oversight

Tax Administration: Lessons Learned From IRS' Initial Experience in Redeploying Employees

Published by the Government Accountability Office on 1997-01-09.

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

                United States General Accounting Office

GAO             Report to the Honorable
                Margaret Milner Richardson,
                Commissioner of Internal Revenue


January 1997
                TAX
                ADMINISTRATION
                Lessons Learned From
                IRS’ Initial Experience
                in Redeploying
                Employees




GAO/GGD-97-24
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      General Government Division

      B-260161

      January 9, 1997

      The Honorable Margaret Milner Richardson
      Commissioner of Internal Revenue
      Department of the Treasury

      Dear Mrs. Richardson:

      This report describes IRS’ initial efforts to redeploy employees under the terms of the
      Redeployment Understanding and provides information on our analysis of the results of those
      efforts. We did this review under our basic legislative authority.

      The report contains recommendations to you. As you know, 31 U.S.C. requires the head of a
      federal agency to submit a written statement on actions taken on our recommendations to the
      Senate Committee on Governmental Affairs and the House Committee on Government Reform
      and Oversight not later than 60 days after the date of the report. A written statement also must
      be sent to the House and Senate Committees on Appropriations with the agency’s first request
      for appropriations made more than 60 days after the date of the report.

      We are sending copies of this report to the Secretary of the Treasury; the Director, Office of
      Management and Budget; and interested committees and subcommittees. We will make copies
      available to others upon request.

      Please call me at (202) 512-8633 if you have any questions about the report. Other major
      contributors to this report are listed in appendix VII.

      Sincerely yours,




      Lynda D. Willis
      Director, Tax Policy and
        Administration Issues
Executive Summary


             Thousands of employees could have their jobs eliminated or redesigned as
Purpose      Internal Revenue Service (IRS) continues modernizing its operations over
             the next several years. For instance, many jobs that involved processing
             tax returns at IRS service centers could be eliminated as IRS moves to a
             paperless environment; and many jobs now directed at resolving taxpayer
             account issues, mainly through correspondence, are to be redesigned as
             customer-service jobs aimed at resolving such issues primarily by
             telephone. Rather than fire employees when their jobs become obsolete,
             IRS decided to give employees the opportunity to transfer into new jobs—a
             process referred to as “redeployment.”

             Because it is important that IRS have the workforce needed for the new
             environment, GAO, under its basic legislative authority, reviewed IRS’ initial
             use of redeployment procedures. GAO’s objective was to determine
             whether there were lessons to be learned from (1) IRS’ initial use of these
             procedures and their impact on IRS’ operations and (2) the reaction of
             redeployed employees and their supervisors to redeployment and the
             redeployment process. Among other things, GAO reviewed redeployment
             results at four IRS service centers and four IRS district offices and
             administered structured interviews to employees and supervisors at those
             eight locations. The results of GAO’s interviews are not projectable.


             In a November 1993 Redeployment Understanding, IRS and the National
Background   Treasury Employees Union (NTEU) outlined the procedures to be used
             when redeploying IRS employees who lost their jobs due to modernization
             initiatives. In general, the procedures called for filling the new jobs
             through lateral reassignment of volunteers, by seniority. If not enough
             volunteers came forward, IRS had the option of involuntarily reassigning
             the least senior employees in the local area or using IRS-wide competition
             to fill the remaining openings. IRS used the redeployment procedures in
             fiscal years 1994 and 1995 to fill new customer-service jobs and vacancies
             created in the modernization process as well as more than 4,000 new
             compliance and customer-service positions authorized by Congress for
             fiscal year 1995.

             Large-scale employee displacement had not occurred at the time of GAO’s
             audit because IRS was still in the early stages of its planned modernization.
             Also, because of funding reductions in fiscal year 1996 and expectations of
             reduced funding levels in fiscal year 1997, IRS decided that it could no
             longer guarantee that employees would be given the opportunity to
             transfer into new jobs within the agency. Thus, after GAO completed its



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                             Executive Summary




                             audit work, IRS terminated the Redeployment Understanding and began
                             planning for a near-term reduction-in-force.


                             If IRS develops new redeployment procedures, there are several lessons to
Results in Brief             be learned from its initial redeployment experiences. For example,
                             although redeployment was intended as a way to move employees out of
                             jobs that would no longer be needed in IRS’ modernized environment, it
                             was initially used to move thousands of employees whose jobs were not in
                             immediate jeopardy into new or existing positions that were expected to
                             be needed in the new environment. Thus, many jobs vacated by
                             redeployed employees had to be filled by new employees, who may
                             subsequently have to be redeployed. Training requirements increased and
                             productivity and taxpayer services declined as experienced employees
                             were replaced by inexperienced employees.

                             Although some operational inefficiencies, such as reduced productivity
                             and increased training, can be expected as an inherent part of any
                             redeployment process, the negotiated Redeployment Understanding
                             exacerbated these inefficiencies because it generally (1) made many IRS
                             employees eligible for redeployment years before their jobs were expected
                             to be eliminated and (2) did not allow IRS to fill jobs with employees who
                             had related experience before bringing in volunteers from unrelated areas.

                             GAO’s interviews of redeployed employees and supervisors pointed to other
                             lessons that might be learned from IRS’ initial redeployment efforts. Most
                             employees were generally satisfied with their new jobs, and supervisors
                             were generally satisfied with their new employees. However, many
                             employees cited concerns about the information IRS provided to explain
                             the redeployment process, the assistance IRS provided to help employees
                             find jobs, and the training IRS provided.



Principal Findings

Redeployment Procedures      It seems reasonable to expect some operational inefficiencies, such as an
Led to Premature             increase in training and a decrease in productivity, as an inherent part of
Reassignments and            any redeployment process. However, these inefficiencies were
                             compounded at IRS, especially in the service centers, by the use of
Operational Inefficiencies   redeployment procedures that made too many employees eligible for




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Executive Summary




redeployment too soon and limited IRS’ ability to take full advantage of
employees’ job experiences.

