to address skill gaps through training, hiring, and knowledge sharing. In addition, our 2016 report found that SEC's succession planning did not address OPM guidance stating that agencies should have a fair and transparent process for identifying high-potential leaders from within the agency. In its 2019-2022 Workforce Planning Strategy, SEC outlined the use of succession planning tools that address the OPM guidance. For example, to help ensure that succession planning steps are executed consistently across the agency and that talent resources are being considered, the Office of Human Resources created and implemented a standardized template that managers in each division and office use to identify key leadership positions and candidate pools. The Office of Human Resources also surveyed all employees to gauge their interest in progressing to higher levels of management responsibility. The Office of Human Resources also tracks senior-level turnover to determine the level of attrition at senior leadership levels and to determine whether SEC is filling these positions internally or externally. In addition, SEC officials said they are developing a program to centralize the process for screening and selecting a cohort of high-potential leaders who will be certified and available to fill senior officer positions as they become vacant. SEC officials said they anticipate launching this program in fiscal year 2020. SEC's 2019-2022 Workforce Planning Strategy outlines how SEC's new workforce and succession planning processes line up with other key elements of the OPM guidance, such as aligning workforce plans with the strategic plan and linking plans to budget formulation. Taken together, SEC's efforts to strengthen its workforce and succession planning efforts will help ensure that it is able to make well-informed decisions about how to best meet its current and future workforce needs.

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

    Agency Affected: United States Securities and Exchange Commission

  3. Status: Closed - Implemented

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

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

    Agency Affected: United States Securities and Exchange Commission

  4. Status: Open

    Priority recommendation

    Comments: SEC management and the union agreed in November 2018 to implement a new performance management system and a new incentive bonus program in 2020. According to SEC officials, SEC plans to work with OPM to validate the new performance management system by conducting focus groups with staff at the midpoint of the 2020 appraisal period and surveying staff on the new system at the conclusion of the 2020 appraisal period. These plans are consistent with our 2013 recommendation that SEC should conduct periodic validations of its performance management system. However, until SEC completes its planned activities, this recommendation remains unaddressed.

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

    Agency Affected: United States Securities and Exchange Commission

  5. Status: Closed - Implemented

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

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

    Agency Affected: United States Securities and Exchange Commission

  6. Status: Closed - Implemented

    Priority recommendation

    Comments: SEC has taken actions to close this recommendation. SEC's Office of the Chief Operating Officer engaged a third-party management consultant team to conduct a study of best practices for communication and collaboration, which was completed in 2018. For the study, the consultants developed a framework of best practices recognized in the public and private sectors and assessed SEC's practices against the framework. The consultants found that each of the best practices in its framework was met by at least one of SEC's activities, tools, technologies, or initiatives. The report included eight recommendations to help address barriers to cross-division communication and collaboration, among other goals. In response to these recommendations, as of September 2019, SEC had taken action on six recommendations and developed planned actions for the remaining two. For example, the Office of Human Resources analyzed data related to communication and collaboration from SEC's Federal Employees Viewpoint Survey results. In addition, the Office of Public Affairs assessed the accessibility of the divisions' and offices' intranet sites. To facilitate staff-to-staff communication and collaboration, SEC officials updated the intranet sites of each mission-critical office and division with main contact phone numbers and staff directories. In addition, SEC plans to pilot a software program that it says should enable collaboration better than SEC's current applications.

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

    Agency Affected: United States Securities and Exchange Commission

  7. Status: Closed - Implemented

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

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

    Agency Affected: United States Securities and Exchange Commission

 

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