oversight

Government Printing Office: Advancing GPO's Transformation Effort through Strategic Human Capital Management

Published by the Government Accountability Office on 2003-10-20.

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

               United States General Accounting Office

GAO            Report to the Subcommittee on
               Legislative Branch, Committee on
               Appropriations, U.S. Senate


October 2003
               GOVERNMENT
               PRINTING OFFICE
               Advancing GPO’s
               Transformation Effort
               through Strategic
               Human Capital
               Management




GAO-04-85

               a

                                                October 2003


                                                GOVERNMENT PRINTING OFFICE

                                                Advancing GPO’s Transformation Effort
Highlights of GAO-04-85, a report to the        through Strategic Human Capital
Subcommittee on Legislative Branch,
Committee on Appropriations, U.S. Senate        Management



The Government Printing Office                  The Public Printer has demonstrated the leadership commitment that is
(GPO) has undertaken the task of                essential to transforming GPO, stating that GPO is going to have to
transforming itself in response to              reengineer itself to remain relevant and viable for the future. Under the
pressing fiscal and other realities in          Public Printer’s direction, GPO has taken several steps that recognize the
the 21st century. This report                   important role strategic human capital management plays in its
focuses on actions GPO’s leaders
can take to advance its
                                                transformation. For example, GPO created and filled the position of Chief
transformation efforts through                  Human Capital Officer (CHCO), shifted the focus of existing training and
strategic human capital                         expanded opportunities for more staff to attend needed training, enhanced
management and is a part of GAO’s               recruitment strategies, and initiated a process to develop an agency strategic
response to a congressional request             plan and an accompanying strategic workforce plan.
that GAO conduct a general
management review of GPO that                   To sustain its transformation efforts, GPO’s leadership needs to ensure that
focuses on issues related to GPO’s              managers throughout the agency appreciate the importance of their role in
management and transformation.                  managing GPO’s workforce and helping transform the agency. Furthermore,
GAO plans to address other                      now that GPO has hired a CHCO, it can begin to restructure its human
management topics, including                    resources office to better support its transformation by adopting a more
strategic planning and financial
management, in a series of reports
                                                strategic view of human capital management and by having human resources
that may assist GPO in its ongoing              officials work collaboratively with GPO managers. To further support its
transformation efforts.                         transformation, GPO should use strategic workforce planning to help ensure
                                                that its staff has the skills needed to meet emerging needs. A workforce plan
                                                that includes both an inventory of current GPO employees’ knowledge and
                                                skills and an identification of the knowledge and skills GPO needs in the
GAO makes many interrelated                     future will best support GPO’s transformation. Finally, a modern, effective,
recommendations that reflect the                and credible performance management system can help GPO facilitate the
important role of human capital in
                                                transformation process and serve as the basis for establishing individuals’
GPO’s ongoing transformation.
These recommendations provide a                 roles and accountability in the transformation. Performance management
framework to reinforce GPO’s                    can also help GPO achieve results, accelerate change, and facilitate two-way
initial transformation efforts and              communication between managers and employees.
enhance its future efforts.
                                                GAO makes numerous recommendations to GPO on the steps it should take
We provided a draft of this report              to strengthen its human capital management in support of its transformation.
in September 2003 to the Public                 These recommendations can guide GPO as it seeks to meet the changing and
Printer for review and comment.                 emerging information needs of its customers. The focus of GAO’s
GPO’s Chief of Staff, Deputy Chief              recommendations is on the following four interrelated areas:
of Staff, and Chief Human Capital
Officer provided comments orally
and by e-mail on behalf of GPO                     • communicating the role of managers in GPO’s transformation,
generally agreeing with the                        • strengthening the role of the human resources office,
content, findings, and                             • 	 developing a strategic workforce plan to ensure GPO has the skills
recommendations in the draft                           and knowledge it needs for the future, and
report.                                            • using a strategic performance management system to drive change.

www.gao.gov/cgi-bin/getrpt?GAO-04-85.
                                                By implementing the recommendations in these four areas, GPO can build
                                                the strong human capital foundation needed to reinforce the transformation
To view the full product, including the scope   now under way.
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                                                                           3
                         Background                                                                                 5
                         Communicating the Role of Managers and Following Up on
                            Employees’ Stated Concerns Is Vital to GPO’s Transformation                          9
                         Developing a Strategic Human Capital Office                                            12
                         Strategic Workforce Planning Can Assist GPO’s Transformation                           19
                         Performance Management Can Help GPO Drive Internal Change and
                            Achieve External Results                                                            26
                         Concluding Observations                                                                34
                         Agency Comments                                                                        35


Appendix
           Appendix I:   Objective, Scope, and Methodology                                                      36


Table                    Table 1: Key Agency Actions to Integrate Human Capital
                                  Approaches with Strategies for Accomplishing Agency
                                  Missions                                                                      13


Figures                  Figure 1: The Net Operating Income (Loss) for GPO’s Major 

                                   Operations (in Thousands of Dollars)                                          7

                         Figure 2: GPO’s Net Operating Income                                                    8

                         Figure 3: GPO’s New Organizational Structure                                           16

                         Figure 4: Critical Elements to Include in the Workforce Planning 

                                   Process                                                                      20

                         Figure 5: Examples of Workforce Data That Are Collected and

                                   Analyzed by Other Federal Agencies                                           22

                         Figure 6: Key Practices for Effective Performance Management                           28

                         Figure 7: 2001 Performance Ratings for Current GPO 

                                   Employees                                                                    31





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                         Page i                             GAO-04-85 GPO’s Strategic Human Capital Management
Page ii   GAO-04-85 GPO’s Strategic Human Capital Management
A

United States General Accounting Office
Washington, D.C. 20548



                                    October 20, 2003


                                    The Honorable Ben Nighthorse Campbell

                                    Chairman

                                    The Honorable Richard J. Durbin

                                    Ranking Minority Member

                                    Subcommittee on Legislative Branch

                                    Committee on Appropriations

                                    United States Senate


                                    Like other public and private organizations, the Government Printing

                                    Office (GPO) has undertaken the enormous task of transforming itself in 

                                    response to the pressing fiscal and other realities of the 21st century. This 

                                    transformation process will eventually lead the organization to make some 

                                    fundamental program and cultural changes. During his nomination hearing 

                                    on October 3, 2002, the Public Printer emphasized GPO’s need to transform 

                                    itself by stating that “. . . like every other manufacturing business in 

                                    America, the GPO is going to have to reengineer itself if it is to remain 

                                    relevant and viable for the future.” On several occasions, the Public Printer 

                                    has reiterated the need for GPO to move from the 19th century to the 21st

                                    century by looking at “. . . the changing and emerging information needs of 

                                    our customers and develop a deeper understanding of our true strengths so 

                                    that we can plan for and build a new business model that will allow us to 

                                    meet the information demands of our customers.” To underscore these 

                                    statements, the Public Printer has taken actions to transform GPO by

                                    creating a new management structure, launching a major reorganization of 

                                    GPO’s divisions, and initiating a demonstration project to allow federal 

                                    agencies more flexibility in contracting for printing services. The Public 

                                    Printer has also taken steps to reduce GPO’s persistent financial losses by 

                                    closing bookstores1 and reducing staffing levels. Finally, the Public Printer 

                                    has initiated a process to develop an agency strategic plan and an 

                                    accompanying strategic workforce plan.


                                    GPO leadership already recognizes that implementing large-scale

                                    organizational transformations are not simple endeavors. As we have 

                                    noted, it typically takes at least 5 to 7 years until an organization’s change

                                    initiatives are fully implemented, and the related culture is transformed in a





                                    1
                                     GPO closed all of its bookstores except for its Washington, D.C. bookstore.




                                    Page 1                              GAO-04-85 GPO’s Strategic Human Capital Management
sustainable manner.2 Further, successful transformations require the
concentrated efforts of both leadership and employees to accomplish the
organization’s new goals.3 To sustain and focus the transformation effort,
organizations need to concentrate on how effectively they use their people,
or human capital.

As agreed with your Subcommittee, this report focuses on actions GPO’s
leadership could take to advance its transformation efforts through
strategic human capital management. To examine GPO’s transformation
efforts, we used our Model of Strategic Human Capital Management
released in March 20024 as the analytical framework for collecting data and
reviewing GPO’s human capital management. This model is designed to
help agency leaders effectively use their human capital and determine how
well they integrate human capital considerations into daily decision making
and planning for the program results they seek to achieve. We focused our
review on the human capital issues that are of most immediate concern and
significance to GPO’s transformation initiative, such as the recent hiring of
a Chief Human Capital Officer (CHCO), the desire to restructure GPO’s
workforce, and the use of a performance management system. We
reviewed GPO documentation describing its personnel practices and
transformation initiatives and interviewed numerous GPO managers about
GPO’s human capital practices. For additional information on our scope
and methodology, see appendix I.