The Redeployment Understanding designated many IRS employees,
including virtually all service center employees, as eligible to be
redeployed, without regard to whether or when their jobs were to be
eliminated. It allowed many employees to redeploy to new positions years
before their old jobs were to be eliminated. As a result, many of the
redeployed employees had to be replaced with other, less-experienced,
employees and new hires. During 1994 and 1995, for example, IRS
redeployed 3,054 career-status employees from service center processing
divisions, but hired 3,886 new career or career-conditional employees in
those divisions. (See pp. 16 to 19.)

The redeployment procedures also limited IRS’ ability to reinvest
experience. Although many employees are currently performing largely
the same work as is planned for redesigned jobs, the Redeployment
Understanding generally required that IRS fill positions by reassigning,
based on seniority, redeployment-eligible volunteers. Such a requirement
could result in selecting inexperienced employees from unrelated areas
because it does not allow IRS to select less-senior staff who are already
doing similar work. Such procedures, for example, are inconsistent with
IRS’ planned phased transfer of experienced employees and their
workloads into the newly designated, customer-service jobs. (See pp. 19 to
21.)

Because of other variables affecting productivity (such as new or
increased workloads), it is difficult to quantify the degree of productivity
decline specifically attributable to redeployment, much less the portion
that was inherent versus that which was avoidable. Nevertheless, GAO
thinks it is reasonable to assume that the redeployment procedures, by
making too many employees eligible for redeployment too soon and by
limiting IRS’ ability to take full advantage of employees’ job experience,
resulted in a greater level of inexperience than might have otherwise been
the case and thus led to less productivity.

That position was supported by two internal IRS studies, which concluded
that the service center divisions responsible for processing tax returns had
experienced significant productivity declines during the 1995 filing season,
in part due to redeployment. For example, processing divisions lost
productivity because more than 1,400 employees who were experienced in
processing returns were redeployed to compliance and customer service



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                           Executive Summary




                           jobs and replaced by inexperienced employees who were either newly
                           hired or reassigned from other areas. (See pp. 27 to 30.)

                           The IRS supervisors GAO interviewed also reported declines in productivity.
                           For example, 18 (75 percent) of the 24 interviewed supervisors who lost
                           employees to redeployment reported that the volume of their unit’s output
                           decreased as a result of redeployment. Also, 10 (42 percent) of the 24
                           supervisors said that the loss of employees degraded their service to
                           taxpayers causing, for example, case backlogs and longer amounts of time
                           to answer telephone calls. Comments from the 30 supervisors who gained
                           employees were more mixed. For example, 10 said that their unit’s output
                           declined while 16 said that their unit’s output had either increased or had
                           not been affected by the redeployment. (See pp. 24 to 27.)

                           According to IRS officials and supervisors GAO interviewed, redeployment
                           also led to an increase in training requirements. Training requirements can
                           be expected to increase as new jobs are added. However, in some cases
                           training requirements increased twofold because many employees whose
                           jobs were not eliminated moved to the new jobs. The employees who
                           moved to the new jobs had to be trained for them while other employees
                           had to be trained for the jobs left vacant. Of the 54 supervisors
                           interviewed, for example, 40 (74 percent) said that the redeployment of
                           experienced employees out of their units or inexperienced employees into
                           their units increased their unit’s training requirements. (See pp. 22 to 24.)

                           Before the Redeployment Understanding was terminated, IRS and the NTEU
                           had made some revisions to make better use of employee experience.
                           However, those actions had not fully resolved the problems identified by
                           GAO. (See pp. 30 and 31.)



Most Interviewed           It may be some time before redeployed employees perform as productively
Employees Satisfied With   in their new jobs as in their old ones or as productively as the experienced
New Jobs, but Many         employees they replaced. However, the comments of the employees and
                           supervisors who GAO interviewed were encouraging, as the vast majority
Dissatisfied With          generally said that they were able to do their new work in an acceptable
Redeployment Process       manner. The 30 supervisors GAO interviewed who had gained employees
                           through redeployment were generally satisfied with the 346 employees
                           redeployed to their units and said that they were performing at or above
                           the “fully successful” level—the minimum acceptable level for
                           performance appraisal purposes. Most of the 188 redeployed employees
                           GAO interviewed were satisfied with their new jobs. However, many of the




                           Page 5                               GAO/GGD-97-24 IRS’ Redeployment Experiences
                  Executive Summary




                  redeployed employees GAO interviewed said that they required more
                  training than that which is normally provided for their positions. (See pp.
                  37 to 41.)

                  Many of the employees were dissatisfied with the redeployment process,
                  particularly with the amount and quality of information, assistance, and
                  training they received. For example, almost one-fourth of the employees
                  interviewed were dissatisfied with the assistance IRS provided to help them
                  find a new position. Of those who gave reasons for their dissatisfaction,
                  most said they needed help in understanding the redeployment process,
                  accessing job announcements, determining their job qualifications, and
                  researching their options. (See pp. 41 to 53.)


                  GAO  recommends that the Commissioner of Internal Revenue—should
Recommendations   future redeployment procedures be developed—address the problems
                  discussed in this report, including (1) limiting redeployment eligibility to
                  employees whose current jobs have been or are about to be substantially
                  altered or eliminated and (2) allowing IRS to redirect employees who are
                  currently and successfully performing existing jobs to redesigned jobs that
                  are substantially the same before seeking volunteers from unrelated
                  functions. GAO also recommends that, as part of any future redeployment
                  effort, the Commissioner consider ways to improve management
                  communications with employees concerning redeployment assistance,
                  information, and training. (See pp. 32 and 44.)


                  GAO obtained oral and written comments on a draft of this report from IRS
Agency Comments   and NTEU in September 1996. Those comments and GAO’s evaluation are
                  discussed beginning on pages 32 and 44.

                  IRS agreed with GAO that any future redeployment should be more focused
                  and better timed but said that the report’s discussion of the timing of the
                  past redeployment was oversimplified. IRS said that the results would have
                  been different if modernization had proceeded on the schedule envisioned
                  when the Redeployment Understanding was signed. GAO disagrees because
                  it had considered IRS’ modernization schedule in making its assessment. IRS
                  did not provide any information to contradict the scheduling information
                  in GAO’s report and said that information in the report was generally
                  factual.




