oversight

Human Capital: OPM Can Better Assist Agencies in Using Personnel Flexibilities

Published by the Government Accountability Office on 2003-05-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States General Accounting Office

GAO          Report to Congressional Requesters




May 2003
             HUMAN CAPITAL
             OPM Can Better Assist
             Agencies in Using
             Personnel Flexibilities




GAO-03-428
             a
                                                May 2003


                                                HUMAN CAPITAL

                                                OPM Can Better Assist Agencies in Using
Highlights of GAO-03-428, a report to
Congressional Requesters
                                                Personnel Flexibilities




 Congressional requesters asked                 OPM Has Taken Several Actions to Assist Agencies
 GAO to provide information on                  OPM has an important leadership role in identifying, developing, applying,
 actions that the Office of Personnel           and overseeing human capital flexibilities across the federal government.
 Management (OPM) has taken to                  OPM has taken several actions to assist federal agencies in effectively using
 facilitate the effective use of
                                                the human capital flexibilities that are currently available to agencies. For
 human capital flexibilities
 throughout the federal government              example, OPM has issued a handbook for agencies that identifies the various
 and what additional actions OPM                flexibilities available to help manage their human capital. Also, OPM has
 might take in this regard. These               taken various actions to assist agencies in identifying additional flexibilities
 flexibilities represent the policies           that might be helpful to agencies in managing their workforces.
 and practices that an agency has
 the authority to implement in                  Human Resources Directors Gave Mixed Views on OPM’s Role
 managing its workforce.                        To yield indications of the progress that OPM has made in its important role
                                                related to assisting agencies in the use of human capital flexibilities, GAO
                                                surveyed the human resources directors of the federal government’s 24
                                                largest departments and agencies in fall of 2001 and again in the fall of 2002.
 To better facilitate the effective use
 of human capital flexibilities
                                                There was little change in the directors’ level of satisfaction with OPM’s role
 throughout the federal government              in assisting agencies in using available flexibilities, which remained mixed.
 and consistent with OPM’s ongoing              For example, one director said OPM had effectively facilitated the use of
 efforts in this regard, GAO                    work-life flexibilities, but others thought that OPM had placed its own
 recommends that the Director of                restrictive interpretation on the use of other personnel flexibilities. The
 OPM                                            level of satisfaction with OPM’s role in identifying additional flexibilities was
 • review existing OPM regulations              greater in 2002 than in 2001, but still remained below the satisfaction level
   and guidance to determine                    for assistance with existing flexibilities. Several directors said that OPM had
   whether they provide agencies                not worked diligently enough in supporting authorization of
   with needed flexibility,                     governmentwide use of new flexibilities that have been sufficiently tested
 • more thoroughly research,
                                                and deemed successful.
   compile, and analyze information
   on the effective and innovative
   use of flexibilities, and                    Additional OPM Actions Could Further Facilitate Use of
 • identify and build consensus for             Flexibilities
   legislation to authorize new                 Although OPM has recently taken numerous actions, OPM could more fully
   flexibilities that would help                meet its leadership role to assist agencies in identifying, developing, and
   agencies better manage their                 applying human capital flexibilities across the federal government. In its
   human capital.                               ongoing internal review of its existing regulations and guidance, OPM could
                                                more directly focus on determining the continued relevance and utility of its
 OPM commented on a draft of this               regulations and guidance by asking whether they provide the flexibility that
 report and agreed with the
                                                agencies need in managing their workforces while also incorporating
 conclusions and recommendations.
                                                protections for employees. In addition, OPM can maximize its efforts to
                                                make human capital flexibilities and effective practices more widely known
                                                to agencies by compiling, analyzing, and sharing information about when,
                                                where, and how the broad range of flexibilities are being used, and should be
                                                used, to help agencies meet their human capital management needs. OPM
                                                also needs to more vigorously identify new flexibilities that would help
 www.gao.gov/cgi-bin/getrpt?GAO-03-428.
                                                agencies better manage their human capital and then work to build
 To view the full report, including the scope   consensus for the legislative action needed.
 and methodology, click on the link above.
 For more information, contact J. Christopher
 Mihm at (202) 512-6806 or mihmj@gao.gov.
Contents



Letter                                                                                                     1
                             Results in Brief                                                              2
                             Background                                                                    5
                             OPM Has Taken Several Actions to Assist Agencies in Using
                               Flexibilities                                                              10
                             Agencies’ Human Resources Directors Gave Mixed Views on OPM’s
                               Role Related to Flexibilities                                              15
                             Additional OPM Actions Could Further Facilitate Agencies’ Use of
                               Flexibilities                                                              19
                             Conclusions                                                                  25
                             Recommendations for Executive Action                                         26
                             Agency Comments                                                              27


Appendixes
              Appendix I:    Objectives, Scope, and Methodology                                           28
             Appendix II:    Comments from the Office of Personnel Management                             31
             Appendix III:   GAO Contacts and Staff Acknowledgments                                       34


Table                        Table 1: Human Resources Directors’ Responses to GAO
                                      Questionnaire on Human Capital Flexibilities (Fall 2001
                                      and Fall 2002)                                                      30


Figures                      Figure 1: Key Practices for Effective Use of Human Capital
                                       Flexibilities                                                       9
                             Figure 2: Human Resources Directors’ Extent of Satisfaction with
                                       OPM’s Role in Helping Their Agencies Use Available
                                       Human Capital Flexibilities (Fall 2001 and Fall 2002)              16
                             Figure 3: Human Resources Directors’ Extent of Satisfaction with
                                       OPM’s Role in Helping Their Agencies Identify Additional
                                       Human Capital Flexibilities That Could Be Authorized
                                       (Fall 2001 and Fall 2002)                                          18




                             Page i                                    GAO-03-428 OPM's Role in Flexibilities
Contents




Abbreviations

CHCO                  chief human capital officer
DOJ                   Department of Justice
NAPA                  National Academy of Public Administration
OMB                   Office of Management and Budget
OPM                   Office of Personnel Management



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Page ii                                             GAO-03-428 OPM's Role in Flexibilities
A
United States General Accounting Office
Washington, D.C. 20548



                                    May 9, 2003                                                                       Leter




                                    The Honorable Joseph I. Lieberman
                                    Ranking Minority Member
                                    Committee on Governmental Affairs
                                    United States Senate

                                    The Honorable Daniel K. Akaka
                                    Ranking Minority Member
                                    Subcommittee on Financial Management, the
                                      Budget and International Security
                                    Committee on Governmental Affairs
                                    United States Senate

                                    The Honorable George V. Voinovich
                                    Chairman
                                    The Honorable Richard J. Durbin
                                    Ranking Minority Member
                                    Subcommittee on Oversight of Government Management,
                                      the Federal Workforce and the District of Columbia
                                    Committee on Governmental Affairs
                                    United States Senate

                                    The Honorable Thad Cochran
                                    United States Senate

                                    To deal with the challenges that federal agencies are experiencing in
                                    acquiring and retaining staff to meet current and expected needs, agencies
                                    need effective human capital flexibilities—with appropriate safeguards—to
                                    assist them. In broad terms, human capital flexibilities represent the
                                    policies and practices that an agency has the authority to implement in
                                    managing its workforce to accomplish its mission and achieve its goals.
                                    These flexibilities can include actions related to recruitment, retention,
                                    compensation, position classification, incentive awards and recognition,
                                    training and development, performance management and appraisals,
                                    realignment and reorganization, and work arrangements and work-life
                                    policies. The tailored use of such flexibilities for acquiring, developing, and




                                    Page 1                                       GAO-03-428 OPM's Role in Flexibilities
                   retaining talent is an important cornerstone of our model of strategic
                   human capital management.1

                   As the federal government’s human capital agency, the Office of Personnel
                   Management (OPM) has an important leadership role in identifying,
                   developing, and applying human capital flexibilities across the federal
                   government. Given the importance of OPM’s role, you asked us to provide
                   information on the actions that OPM has taken to facilitate the effective use
                   of human capital flexibilities throughout the federal government and what
                   additional actions OPM might take in this regard. This report is the second
                   of two reports responding to your request for information on the use of
                   human capital flexibilities in the federal government. In December 2002,
                   we reported on (1) the key practices that agencies should implement for
                   effective use of human capital flexibilities and (2) agency and union
                   officials’ views related to the use of human capital flexibilities.2 In addition
                   to the above addressees, both reports were also done at the request of the
                   Honorable Fred Thompson, former ranking minority member of the Senate
                   Committee on Governmental Affairs.