This report is part of your request that we conduct a general management
review of GPO that examines GPO’s human capital, financial management,
information management, strategic planning, organizational operations, as
well as its use of technology in printing and information dissemination. The
Subcommittee requested that our general management review be done in
conjunction with another GAO review mandated in the Committee on
Appropriation’s report of legislative branch appropriations for fiscal year
2003, which will examine the current state of printing and dissemination of


2
  U.S. General Accounting Office, Highlights of a GAO Forum: Mergers and
Transformation: Lessons Learned for a Department of Homeland Security and Other
Federal Agencies, GAO-03-293SP (Washington, D.C.: Nov. 14, 2002).
3
 U.S. General Accounting Office, Results-Oriented Cultures: Implementation Steps to
Assist Mergers and Organizational Transformations, GAO-03-669 (Washington, D.C.: July
2, 2003).
4
 U.S. General Accounting Office, A Model of Strategic Human Capital Management, GAO-
02-373SP (Washington, D.C.: Mar. 15, 2002).




Page 2                            GAO-04-85 GPO’s Strategic Human Capital Management
                    federal government information. We plan to address this topic and others
                    related to GPO’s management as part of a series of reports to be issued
                    periodically to assist GPO in its ongoing transformation efforts. For
                    example, in the coming months, we plan to issue a report on legislative and
                    executive branch printing requirements and views of GPO, which will
                    provide GPO with important information it needs to develop its strategic
                    plan. In addition, we plan to continue working with GPO leaders
                    cooperatively, meeting regularly with them about the progress of their
                    transformation initiatives, and at their request, continuing to provide them
                    with information on our human capital efforts and related initiatives.



Results in Brief	   The Public Printer clearly recognizes strategic human capital management
                    as critical to the success of GPO’s transformation. To strengthen GPO’s
                    human capital management, the Public Printer has established and recently
                    filled the position of CHCO, shifted the focus of training, and enhanced
                    recruitment strategies. GPO can build on these important first steps by
                    taking additional actions to further (1) enhance communication with senior
                    managers, (2) build a strategic human resources office to help drive the
                    transformation, (3) develop strategic workforce plans, and (4) implement
                    an individual performance management system that aligns organizational
                    goals with day-to-day operations and creates a line of sight between
                    individual and organizational performance.

                    •	 Communication: As part of their efforts to transform the organization,
                       GPO’s leadership has shown commitment to improving human capital
                       management. To sustain this transformation, GPO’s leadership needs to
                       ensure that managers throughout the organization appreciate the
                       importance of their roles in transforming the organization and managing
                       GPO’s workforce. To this end, we recommend steps that the Public
                       Printer and GPO’s CHCO should take to strengthen communications and
                       hold managers accountable for effectively managing people and leading
                       change.

                    •	 Strategic human capital office: The appointment of the CHCO was a
                       critical first step. GPO can now support its transformation by adopting a
                       strategic view of human capital management that centers on the
                       contributions GPO’s Human Resources Office can make to the long-term
                       accomplishment of GPO’s mission. We recommend numerous steps
                       GPO leadership can take to strengthen the role of human capital and
                       ensure that it will be integrated with strategies for accomplishing GPO’s
                       mission and program goals. For example, by involving the CHCO and



                    Page 3                        GAO-04-85 GPO’s Strategic Human Capital Management
    other human capital leaders in strategic planning, GPO can ensure that
    its human capital approaches are integrated with its program strategies.
    The Public Printer and CHCO will need to develop a new human capital
    organization with a strong collaborative focus and culture. The Human
    Resources Office should work in partnership with managers in all of
    GPO’s divisions to integrate human capital approaches with GPO’s
    program strategies.

•	 Strategic workforce planning: GPO should use strategic workforce
   planning to integrate its human capital approaches with its programs
   and ensure that it recruits and develops staff needed to meet emerging
   needs. We recommend several steps to assist GPO leadership in
   preparing for GPO’s future. Specifically, to implement effective
   workforce planning, GPO will need to analyze workforce skills gaps
   based on the decisions it is making as part of its ongoing efforts to set a
   strategic direction, develop human capital strategies to fill the gaps,
   build the capability to support workforce planning, and evaluate and
   revise its human capital strategies. GPO collects some data on its
   workforce, including the number of people eligible for retirement and
   the results of employees’ performance reviews. However, GPO needs to
   develop a system to collect and analyze data on the knowledge and
   skills of its workforce and develop performance measures for its human
   capital strategies in order to evaluate them.

•	 Performance management: Effective performance management is one
   of the nine key practices we identified for effective mergers and
   transformations.5 The performance management system can help
   manage and direct the transformation process and serve as the basis for
   setting expectations for individuals’ roles in the transformation process.
   GPO is developing a strategic plan and organizational goals that, when
   completed, can serve as the basis for setting individual performance
   expectations and ensuring accountability. However, GPO can begin to
   use the performance management system now to drive its
   transformation and help achieve critical organizational imperatives,
   such as improving its financial condition. We recommend several steps
   through which GPO can develop a performance management system to
   help achieve results, accelerate change, and facilitate two-way
   communication between managers and employees so that discussions



5
 GAO-03-669.




Page 4                         GAO-04-85 GPO’s Strategic Human Capital Management
                  about individual and organizational performance are integrated and
                  ongoing.

              We provided a draft of this report in September 2003 to the Public Printer
              for review and comment. GPO’s Chief of Staff, Deputy Chief of Staff, and
              Chief Human Capital Officer provided comments orally and by e-mail. The
              GPO officials generally agreed with the content, findings, and
              recommendations of the draft report. The officials also provided minor
              technical clarifications, and we made those changes where appropriate.



Background	   Under the public printing and documents statutes of Title 44, United States
              Code, GPO’s mission is to fulfill the needs of the federal government for
              information products and to distribute those products to the public.6 GPO
              was created in 1860 as part of the legislative branch primarily to satisfy the
              printing needs of Congress but eventually became the focal point for
              printing, binding, and information dissemination services across the federal
              government. GPO publishes the Congressional Record overnight when
              Congress is in session and produces the Federal Register, the Code of
              Federal Regulations, and other key federal government documents, such
              as the annual U.S. Budget. In addition, approximately 130 federal
              departments and agencies use GPO’s in-plant printing facility, electronic
              information systems, or printing-buying operations to produce a variety of
              government information products, such as census and tax forms, U.S.
              passports, and federal regulations and reports. Through its Information
              Dissemination programs (formerly Superintendent of Documents), GPO
              disseminates these government information products via a system of 1,200
              depository libraries located around the country (the Federal Depository
              Library Program), its Web site (http://www.gpoaccess.gov), telephone and
              fax ordering, an online ordering site, and a bookstore.

              GPO’s role as the principal agent for printing and distributing federal
              government information currently faces two major challenges. First, in a
              memorandum dated May 3, 2002, the Office of Management and Budget
              (OMB) recommended that the Federal Acquisition Regulatory Council
              eliminate restrictions mandating the use of GPO as the federal
              government’s single source for obtaining printing services and related
              supplies. After this proposed rule change was issued in the Federal


              6
               These are chapters 1, 3, 5, 7, 9, 11, 13, 15, 17, 19, 39, and 41 of Title 44, U.S.C..




              Page 5                                  GAO-04-85 GPO’s Strategic Human Capital Management
Register on November 13, 2002,7 GPO and OMB entered a compact on June
6, 2003, in which GPO would create a demonstration project designed to
provide federal agencies flexibility in choosing their own printing services.
According to GPO, the demonstration project would be a print
procurement contract, which would function similar to the General
Services Administration’s (GSA) Federal Supply Schedule8 and be tested
for 1 year, beginning on October 1, 2003, with the Department of Labor
serving as the federal agency customer. The demonstration project is
expected to result in GPO adopting the role of registering and qualifying
printers to participate in the contract as well as offering customer support
and in federal agencies being able to select qualified printers, using either
lowest price or best value techniques.

Second, the demand from federal agencies for ink-on-paper printing has
declined in recent years because the public has increasingly accessed
government information through the Internet and obtained GPO’s products
through electronic publishing technologies. This trend has affected all of
GPO’s programs, reducing the production, procurement, and sales of
printed products. As a result, over the past 5 fiscal years, GPO has
sustained losses in all of its major operations except for its in-house
printing. As shown in figure 1, since 1998, in-house printing, which includes
the Federal Register and Code of Federal Regulations, has raised
$39,814,000 in income; purchased printing, which includes most of the
printing done for federal agencies, lost $12,299,000; the sales program,
which includes sales from the recently closed bookstores, as well as online
and telephone sales, lost $48,275,000; and agency distribution services,
which distributes executive branch publications, lost $274,000.




7
 67 Fed. Reg. 68,914-68,918 (2002).
8
 Under the Federal Supply Schedule Program, GSA enters into contracts with commercial
firms to provide supplies and services at stated prices for given periods. Orders are placed
directly with the schedule contractor and deliveries are made directly to the customer.