                  Page 6                              GAO/GGD-97-24 IRS’ Redeployment Experiences
Executive Summary




IRS  also said that Congress’ authorization of thousands of new compliance
and customer-service positions provided an opportunity to redeploy many
employees and that IRS would have had even more employees to redeploy
if it had filled the new positions with external hires rather than through
redeployment. GAO is not suggesting that the new positions should have
been filled through external hires. It is suggesting, instead, that IRS would
have had less disruption if the redeployment procedures had focused on
finding new jobs for employees as their displacement became imminent
and allowed IRS to redeploy employees who had experience related to the
jobs being filled before those who lacked related experience.

NTEU said that the report was “flawed in its design” and failed to present
any data to support most of its conclusions. As an example, NTEU cited
GAO’s conclusion that the redeployment procedures led to premature
reassignments and operational inefficiencies. GAO believes that its report
contains sufficient data to support that conclusion, much of which came
from IRS’ own studies and employees.

However, NTEU said that to accurately reach such a conclusion, GAO would
have had to present some comparative analysis of the operational impact
of the Redeployment Understanding versus some alternative selection
procedure, such as the traditional competitive selection process. GAO did
not intend to suggest, as NTEU’s comment seems to imply, that IRS should
have used the traditional competitive process in lieu of the redeployment
procedures. What GAO is suggesting that the redeployment process would
have been more efficient if the procedures had been more focused and
better timed. However, GAO did not do a comparison of what the
operational impact would have been under different procedures because
such a comparison would have been highly speculative.




Page 7                               GAO/GGD-97-24 IRS’ Redeployment Experiences
Contents



Executive Summary                                                                                 2


Chapter 1                                                                                        10
                       Organizational Change at IRS and Potential Impact on Employees            11
Introduction           Objective, Scope, and Methodology                                         14

Chapter 2                                                                                        16
                       Redeployment Procedures Made Too Many Employees Eligible                  16
Redeployment             Too Soon and Limited IRS’ Ability to Take Full Advantage of
Procedures Led to        Employees’ Job Experience
                       Redeployment Resulted in Increased Training, Decreased                    22
Premature                Productivity, and Reduced Service to Taxpayers
Reassignments and      IRS and NTEU Made Some Changes to Reduce Experience Loss                  30
Operational            Conclusions                                                               31
                       Recommendation to the Commissioner of Internal Revenue                    32
Inefficiencies         Agency Comments and Our Evaluation                                        32

Chapter 3                                                                                        37
                       Most Redeployed Employees Were Meeting Performance                        37
Redeployed Employee      Standards and Were Satisfied With Their New Jobs
Job Satisfaction and   Some Employees, Especially Those Who Lacked Related                       39
                         Experience, Required Additional Training
Initial Performance    Many Employees Found Redeployment Assistance, Information,                41
Results Were             and Training Inadequate
Encouraging            Many Supervisors Were Also Dissatisfied With the Redeployment             43
                         Process
                       Conclusions                                                               44
                       Recommendation to the Commissioner of Internal Revenue                    44
                       Agency Comments and Our Evaluation                                        44

Appendixes             Appendix I: IRS Staffing in January 1994 and January 1996                 46
                       Appendix II: Overview of IRS’ Redeployment Planning                       47
                       Appendix III: Information on How We Selected the IRS Sites We             49
                         Visited and the Employees and Supervisors We Interviewed
                       Appendix IV: Changes in Staffing at Service Center Processing             52
                         Divisions
                       Appendix V: Comments From the Internal Revenue Service                    53
                       Appendix VI: Comments From the National Treasury Employees                57
                         Union
                       Appendix VII: Major Contributors to This Report                           61




                       Page 8                            GAO/GGD-97-24 IRS’ Redeployment Experiences
          Contents




Tables    Table 3.1: Redeployed Employees’ Opinions on the Adequacy of              42
            Redeployment Assistance, Information, and Training
          Table 3.2: Gaining and Losing Supervisors’ Opinions of How IRS            43
            Handled the Redeployment Process
          Table I.1: IRS Staffing in January 1994 and January 1996                  46
          Table III.1: Structured Interviews by Site                                51
          Table IV.1: Changes in Processing Division Staffing Between               52
            January 1994 and December 1994
          Table IV.2: Changes in Processing Division Staffing Between               52
            December 1994 and January 1996

Figures   Figure 2.1: Supervisors’ Views on How Redeployment Affected               24
            Their Units’ Training Requirements
          Figure 2.2: Losing Supervisors’ Views on How Redeployment                 25
            Affected Their Units’ Productivity
          Figure 2.3: Gaining Supervisors’ Views on How Redeployment                26
            Affected Their Units’ Productivity
          Figure 2.4: Permanent Employee Transfer Rates at Submission               29
            and Nonsubmission Processing Centers
          Figure 3.1: Redeployed Employees’ Job Satisfaction                        39




          Abbreviations

          ACS        Automated Collection System
          DPS        Document Processing System
          IDRS       Integrated Data Retrieval System
          IRS        Internal Revenue Service
          NTEU       National Treasury Employees Union
          OJT        on-the-job training
          OPM        Office of Personnel Management
          PRP        Problem Resolution Program
          TPS        Taxpayer Service


          Page 9                            GAO/GGD-97-24 IRS’ Redeployment Experiences
Chapter 1

Introduction


               As the Internal Revenue Service (IRS) replaces its outdated computer and
               telecommunications systems, it is also overhauling the way it is organized,
               staffed, and operated. These changes are part of a new business vision
               designed to take advantage of new capabilities as IRS moves toward a
               paperless electronic environment. As these changes are phased in over the
               next several years, thousands of employees could be displaced as their
               jobs are eliminated or redesigned.