                   To address the issue of OPM’s role in facilitating agencies’ use of human
                   capital flexibilities, we reviewed relevant reports and interviewed
                   cognizant officials from OPM, the Merit Systems Protection Board, and the
                   National Academy of Public Administration (NAPA). We also interviewed
                   the individuals serving in the positions of human resources directors for
                   the federal government’s 24 largest departments and agencies. We
                   surveyed these 24 human resources directors in the fall of 2001 and
                   surveyed the individuals in these positions again in the fall of 2002. In
                   addition, we reviewed previous GAO reports on a broad range of human
                   capital issues. We conducted our work in accordance with generally
                   accepted government auditing standards. (See app. I for additional
                   information on our objectives, scope, and methodology.)



Results in Brief   OPM recognizes its important leadership role in assisting federal agencies
                   in identifying, developing, and applying human capital flexibilities across


                   1
                    U.S. General Accounting Office, A Model of Strategic Human Capital Management, GAO-
                   02-373SP (Washington, D.C.: Mar. 15, 2002).
                   2
                    U.S. General Accounting Office, Human Capital: Effective Use of Flexibilities Can Assist
                   Agencies in Managing Their Workforces, GAO-03-2 (Washington, D.C.: Dec. 6, 2002).




                   Page 2                                             GAO-03-428 OPM's Role in Flexibilities
the federal government. As noted in its most recent strategic plan, OPM’s
strategy in fulfilling its mission is to provide human resources management
leadership and services for all agencies in a manner that blends and
balances flexibility and consistency. OPM seeks to maintain consistency in
the federal government’s human resources management systems for areas
such as merit principles and accountability, while at the same time assist
agencies to facilitate the effective use of available human capital
flexibilities, as well as to identify and develop additional human capital
flexibilities that could be authorized to help agencies manage their
workforces.

OPM has several initiatives underway to assist federal agencies in
effectively using the human capital flexibilities that are currently available
to agencies. For example, OPM has issued a handbook3 for agencies that
identifies the various flexibilities available to help manage human capital
and has several initiatives under way to address key personnel challenges
in the area of hiring. OPM has also developed information on lessons
learned for using human capital flexibilities and implementing change to
improve federal human resources management. OPM has also committed
the assistance of its various internal experts to serve as liaisons with
agencies and to provide expedited services when needed, including
assistance in the implementation of human capital flexibilities.
Furthermore, OPM has reorganized its structure with the expectation that
it will be able to better serve and respond to requests from agency
customers and help ensure that all levels within OPM are supportive of
agencies’ efforts to use flexibilities.4

OPM has also taken some actions to identify legislative options for
additional flexibilities that might be helpful to agencies in managing their
workforces. For example, OPM has suggested the broader application
through legislation of various personnel flexibilities that have been tested
and evaluated through pilot projects and alternative personnel systems
over the past two decades. Also, OPM has been recently more active in
supporting the passage of proposed legislation that would enhance the



3
 U.S. Office of Personnel Management, Human Resources Flexibilities and Authorities in
the Federal Government (Washington, D.C.: Updated July 25, 2001).
4
 For additional information on OPM’s restructuring efforts see our report: Major
Management Challenges and Program Risks: Office of Personnel Management (GAO-03-
115, January 2003).




Page 3                                            GAO-03-428 OPM's Role in Flexibilities
human capital flexibilities already available, including the governmentwide
provisions in the Homeland Security Act of 2002.5

The views of human resources directors from across the federal
government yield revealing indications of the progress that OPM has made
in its important role related to assisting agencies in the use of human
capital flexibilities. The human resources directors we surveyed in the fall
of 2001 and again in the fall of 2002 gave mixed views on their satisfaction
with OPM’s role in assisting agencies in using available flexibilities. One
director we interviewed, for example, praised OPM for the positive actions
it had taken in facilitating work-life programs for federal employees. On
the other hand, several directors noted, for instance, that OPM often has
placed its own restrictive interpretation on the use of personnel
flexibilities, surrounding them with too many regulations that make the use
of such flexibilities extremely complicated and more difficult than needed.

The human resources directors were generally less satisfied with OPM’s
role in identifying additional flexibilities that could be authorized for
agencies to use in managing their workforces, although the level of
satisfaction was greater in 2002 than in 2001. Several directors we
interviewed said, for example, that although OPM had actively listened to
agency officials’ views about their various needs for additional flexibilities,
OPM had not worked diligently enough in supporting efforts to bring about
governmentwide authorization and implementation of innovative human
capital practices and flexibilities that have been sufficiently tested and
deemed successful.

Although OPM has recently taken numerous actions, OPM could take
additional steps to assist agencies in identifying, developing, applying, and
overseeing human capital flexibilities across the federal government. As
part of its ongoing internal review of its existing regulations and guidance,
OPM has focused chiefly on reviewing the clarity and readability of its
regulations and guidance. OPM could more directly focus on determining
the continued relevance and utility of its regulations and guidance by
asking whether they provide the flexibility that agencies need in managing
their workforces while also incorporating protections for employees. In
addition, OPM could enhance its efforts to make human capital flexibilities
and effective practices more widely known to agencies. Although OPM has
made efforts to inform agencies of what flexibilities are generally available


5
Pub. L. No. 107-296, Nov. 25, 2002.




Page 4                                       GAO-03-428 OPM's Role in Flexibilities
             and why their use is important, OPM has yet to take full advantage of its
             ability to compile, analyze, and share information about when, where, and
             how the broad range of flexibilities are being used, and should be used, to
             help agencies meet their human capital management needs. It is also
             important for OPM to oversee the use of personnel flexibilities to ensure
             not only that the use of flexibilities are being maximized, but also, along
             with agencies, ensuring that flexibilities are being used consistent with the
             merit principles and other national goals and include appropriate
             safeguards. Finally, OPM could play a critical role in identifying and
             building a consensus for new flexibilities that would help agencies better
             manage their human capital.

             These additional OPM actions are consistent with OPM’s overall goal of
             aiding federal agencies in adopting human resources management systems
             that improve their ability to build successful, high-performance
             organizations. Because this role is critical to improved governmentwide
             strategic human capital management, this report contains
             recommendations to the Director of OPM for the more effective use of
             existing human capital flexibilities and for the identification of additional
             human capital flexibilities that might be needed within the federal
             government.

             OPM commented on a draft of this report and agreed with the conclusions
             and recommendations. OPM pointed out that in future studies that address
             OPM leadership issues, in addition to surveying agency human resource
             directors, we should also survey agency chief operating officers. OPM
             believed that the chief operating officers have the “best perspective and the
             widest array of information about recruitment and retention issues.” We
             agree that such future studies would benefit from the perspectives of chief
             operating officers. OPM’s complete comments are shown in appendix II.



Background   In serving as the federal government’s human capital agency, OPM sees its
             role to be the President’s strategic advisor on human capital issues, to
             develop tools and provide support to agencies in their human capital
             transformation efforts, and to assist in making the federal government a
             high-performing workplace. As such, OPM, in conjunction with the Office
             of Management and Budget (OMB), is charged with leading the federal
             government’s strategic management of human capital initiative, one of five




             Page 5                                      GAO-03-428 OPM's Role in Flexibilities
governmentwide initiatives of the President’s Management Agenda.6 In
carrying out this effort, OPM’s strategy is to provide human resources
management leadership and services to all agencies in a manner that
blends and balances flexibility and consistency. As we noted in our recent
report on OPM’s management challenges, OPM carries out its leadership
role in a decentralized environment where both it and the agencies have
shared responsibilities for addressing the human capital and related
challenges facing the federal government.7

OPM’s role in aiding federal agencies represents a considerable challenge
because federal managers have complained for years about the rigid and
elaborate procedures required for federal personnel administration and
have often expressed the need for more flexibility within a system that has
traditionally been based on uniform rules. Reformers have long sought to
decentralize the personnel system and simplify the rules, arguing that
however well the system may have operated in the past, it is no longer
suited to meet the needs of a changing and competitive world. In 1983, for
example, NAPA published a report critical of excessive restrictions on
federal managers, including constraints on their human resources
decisions.8 In response to these criticisms, OPM has, over time,
decentralized and delegated many personnel decisions to the agencies and
has encouraged agencies to use human capital flexibilities to help tailor
their personnel approaches to accomplish their unique missions. Our
strategic human capital management model also advocates that agencies
craft a tailored approach to their use of available flexibilities by drawing on
those flexibilities that are appropriate for their particular organizations and
their mission accomplishment.9 Because of this tailoring, the federal
personnel system is becoming more varied, notwithstanding its often-cited
characterization as a “single employer.”