Page 6                                GAO-04-85 GPO’s Strategic Human Capital Management
Figure 1: The Net Operating Income (Loss) for GPO’s Major Operations (in Thousands of Dollars)


                                           In-house printing                                       Purchased printing
                                           Dollars in thousands                                     Dollars in thousands
                                           16,000                                                   4,000                            3,722
                                                                      14,539
                                                                                                    2,000
                                           12,000                                                                            280
                                                    11,039                                              0
                                                             9,420
                                            8,000                                                  -2,000

                                                                                                   -4,000
                                                                                                                                             -3,808
                                            4,000                                        2,712
                                                                                 2,104             -6,000
                                                                                                                    -5,623
                                               0                                                   -8,000 -6,870
                                                    1998     1999      2000      2001     2002              1998      1999   2000    2001     2002
                                                    Fiscal year                                             Fiscal year
                                                                                Total: $39,814                                      Total: -$12,299


                                          Sales program                                              Agency distribution services
                                          Dollars in thousands                                       Dollars in thousands
                                                                                                     200
                                                                                                                             129
                                               0                                                                                      105      80
                                                                                                     100

                                           -4,000 -3,626                                                0

                                                                                                     -100
                                           -8,000                               -7,607
                                                             -9,246                                  -200            -193
                                          -12,000                     -11,815
                                                                                                     -300

                                          -16,000                                        -15,981     -400    -395
                                                    1998     1999      2000      2001     2002              1998      1999   2000    2001     2002
                                                    Fiscal year                                             Fiscal year
                                                                                Total: -$48,275                                        Total: -$274


Source: GAO.



                                          As shown in figure 2, GPO’s losses for its major operations during the 5-
                                          year period were $21 million, with the greatest net loss at approximately
                                          $17 million from operations in fiscal year 2002.




                                          Page 7                                         GAO-04-85 GPO’s Strategic Human Capital Management
Figure 2: GPO’s Net Operating Income
    Dollars in thousands
     4,000                          3,133
     2,000
               148
         0

     2,000                                    -1,676
     4,000

     6,000                 -5,642
     8,000

    10,000

    12,000

    14,000

    16,000
                                                         -16,997
    18,000
             1998          1999     2000      2001        2002
             Fiscal year
                                            5-year total: -$21,034
    Source: GAO.


Note: Net operating income before eliminations.


The decline in the demand for GPO’s ink-on-paper products and the shift
toward using its electronically disseminated products has led to a decline
in GPO’s workforce. Over the past 6 years, GPO’s total number of full-time
equivalent (FTE) employees has declined by 13 percent, from 3,430 FTEs in
1998 to 2,978 FTEs in 2003. The workforce will experience additional
decreases through GPO’s retirement separation incentive program, which
was announced on April 29, 2003. The program, based on authority
provided in the Legislative Branch Appropriations Act, 1999, as amended,
seeks to generate payroll savings by reducing GPO’s existing staffing levels
by approximately 300 employees.9

GPO’s current workforce represents a diverse set of skills, ranging from
electricians to printing machinists to information technology specialists.
About 47 percent of GPO’s employees are in blue-collar occupations, such
as platemakers and electricians, which are represented by 16 different
unions. As of August 2003, almost half of GPO’s workforce was eligible for

9
 44 U.S.C. 305 note.




Page 8                                      GAO-04-85 GPO’s Strategic Human Capital Management
                       retirement, while about 5 percent of the workforce was under the age of 30.
                       As we have reported before,10 it is important to consider the number and
                       type of employees an agency will lose to retirement because retirees often
                       represent an agency’s most experienced and knowledgeable staff.

                       In January 2003, the Public Printer initiated a process to develop a strategic
                       plan and an accompanying strategic workforce plan. The process includes
                       a year of data gathering to assess GPO’s current status; a year to develop
                       and write the plan, which will include input from employees, Congress,
                       customers, and other stakeholders; and 3 to 5 years to fully implement the
                       plan. Currently, GPO is in the data-gathering phase of its strategic planning
                       process.



Communicating the      Creating an effective, ongoing communication strategy is essential when
                       defining and implementing any transformation effort. More specifically, for
Role of Managers and   GPO it is important to communicate the role that managers should play in
Following Up on        managing people and implementing human capital initiatives in the
                       agency’s transformation. A comprehensive communication strategy that
Employees’ Stated      reaches out to employees, unions, Congress, customers, and stakeholders
Concerns Is Vital to   and seeks to engage them in the transformation process could help GPO’s
GPO’s Transformation   leaders convey an understanding of the purpose of planned changes and
                       build trust, cultivating a strong relationship with management and gaining
                       employee ownership for the transformation. Additionally, communication
                       should facilitate a two-way honest exchange between managers and
                       employees and allow for constructive feedback from employees.

                       This communication is central to forming the effective partnerships that
                       are crucial to the success of any organization. Because an organization’s
                       people are the drivers of any transformation, it is vital to solicit their input
                       and monitor their attitudes. Obtaining employees’ attitudes through pulse
                       surveys, focus groups, or confidential hotlines can serve as a quick check
                       of how employees are feeling about the large-scale changes that are
                       occurring and the new organization as a whole. Most important, employees
                       should see that top leadership not only listens to their concerns, but also
                       takes action and makes appropriate adjustments to the transformation
                       effort based on them.


                       10
                          U.S. General Accounting Office, Federal Employee Retirements: Expected Increase Over
                       the Next 5 Years Illustrates Need for Workforce Planning, GAO-01-509 (Washington, D.C.:
                       Apr. 27, 2001).




                       Page 9                             GAO-04-85 GPO’s Strategic Human Capital Management
Status of GPO’s             GPO’s leaders have demonstrated that they are committed to a strategic
Communication and Follow-   human capital approach and understand that implementing a large-scale
                            management initiative, such as GPO’s transformation, requires the
up Efforts                  concentrated efforts of both leadership and employees. GPO leadership
                            has communicated to employees the need for a transformed GPO through
                            several channels, including holding town hall meetings with question and
                            answer sessions for all employees. In addition, GPO has established an
                            Employee Communications Office to disseminate information to the
                            employees regarding GPO’s ongoing changes through a recently created
                            intranet site, newsletters, and mailings to employees’ homes. Overall,
                            managers say that communication has improved dramatically since the
                            arrival of GPO’s new leadership team.

                            To indicate his commitment to GPO’s human capital, the Public Printer has

                            •	 shifted the focus of existing training and expanded opportunities for
                               more staff to attend needed training;

                            •	 instituted a new time-off awards program, the first such program
                               instituted at GPO in a decade;

                            •	 implemented a new executive development program, demonstrating
                               GPO’s investment in its future leaders; and

                            •	 initiated an employee climate survey to get GPO employees’ views on
                               issues requiring management attention.

                            Although GPO leadership demonstrated commitment to communication
                            and human capital, we found that GPO’s managers did not consistently
                            understand the roles they should play in the transformation. For example,
                            some managers expressed the need to have additional details about the
                            direction of their units within the context of GPO’s transformation and
                            were unclear about what training requests they should accept. A key factor
                            in the success of any strategic human capital initiative is the sustained
                            attention of senior leaders and managers at all levels of the agency to
                            valuing and investing in their employees. As GPO’s leadership
                            communicates with employees regarding its transformation efforts, it also
                            needs to inform managers about their roles in managing people and in
                            monitoring and refining human capital initiatives. Establishing a
                            performance expectation that holds managers accountable for the effective
                            management of people can help clarify the roles of managers and further
                            demonstrate leadership’s commitment to human capital management.


                            Page 10                       GAO-04-85 GPO’s Strategic Human Capital Management
                          Follow-up action on GPO’s employee climate survey, conducted in
                          February 2003, has been slow. Planned focus groups with employees to
                          discuss the findings and develop actions that could be taken to address
                          some of the issues raised by the survey results were delayed until the new
                          CHCO was hired to ensure that the follow-up and the implementation of
                          any recommendations resulting from the survey received the appropriate
                          level of attention. Moreover, while GPO’s employee climate survey
                          identified several issues for immediate attention, such as communications,
                          performance management, and training, managers we interviewed, both
                          within the Human Resources Office and in other areas of GPO, said they
                          did not believe that it was their responsibility to address issues identified in
                          the employee survey. To address these issues, all GPO managers should
                          have performance expectations making them responsible and accountable
                          for taking actions to change GPO’s work environment. While monitoring
                          employee attitudes provides good information, it is most important that
                          employees see that top leadership not only listens to their concerns but
                          also takes action on them.



Recommended Next Steps	   GPO’s leaders have communicated a clear message about the need to
                          transform GPO. To build on their progress by strengthening two-way
                          communications and employee involvement, the Public Printer should take
                          the following actions:

                          •	 Communicate with managers about their roles in strengthening GPO’s
                             human capital management in support of mission needs. GPO
                             leadership should continue to hold town hall meetings and use the
                             Employee Communication Office to reach out to employees and engage
                             them in a two-way exchange so that they understand how they may be
                             able to help with the transformation.

                          •	 Ensure that managers are held accountable, through GPO’s performance
                             management system and other mechanisms, for effectively managing
                             people and leading change.

                          In addition, the CHCO should follow up on the completed employee
                          climate survey by holding focus groups that work to develop recommended
                          solutions to issues raised in the survey results, including adjustments to
                          GPO’s transformation and human capital approaches.