               IRSpledged in 1990 that employees displaced by modernization would be
               given the opportunity for retraining that would allow them to maintain
               their employment at the same grade. To help keep this pledge while also
               meeting the job requirements of the new environment, IRS negotiated
               standard redeployment policies and procedures in a November 1993
               Redeployment Understanding with the National Treasury Employees
               Union (NTEU). According to the Understanding and IRS officials, the goal of
               the redeployment process was to move employees out of positions that
               would not continue in the modernized environment and into
               positions—new, redesigned, or existing—that would be needed in the new
               environment. At that time, IRS planned to meet its changing job
               requirements largely through redeployment.

               Because of funding reductions in fiscal year 1996 and expectations of
               reduced funding levels in fiscal year 1997, however, IRS decided that it
               could no longer guarantee that employees would be given the opportunity
               to transfer into new jobs within the agency. Thus, after we had completed
               our audit work, IRS terminated the Redeployment Understanding and
               began planning for a near-term reduction-in-force.

               Because it is important that IRS’ workforce have the knowledge, skills, and
               abilities needed for the new environment, we reviewed, under our basic
               legislative authority, IRS’ initial use of the procedures established through
               the Redeployment Understanding. Although those procedures have since
               been terminated, IRS’ experiences in implementing them provide useful
               information for developing any future redeployment procedures.




               Page 10                              GAO/GGD-97-24 IRS’ Redeployment Experiences
                      Chapter 1
                      Introduction




                      In January 1994, IRS had about 131,000 employees1 in a National Office, 7
Organizational        regional offices, 63 district offices, 10 service centers, 2 computing
Change at IRS and     centers, and 1 compliance center (appendix I has a detailed breakdown by
Potential Impact on   type of employee). District operations included hundreds of local posts of
                      duty, 34 locations that housed taxpayer service and collection call sites,2
Employees             and 3 forms distribution centers.

                      As part of its modernization, IRS, in 1995 and 1996, reduced the number of
                      regions from 7 to 4 and consolidated the number of districts from 63 to 33.
                      IRS is also consolidating various support functions that were decentralized
                      in as many as 84 separate organizations. For example, most of the staff
                      support for basic resources management functions, such as personnel,
                      facilities management, and training, is being consolidated into 21 host
                      locations. Similarly, information systems jobs, such as computer
                      programmers and operators at service centers and district offices, are to
                      be consolidated into a yet-to-be determined number of field information
                      systems offices.

                      The restructuring of IRS’ service centers, which accounted for about
                      39 percent of its workforce in January 1994, is a major component of IRS’
                      new business vision. Currently all 10 service centers process tax returns
                      and other documents and have various forms of non face-to-face
                      interaction with taxpayers. IRS’ plan, as of February 1996, was to have
                      (1) all 10 centers function as customer-service sites,3 (2) at least 5 of the 10
                      centers function as submission processing centers,4 and (3) 1 of the 5
                      submission processing centers also serve as IRS’ third computing center.5

                      IRSis also changing where and how it provides customer service. Until
                      1994, customer service was provided at the 10 service centers, the 34
                      locations that housed ACS and/or TPS sites, and the 3 forms distribution
                      centers. Under the new business vision, customer service is to be provided

                      1
                       The number had declined to about 126,500 in January 1996.
                      2
                       The 34 locations included 3 that housed Automated Collection System (ACS) call sites, 13 that housed
                      Taxpayer Service (TPS) call sites, and 18 that housed both ACS and TPS sites. ACS sites contact
                      taxpayers to collect overdue taxes and answer calls from taxpayers in response to collection actions.
                      TPS sites answer calls from taxpayers with questions on tax laws, accounts, and procedures.
                      3
                       Customer-service sites are to resolve taxpayer questions and problems that do not require face-to-face
                      contact with the taxpayer.
                      4
                       Submission processing centers are to process paper documents, including tax returns, information
                      documents (such as forms 1099 and W-2), and correspondence.
                      5
                       Computing centers are to process electronic tax returns and maintain central files of individual and
                      business tax accounts.



                      Page 11                                          GAO/GGD-97-24 IRS’ Redeployment Experiences
Chapter 1
Introduction




at only 23 locations—the 10 service centers and 13 other locations.
Besides absorbing the functions and workloads of TPS and ACS sites and
forms distribution centers, customer-service sites are to also absorb and
attempt to convert, to the telephone, some work now done by
correspondence in various service center branches, such as collections,
adjustments, and taxpayer relations.

In December 1993, IRS estimated that these business vision changes would
eliminate more than 19,600 service center jobs and more than 4,600 district
office jobs. In addition, the consolidation of regions and districts was
expected to displace over 1,100 managers and support staff.

To maintain employee morale and cooperation during the transition to its
new environment, IRS pledged, in a 1990 policy statement, that career and
career-conditional6 employees would be given the opportunity for
retraining that would allow them to maintain employment at their current
grade.7 This pledge did not apply to temporary8 and term9 employees. IRS
officials believed that attrition, the use of term employees for jobs being
phased out, and the need to fill the additional customer service and
compliance jobs authorized by Congress as part of IRS’ fiscal year 1995
appropriation, would enable IRS to meet new job requirements and keep its
job protection pledge. Under this workforce transition strategy, displaced
employees would have to be redeployed to new or redesigned jobs that
would generally require greater technical knowledge and communication
skills than are needed for their current jobs.




6
 In general, according to Office of Personnel Management (OPM) regulations, persons not employed
on a temporary or otherwise limited basis are appointed as career or career-conditional employees.
New federal employees generally attain career status after 3 years of substantially continuous,
creditable service in career-conditional status.
7
 As noted earlier, IRS has since decided that it can no longer guarantee continuing employment and
has begun planning for a near-term reduction-in-force. Thus, in effect, the 1990 policy statement has
been rescinded.
8
 OPM regulations authorize federal agencies to make a temporary limited appointment to fill a
short-term position (i.e., one that is not expected to last longer than 1 year). The appointment may be
extended up to 2 years, or longer, in increments of 1 year or less, if the situation meets certain OPM
criteria.
9
 OPM regulations authorize federal agencies to make a term appointment when the employment need
is longer than 1 year but not more than 4 years. Term employment ends automatically when the term
expires.