6
 The President’s Management Agenda includes five governmentwide initiatives: the strategic
management of human capital, competitive sourcing, improved financial performance,
budget and performance integration, and expanded electronic government.
7
 U.S. General Accounting Office, Major Management Challenges and Program Risks:
Office of Personnel Management, GAO-03-115 (Washington, D.C.: January 2003).
8
 National Academy of Public Administration, Revitalizing Federal Management: Managers
and Their Overburdened Systems (Washington, D.C.: 1983).
9
GAO-02-373SP.




Page 6                                              GAO-03-428 OPM's Role in Flexibilities
The overall trend toward increased flexibility has revealed itself in a
number of ways, including the efforts of some agencies to seek
congressional approval to deviate from the personnel provisions of Title 5
of the U.S. Code that have traditionally governed much of the federal
government’s civil service system.10 As observed in a 1998 OPM report,11
federal agencies’ status relative to these Title 5 personnel requirements can
be better understood by thinking of them on a continuum. On one end of
the continuum are federal agencies that generally must follow Title 5
personnel requirements. These agencies do not have the authority, for
example, to establish their own pay systems. On the other end of the
continuum are federal agencies that have more flexibility in that they are
exempt from many Title 5 personnel requirements. For example, the
Congress provided the Tennessee Valley Authority and the Federal Reserve
Board with broad authority to set up their own personnel systems and
procedures. This trend toward greater flexibility, in fact, has gained
momentum to the extent that about half of federal civilian employees are
now exempt from at least some of the personnel-related requirements of
Title 5. For example, the Federal Aviation Administration, the Internal
Revenue Service, and the new Department of Homeland Security have
exemption from key Title 5 requirements.

In addition to receiving congressional authorizations for exemptions from
the personnel-related requirements of Title 5, other mechanisms are
available to initiate human capital innovations and flexibilities within
federal agencies. OPM has the authority to reassess and make changes to
its existing regulations and guidance to supply agencies with additional
flexibilities. Additionally, a federal agency can obtain authority from OPM
to waive some existing federal human resources laws or regulations
through an OPM-sponsored personnel demonstration project. The aim of
these demonstration projects is to encourage experimentation in human
resources management by allowing federal agencies to propose, develop,
test, and evaluate changes to their own personnel systems. In some cases,
Congress has allowed some agencies to implement alternatives that have

10
  Title 5 laws (or requirements) refer to those personnel management laws, procedures, and
associated functions generally applicable to federal employees. Most federal personnel
laws governing topics such as classification, appointment, pay and benefits, and adverse
action are contained in Title 5. Title 5 also contains laws unrelated to federal personnel
issues, such as the Administrative Procedure Act and the Freedom of Information Act, that
are also applicable to federal agencies.
11
 U.S. Office of Personnel Management, HRM Policies and Practices in Title 5-Exempt
Organizations (Washington, D.C.: August 1998).




Page 7                                              GAO-03-428 OPM's Role in Flexibilities
been tested and deemed successful. For example, more flexible pay
approaches that were tested within the Department of the Navy’s China
Lake (California) demonstration project in the early 1980s were eventually
adopted by other federal agencies such as the Department of Commerce’s
National Institute of Standards and Technology.

In December 2002, we reported on agency officials’ and union
representatives’ views regarding various issues related to flexibilities.
According to the agency officials and union representatives we
interviewed, existing flexibilities that are most effective in managing the
workforce are work-life policies and programs, such as alternative and
flexible work schedules, transit subsidies, and child care assistance;
monetary recruitment and retention incentives, such as recruitment
bonuses and retention allowances; special hiring authorities, such as
student employment and outstanding scholar programs; and incentive
awards for notable job performance and contributions, such as cash and
time-off awards. Agency and union officials also identified five categories
of additional human capital flexibilities as most helpful if authorized for
their agencies: (1) more flexible pay approaches, (2) greater flexibility to
streamline and improve the federal hiring process, (3) increased flexibility
in addressing employees’ poor job performance, (4) additional workforce
restructuring options, and (5) expanded flexibility in acquiring and
retaining temporary employees. Furthermore, we reported that the agency
managers and supervisors and human resources officials we interviewed
generally agreed that additional human capital flexibilities could be
authorized and implemented in their agencies while also ensuring
protection of employees’ rights. Union representatives, however,
expressed mixed views on the ability of agencies to protect employee
rights with the authorization and implementation of additional flexibilities.
Specifically, several union representatives said that managers could more
easily abuse their authority when implementing additional flexibilities, and
that agency leaders often do not take appropriate actions in dealing with
abusive managers.

Based on our interviews with human resources directors from across the
federal government and our previous human capital work, we also reported
on six key practices that agencies should implement to use human capital
flexibilities effectively. Figure 1 identifies these key practices.




Page 8                                      GAO-03-428 OPM's Role in Flexibilities
Figure 1: Key Practices for Effective Use of Human Capital Flexibilities




                                            Lastly, also in our December 2002 report, we noted that agency and union
                                            officials identified several significant reasons why agencies have not made
                                            greater use of the human capital flexibilities that are available to them.
                                            These reported barriers that have hampered agencies in maximizing their
                                            use of available flexibilities included: agencies’ weak strategic human
                                            capital planning and inadequate funding for using these flexibilities given
                                            competing priorities; managers’ and supervisors’ lack of awareness and
                                            knowledge of the flexibilities; managers’ and supervisors’ belief that
                                            approval processes to use specific flexibilities are often burdensome and
                                            time-consuming; and managers’ and supervisors’ concerns that employees
                                            will view the use of various flexibilities as inherently unfair, particularly
                                            given the common belief that all employees must be treated essentially the
                                            same regardless of job performance and agency needs.




                                            Page 9                                      GAO-03-428 OPM's Role in Flexibilities
                           As noted in our report, the recently enacted Homeland Security Act of 2002
                           provided agencies with a number of additional flexibilities relating to
                           governmentwide human capital management. For example, agencies will
                           now be permitted to offer buyouts to their employees without the
                           requirement to reduce their overall number of employees. The legislation
                           also permits agencies to use a more flexible approach in the rating and
                           ranking of job candidates (categorical rating) during the hiring and staffing
                           process. The Act also created chief human capital officer (CHCO)
                           positions for the largest federal departments and agencies, an interagency
                           CHCO Council, and a requirement that agencies discuss their human
                           capital approaches in their annual performance plans and reports under the
                           Government Performance and Results Act.



OPM Has Taken              OPM deems that its role related to human capital flexibilities is broader
                           than merely articulating polices that federal agencies use in managing their
Several Actions to         workforces. OPM sees that it has an important leadership role in
Assist Agencies in         identifying, developing, and applying human capital flexibilities across the
                           federal government. As such, OPM has several initiatives underway with
Using Flexibilities        the goal of assisting federal agencies in using available flexibilities and
                           identifying additional flexibilities that might be beneficial for agencies.



OPM Has Initiatives to     One of OPM’s primary functions related to assisting agencies in the use of
Assist Agencies in Using   human capital flexibilities is to serve as a clearinghouse for information
                           through a variety of sources, including its Web site. For example, OPM
Available Flexibilities
                           prepared and posted on its Web site a handbook on personnel flexibilities
                           generally available to federal agencies. This handbook, Human Resources
                           Flexibilities and Authorities in the Federal Government, describes the
                           flexibilities that agencies can use to manage their human capital challenges
                           and provides information about the statutory and regulatory authorities for
                           the specific flexibilities. OPM has also established Web-based
                           clearinghouses of information on best practices in two areas of human
                           resources management: employee performance management and
                           accountability. OPM said that it has received positive feedback on these
                           two Web-based clearinghouses and that many of OPM’s customers have
                           said that the information has been useful to them in researching
                           information and when redesigning human resources-related programs.