                          Page 11                         GAO-04-85 GPO’s Strategic Human Capital Management
Developing a Strategic 
   Our work and that of others has shown that over the past decade, high-
                           performing organizations have increasingly adopted a strategic view of
Human Capital Office
      human capital management in helping to achieve organizational missions
                           and program goals.11 This new strategic view centers on the contributions
                           that human capital management can make to the long-term
                           accomplishment of the agency’s mission. As such, the function traditionally
                           called personnel or human resources needs to be fundamentally
                           transformed, from being a strictly support function involved in managing
                           personnel processes and ensuring compliance with rules and regulations to
                           designing and implementing human capital approaches that are aimed at
                           supporting the agency’s strategic goals. Human capital professionals must
                           have the appropriate preparation not just to provide effective support
                           services, but also to consult effectively with line managers in tailoring
                           human capital strategies to the unique needs of the agency.

                           In April 2003, we reported on key actions that selected agencies had taken
                           to integrate their human capital approaches with their strategies for
                           accomplishing organizational missions and to shift the focus of their
                           Human Resources Office from performing primarily compliance activities
                           to performing consulting activities.12 These actions can be particularly
                           instructive to GPO as it strengthens the role of human capital in support of
                           its transformation. Table 1 identifies the actions taken and who within each
                           agency initiated them.




                           11
                                GAO-03-446.
                           12
                                GAO-03-446.




                           Page 12                       GAO-04-85 GPO’s Strategic Human Capital Management
Table 1: Key Agency Actions to Integrate Human Capital Approaches with Strategies for Accomplishing Agency Missions

Action initiators   Description of action
Agency leaders      • Agency leaders included human capital leaders in key agency decision-making. For example, United States Coast
                      Guard’s (USCG) agency leadership has engaged its human capital organization earlier in the strategic planning
                      and decision-making process by appointing its Assistant Commandant for Human Resources as a member of the
                      agency’s senior management team and a full partner in the development of key USCG management decisions.

                    • Agency leaders also established entities, such as human capital councils, accountable for integrating human
                      capital approaches with strategies for achieving programmatic goals. The groups’ members include both program
                      leaders and human capital leaders. For example, the GSA created a Human Capital Council to ensure, among
                      other objectives, that the agency’s human capital strategic plan was integrated within GSA’s strategic plan and
                      supported the agency’s program strategies.
Human capital       • Human capital leaders are establishing and communicating clear human capital strategic visions. For example,
leaders               GSA’s Chief People Officer’s vision is for GSA’s Chief People Office (CPO) to become a partner in GSA’s
                      business success. To do so, she explained that CPO must deliver products and services that enable its customers
                      to focus on their core business. Similarly, Internal Revenue Service’s (IRS) former Chief Human Resource
                      Officer’s vision is for the human capital professionals in IRS to become more proactive in providing human capital
                      strategies and solutions that directly enhance the agency’s performance.

                    • Human capital leaders are restructuring their human capital organizations to improve their alignment with their
                      vision. For example, IRS’s restructured human capital management function includes, as one of three major
                      components, a national headquarters strategic human resources organization.

                    • Human capital leaders are using technological advances to provide opportunities to free organizational resources
                      that can be redeployed for strategic purposes. For example, the United States Geological Survey (USGS)
                      partnered with QuickHire, a commercial off-the-shelf software developer, to develop an on-line automated
                      recruitment system (OARS) that allows USGS’s human capital staff to enter job vacancies into a centralized
                      database and develop rating and ranking criteria by selecting and weighting questions from an extensive question
                      library organized by job series. According to USGS, as the agency continues to gain experience and efficiencies
                      using OARS, it hopes to divert an increasing number of human capital staff members to other strategic efforts.

                    • Human capital leaders are promoting a more strategic role for human capital professionals and are investing in the
                      development of new competencies for human capital professionals to support their increased strategic
                      engagement. For example, in response to the changing role and functions of its human capital community, GSA
                      has developed new core competencies needed by its human capital staff. Included in these competencies are the
                      new skills GSA’s Chief People Officer believes the agency’s human capital staff members must develop to become
                      business partners.
Agency leaders      • Jointly, agency leaders and human capital leaders are having human capital professionals and agency line
and human             managers share the accountability for successfully integrating strategic human capital approaches into the
capitalleaders        planning and decision making of the agency. For example, Federal Emergency Management Agency’s (FEMA)
                      human capital leaders and program officials have implemented an innovative employee staffing effort. According to
                      FEMA officials, this greatly enhanced the agency’s emergency response capability by providing the human capital
                      staff and the line managers the ability to collaborate in identifying available deployment candidates for assignment
                      as soon as federal disasters are declared.
Source: GAO.




                                             Page 13                              GAO-04-85 GPO’s Strategic Human Capital Management
Status of GPO’s Efforts to   GPO’s new leaders recognize that its Human Resources Office has been
Create a Strategic Human     characterized by the following weaknesses:
Capital Function             •	 Lacking a strategic focus. Managers in both the Human Resources
                                Office and GPO’s program divisions acknowledged the need to improve
                                collaboration in support of agency goals and the transformation and
                                indicated that efforts should be more proactive. One official in the
                                Human Resources Office indicated the need for the new CHCO to
                                dramatically improve communication with GPO program managers so
                                that the Human Resources Office can better understand and anticipate
                                their needs.

                             •	 Viewing human capital as costs to be cut rather than as assets needed
                                to achieve results. Managers told us that the Human Resources Office
                                had been used to reduce and control salary costs by restricting
                                promotions, denying managers requests to increase the grade levels of
                                positions so that they would reflect increased responsibilities, and
                                downgrading vacant positions. Managers said that these actions
                                contributed to good employees leaving GPO for positions in other
                                federal agencies where they had more opportunities for advancement.

                             •	 Focusing more on processing transactions rather than strategically
                                managing human capital to help achieve results. Program managers
                                viewed the Human Resources Office’s assistance in such efforts as
                                filling recruitment needs and providing requested employee data as
                                positive but very limited and falling far short of their expectations for
                                assistance.

                             •	 Being an obstacle to rather than supporting manager’s needs. For
                                example, we were told that the Human Resources Office has not
                                provided adequate assistance or guidance to managers in writing
                                position descriptions needed to fill critical vacancies or get positions
                                reclassified. A few managers told us that, as a result, they found the
                                hiring process took longer than necessary and caused significant
                                frustration and rework, taking attention away from other higher
                                priorities.

                             GPO’s Human Resources Office faces substantial challenges resulting from
                             the many changes accompanying GPO’s transformation. For example, the
                             Information Dissemination Division, formerly the Superintendent of
                             Documents Division, is undergoing a major reorganization to better
                             position it to address GPO’s increasing emphasis on electronic information


                             Page 14                        GAO-04-85 GPO’s Strategic Human Capital Management
dissemination. This divisional reorganization has created four major
sections within the division, which will require the Human Resources
Office to perform additional work reclassifying positions, developing
position descriptions, and recruiting people for new positions. GPO
managers expressed concerns about the Human Resources Office’s ability
to respond to the increased demands for support due to other divisional
reorganizations and transformation-related initiatives on the horizon. In
addition, some managers questioned whether the Human Resources Office
had sufficient staff with the competencies needed to effectively serve as
advisors to and partners with senior leaders and managers.

As an important first step in changing the role of the Human Resources
Office at GPO, the Public Printer created a new organizational structure
that establishes the position of CHCO, equivalent to the heads of the other
administrative and operating divisions. (See fig. 3.) This structure is
consistent with executive branch agencies, many of which have now
established CHCO positions. The creation of the Human Resources Office
establishes accountability for the cross-functional area of human capital
management within GPO and may help GPO use resources driven by the
Public Printer’s strategic vision more efficiently.




Page 15                       GAO-04-85 GPO’s Strategic Human Capital Management
Figure 3: GPO’s New Organizational Structure


                                                                  Chief Executive Officer
                                                                         (Public Printer)                               Innovation & New Technology
                        Chief of Staff


                    Deputy Chief Of Staff                                                                              Congressional & Government Relations


                   Assistant Chief Of Staff                                                                            Public Relations


                                                                  Chief Operating Officer
                             Inspector General                       (Deputy Public Printer)



                  Office of Equal Employment
                            Opportunity



                  Office of Dispute Resolution



                              General Counsel                                                                Computerized printing console on a GPO press.




                Customer               Information    Plant Operations                  IT & Systems           Human                   Finance &
                 Services            Dissemination       (Managing                    (Chief Information      Resources               Administration
               (Managing            (Superintendent       Director)                        Officer)         (Chief Human             (Chief Financial
                 Director)           of Documents)                                                                                       Officer)
                                                                                                            Capital Officer)




  Pre-press, press, and post-press stages of GPO’s in-house printing operation.

Source: GAO.