Page 12                                           GAO/GGD-97-24 IRS’ Redeployment Experiences
Chapter 1
Introduction




Responding to a series of reports citing the need for sound human
resource planning as IRS implements its new business vision,10 IRS has done
much to prepare for the redeployment of employees whose jobs are
expected to be redesigned or eliminated. Over the past 3 years, IRS has
(1) developed various models for projecting and comparing current and
future workforce requirements, (2) established standard redeployment
policies and procedures and a Redeployment Resolution Council11 in
partnership with NTEU, and (3) developed site-specific plans for
redeploying employees. Appendix II provides a brief overview of these
efforts.

In the November 1993 Redeployment Understanding, IRS and NTEU
established, for the first time, standard procedures for the redeployment of
bargaining-unit employees12 whose jobs would be redesigned or eliminated
in the transition to the modernized environment. Before they established
standard procedures, IRS and NTEU were negotiating the redeployment of
displaced employees on a project-by-project basis. According to its general
work contract with NTEU, IRS could involuntarily reassign employees whose
jobs were abolished, but such reassignments were subject to
negotiations.13

The new standard procedures generally required that vacancies for
positions needed in the new environment be filled first through lateral
reassignment of eligible volunteers, in order of their seniority, as defined
by their time in federal service. If the number of volunteers was
insufficient, IRS had the option of using involuntary reassignment of the
least senior employees in the local area or using the normal IRS-wide


10
 Managing IRS: Actions Needed to Assure Quality Service in the Future (GAO/GGD-89-1, Oct. 14,
1988); Managing IRS: Important Strides Forward Since 1988 but More Needs to Be Done
(GAO/GGD-91-74, Apr. 29, 1991); Review of the Tax Systems Modernization of the Internal Revenue
Service, National Research Council, September 1992; and Tax Systems Modernization: Automated
Underreporter Project Shows Need for Human Resource Planning (GAO/GGD-94-159, July 8, 1994).
11
  The five-member Redeployment Resolution Council was composed of the NTEU National President
and one other NTEU member, IRS’ Modernization Executive and Chief of Management and
Administration, and a neutral fifth member. The Council’s duties generally included interpreting
redeployment policies and procedures, approving site redeployment plans, and making decisions on
redeployment related grievances.
12
 NTEU represents about 85 percent of the employees in service center and district office positions.
These employees are referred to as “bargaining-unit employees.” Managers and employees in positions
not represented by NTEU were subject to different redeployment procedures, which gave regional
commissioners the authority to determine how those employees would be selected.
13
  The impacts of involuntarily reassigning displaced employees to locations within 20 miles were
subject to subsequent negotiations, while arrangements had to be negotiated in advance for
reassignments beyond that distance.



Page 13                                         GAO/GGD-97-24 IRS’ Redeployment Experiences
                            Chapter 1
                            Introduction




                            competitive process14 to fill the remaining openings. While the
                            Redeployment Understanding was a binding document, it could be
                            reopened or terminated at any time by IRS or NTEU. As noted earlier, it was
                            terminated effective August 23, 1996.

                            Because IRS was still in the early stages of its planned overhaul at the time
                            of our audit work, the large-scale employee displacement expected from
                            the consolidation and modernization of the customer-service and
                            submission processing functions had not yet occurred. Thus, with the
                            exception of some displaced National and Regional Office staff,
                            redeployment in fiscal years 1994 and 1995 was driven largely by the
                            availability of positions into which employees in jobs not expected to be
                            needed in the new environment could be redeployed. They included new,
                            redesigned, or existing (vacant) positions that could be expected to
                            continue in the modernized environment. According to National Office
                            officials, redeployment in fiscal year 1994 was driven largely by the need
                            to staff the first operational customer-service units and to fill vacancies
                            created by attrition. Another factor driving redeployment in fiscal year
                            1995 was the reassignment of existing employees to over 4,300 new
                            compliance and customer-service jobs authorized that year.


                            We examined IRS’ early experience in redeploying employees to new jobs
Objective, Scope, and       using the procedures established in the November 1993 Redeployment
Methodology                 Understanding between IRS and NTEU. Our objective was to determine
                            whether there were lessons to be learned from (1) IRS’ initial use of these
                            procedures and their impact on IRS’ operations and (2) the reaction of
                            redeployed employees and their supervisors to redeployment and the
                            redeployment process.

                            To address our objective we

                        •   reviewed the November 1993 Redeployment Understanding and associated
                            supplements and revisions and discussed redeployment policies and
                            procedures with cognizant IRS and NTEU officials;
                        •   reviewed site redeployment plans and discussed preliminary redeployment
                            results at four IRS service centers (Atlanta; Brookhaven, NY; Cincinnati;
                            and Fresno, CA) and four district offices (Atlanta, Baltimore, Cincinnati,
                            and San Francisco);


                            14
                             In general, the competitive process ranks applicants by scores derived mainly from their last
                            performance appraisal in their current position and, to a lesser extent, from their (1) pertinent
                            experience and training and (2) incentive awards.



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    Introduction




•   reviewed IRS reports on redeployment results, including related internal
    audits or studies;
•   obtained and analyzed databases showing overall IRS staffing at three
    points in time—January 8, 1994; December 10, 1994; and January 6,
    1996—in order to identify and monitor significant changes;15 and
•   administered structured interviews, at the 8 locations we visited, to 188
    employees who had been redeployed to new jobs, 30 supervisors who had
    gained a total of 346 redeployed employees, and 24 supervisors who had
    lost a total of 412 redeployed employees. The results of our interviews are
    not projectable to all IRS managers and employees.

    Appendix III contains information on how we selected the locations we
    visited and the persons we interviewed.

    Because IRS expected to make significant changes to its initial estimates of
    workforce requirements and the extent that employees would be
    redeployed to meet those requirements, we did not attempt to validate IRS’
    workforce requirements and redeployment models or the output from
    those models.

    We conducted our review from June 1994 through July 1996 in accordance
    with generally accepted government auditing standards. We requested
    comments on a draft of this report from the Commissioner of Internal
    Revenue and the National President of NTEU, or their designees. We
    received written comments from IRS’ Chief, Management and
    Administration, on September 11, 1996, and from NTEU’s National President
    on September 17, 1996. Those comments are summarized and evaluated on
    pages 32 and 44 and are reprinted in appendixes V and VI, respectively.