                           OPM is also developing a Preferred Practices Guide that it said would
                           highlight efficient and effective hiring practices using existing hiring



                           Page 10                                     GAO-03-428 OPM's Role in Flexibilities
flexibilities. To assist in developing this guide, OPM in July 2002 asked
federal human resources directors to share information with OPM about
their improved results in areas related to hiring by using newly developed
practices, strategies, and methods that could assist other agencies in
addressing similar challenges. According to OPM, the contents of this Web-
based document will likely parallel the steps of the federal hiring process
and encompass areas such as workforce planning, recruitment,
assessment, and retention. The guide is also expected to include actual
examples of agency hiring practices, such as the Emerging Leaders
Program, a 2-year career development intern program created by the
Department of Health and Human Services, and the Recruitment “Timely
Feedback” Executive Tool, a monthly reporting and accountability system
for gauging progress on recruiting initiatives that was established at the
Social Security Administration. This Preferred Practices Guide, which
OPM plans to post on its Web site in early 2003, would complement other
ongoing OPM hiring-related efforts to encourage agencies to (1) provide
interested persons with timely and informed responses to questions about
the federal recruiting process, (2) develop clear and understandable job
announcements, and (3) provide job applicants with regular updates on the
status of their applications as significant decisions are reached.

OPM has also issued a report entitled Demonstration Projects and
Alternative Personnel Systems: HR Flexibilities and Lessons Learned,
which contains lessons learned about implementing change to improve
federal human capital management. According to OPM, these lessons
learned are based on the testing of several personnel flexibilities in a wide
variety of demonstration projects and alternative personnel systems at
federal agencies over the past 20 years.12 OPM said that agency officials
from the various projects collaborated with OPM staff in developing the
report. The lessons learned in OPM’s report are similar to the key practices
that we recently reported on for effectively using human capital
flexibilities.

OPM has also committed the assistance of its various experts to help
agencies with human capital issues and challenges, including use of the
various flexibilities available to agencies. OPM has established a human
capital team of desk officers who serve as liaisons with agencies and who
are to work closely with the agencies to help them in responding to the


12
 U.S. Office of Personnel Management, Demonstration Projects and Alternative Personnel
Systems: HR Flexibilities and Lessons Learned (Washington, D.C.: 2001).




Page 11                                          GAO-03-428 OPM's Role in Flexibilities
President’s Management Agenda. For some agencies with less planning
and actions on strategic human capital management, these desk officers
provide coaching and assistance and establish contacts with OPM’s
program office experts. OPM said that when working with their assigned
agency representatives, the desk officers take full advantage of all available
OPM resources, including clearinghouse information, to help agencies
identify available flexibilities. For example, OPM said that its desk officer
for the Department of Education fielded an inquiry that led to on-site
assistance in the planning and implementation of a demonstration project
for that department.

OPM has also formed “strike force teams,” created on an ad hoc basis, to
provide expedited service to agencies with critical, time-sensitive human
capital needs. These strike force teams are to serve a single focal point
through which agencies can get assistance and advice on a wide range of
topics and issues, including the implementation of human capital
flexibilities. OPM has created strike force teams for several agencies,
including the Department of Housing and Urban Development, the
Department of Justice (DOJ), and the Transportation Security
Administration. For example, at the request of the Assistant Attorney
General, a strike force team worked with DOJ human resources staff to
develop and present a briefing on human resource flexibilities for DOJ
political appointees. OPM is also working jointly with the new Department
of Homeland Security to prescribe regulations for the department’s human
resources management system.

OPM also holds conferences, training sessions, and other meetings to share
information with agency officials, including material on the availability of
flexibilities. For example, OPM conducts an annual conference to provide
federal managers and human resources practitioners with updates and
other information about the federal compensation environment, including
topics such as pay and leave administration, performance management,
position classification, and efforts to improve the compensation tools
available to support agency missions. As an example of its training
function, OPM, in collaboration with OMB, presented a half day of training
on personnel authorities available to agencies as part of transition training
for new political appointees. OPM said that it also held one-on-one
meetings with more than 30 agencies to discuss telework, learn about
agency initiatives in this area, and find out how OPM can assist agencies in
expanding telework opportunities.




Page 12                                      GAO-03-428 OPM's Role in Flexibilities
                           In addition, OPM has realigned its own organizational structure and
                           workforce. OPM’s goal was to create a new, flexible structure that will “de-
                           stovepipe” the agency; enable it to be more responsive to its primary
                           customers, federal departments and agencies; and allow it to focus on the
                           agency’s core mission. For example, OPM has decided to put its various
                           program development offices under the control of one associate director
                           and its product and services functions under another associate director to
                           ensure that it appropriately and efficiently responds to its customers.
                           Effective implementation of OPM’s latest organizational and workforce
                           realignment will be crucial to maximizing its performance as the federal
                           government’s human capital leader, assuring its own and other agencies’
                           accountability, and ultimately achieving its goals.



OPM Also Has Some          OPM has furthermore initiated some efforts to assist agencies in identifying
Initiatives to Assist in   additional flexibilities that might be effective in helping the agencies
                           manage their workforces. For example, OPM said that it has actively
Identifying Additional     supported passage of proposed legislation that would enhance human
Flexibilities              capital flexibilities and provide more latitude for flexible implementing
                           regulations. OPM told us, for example, that it developed and drafted a
                           significant portion of the proposed Managerial Flexibility Act of 2001,13 a
                           bill intended to give federal managers tools and flexibility in areas such as
                           personnel, budgeting, and property management and disposal. This
                           proposed legislation did not pass the 107th Congress, although several
                           related provisions were included in the recently enacted Homeland
                           Security Act of 2002. OPM officials told us that these legislative efforts
                           should serve as evidence that OPM can and does identify areas where
                           changes to statute would provide more flexibility to agencies. Moreover,
                           one component of the proposed legislation, which was not enacted,
                           includes streamlining the process for implementing demonstration projects
                           and creating a mechanism to export tested innovations to other federal
                           organizations. OPM believes that to get a better return on investment from
                           years of demonstration project evaluations, a method should exist—short
                           of separate legislation—for converting successfully tested alternative
                           systems and flexibilities to permanent programs and for making them
                           available to other agencies.




                           13
                                S. 1612, 107th Cong., 1st sess.




                           Page 13                                     GAO-03-428 OPM's Role in Flexibilities
OPM has taken other actions to assist agencies in identifying additional
flexibilities that they could use to manage their workforces. For example,
in its HR Flexibilities and Lessons Learned report, OPM identified
personnel flexibilities that have been tested and evaluated through
demonstration projects or alternative personnel systems over the last 20
years. OPM said that during the development of the Managerial Flexibility
Act, the President’s Management Council requested information on existing
flexibilities and that OPM created its report in response to that request in
an effort to catalogue these flexibilities in one document. OPM said that
some of the flexibilities catalogued in its report have been thoroughly
tested over time in a variety of environments, while others have more
limited agency applicability and thus have more limited data to show their
success. Some of these flexibilities outlined in the report correspond to the
types of flexibilities that agency and union officials told us could be
beneficial for their agencies, such as broadbanded pay systems, categorical
rating for hiring, and expanded probationary periods for new employees.14

OPM recognizes that additional efforts are needed to address key
personnel challenges within the federal workforce, particularly in the areas
of pay and hiring. In April 2002, OPM released a report that presents the
case for the need for reform of the white-collar federal pay system under
which 1.2 million General Schedule federal employees are paid.15 Without
recommending a specific solution, OPM’s report stresses the importance of
developing a contemporary pay system that is more flexible, market-
sensitive, and performance-oriented as well as a better tool for improving
strategic human capital management. Also, OPM said that in the coming
months it will identify additional projects and proposals that will address
systemic problems associated with the hiring process. These additional
initiatives will include deploying competency-based qualifications,
improving entry-level hiring, and updating and modernizing exam scoring
policy. According to OPM officials, as it moves forward on these pay and
hiring initiatives, OPM will assess what additional flexibilities and tools
might be needed for agencies as they look for ways to better manage their
workforces.