                                                      Page 16                                      GAO-04-85 GPO’s Strategic Human Capital Management
                          GPO’s new CHCO has the opportunity to transform GPO’s Human
                          Resources Office into one that integrates GPO’s human capital approaches
                          with strategies for achieving programmatic results. The new CHCO realizes
                          that this transformation is critical to the success of GPO’s strategic human
                          capital efforts and told us that his vision for the Human Resources Office
                          includes human capital professionals working strategically with GPO’s line
                          managers to integrate the human capital function throughout the agency.

                          As the CHCO begins his efforts, he can build on the Human Resources
                          Office’s ongoing efforts to streamline operations and employ technology to
                          meet customer needs and free organizational resources that can be
                          redeployed for strategic purposes. GPO’s Human Resources Office is
                          streamlining and moving its payroll functions from within GPO to the
                          National Finance Center, which handles payroll functions for many federal
                          agencies. The Human Resources Office has also developed an automated
                          system that alerts managers when employees under their supervision are
                          due in-grade promotions and is working to convert employee performance
                          ratings into an online/automated format. GPO managers have viewed these
                          efforts positively and have indicated that there may be other opportunities
                          to further automate and streamline human capital processes.



Recommended Next Steps	   GPO’s hiring of a CHCO, concurrent with its efforts to begin developing an
                          overall agency strategic plan and a complementary strategic workforce
                          plan, creates the opportunity for GPO leadership and human capital leaders
                          to work together to strengthen the role of human capital and ensure that it
                          will be integrated with strategies for accomplishing GPO’s mission and
                          program goals. To effectively support GPO’s overall transformation efforts,
                          the CHCO will need to develop a new human capital organization with a
                          strong collaborative focus and culture. This may involve a number of steps,
                          such as establishing a strategic vision for the Human Resources Office and
                          ensuring that human capital professionals have the competencies needed
                          to collaborate with GPO’s managers. The final result should be a Human
                          Resources Office that helps integrate human capital approaches with
                          GPO’s program strategies throughout the organization by working in
                          partnership with managers of all divisions.

                          To enhance the role of strategic human capital in support of GPO’s
                          transformation efforts, the Public Printer should take the following actions:

                          •	 Include human capital leaders in agency strategic planning and decision
                             making. Involving these leaders as full partners would acknowledge



                          Page 17                       GAO-04-85 GPO’s Strategic Human Capital Management
   both the commitment of the Public Printer to strategically managing
   GPO’s people and create the expectation that human capital
   professionals will contribute to organizational success.

•	 Establish an entity, such as a human capital council, that is accountable
   for integrating human capital approaches with strategies for achieving
   programmatic goals. The group’s members should include both program
   managers and human capital professionals. As GPO develops and
   implements its strategic plan and human capital plan, the group can help
   ensure that the plans are integrated.

•	 Communicate clearly that the CHCO should create a Human Resources
   Office that is not solely focused on routine processing and compliance
   issues but is also focused on strategic human capital planning and
   management.

To further the integration of human capital with GPO’s strategies for
transformation and mission accomplishment, the CHCO should take the
following actions:

•	 Establish a human capital strategic vision, and a mission for the Human
   Resources Office, and define goals and expectations for human capital
   professionals as well as the Human Resources Office that can be used to
   hold human capital professionals accountable.

•	 Strengthen communication between human capital officials and
   program managers to enhance the understanding of how they can work
   together to achieve organizational goals. As a key part of strengthening
   communication, the CHCO should routinely solicit the feedback of GPO
   managers to identify how the Human Resources Office can best meet
   managers’ needs and help them uphold federal merit principles.

•	 Consider how to organize the Human Resources Office to align it with
   the strategic vision and best achieve integration of GPO’s human capital
   approaches and mission strategies. One potential approach used
   successfully in other federal agencies is to integrate human capital
   professionals throughout the agency’s operational divisions. Each of
   these human capital professionals reports to a particular operating
   division leader and is tasked with implementing and customizing human
   capital policies, procedures, and strategies to fit the division's unique
   needs.




Page 18                       GAO-04-85 GPO’s Strategic Human Capital Management
                       •	 Ensure that human capital professionals have the skills needed to
                          implement the Human Resources Office’s mission, thereby helping to
                          achieve the goals of the Human Resources Office and the agency as a
                          whole. This will include providing necessary training for current human
                          capital professionals and hiring new human capital professionals with
                          the appropriate skills to help implement the Human Resources Office’s
                          mission.

                       •	 Further explore how technological advances can provide opportunities
                          to better serve managers and free organizational resources that can be
                          redeployed for strategic purposes.

                       Together, the Public Printer and the CHCO should clearly define and
                       communicate to the human capital professionals, as well as throughout
                       GPO, that the role of the Human Resources Office is to partner with the
                       other units within GPO to achieve the agency’s mission. The town hall
                       meetings initiated by the Public Printer are one forum in which this type of
                       communication can happen. It should be made clear that agency and
                       human capital leaders, human capital professionals, and line managers
                       share responsibility for advancing agency programmatic and human capital
                       goals.



Strategic Workforce    A key factor in successfully transforming GPO and sustaining high
                       performance is the effective integration and alignment of GPO’s human
Planning Can Assist    capital approaches with its strategies for achieving mission and
GPO’s Transformation   programmatic goals and results. GPO should use strategic workforce
                       planning to integrate and align its human capital approaches with its
                       mission strategies. Strategic workforce planning focuses on developing
                       long-term strategies for acquiring, developing, and retaining an
                       organization’s workforce to meet future needs. It is an essential element of
                       GPO’s management infrastructure, which is needed to ensure that its
                       human capital program addresses workforce issues in a manner that is
                       clearly linked to achieving the agency’s mission and goals.

                       The goal of strategic workforce planning is to ensure that the right people
                       with the right skills are in the right place at the right time. Agency
                       approaches to workforce planning can vary with their particular needs and
                       missions. Nevertheless, looking across existing successful public and
                       private organizations, certain critical elements recur as part of a successful
                       workforce plan and workforce planning process. Although fluid, this
                       process starts with an organization setting a strategic direction that



                       Page 19                        GAO-04-85 GPO’s Strategic Human Capital Management
includes program goals and strategies to achieve those goals. The process
consists of five critical elements that frame successful workforce planning
efforts. Figure 4 uses a simple model to show these critical elements and
their relationships to the agency’s overall strategic direction and goals.



Figure 4: Critical Elements to Include in the Workforce Planning Process




                                        Set strategic
                                         direction




               Evaluation of                                      Workforce gap
               and revisions                                        analysis
               to strategies            Involvement
                                      of management
                                      and employees




                                    Workforce strategies
                                      to fill the gaps



                       Build capability to support workforce strategies


Source: GAO.




These five elements may be helpful to GPO in developing its plan:

•	 involve top management, employees, and other stakeholders in
   developing, communicating, implementing, and evaluating the strategic
   workforce plan;

•	 determine workforce gaps by identifying the critical skills and
   competencies that will be needed to achieve the future programmatic



Page 20                              GAO-04-85 GPO’s Strategic Human Capital Management
   results, inventorying the skills and competencies of the existing
   workforce, and analyzing the gaps;

•	 develop strategies to address gaps in number, deployment, and the
   alignment of human capital approaches that enable and sustain the
   contributions of all critical skills and competencies;

•	 build the capability needed to address administrative, educational, and
   other requirements important to support workforce strategies; and

•	 monitor and evaluate the agency’s progress toward its human capital
   goals and the contribution that human capital results have made toward
   achieving programmatic goals.

Additionally, collecting and analyzing data is a fundamental building block
for measuring the effectiveness of human capital approaches in support of
the mission and goals of an agency. Having complete and reliable data is
particularly important to doing a workforce gap analysis. Early
development of the data provides a baseline by which an agency can
identify current workforce problems, and regular updating of the data
enables agencies to plan for improvements, manage changes in the
programs and workforce, and track the effects of changes on achieving
program goals. As shown in figure 5, agencies can collect and analyze a
variety of information to support their workforce planning efforts.




Page 21                       GAO-04-85 GPO’s Strategic Human Capital Management
                            Figure 5: Examples of Workforce Data That Are Collected and Analyzed by Other
                            Federal Agencies


                               ●	   Actual and projected attrition rates (including retirements) showing how many
                                    people have left the agency in the past and the estimated number who will leave in
                                    the future.

                               ●	   Exit surveys or interviews with departing employees to better understand the
                                    reasons that people leave.

                               ●    Knowledge, skills, and experiences of the current workforce.

                               ●	   Size and shape of the workforce including information such as, the distribution of
                                    employees by pay level and ratio of managers to employees.

                               ●	   Dispersal of performance appraisal ratings, such as the mean, mode, and
                                    standard deviation of scores.

                               ●    Number of performance awards and their distribution among divisions and offices.

                               ●    Total human capital cost in dollars and as a percentage of total operating budget.

                               ●    Average period required to fill vacancies, and trends over time.

                               ●    Acceptance rates among job candidates to whom positions are offered.

                               ●    Costs of promotion, grade increase, and within-grade increases.

                            Source: GAO.