    15
      Although we did not assess the reliability of the databases, the official from whom we obtained them
    told us that the data elements we used were extracted from two highly reliable files maintained for IRS
    by the Department of Agriculture’s National Finance Center as components of the Treasury Integrated
    Management Information System and are used as a source for employee pay computations. Some of
    the same data elements were also extracted as part of the separate reassignment databases that we
    used to identify redeployed employees for interviewing. Those data elements were highly reliable
    based on verification by the employees we interviewed.



    Page 15                                          GAO/GGD-97-24 IRS’ Redeployment Experiences
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Redeployment Procedures Led to Premature
Reassignments and Operational
Inefficiencies
                          Because the new redeployment procedures made too many people eligible
                          for redeployment too soon and precluded IRS from directing experienced
                          people into new jobs, (1) many employees were redeployed years before
                          the jobs they left were to be eliminated and (2) training requirements
                          increased while productivity and customer service decreased.

                          Service centers, particularly their returns processing functions, were most
                          affected. To help cope with declining experience levels and higher error
                          rates, processing divisions increased their use of overtime and temporary
                          assignments (details). The processing divisions also ended up hiring more
                          new career and career-conditional employees than they had lost through
                          redeployment to sustain paper returns processing operations until delayed
                          modernization efforts are implemented.

                          Before the Redeployment Understanding was terminated, IRS and NTEU had
                          worked together to change redeployment policies and procedures to make
                          better use of employee experience, but they had not fully resolved these
                          problems.


                          The November 1993 Redeployment Understanding designated many IRS
Redeployment              employees, including virtually all service center employees, as eligible for
Procedures Made Too       redeployment without regard to whether or when their jobs were to be
Many Employees            eliminated. Consequently, many employees were redeployed too soon in
                          order to fill new compliance and customer service positions. IRS had to
Eligible Too Soon and     hire several thousand new employees to replace experienced employees
Limited IRS’ Ability to   who left jobs in service center returns processing divisions. Furthermore,
                          the Redeployment Understanding required IRS to fill positions with
Take Full Advantage       volunteers by seniority, rather than first allowing IRS to redirect
of Employees’ Job         experienced employees to new jobs requiring many of the same tasks as
Experience                their current jobs. The resulting increase in training requirements and
                          decline in productivity could have been minimized had the Redeployment
                          Understanding (1) limited redeployment to those employees whose jobs
                          were being eliminated and (2) allowed IRS to move employees who had the
                          experience and skills needed for the new jobs.


Too Many Employees Were   As part of IRS’ fiscal year 1995 appropriation, Congress authorized
Redeployed Too Soon       $405 million for IRS to hire the full-time equivalent of 6,238 employees.
                          According to IRS officials, the new jobs were primarily compliance and
                          customer-service jobs at service centers and district offices.




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While some of the new compliance and customer-service jobs were filled
by employees whose National Office or regional office jobs had been
eliminated, most were filled by service center and district office
employees whose jobs were not in jeopardy of being eliminated for several
years. According to IRS redeployment plans at the time, the displacement
of large numbers of processing employees was not expected to begin until
fiscal year 1997 or later, when IRS was to begin implementing its Document
Processing System (DPS)16 and consolidating its paper processing
operations into five service centers.17

As of September 30, 1995, IRS had filled 5,470 of these jobs—4,325 of them,
or 79 percent, with existing employees; and the rest were filled through
new hires. Many of the employees who transferred into those new jobs
had to be replaced with less-experienced employees. As shown in
appendix IV, IRS redeployed 1,182 and 1,872 career or career-conditional
employees from its processing divisions to jobs elsewhere in IRS in 1994
and 1995, respectively. During the same years, the processing divisions
hired 14 and 3,872 new, career or career-conditional employees,
respectively. These new career and career-conditional employees are also
eligible for redeployment. Although IRS hired mostly term employees in
1994, a National Office official told us that IRS had to hire new
career-status employees in 1995 because term employees could not be
used to sustain current processing operations long enough due to the
4-year limit on term employment.

The Redeployment Understanding contributed to this sizeable turnover of
service center staff by making almost all service center employees eligible
for redeployment, since substantial operational changes were planned for
the service centers. According to our analysis of IRS staffing data, of 50,580
service center employees on IRS’ rolls in January 1994, 47,317 were
designated as eligible for redeployment. The only exceptions were 2,796
term and temporary employees and 467 Criminal Investigation Division
employees. According to IRS National Office officials, NTEU would not agree
to limit redeployment eligibility to employees in specific jobs because IRS
had not finalized the types and numbers of positions needed for its new
environment. Also, according to an NTEU official, NTEU presumed that all


16
  Currently, data from most types of paper returns are manually transcribed into machine-readable
format for further automated processing and posting to taxpayer accounts. With DPS, paper returns
were to be electronically scanned and automatically converted to machine-readable format.
17
  IRS is reassessing its paper processing plans. It announced, on October 8, 1996, that DPS was being
terminated. According to IRS, it is considering other options, including contracting out and/or
acquisition of a new manual data entry system.



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service center jobs would be affected and that IRS should not offer
available jobs only to displaced employees.

Because, unlike at the service centers, many district office positions are
expected to continue in the modernized environment, the Redeployment
Understanding generally limited redeployment eligibility in district offices
to employees at closing ACS and TPS sites, resources management support
services employees, and some information systems employees. Although
redeployment eligibility at district offices was more restricted than at
service centers, many of the eligible district office employees were
designated as eligible long before their jobs were scheduled for
elimination. For example, among the district employees designated as
redeployment eligible in November 1993, there were about 5,500
employees at 29 ACS and TPS sites that were scheduled to close. At that
time, however, 27 of these 29 sites were not scheduled to close until
October 1999. The other two sites were scheduled to close in October 1996
and October 1997, respectively.