14
     GAO-03-2.
15
 U.S. Office of Personnel Management, A Fresh Start for Federal Pay: The Case for
Modernization (Washington, D.C.: April 2002).




Page 14                                           GAO-03-428 OPM's Role in Flexibilities
Agencies’ Human               Although federal agencies have the primary responsibility to maximize
                              their use of human capital flexibilities, OPM also plays a key role in
Resources Directors           facilitating agencies’ use of existing flexibilities as well as identifying new
Gave Mixed Views on           personnel authorities that agencies might need in managing their
                              workforces. The views of agencies’ human resources directors can help to
OPM’s Role Related to         provide indications of the progress that OPM has made in its important role
Flexibilities                 related to human capital flexibilities. We therefore surveyed the human
                              resources directors for the 24 largest departments and agencies in the
                              federal government to obtain their views on OPM’s role related to
                              flexibilities.



Directors’ Views Varied on    In the surveys we conducted in the fall of 2001 and again in the fall of 2002,
OPM’s Role Related to Using   the human resources directors for the largest departments and agencies
                              gave mixed views on their satisfaction with OPM’s role in assisting their
Available Flexibilities
                              agencies in using available human capital flexibilities. Figure 2 depicts the
                              directors’ responses on this issue for both 2001 and 2002.16 In 2002, 7 of the
                              24 responding directors said that they were satisfied to “little or no” or
                              “some” extent regarding OPM’s role in assisting their agencies in using
                              available flexibilities. Conversely, 7 of the 24 responding directors in 2002
                              said that they were satisfied to a “great” or “very great” extent with OPM’s
                              role in assisting their agencies with available flexibilities. Overall for 2002
                              on this issue, the average satisfaction level of the human resource directors
                              was unchanged between 2001 and 2002. Specifically, for 2002 our survey
                              showed that for five agencies, the director’s level of satisfaction was
                              greater than the level of satisfaction for that agency’s human resources
                              director from the previous year; for five agencies, the directors’ level of
                              satisfaction was less than the level of satisfaction for that agency’s human
                              resources director from the previous year.




                              16
                               During the period between the 2001 and 2002 surveys, 16 of the 24 individuals serving in
                              the positions of human resources directors had changed.




                              Page 15                                             GAO-03-428 OPM's Role in Flexibilities
Figure 2: Human Resources Directors’ Extent of Satisfaction with OPM’s Role in
Helping Their Agencies Use Available Human Capital Flexibilities (Fall 2001 and Fall
2002)

     Question: To what extent are you satisfied with the role that OPM
     has played in helping your department/agency use these
     available human capital flexibilities?

10 Number
                                                           9
                                                  8
 8
                               7                                     7

 6                                      5
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Source: Federal human resources directors’ responses to GAO questionnaire.


In our interviews with the human resources directors regarding the issue of
OPM’s role in assisting agencies in the use of available flexibilities, several
of the directors said that OPM communicates well with agencies through e-
mails, meetings, workgroups, and its Web site and has taken some action to
disseminate information about existing flexibilities. One director, for
example, commended OPM for effectively using its Web site to share
information about what flexibilities are generally available to agencies.
Another director praised OPM for the positive actions it had taken with
respect to facilitating work-life programs for federal employees. However,
directors frequently commented that OPM often puts its own restrictive
interpretation on the use of flexibilities, surrounding them with too many
regulations that can make their use unduly complicated and more difficult;
regulations and guidance on implementing the Federal Career Intern
Program were mentioned frequently in this regard, for example. Several
directors argued that their agencies should be able to implement human
capital flexibilities in the most flexible fashion, not the most restrictive.



Page 16                                                                       GAO-03-428 OPM's Role in Flexibilities
                              One director expressed the opinion that, although the upper management
                              of OPM may support using flexibilities, middle management and lower-
                              level staff within the agency seemed resistant to change and sometimes
                              hampered the efforts of agencies in the use of flexibilities. This director
                              wanted to see OPM play a more facilitative and consultative role, working
                              in concert with agencies. In addition, directors from several agencies
                              stated that OPM needs to host additional forums to share experiences on
                              the use of existing human capital flexibilities, with OPM more fully serving
                              as a clearinghouse in making flexibilities and effective practices more
                              widely known to agencies.



Directors Were Somewhat       While the human resources directors we surveyed gave mixed views on
Less Satisfied with OPM’s     their satisfaction with OPM’s role related to available flexibilities, the
                              directors were less satisfied with OPM’s role in assisting agencies in
Role Related to Identifying
                              identifying additional human capital flexibilities that could be authorized.
Additional Flexibilities      However, the directors’ extent of satisfaction on this issue, as measured in
                              our survey, was greater in 2002 than in 2001. Figure 3 depicts the directors’
                              responses on this issue for both 2001 and 2002. In 2002, 11 of the 24
                              responding directors said that they were satisfied to “little or no” or “some”
                              extent regarding OPM’s role in identifying additional flexibilities that could
                              be authorized for agencies. Conversely, 6 of the 24 responding directors
                              said that they were satisfied to a “great” or “very great” extent regarding
                              OPM’s role in identifying additional flexibilities. For seven agencies, the
                              director’s level of satisfaction was greater in 2002 than the level of
                              satisfaction for that agency’s human resources director from the previous
                              year; for four agencies, the director’s level of satisfaction was less than the
                              level of satisfaction for that agency’s human resources director from the
                              previous year.




                              Page 17                                      GAO-03-428 OPM's Role in Flexibilities
Figure 3: Human Resources Directors’ Extent of Satisfaction with OPM’s Role in
Helping Their Agencies Identify Additional Human Capital Flexibilities That Could Be
Authorized (Fall 2001 and Fall 2002)

       Question: To what extent are you satisfied with the role that OPM
       has played in helping your department/agency identify additional
       human capital flexibilities that could be authorized?

10 Number
                                 9

 8

                                          6         6
 6
                      5
                                                             4                  4
 4
            3                                                         3                                              3        3
                                                                                                     2
 2


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Source: Federal human resources directors’ responses to GAO questionnaire.



One human resources director we interviewed said, for example, that OPM
has done a commendable job of listening to agencies’ concerns about the
need for additional flexibilities, particularly through the Human Resources
Management Council, an interagency organization of federal human
resources directors.17 However, several directors said that OPM needs to
play a more active role in identifying flexibilities that agencies might use to
manage their workforces. Several human resources directors said that
OPM should be doing more to conduct or coordinate personnel
management research on additional flexibilities that might prove effective
for agencies to use in managing their workforces. Several of these
directors also told us that OPM should work more diligently to support


17
 The recently enacted Homeland Security Act of 2002 establishes an Interagency Chief
Human Capital Officer Council, which could replace the Human Resources Management
Council.




Page 18                                                                        GAO-03-428 OPM's Role in Flexibilities
                        efforts in authorizing and implementing governmentwide those innovative
                        human capital practices and flexibilities that have been sufficiently tested
                        and deemed to be successful, such as those tested in OPM-sponsored
                        personnel demonstration projects.

                        According to many of the human resources directors we interviewed, OPM
                        needs to play a larger role in acting as a change agent to get human capital
                        legislation passed and implemented. While recognizing that OPM cannot
                        promote legislation that is inconsistent with the administration’s views of
                        the civil service, human resources directors said that OPM should be the
                        policy leader in the area of human capital and, as the leader, should push
                        harder for major civil service reform. In the human resources directors’
                        opinions, OPM needs to look at personnel reforms in a new, open, and
                        objective way and develop changes to current laws and regulations to
                        ensure that agencies can effectively obtain and manage their workforces.
                        In addition, some directors expressed frustration about the lack of
                        coordination between OPM and OMB in responding to OMB’s request for
                        agencies to complete workforce planning and restructuring analyses.18
                        Further, they said that OPM, OMB, and Congress need better
                        communication and coordination in developing budgets and recognizing
                        the costs involved in using human capital flexibilities.