Status of GPO’s Workforce   GPO leaders have shown that they understand the benefits of involving
Planning Efforts            managers and employees in developing human capital initiatives and have
                            the opportunity to continue this practice to support GPO’s workforce
                            planning efforts. GPO has included both managers and employees in newly
                            created task forces that are examining the training needed for the new
                            Information Dissemination Division, exploring the creation of a
                            gainsharing program, and making decisions to implement the time off
                            awards program. GPO managers and labor leaders told us that they view
                            participation in these efforts favorably and want more specific information
                            about the role that they could play in GPO’s transformation. GPO
                            leadership can build on its experiences in using management and employee
                            task forces and on the interest and support shown by these managers and
                            employees by involving them in workforce planning. Involving GPO



                            Page 22                                GAO-04-85 GPO’s Strategic Human Capital Management
employees in strategic workforce planning can build support and foster a
clear understanding of how managers and employees can contribute to the
overall transformation of GPO by doing their part to help develop and
implement human capital approaches.

GPO leaders acknowledge the importance of strategic workforce planning,
including workforce gap analysis, to help GPO transform itself. They
understand that they need to identify, in greater detail, the new skills and
competencies that GPO will need and develop an inventory of the skills and
competencies of its existing workforce to analyze workforce gaps. GPO
leadership has told us that, currently, it is difficult for leaders to identify all
of the specific skills and competencies GPO will need because they are still
working to better define GPO’s future mission and strategies as part of its
recently initiated strategic planning effort. Although uncertainty about
GPO’s future may complicate the identification of future workforce needs,
GPO may find it useful to begin producing an inventory of its employees’
skills and competencies and work with its senior managers to identify
some obvious gaps and establish a more systematic process for analyzing
workforce gaps as it develops its strategic plan.

More specifically, although GPO leadership has not systematically
determined the specific skills it will need to effectively carry out its shifting
role, it has indicated that GPO’s emphasis will increasingly shift from
printed information dissemination to more electronic dissemination, and in
some areas GPO has begun to identify some potential skills gaps. For
example, the Superintendent of Documents said that the skills needed to
complete GPO’s document cataloging function are changing rapidly as the
number of electronic documents increases. Cataloging now requires
Internet searching skills and greater sophistication to locate documents
that are available on agency Web sites. While GPO currently lacks a fact-
based systematic approach to define the critical skills and competencies
required to meet its strategic program goals, it can use available
information about skills gaps as a starting point for its workforce planning
activities.

To help meet its skills gaps, GPO has begun by strengthening its ability to
recruit and develop staff. GPO formed a strategic partnership with leading
universities in the areas of printing and graphic communications and
initiated a recruiting drive to attract graduates in other disciplines, such as
business administration and electrical, mechanical, and chemical
engineering. Also, GPO hired experts who possess skills and competencies
for addressing immediate needs, such as developing new sales and



Page 23                          GAO-04-85 GPO’s Strategic Human Capital Management
marketing strategies, to serve in temporary positions. To develop its
existing workforce, GPO has shifted the focus of existing training and
expanded opportunities for more staff to attend needed training.

Recent actions by GPO’s leaders demonstrate an understanding of the need
to consider workforce skills and knowledge when making business
decisions and implementing human capital approaches. For example, GPO
made the business decision that it needed to decrease its staff by about 300
people to reduce its costs. To achieve this reduction, GPO initiated a
retirement separation incentive program, which included an approach to
ensure that GPO retained employees with critical knowledge and skills.
This approach involved GPO’s executive committee screening employees
to separate early retirement applicants into two groups, priority 1 and
priority 2. Priority 1 applicants held positions that would not be filled
because the positions were no longer necessary. Priority 2 applicants held
positions that would be filled by other GPO employees, who would leave
positions that would not be filled. Thus, GPO took a step toward stemming
its operating losses while ensuring the retention of needed knowledge and
skills.

Workforce planning includes building the capability to support workforce
strategies by addressing administrative, educational, and other
requirements. For example, it is important for GPO to educate managers on
the use of available human capital flexibilities, such as the time-off awards
program recently introduced at GPO. Educating managers and employees
on the availability and use of such flexibilities is one way for GPO to
integrate human capital approaches throughout the organization. Managers
and supervisors can be more effective in using time off awards and other
authorities if they are properly trained on when they can be used and how
to ensure consistency, fairness, and transparency for their use.

GPO collects some data on its workforce, including the number of people
eligible for retirement and the results of employees’ performance reviews.
However, GPO lacks information necessary to evaluate the effectiveness of
its workforce strategies. Attention to the development and collection of
workforce data could help ensure that GPO’s human capital approaches are
supporting its strategies for achieving results and transforming the
organization.

GPO's managers can use human capital data like those shown in figure 5 to
help them identify human capital challenges, develop strategies to address
them, and create measures to assess the strategies' success. For example,



Page 24                       GAO-04-85 GPO’s Strategic Human Capital Management
                          exit interviews can help GPO develop effective workforce strategies to
                          address the reasons why top performing staff leave. Although overall
                          attrition may not be a problem for GPO given its current downsizing
                          efforts, it is important for GPO to retain top performers who have the skills
                          it needs in the future. Some managers told us that high-performing staff
                          have left GPO for comparable positions at other federal agencies because
                          GPO’s promotion possibilities were limited, often resulting from difficulties
                          in reclassifying these positions. However, GPO has not conducted
                          interviews with its departing employees to confirm their reasons for
                          leaving. Without comprehensive data on why people leave GPO, it cannot
                          determine what types of actions it should take, if any, to retain top
                          performers.



Recommended Next Steps	   To ensure that human capital strategies are integrated throughout the
                          agency, GPO should develop a strategic workforce plan that can guide its
                          transformation and support mission accomplishment. The Public Printer
                          and the CHCO should take the following actions:

                          •	 Involve staff in all phases of workforce planning to help improve the
                             quality of the plan and build support needed to successfully implement
                             it. Specifically, GPO should (1) ensure that top management sets the
                             overall direction and goals of workforce planning, (2) involve employees
                             and other stakeholders in developing, implementing, and evaluating
                             future workforce strategies, and (3) establish a communication strategy
                             to create shared expectations, promote transparency, and report
                             progress.

                          •	 Complete a workforce gap analysis to identify critical skills and
                             competency gaps that could affect GPO’s ability to achieve its mission
                             and transform the organization. The workforce gap analysis should
                             include (1) an analysis of the current workforce to develop an inventory
                             of employees’ skills and competencies and (2) a systematic
                             identification of the new skills and competencies that GPO will need in
                             the future so that it can pinpoint any gaps that could affect its mission
                             accomplishment and transformation.

                          •	 Develop strategies to address any identified workforce gaps and move
                             from the current to the future workforce needed to achieve GPO’s
                             mission and transformation. These strategies, consistent with recent
                             efforts at GPO, should include the programs, policies, and practices that
                             will enable an agency to recruit, develop, and retain critical staff.



                          Page 25                       GAO-04-85 GPO’s Strategic Human Capital Management
                      •	 Build the capability to support workforce strategies by addressing
                         administrative, educational, and other requirements. To this end,
                         managers and employees need training to understand how to use
                         available human capital authorities and flexibilities effectively so that
                         they are implemented equitably and their strategic purpose is fulfilled.

                      •	 Evaluate the results of current human capital strategies and make any
                         needed revisions to ensure that the strategies work as intended and
                         support the transformation. This will provide a baseline by which to
                         evaluate these strategies to ensure alignment with its mission and
                         transformation efforts.

                      •	 Develop performance measures for GPO’s human capital strategies.
                         Such measures are a first step in holding managers accountable for their
                         management of human capital and provide valuable data for future
                         workforce planning efforts. GPO could benchmark its human capital
                         data against the data of high-performing organizations.

                      •	 Periodically survey managers and employees regarding human capital
                         strategies to ensure that they are being implemented fairly, observing
                         federal merit principles, and being used appropriately.



Performance           In July 2003, we reported that an organization’s performance management
                      system can be a vital tool for aligning the organization with desired results
Management Can Help   and creating a “line of sight” showing how team, unit, and individual
GPO Drive Internal    performance can contribute to overall organizational results. The
                      performance management system can help manage and direct the
Change and Achieve    transformation process. The system serves as the basis for setting
External Results      expectations for individuals’ roles in the transformation process.13
                      Effective performance management systems are not merely used for once-
                      or twice-yearly individual expectation setting and rating processes, but are
                      tools to help the organization manage day to day. These systems are used to
                      achieve results, accelerate change, and facilitate two-way communication
                      throughout the year so that discussions about individual and organizational
                      performance are integrated and ongoing.




                      13
                           GAO-03-669.




                      Page 26                        GAO-04-85 GPO’s Strategic Human Capital Management
In March 2003, we reported on key practices for federal agencies to
consider when developing modern, effective, and credible performance
management systems.14 While it is important that organizations develop
performance management systems that reflect their specific structures,
priorities, and cultures, these systems also reinforce individual
accountability for results, and therefore, can strengthen overall agency
performance. Figure 6 lists nine key practices for effective performance
management that GPO may find instructive as it develops a more robust
performance management system.




14
  U.S. General Accounting Office, Results-Oriented Cultures: Creating a Clear Linkage
between Individual Performance and Organizational Success, GAO-03-488 (Washington,
D.C.: Mar. 14, 2003).