According to National Office officials, however, 11 of the 29 ACS and TPS
sites were closed earlier than expected because they experienced “high
attrition.”18 Specifically, nine sites that were scheduled to close in 1999
and the two sites that were scheduled to close by 1997 were closed 2 to 5
years early—between 1994 and 1996. Also, as of September 1996, eight
other sites that were scheduled to close in 1999 were rescheduled to close
sooner—from 1996 through 1998. However, 4 of the remaining 10 sites
originally scheduled to close in 1999 are now scheduled to close between
2000 and 2002.

On the basis of our analyses of staffing and reassignment data provided by
IRS, we believe that the early closure of some sites and the changes to
scheduled closure dates for other sites occurred, at least in part, because
employees who had been declared redeployment eligible in November
1993 were redeployed earlier than expected. For example, staffing data for
the Brooklyn TPS site showed that of the 240 employees who were on the
site’s rolls on January 8, 1994, 105 had been reassigned to other jobs; 3 had
been assigned to other TPS sites as of December 10, 1994; and 18 were no




18
 National Office officials told us that this attrition required IRS to redistribute call-site equipment and
workloads among the remaining sites that were scheduled to close and accelerate the planned
migration of workloads into customer-service centers.



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                            Reassignments and Operational
                            Inefficiencies




                            longer employed with IRS. At least 76 of the 108 reassigned employees
                            were reassigned before the office was closed in October 1994.19

                            Employees at four ACS and TPS sites were also designated as eligible even
                            though their jobs were to be merged with customer-service centers in the
                            same local area. As a result, many of these employees were redeployed out
                            of the closing sites while other career or career-conditional employees
                            were hired or redeployed into the closing sites.

                            Our structured interviews of 24 service center and district office
                            supervisors who lost redeployed employees provided further evidence of
                            premature redeployment. According to the supervisors, who reported
                            losing 412 employees, none of the positions vacated by those employees
                            had been eliminated. The supervisors said that IRS planned to fill 350
                            (85 percent) when funding became available, leaving 62 (15 percent) to be
                            eliminated.

                            Many of the service center officials and supervisors we interviewed
                            expressed the belief that too many employees were designated as eligible
                            for redeployment. For example, the Chief of the Collections Branch at one
                            center said that “blanket redeployment [eligibility]” for the entire service
                            center was a “mistake.” A Processing Division Chief at another center said
                            that redeployment eligibility should be limited to displaced employees and
                            should not include employees who will not be displaced for many years,
                            such as those in the Processing Division. A supervisor of a section at that
                            center who had gained redeployed employees said it had been a “costly
                            transition” because “all employees were considered redeployment eligible
                            even if their job had not been abolished.”


Redeployment Procedures     With some exceptions, such as hardships and placement actions resulting
Limited IRS’ Ability to     from a grievance, the November 1993 Redeployment Understanding
Direct Experienced          generally required that vacancies for bargaining-unit positions that would
                            be needed in the new environment were to be filled as follows:
Employees to Related Jobs




                            19
                              We only had redeployment data for the eight sites we visited and thus could only identify
                            reassignment dates for employees who were reassigned to those sites.



                            Page 19                                          GAO/GGD-97-24 IRS’ Redeployment Experiences
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    Inefficiencies




•   Lateral reassignment (or change to lower grade), based on seniority,20 of
    eligible21 volunteers (1) from within the local commuting area and then, if
    the number of volunteers was insufficient, (2) from outside the local
    commuting area.
•   When the number of volunteers for lateral reassignment (or change to
    lower grade) was insufficient, IRS could consider making directed
    (involuntary) reassignments, by inverse seniority, from eligible employees
    within the local commuting area.
•   When the number of volunteers for lateral reassignment (or change to
    lower grade) was insufficient and IRS did not use the directed reassignment
    process, IRS could fill the vacancy through IRS-wide competition.22
•   When there were no redeployment-eligible internal applicants, IRS could
    fill vacancies for jobs that would be continued in the new environment
    with external hires. Vacancies for noncontinuing jobs were to be filled by
    temporary or term appointments.

    In October 1994, IRS and NTEU made an exception to the Redeployment
    Understanding to allow district customer-service sites to staff their new
    units with volunteers from closing ACS and TPS sites, before using the
    established redeployment process, since staff in those sites would already
    have experience in resolving taxpayer account matters via the telephone.
    At the same time, four service centers (Andover, Atlanta, Cincinnati, and
    Philadelphia) were authorized to fill up to 30 percent of their new
    customer-service positions with volunteers from ACS and TPS sites that
    were closing in nearby districts (Boston, Atlanta, Cincinnati, and
    Philadelphia). The Cincinnati Service Center requested this exception in
    order to optimize the mix of experience needed to begin its new
    customer-service operations.

    Except for certain resources management employees, no other exceptions
    were made to take advantage of service center employee experience.
    Thus, the redeployment procedures did not give service centers a viable
    opportunity to redirect experienced employees to related new or
    redesigned jobs before seeking volunteers from unrelated jobs. The
    Redeployment Understanding technically allows IRS to make directed

    20
      Seniority is determined by an employee’s government service computation date, which generally
    reflects all federal service.
    21
      Redeployment-eligible employees generally included all career and career-conditional IRS employees
    in (1) the National Office, regional offices, service centers, computing centers, and Austin Compliance
    Center; (2) certain district office operations, including ACS and TPS locations; and (3) resources
    management and information systems functions.
    22
     Competition differs from lateral reassignment in that employees are competing for a promotion or a
    higher career ladder giving them the potential for later advancement without further competition.



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reassignments before using the competitive process; however, using this
option was not practical because it required that directed assignments be
made in inverse seniority order from within the entire local commuting
area. This provision would mean that a center’s newest employee (and
least likely to have related experience) must be the first one directed to fill
a vacancy.

The redeployment of employees into new customer-service units
illustrates how these procedures limited IRS’ ability to reinvest experience.
IRS’ customer-service workload migration plans called for the phased
transfer of related work, workers, and funding, concurrently, from the
district and service center sites currently doing the work to the new
customer-service units. In that regard, IRS had directed 137 staff from
related areas into the customer-service prototype unit at the Fresno
Service Center before the Redeployment Understanding took effect.
However, staffing of subsequent customer-service vacancies at Fresno and
customer-service units established at other centers was subject to the
Redeployment Understanding.