Additional OPM          Assisting federal agencies in using available flexibilities and in identifying
                        additional flexibilities is an important part of OPM’s overall goal of aiding
Actions Could Further   agencies in adopting human resources management systems that improve
Facilitate Agencies’    their ability to build successful, high-performance organizations. In
                        testimony before Congress in February of 2001, we suggested two areas in
Use of Flexibilities    which OPM could make substantial additional contributions in addressing
                        the federal government’s human capital challenges.19 The first was in
                        reviewing existing OPM regulations and guidance to determine their
                        continued relevance and utility by asking whether they provide agencies
                        with the flexibilities they need while incorporating protections for
                        employees. The second area was in making existing human capital
                        flexibilities and effective practices more widely known to the agencies, and
                        in taking fullest advantage of OPM’s ability to facilitate information-sharing


                        18
                         This requirement for workforce planning and restructuring analyses is contained in OMB
                        Bulletin No. 01-07, dated May 8, 2001.
                        19
                             GAO-01-357T.




                        Page 19                                            GAO-03-428 OPM's Role in Flexibilities
                            and outreach to human capital managers throughout the federal
                            government. Although OPM has taken concerted action in some areas to
                            assist agencies in using flexibilities, OPM has taken limited actions related
                            to these two areas. Moreover, OPM could do more to assist agencies in
                            identifying additional human capital flexibilities that could be authorized
                            and also be actively working to build consensus to support related
                            legislation that might be needed. Greater attention to these areas could
                            allow OPM to more fully fulfill its leadership role to assist agencies in
                            identifying, developing, and applying human capital flexibilities across the
                            federal government. As we noted in the previous testimony, as OPM
                            continues to move from “rules to tools,” its more valuable contributions in
                            the future will come less from traditional compliance activities than from
                            its initiatives as a strategic partner to agencies.



OPM’s Review of             Just as agencies need to streamline and improve their own internal
Regulations Could Provide   administrative processes to effectively use flexibilities, OPM similarly
                            needs to ensure that its regulations and guidance provide adequate
Opportunity to Give
                            flexibility while also recognizing the importance of ensuring fairness and
Additional Flexibility to   incorporating employee protections. As we noted in our December 2002
Agencies                    report, if senior managers within agencies want supervisors to make
                            effective use of flexibilities, supervisors must view agencies’ internal
                            processes to use the flexibility worth their time compared to the expected
                            benefit to be gained in implementing the flexibility. Similarly, if OPM wants
                            agencies to make effective use of flexibilities, agencies must view OPM’s
                            regulatory requirements for using the flexibility worth the expected
                            benefits that the flexibility would provide.

                            In comments that it provided in response to our December 2002 report,
                            OPM said that it is undertaking a review of its regulations and guidance.
                            According to OPM, the purpose of this regulatory review, which began in
                            December 2001, is to restate regulations in plainer language wherever
                            possible to eliminate redundant or obsolete material and to revise
                            regulations to make them more easily usable by a variety of readers. OPM
                            said that because it has focused chiefly on making the regulations as
                            readable as possible, rather than making substantive changes, the agency
                            did not anticipate making changes to provide additional flexibility as part
                            of this effort. OPM said that its Office of General Counsel, which is leading
                            the regulatory review, has been carrying it out by working with OPM’s
                            program offices to establish basic protocols, selecting provisions that
                            require elimination or redrafting, soliciting drafts from the offices, and then
                            reviewing and revising these drafts in conjunction with the OPM program



                            Page 20                                      GAO-03-428 OPM's Role in Flexibilities
staff. OPM said that it amends its regulations to provide flexibility, on an
as-needed basis, in the ordinary course of carrying out the OPM Director’s
policies.

In response to our request for examples of regulations that it has redrafted
under this effort, OPM said it was reviewing all of the regulations in chapter
I of Title 5 of the U.S. Code of Federal Regulations but that it was not yet in
a position to supply examples because it had recently begun to submit
some of the redrafted material to OMB for clearance. Nonetheless, a report
we recently issued included an example of where OPM revised regulations
to, at least in part, provide additional flexibility to agencies.20 In the fall of
2000, OPM amended regulations on evaluating the job performance of
senior executives within the federal government. OPM’s goal in developing
these regulations was to help agencies hold their senior executives
accountable by increasing agency flexibility, focusing on results,
emphasizing accountability, and improving links between pay and
performance. These changes were to balance the agencies’ desire for
maximum flexibility with the need for a corporate approach that
safeguards merit principles. OPM’s changes to the regulations included
paring back many of the previous requirements to those in statute to give
agencies more flexibility to tailor their performance management systems
to their unique mission requirements and organizational cultures. OPM
made these regulatory changes in part because performance management
systems have tended to focus on process over results.

Because providing additional flexibility has not been a fundamental
purpose of its current regulatory review, OPM is not taking advantage of a
crucial opportunity to provide additional flexibility, where appropriate, on
a systematic basis rather than through a piece-meal, ad hoc approach.
Human resources directors we interviewed often said that OPM should
provide agencies with greater delegation to carry out their human capital
programs. For example, some directors commented that agencies should
be able to waive the annuity offsets for reemployed annuitants without
authority by OPM.21 Some directors also told us that OPM should allow



20
  U.S. General Accounting Office, Results-Oriented Cultures: Using Balanced Expectations
to Manage Senior Executive Performance, GAO-02-966 (Washington, D.C.: Sept. 27, 2002).
21
  Unless waived by OPM or an agency pursuant to a grant of authority by OPM, an amount
equal to the annuity will be deducted from the reemployed annuitant's salary when the
federal civilian retiree is reemployed. See 5 U.S.C. 8344 and 8468 and 5 CFR part 553.




Page 21                                            GAO-03-428 OPM's Role in Flexibilities
agencies to extend the probationary periods for newly hired employees
beyond the standard 1-year period.22 Directors also said that OPM’s
guidance for implementing human capital programs could sometimes be
overly restrictive and burdensome. For example, some directors said that
OPM’s internal approval and evaluation processes for personnel
demonstration projects needed to be streamlined to make the program
more practical.23 One director told us, for instance, that her agency had
considered applying as a demonstration project but demurred because
officials at her agency viewed OPM’s requirements as too burdensome.

It is important to note that human resources directors we interviewed also
expressed interest in gaining increased flexibilities that would require
changes in federal statute and thus are outside of OPM’s authority to
change independently. Directors commented on such areas as decreasing
some of the limitations and parameters of allowable personnel
demonstration projects. As we noted in recent testimony, OMB and the
Congress have key roles in improving human capital management
governmentwide, including the important responsibility of determining the
scope and appropriateness of additional human capital flexibilities
agencies may seek through legislation.24 In recent testimony on using
strategic human capital management to drive transformational change, we
noted the potential benefits of providing additional flexibility in the
government’s personnel systems by suggesting, for example, that the
Congress may wish to explore the benefits of allowing agencies to apply to
OPM on a case-by-case basis (i.e., case exemptions) for authority to
establish more flexible pay systems for certain critical occupations or, even
more broadly, allowing OPM to grant governmentwide authority for all
agencies (i.e., class exemptions) to use more flexible pay systems for their
critical occupations.25



22
     See 5 CFR 315, Subpart H.
23
 Guidance on developing, implementing, and evaluating an OPM-sponsored personnel
demonstration project can be found in OPM’s Demonstration Projects Handbook and OPM’s
Demonstration Projects Evaluation Handbook.
24
 U.S. General Accounting Office, Human Capital: Meeting the Governmentwide High-
Risk Challenge, GAO-01-357T (Washington, D.C.: Feb. 1, 2001).
25
 U.S. General Accounting Office, Managing For Results: Using Strategic Human Capital
Management to Drive Transformational Change, GAO-02-940T (Washington, D.C.: July 15,
2002).




Page 22                                          GAO-03-428 OPM's Role in Flexibilities
A More Comprehensive          In our December 2002 report on human capital flexibilities, we noted that
Clearinghouse and             one of the key factors for effectively using flexibilities is educating agency
                              managers and employees on the availability of these flexibilities as well as
Increased Information         about the situations where the use of those flexibilities is most appropriate.
Sharing about Flexibilities   Ultimately the flexibilities within the personnel system are only beneficial
Could Better Assist           if the managers and supervisors who would carry them out are aware of not
Agencies                      only their existence but also the best manner in which they could be used.
                              With a comprehensive clearinghouse and broad information sharing about
                              flexibilities, OPM can greatly assist agencies in educating their managers
                              and supervisors as well as preparing their human capital managers for their
                              consultative role regarding the best manner in which the full range of
                              flexibilities should be implemented.26 This information would also be
                              useful to support OPM’s oversight of agencies’ use of personnel
                              flexibilities.