Page 27                           GAO-04-85 GPO’s Strategic Human Capital Management
Figure 6: Key Practices for Effective Performance Management


   1. Align individual performance expectations with organizational goals. An explicit alignment of daily activities with broader
      results helps individuals see the connection between their daily activities and organizational goals and encourages individuals
      to focus on their roles and responsibilities to help achieve those goals.

   2. Connect performance expectations to crosscutting goals. High-performing organizations use their performance
      management systems to strengthen accountability for results, specifically by placing greater emphasis on fostering the
      necessary collaboration, interaction, and teamwork across organizational boundaries to achieve these results.

   3. Provide and routinely use performance information to track organizational priorities. High-performing organizations
      provide objective performance information to individuals to show progress in achieving organizational results and other
      priorities and help them manage during the year, to identify performance gaps, and to pinpoint improvement opportunities.

   4. Require follow-up actions to address organizational priorities. High-performing organizations require individuals to take
      follow-up actions based on performance information available to them. By requiring and tracking such follow-up actions on
      performance gaps, these organizations underscore the importance of holding individuals accountable for making progress on
      their priorities.

   5. Use competencies to provide a fuller assessment of performance. High-performing organizations use competencies,
      which define the skills and supporting behaviors that individuals need to effectively contribute to organizational results, and are
      based on valid, reliable, and transparent performance management systems.

   6. Link pay to individual and organizational performance. High-performing organizations seek to create pay, incentive, and
      reward systems that link employee knowledge, skills, and contributions to organizational results.

   7. Make meaningful distinctions in performance. Effective performance management systems seek to achieve three key
      objectives to help make meaningful distinctions in performance. First, they strive to provide candid and constructive feedback
      to help individuals maximize their contribution and potential in understanding and realizing the goals and objectives of the
      organization. Second, they seek to provide management with the objective and fact-based information it needs to reward top
      performers. Third, they provide the necessary information and documentation to deal with poor performers.

   8. Involve employees and stakeholders to gain ownership of performance management systems. High-performing
      organizations have found that actively involving employees and stakeholders in developing the performance management
      systems and providing ongoing training on the systems helps increase their understanding and ownership of the
      organizational goals and objectives.

   9. Maintain continuity during transitions. High-performing organizations recognize that because cultural transformations take
      time, they need to reinforce accountability for organizational goals.

Source: GAO.




                                               Page 28                               GAO-04-85 GPO’s Strategic Human Capital Management
Analysis of GPO’s        GPO has begun to make progress on two of the key practices for effective
Performance Management   performance management. GPO has taken a first step toward aligning
                         individual performance expectations with organizational goals by
Efforts                  beginning to develop an agency strategic plan and complementary
                         workforce plan. GPO is also beginning to explore the use of competencies
                         to provide a fuller assessment of performance. The other seven key
                         practices present opportunities for GPO to strengthen its performance
                         management system. For example, GPO presently does not make
                         meaningful distinctions in performance or link pay to individual and
                         organizational performance. As GPO explores actions to strengthen its
                         performance management, it has the opportunity to involve employees and
                         stakeholders so that they gain ownership of the performance management
                         system.

                         An explicit alignment of daily activities with broader results is one of the
                         defining features of effective performance management systems in high-
                         performing organizations. These organizations use their performance
                         management systems to improve performance by helping individuals see
                         the connection between their daily activities and organizational goals and
                         encouraging individuals to focus on their roles and responsibilities to help
                         achieve these goals. Such organizations continuously review and revise
                         their performance management systems to support their strategic and
                         performance goals, as well as their core values and transformational
                         objectives.

                         Currently, GPO requires that supervisors set annual performance
                         expectations for all staff that are linked to employees’ position descriptions
                         rather than unit goals. Once GPO’s strategic plan and organizational goals
                         are established, GPO can use them as the basis for setting individual
                         performance expectations and ensuring related accountability. However,
                         GPO can begin to use the performance management system now to drive
                         its transformation and hold individuals accountable for helping to achieve
                         critical organizational priorities, such as improving GPO’s financial
                         condition and customer service. For example, we were told that employees
                         in GPO’s Information Dissemination Division lack basic sales techniques,
                         like matching customer needs with available products. GPO could create a
                         performance expectation for its sales staff related to their knowledge of
                         GPO products. The performance expectation could help GPO improve its
                         financial condition and customer service as staff become more familiar
                         with the types of products GPO offers and matching these products to
                         customers’ needs.




                         Page 29                        GAO-04-85 GPO’s Strategic Human Capital Management
Further, GPO could help staff achieve organizational goals by requiring that
managers take follow-up actions to address performance gaps. For
example, GPO could routinely collect and analyze information from its
customers to determine their views on the quality and timeliness of the
products and services GPO provides as well as their current and future
needs. Through the performance management system, managers in GPO's
in-house printing operation could be required to use this information to
follow up on recurring issues and plan for its customers' future needs.

High-performing organizations use competencies to examine how the
performance of individual employees contributes to the organization’s
results. Competencies, which define the skills and supporting behaviors
that individuals are expected to exhibit to carry out their work effectively,
can provide a fuller picture of an individual’s performance. Because GPO is
developing its agency strategic plan and related workforce plan, identifying
core competencies for employees will necessarily lag. However, some GPO
managers have started to identify critical competencies for employees in
their units. For example, one manager in the Human Resources Office
plans to revise the performance expectations for her staff to include a
focus on customer service in order to improve the collaboration between
her staff and managers throughout GPO. More generally, GPO is identifying
competencies for senior managers to be included in their performance
contracts.

Effective performance management requires the organization’s leadership
to make meaningful distinctions between acceptable and outstanding
performance of individuals and to appropriately reward those who perform
at the highest level. In doing so, performance management systems in high-
performing organizations typically seek to achieve three key objectives: (1)
they strive to provide candid and constructive feedback to help individuals
maximize their contribution and potential in understanding and realizing
the goals and objectives of the organization, (2) they seek to provide
management with the objective and fact-based information it needs to
reward top performers, and (3) they provide the necessary information and
documentation to deal with poor performers.

GPO’s performance management system does not make meaningful
distinctions among employees’ performance in the performance appraisal
process. Managers told us that attention given to preparing individual
performance ratings had decreased over the past decade due to the lack of
performance awards. In addition, they said that since the ratings were not
used as the basis for employee recognition, there was little incentive for



Page 30                       GAO-04-85 GPO’s Strategic Human Capital Management
mangers to make distinctions among their employees’ performance when
rating their staff. As a result, managers said that they rated large numbers
of their staff as outstanding to boost morale and to avoid employee
complaints. Figure 7 shows that over 94 percent of the employees who
were rated in 2001 received an overall rating of outstanding or excellent.



Figure 7: 2001 Performance Ratings for Current GPO Employees
                                                    Outstanding
                                                    1,603 employees

                                                    Excellent
                                                    556 employees

                                                    Fully successful
                                                    106 employees
                                                                                100%
                                24%                                             2,283 employeesa
                                                    0%
                                                    Marginal
                                      5%            0 employees
                70%
                                                    1%
                                                    Unsatisfactory
                                                    18 employees




 Source: GPO.


Note: Data are 2001 ratings of on-board employees as of August 7, 2003. Data for 2002 are not yet
available.
a
 This number is less than GPO’s current number of staff, or 2,928, because it does not include
employees hired since 2001 and those not rated because they were not covered by performance
standards for a minimum of 90 days.


The lack of identified distinctions among employee’s performance
compromises GPO’s ability to select among employees for development
and advancement opportunities. In the absence of objective and fact-based
performance information, managers rely on their personal knowledge of
employee performance and employees’ reputations. Having objective and
fact-based information and related documentation on which to justify
personnel decisions is fundamental to ensuring that managers can
effectively fulfill their responsibilities to uphold federal merit system
principles. Further, without this information, managers lack the basic tools
to motivate and reward staff for their performance.


Page 31                                GAO-04-85 GPO’s Strategic Human Capital Management
Seniority rather than performance is the basis for most pay decisions by
GPO managers, and financial awards are not used to reward GPO’s top
performers. However, GPO’s leadership recognizes the need to strengthen
incentives for individual and organizational performance and has taken
some actions to stimulate higher performance. On February 10, 2003, GPO
instituted a time-off awards program to recognize outstanding effort by
rewarding productivity, dedication, creativity, and superior
accomplishment. Before the time-off awards program was introduced, GPO
had been without any mechanism to recognize and reward outstanding
performance since 1992 when funding for its incentive awards and
recognition system was removed due to financial constraints and equity
concerns. While the time-off awards program represents an improvement
in GPO’s rewarding of employees for good performance, several managers
told us that GPO needs to do more to reward performance through
financial mechanisms. Consistent with this view, GPO leadership recently
formed a task force to determine the feasibility of developing a gainsharing
program modeled after the program at the Bureau of Engraving and
Printing, which rewards employees for meeting organizational goals. Under
the program, all employees share in the gains from proven savings
according to predetermined standards and payout formulas.