                              OPM has not, however, fully maximized its efforts to make human capital
                              flexibilities and effective practices more widely known to agencies.
                              Although OPM has made efforts to inform agencies of what flexibilities are
                              generally available and why their use is important, OPM has yet to take full
                              advantage of its ability to compile, analyze, and distribute information
                              about when, where, and how the broad range of flexibilities are being used,
                              and should be used, to help agencies meet their human capital management
                              needs. Human resources directors we interviewed frequently brought up
                              that OPM needs to take further determined action on this issue. One
                              human resources director said, for example, that OPM should be setting
                              benchmarks and identifying best practices for using flexibilities. Another
                              director added that OPM should provide agencies with different scenarios
                              of how flexibilities can be used. Another director commented that OPM
                              needs to develop more educational and training aids to inform agency
                              officials about these best practices. Yet another director added that OPM
                              should evaluate the effectiveness of many different flexibilities and share
                              the results with other agencies.

                              OPM officials told us that they do not generally know which federal
                              agencies have done effective jobs in using specific flexibilities nor which
                              practices these agencies employed to produce effective results. OPM could


                              26
                                 We discussed agency actions to shift their human capital offices from primarily
                              compliance activities to consulting activities in our report: Human Capital: Selected Agency
                              Actions to Integrate Human Capital Approaches to Attain Mission Results (GAO-03-446,
                              April 2003).




                              Page 23                                              GAO-03-428 OPM's Role in Flexibilities
use its outreach and information-sharing efforts to more thoroughly
identify which federal agencies are specifically using the various
flexibilities in effective ways and reporting on the particular practices that
these agencies are using to implement their flexibilities. Examination of
information from OPM’s database of federal civilian employees, the Central
Personnel Data File, could help OPM in such analysis, including identifying
possible correlations between an agency’s use of flexibilities and factors
such as employees’ occupations, grade levels, and duty stations. This
compilation, analysis, and distribution of information could also include
research OPM conducts or sponsors that may shed light on effective
practices for implementing existing flexibilities.

OPM could also use this analysis of agencies’ use of flexibilities in its
oversight role. OPM’s new Human Capital Assessment and Accountability
Framework provides guidance for agencies to maximize their human
capital management and is being used by OPM to evaluate agencies’
progress. For example, under one of the framework’s six standards for
success,27 key questions to consider include the following:

• Does the agency use flexible compensation strategies to attract and
  retain quality employees who possess mission-critical competencies?

• Does the agency provide work/life flexibilities, facilities, services, and
  programs to make the agency an attractive place to work?

The information gathered on personnel flexibilities could assist OPM in its
assessment of this standard. In addition, OPM has the responsibility to not
only review whether agencies are maximizing the use of personnel
flexibilities, but also, along with agencies, ensure that flexibilities are being
used fairly and are consistent with the merit principles and other national
goals and include appropriate safeguards.




27
  The six human capital standards for success in OPM’s Human Capital Assessment and
Accountability Framework are strategic alignment, workforce planning and deployment,
leadership and knowledge management, results-oriented performance culture, talent, and
accountability.




Page 24                                           GAO-03-428 OPM's Role in Flexibilities
Additional Efforts to        The human resource directors we interviewed said that OPM could do
Identify New Flexibilities   more to assist agencies in identifying additional human capital flexibilities
                             that could be authorized. The information gathered on agencies’ use of
Needed                       flexibilities could also be used to gain greater insight into agencies’ needs
                             related to additional flexibilities that might be helpful for agencies’
                             management of their human capital. In our discussions with OPM about its
                             efforts in assisting agencies with flexibilities, OPM officials told us that it
                             was not feasible to identify or track all agency requests for additional
                             flexibilities because such requests are received throughout the
                             organization and range from casual questions to formal requests for
                             exceptions or demonstration projects. Tracking such requests, however,
                             could assist OPM in gaining a clearer picture of agency concerns and
                             requests for additional tools and flexibilities as well as more
                             comprehensively documenting agency needs for the benefit of
                             policymakers as statutory and regulatory changes are proposed and
                             considered. The recently legislated Chief Human Capital Officers Council,
                             chaired by the OPM Director, could also aid in disseminating information
                             about effective human capital practices. We have reported that the use of
                             the similar interagency councils of chief financial officers and chief
                             information officers to, among other things, share information about
                             effective practices, was one of the major positive public management
                             developments over the past decade.28

                             Once OPM determines that additional flexibilities are needed, it could
                             actively work to build consensus to support needed legislation. As noted
                             earlier, OPM actively supported legislation in the last Congress to authorize
                             additional flexibilities to agencies. Specifically, OPM drafted and
                             supported a significant portion of the proposed Managerial Flexibility Act
                             of 2001. OPM could continue to support such legislation and identify
                             additional personnel flexibilities that are needed.



Conclusions                  The ineffective use of flexibilities can significantly hinder the ability of
                             federal agencies to recruit, hire, retain, and manage their human capital. To
                             deal with their human capital challenges, it is important for agencies to
                             assess and determine which human capital flexibilities are the most
                             appropriate and effective for managing their workforces. As we previously


                             28
                                U.S. General Accounting Office, Government Management: Observations on OMB’s
                             Management Leadership Efforts, GAO/T-GGD/AIMD-99-65 (Washington, D.C.: Feb. 4, 1999).




                             Page 25                                          GAO-03-428 OPM's Role in Flexibilities
                      reported, to ensure more effective use of human capital flexibilities, it is
                      important that agencies (1) plan strategically and make targeted
                      investments, (2) ensure stakeholder input in developing policies and
                      procedures, (3) educate managers and employees on the availability and
                      use of flexibilities, (4) streamline and improve administrative processes,
                      (5) build accountability into their systems, and (6) change their
                      organizational cultures. By more effectively using flexibilities, agencies
                      would be in a better position to manage their workforces, assure
                      accountability, and transform their cultures to address current and
                      emerging demands.

                      OPM provides the necessary link to agencies to accomplish their goals by
                      making existing human capital flexibilities more widely known and easier
                      to use and by identifying additional flexibilities that can help agencies
                      better manage their workforces. While it has taken some actions to inform
                      agencies about what flexibilities are generally available and why their use
                      is important, OPM has significant opportunities to strengthen its role as its
                      moves forward to assist agencies as an integral part of the administration’s
                      human capital transformation efforts. By taking hold of these
                      opportunities, OPM could more successfully aid agencies with more
                      comprehensive information about the tools and authorities available to
                      them for managing their workforce and the most effective ways that these
                      flexibilities can be implemented. The new CHCO Council could be an
                      excellent vehicle to assist in these areas.



Recommendations for   Given the importance of the effective use of flexibilities as a critical part of
                      improved human capital management within the federal government and
Executive Action      consistent with OPM’s ongoing efforts in this regard, we recommend that
                      the Director of OPM take the following actions.

                      • Review existing OPM regulations and guidance to determine whether
                        they provide agencies with needed flexibility while also incorporating
                        protection for employees.

                      • Work with and through the new Chief Human Capital Officers Council to
                        more thoroughly research, compile, and analyze information on the
                        effective and innovative use of human capital flexibilities and more fully
                        serve as a clearinghouse in sharing and distributing information about
                        when, where, and how the broad range of flexibilities are being used,
                        and should be used, to help agencies meet their human capital
                        management needs.



                      Page 26                                       GAO-03-428 OPM's Role in Flexibilities
                  • Continue to identify additional personnel flexibilities needed to better
                    manage the federal workforce and then develop and build consensus for
                    needed legislation.



Agency Comments   OPM commented on a draft of this report and agreed with the conclusions
                  and recommendations. OPM pointed out that in future studies that address
                  OPM leadership issues, in addition to surveying agency human resource
                  directors, we should also survey agency chief operating officers. OPM
                  believed that the chief operating officers have the “best perspective and the
                  widest array of information about recruitment and retention issues.” We
                  agree that such future studies would benefit from the perspectives of chief
                  operating officers. OPM’s complete comments are shown in appendix II.