High-performing organizations have found that actively involving
employees and stakeholders, such as unions or other employee
associations, when developing results-oriented performance management
systems helps improve employees’ confidence and belief in the fairness of
the system and increases their understanding and ownership of
organizational goals and objectives. Effective performance management
systems depend on individuals’, their supervisors’, and management’s
common understanding, support, and use of these systems to reinforce the
connection between performance management and organizational results.
These organizations recognize that they must conduct frequent training for
staff members at all levels of the organization to maximize the
effectiveness of the performance management systems.15 Overall,
employees and supervisors share the responsibility for individual
performance management. Both are actively involved in identifying how
they can contribute to organizational results and are held accountable for
their contributions.



15
 U.S. General Accounting Office, Human Capital: Practices That Empowered and
Involved Employees, GAO-01-1070 (Washington, D.C.: Sept. 14, 2001).




Page 32                          GAO-04-85 GPO’s Strategic Human Capital Management
                          GPO leadership has demonstrated that it understands the importance of
                          working with employees at all levels of the organization to implement
                          human capital changes. As GPO moves forward to make additional needed
                          changes to its performance management system, it is vital that leaders
                          work to further strengthen the involvement of employees and stakeholders
                          such as GPO’s unions and employee associations. GPO cannot successfully
                          improve its performance management system without the support and
                          commitment of its many unions, which have substantial influence over
                          GPO’s human capital policies because of their right to bargain for wages.
                          Given that union leaders and GPO’s leadership agree that GPO’s
                          performance management system is ineffective, common ground exists
                          from which GPO, GPO’s employees, and the employees’ elected
                          representatives can begin a dialogue about how best to change the system.
                          The constructive relationship that currently exists between GPO’s union
                          leaders and GPO management can facilitate this dialogue.



Recommended Next Steps	   Public sector organizations both in the United States and abroad have used
                          their performance management systems to create a clear linkage—“line of
                          sight”—between individual performance and organizational success and,
                          thus, transform their cultures to be more results-oriented, customer-
                          focused, and collaborative. GPO can obtain similar benefits by adopting the
                          practices of leading organizations’ performance management systems.
                          Specifically, the Public Printer, in conjunction with the CHCO should take
                          the following actions:

                          •	 Align the individual performance expectations with organizational
                             goals, which helps individuals identify the connection between their
                             daily activities and organizational goals.

                          •	 Connect performance expectations to crosscutting organizational goals,
                             which would foster the necessary collaboration, interaction, and
                             teamwork across organizational boundaries to achieve these results.

                          •	 Provide and routinely use performance information to track
                             organizational priorities, which would help GPO identify performance
                             gaps and pinpoint improvement opportunities.

                          •	 Require individuals to take follow-up actions on identified performance
                             gaps to address organizational priorities, which underscores the
                             importance of holding individuals accountable for making progress on
                             their priorities.



                          Page 33                      GAO-04-85 GPO’s Strategic Human Capital Management
                •	 Use competencies, which define the skills and supporting behaviors that
                   individuals are expected to exhibit, to provide a fuller assessment of
                   performance.

                •	 Link employee pay and awards to individual and organizational
                   performance, which establishes incentives for high performance.

                •	 Make meaningful distinctions in performance, which provides a basis
                   for constructive feedback, rewarding top performers, and dealing with
                   poor performers.

                •	 Involve employees and stakeholders in the development of the
                   performance management system which helps increase their ownership
                   of the organizational goals and objectives.

                •	 Maintain continuity during leadership transitions by focusing on a broad
                   set of programmatic priorities.



Concluding 	    Realizing the importance of effective human capital management, the new
                Public Printer has taken several important steps to establish the foundation
Observations	   needed to successfully transform GPO. However, there are additional
                opportunities for GPO to strengthen human capital management to support
                its progress into the 21st century.

                We found that, although GPO’s leadership recognizes the importance of
                human capital management in GPO’s transformation, it must ensure that
                managers appreciate the importance of their roles in order to make the
                entire workforce accountable for results. To achieve this transformation,
                GPO will need to strengthen the role of human capital management and
                ensure that it will be integrated with strategies for accomplishing GPO’s
                mission and program goals. In addition, to ensure that GPO’s workforce has
                the correct mix of skills and competencies for the future, GPO leadership
                will need to establish a strategic workforce planning process. Finally, to
                make GPO’s units and workforce accountable for results, GPO will need to
                strengthen its current performance management systems. GPO’s future
                success will depend largely on how well it is able to build and strengthen
                its capacity to effectively manage human capital in support of results.




                Page 34                       GAO-04-85 GPO’s Strategic Human Capital Management
Agency Comments	   We provided a draft of this report in September 2003 to the Public Printer
                   for his review and comment. GPO’s Chief of Staff, Deputy Chief of Staff,
                   and Chief Human Capital Officer provided comments orally and by e-mail
                   on behalf of GPO generally agreeing with the content, findings, and
                   recommendations of the draft report. They also provided minor technical
                   clarifications, and we made those changes where appropriate.

                   The officials stated that GPO is committed to implementing the
                   recommendations that we made to strengthen its human capital
                   management and that the recommendations were fully consistent with the
                   direction in which GPO is already moving. The officials stated that they
                   look forward to continuing to work cooperatively with us throughout
                   GPO’s transformation effort and that our ongoing work on legislative and
                   executive branch printing requirements will be an important input into
                   GPO’s ongoing strategic planning efforts.


                   Unless you announce its contents earlier, we plan no further distribution of
                   this report until 7 days after its issuance date. At that time, we will send
                   copies to the Public Printer, GPO, as well as the Joint Committee on
                   Printing, and the House Appropriations Legislative Subcommittee, Senate
                   Committee on Rules and Administration, and House Committee on
                   Administration. We will also make copies available to others upon request.
                   In addition, the report will be available at no charge on GAO’s Web site at
                   http://www.gao.gov.

                   If you have any questions about this report, please contact me or Steven
                   Lozano on (202) 512-6806 or on mihmj@gao.gov and lozanos@gao.gov.
                   Major contributors to this report were William Reinsberg, Benjamin
                   Crawford, Masha Pastuhov-Pastein, and Carole Cimitile.




                   J. Christopher Mihm
                   Director, Strategic Issues




                   Page 35                       GAO-04-85 GPO’s Strategic Human Capital Management
Appendix I

Objective, Scope, and Methodology



              The objective of our review was to describe the Government Printing
              Office’s (GPO) actions and plans for strategically managing its workforce
              and recommend next steps for GPO as it transforms. To identify strategic
              human capital practices and recommend next steps, we reviewed our
              models, guides, reports, and other products on strategic planning and
              performance measurement, strategic human capital management,
              transformation efforts, and other related areas. We used our Model of
              Strategic Human Capital Management to guide our initial analysis. From
              that analysis, we identified a set of human capital issues that could benefit
              GPO if addressed in the short term. These issues include the role of GPO’s
              Human Resources Office and the Chief Human Capital Officer (CHCO), the
              desire to restructure GPO's workforce as part of its transformation, and the
              use of performance management systems. In order to address these
              immediate issues, we narrowed our review to focus on five of the eight
              critical success factors in our model:

              • leadership’s commitment to human capital management,

              • the role of the human capital function,

              • integration and alignment,

              • data-driven human capital decisions, and

              • unit and organizational performance linked to organizational goals.

              To assess GPO’s actions and plans related to these critical success factors,
              we reviewed statements by the Public Printer; individual performance
              standards, position descriptions, and vacancy announcements; GPO
              policies and procedures; results from GPO’s employee climate survey taken
              in March 2003; studies of GPO human capital issues conducted by the
              Office of Personnel Management and Booz-Allen and Hamilton;
              organizational charts; information from GPO’s intranet; and other relevant
              documentation.

              To obtain additional information and perspectives on GPO’s human capital
              issues, we interviewed key senior GPO officials, including the Deputy
              Public Printer; Chief of Staff; Deputy Chief of Staff; Superintendent of
              Documents; Managing Director of Plant Operations; Managing Director of




              Page 36                        GAO-04-85 GPO’s Strategic Human Capital Management
           Appendix I

           Objective, Scope, and Methodology





           Customer Services; the CHCO; former Personnel Director;1 Acting
           Personnel Director; Director, Office of Employee and Labor Relations;
           General Counsel; and Comptroller. We also interviewed GPO officials at the
           next level of management responsible for human capital, information
           dissemination, and customer service and union leaders. In addition, we
           visited GPO headquarters in Washington, D.C., and a distribution center in
           Laurel, Maryland, to talk with frontline managers about their
           responsibilities and the responsibilities of their employees.

           We developed the recommended next steps by referring to our models,
           guides, reports, and other products on strategic human capital
           management and identifying additional practices that were associated with
           and would further complement or support current GPO efforts. We
           performed our work from March through September 2003 in accordance
           with generally accepted government auditing standards.




           1
               GPO’s Personnel Director retired on July 3, 2003.




(450233)   Page 37                                GAO-04-85 GPO’s Strategic Human Capital Management
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