                  As agreed with your offices, unless you publicly announce its contents
                  earlier, we plan no further distribution of this report until 30 days from its
                  date. At that time, we will send copies to the Chairman, Senate Committee
                  on Governmental Affairs, and the Chairman and Ranking Minority Member,
                  House Committee on Government Reform, and other interested
                  congressional parties. We will also send copies to the Director of OPM. We
                  also will make copies available to others upon request. In addition, the
                  report will be available at no charge on the GAO Web site at
                  http://www.gao.gov.

                  If you have any questions about this report, please contact me on (202) 512-
                  6806. Key contributors to this report are listed in appendix III.




                  J. Christopher Mihm
                  Director, Strategic Issues




                  Page 27                                      GAO-03-428 OPM's Role in Flexibilities
Appendix I

Objectives, Scope, and Methodology                                                                       AA
                                                                                                          ppp
                                                                                                            ep
                                                                                                             ned
                                                                                                               n
                                                                                                               x
                                                                                                               id
                                                                                                                e
                                                                                                                x
                                                                                                                Iis




              This report is the second of two reports responding to a request from the
              Senate Committee on Governmental Affairs and two of its subcommittees
              regarding the use of human capital flexibilities in managing agency
              workforces. The objectives of our first report, issued in December 2002,
              were to provide information on (1) actions that federal agencies can take to
              more effectively implement human capital flexibilities and (2) agency and
              union officials’ views related to the use of human capital flexibilities.1 The
              objectives of this report were to provide information on actions that the
              Office of Personnel Management (OPM) has taken to facilitate the effective
              use of human capital flexibilities throughout the federal government as
              well as what additional actions OPM might take in this regard. Our work in
              responding to this request was conducted in two phases. Phase one of our
              work primarily involved surveying and interviewing the human resources
              directors from the 24 largest departments and agencies. Phase two of our
              work involved conducting semi-structured interviews with managers and
              supervisors, human resources officials, and local union representatives
              from seven federal agencies we selected for more detailed review.2 This
              report was developed primarily from our work during phase one.

              To respond to the objectives of this report, we gathered information from a
              variety of sources using several different data collection techniques.
              During phase one of our work, we interviewed representatives from OPM,
              the federal government’s human resources agency; Merit Systems
              Protection Board, a federal agency that hears and decides civil service
              cases, reviews OPM regulations, and conducts studies of the federal
              government’s merit systems; and the National Academy of Public
              Administration, an independent, nonpartisan, nonprofit, congressionally
              chartered organization that assists federal, state, and local governments in
              improving their performance. We interviewed representatives of these
              three organizations to gather background information on the federal
              government’s experiences with and use of human capital flexibilities and
              OPM’s role in assisting agencies in their use of personnel flexibilities. We
              also reviewed numerous reports issued by these organizations on
              governmentwide human capital issues, the use of various human capital



              1
               U.S. General Accounting Office, Human Capital: Effective Use of Flexibilities Can Assist
              Agencies in Managing Their Workforces, GAO-03-2 (Washington, D.C.: Dec. 6, 2002).
              2
                The seven agencies were the Department of the Air Force, General Services
              Administration, Internal Revenue Service, International Trade Administration, U.S. Mint,
              Department of State, and Veterans Benefits Administration.




              Page 28                                             GAO-03-428 OPM's Role in Flexibilities
Appendix I
Objectives, Scope, and Methodology




flexibilities in federal agencies, and the role of OPM. In addition, we
reviewed previous GAO reports on a broad range of human capital issues.

In the fall of 2001, we also gathered information for our objectives by
conducting semistructured interviews with the human resources directors
of the 24 largest federal departments and agencies. To produce a general
summary of the human resources directors’ views, we first reviewed their
responses to the open-ended questions we had posed to them. Based on
our analysis of those responses, we identified a set of recurring themes and
then classified each director’s responses in accord with these recurring
themes. At least two staff reviewers collectively coded the responses from
each of the 24 interviews and the coding was verified when entered into a
database we created for our analysis. In addition, prior to our interviews
with the 24 human resources directors, each of the 24 officials completed a
survey of seven closed-ended questions dealing with agencies’ use of
human capital flexibilities, OPM’s role related to these flexibilities, and the
federal hiring process.

To update this information, we resurveyed the 24 individuals serving in the
agencies’ human resources director positions in the fall of 2002, asking the
same seven questions. During the period between the 2001 and 2002
surveys, 16 of the 24 individuals serving in the positions of human
resources directors had changed. Table 1 shows the questions from these
surveys along with a summary of the answers provided. For each item,
respondents were to indicate the strength of their perception on a 5-point
scale, from “little or no extent” to “very great extent.”

Our audit work on both phases of our review was done from May 2001
through November 2002. We conducted our audit work in accordance with
generally accepted government auditing standards.




Page 29                                      GAO-03-428 OPM's Role in Flexibilities
                                                  Appendix I
                                                  Objectives, Scope, and Methodology




Table 1: Human Resources Directors’ Responses to GAO Questionnaire on Human Capital Flexibilities (Fall 2001 and Fall 2002)

                                                               Little or        Some        Moderate         Great   Very great    No basis to
                                                              no extent         extent        extent        extent       extent     judge/NA
1. To what extent are managers and        Fall 2001                     1             2             14           7             0             0
supervisors within your department/agency Fall 2002                     0             1             13          10             0             0
aware of the human capital flexibilities
available to them?
2. To what extent has the U.S. Office of         Fall 2001              1             5              9           6             3             0
Personnel Management (OPM) assisted              Fall 2002              2             6              9           4             3             0
your department/agency in using human
capital flexibilities that are already available
to your department/agency?
3. To what extent are you satisfied with the Fall 2001                  0             7              8           7             0             2
role that OPM has played in helping your     Fall 2002                  2             5              9           4             3             1
department/agency use these available
human capital flexibilities?
4. To what extent has OPM assisted your Fall 2001                       4            10              4           3             0             3
department/agency in identifying additional Fall 2002                   4             9              5           3             1             2
human capital flexibilities that could be
authorized?
5. To what extent are you satisfied with the Fall 2001                  3             9              6           3             0             3
role that OPM has played in helping your     Fall 2002                  5             6              4           4             2             3
department/agency identify additional
human capital flexibilities that could be
authorized?
6. To what extent is the time needed to fill a Fall 2001                0             2              7          13             2             0
position, or “hiring time,” a problem within   Fall 2002                0             3              8          10             3             0
your department/agency?


                                                                                             Neither
                                                                 Greatly Somewhat         helped nor     Somewhat       Greatly    No basis to
                                                               hindered   hindered         hindered         helped      helped      judge/NA
7. Overall, would you say that OPM has          Fall 2001               0             5              5          11             2             1
helped or hindered the hiring process in        Fall 2002               2             2              9           7             3             1
your department/agency?

Source: GAO survey data.

                                                  Note: For the Fall 2001 and Fall 2002 surveys, N=24.




                                                  Page 30                                                GAO-03-428 OPM's Role in Flexibilities
Appendix II

Comments from the Office of Personnel
Management                                                         Appendx
                                                                         Ii




              Page 31         GAO-03-428 OPM's Role in Flexibilities
Appendix II
Comments from the Office of Personnel
Management




Page 32                                 GAO-03-428 OPM's Role in Flexibilities
Appendix II
Comments from the Office of Personnel
Management




Page 33                                 GAO-03-428 OPM's Role in Flexibilities
Appendix III

GAO Contacts and Staff Acknowledgments                                                            Appendx
                                                                                                        iI




GAO Contacts      J. Christopher Mihm or Edward Stephenson, (202) 512-6806



Acknowledgments   In addition to the persons above, K. Scott Derrick, Charlesetta Bailey, Tom
                  Beall, Ridge Bowman, Karin Fangman, Molly K. Gleeson, Judith Kordahl,
                  Shelby D. Stephan, Gary Stofko, Mike Volpe, and Scott Zuchorski made key
                  contributions to this report.




(450158)          Page 34                                    GAO-03-428 OPM's Role in Flexibilities
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