In the service centers, related work includes that being handled through
correspondence by employees in the Adjustments, Taxpayer Relations,
and Collections branches. For example, employees in the Adjustments
Branch generally correspond with taxpayers to resolve account-related
problems and make necessary adjustments to taxpayer accounts using the
Integrated Data Retrieval System (IDRS). Employees in the
customer-service units being phased in at service centers generally do the
same type of work, except that they communicate with taxpayers
primarily by telephone rather than correspondence. Thus, experienced
Adjustments Branch employees might need training in telephone
techniques but would need little or no additional training in how to resolve
account-related problems or how to adjust accounts using IDRS.

However, employees redeployed by seniority or the competitive process
may come from areas such as the Processing Division, where they worked
as mail handlers, data transcribers, or in other jobs totally unrelated to the
kind of work they would be expected to do in the customer-service units.
These employees would require significant training not only in telephone
techniques but also in resolving account-related problems and using IDRS.




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                        Even in a well-timed and properly targeted redeployment, some temporary
Redeployment            increase in training and decline in productivity and customer service can
Resulted in Increased   be expected as an inherent consequence. At a minimum, the redeployment
Training, Decreased     of employees increases training requirements and decreases productivity
                        and service because neither the experienced employees serving as
Productivity, and       instructors nor the trainees are actively contributing to the organization’s
Reduced Service to      business while they are involved in classroom training. Nor are they
                        contributing fully during on-the-job (OJT) training. Because of other
Taxpayers               variables affecting productivity (such as new or increased workloads,
                        equipment failure, etc.), it is difficult to quantify the degree of productivity
                        decline specifically attributable to redeployment, much less the portion
                        that was inherent versus that which was avoidable. Nevertheless, we think
                        it is reasonable to assume that the redeployment procedures, by making
                        too many employees eligible for redeployment too soon and by limiting IRS’
                        ability to take full advantage of employees’ job experience, resulted in a
                        greater level of inexperience than might have otherwise been the case and
                        thus led to more training, less productivity, and less service to taxpayers.


Training Requirements   Although training requirements increased due to redeployment that
Increased               occurred in fiscal year 1994, they increased substantially in fiscal year 1995
                        due to the availability of several thousand additional compliance jobs
                        authorized that year. As stated earlier, IRS redeployed existing employees
                        to fill 4,325 (or 79 percent) of the 5,470 additional compliance jobs
                        authorized for fiscal year 1995. Because these jobs were filled by
                        redeployment-eligible employees whose vacated positions, such as those
                        in processing or customer service, also had to be filled and the persons
                        filling them had to be trained, training often occurred two or more times23
                        in order to fill one new job. Service center and district officials and
                        supervisors expressed concern about this increase in training
                        requirements.

                        For example, one service center official said that redeployment had a big
                        effect on training, and that training costs had increased over $240,000, or
                        34 percent, during the first 6 months of 1995 from the same period in 1994.

                        According to another center’s June 1995 assessment of its first year
                        redeployment results,



                        23
                          Because the number of times an eligible employee could be redeployed was not limited until
                        December 1994, many employees were redeployed two or more times, further increasing training
                        requirements.



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“The Center expended 92,086 more training hours over the same period of time in [fiscal
year] 95 than [fiscal year] 94. Compliance Division accounted for 57,799 of these hours, due
to the hiring initiative, while [the] Processing Division accounted for an additional 31,040.”


According to data provided by the Center, the 92,086 additional hours was
an increase of 24 percent over the 377,442 hours used in fiscal year 1994.

A compliance division manager at a third service center said that his
division had exceeded its fiscal year 1995 training allotment by over 14,000
hours, or 62 percent.

Similarly, although fewer district employees were eligible for
redeployment than at service centers, an official at one district said that
because TPS and ACS work in that district could not be absorbed at sites in
other districts, vacancies had to be filled with new temporary and term
employees, which created concerns about quality and additional training
costs.

Many of the supervisors we interviewed also said that redeploying
experienced employees out of their units and/or inexperienced employees
into their units increased their training requirements. We interviewed 30
supervisors (hereafter referred to as “gaining supervisors”) who had,
altogether, received 346 redeployed employees and 24 supervisors
(hereafter referred to as “losing supervisors”) who had lost 412 employees
to other units.24 As shown in figure 2.1, 20 (83 percent) of the 24
supervisors who lost employees and 20 (67 percent) of the 30 supervisors
who gained employees said redeployment had increased training
requirements in their units.




24
 In general, gaining supervisors were selected from high-gain areas while losing supervisors were
selected from high-loss areas. However, each could have gained and lost employees, and some of the
412 employees lost by supervisors in our sample could have been among the 346 employees gained by
other supervisors in our sample.



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                                        Chapter 2
                                        Redeployment Procedures Led to Premature
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                                        Inefficiencies




Figure 2.1: Supervisors’ Views on How
Redeployment Affected Their Units’           Number of reporting supervisors
Training Requirements
                                             20     20
                                        20




                                        15




                                        10                                         9




                                         5
                                                                                              3

                                                                           1                          1
                                                                   0                                             0
                                         0

                                              Increased                Decreased       Not affected       Not applicable



                                                         Gaining supervisors

                                                         Losing supervisors



                                        Source: GAO-structured interviews with 30 supervisors who gained and 24 supervisors who lost
                                        redeployed employees.




                                        According to many of the service center and district office officials and
                                        supervisors we interviewed, the increased training requirements also
                                        decreased the number of experienced employees on line—since these
                                        employees are often used as training instructors—thus further eroding
                                        unit productivity.


Productivity and Service to             We asked losing supervisors how the loss of employees through
Taxpayers Declined                      redeployment affected their unit’s productivity in terms of volume,
                                        accuracy, and timeliness. Their views varied. As shown in figure 2.2, of the
                                        24 supervisors interviewed, 18 (75 percent) said that the volume of their
                                        unit’s output decreased, 9 (38 percent) said that the accuracy of their
                                        output decreased, and 9 (38 percent) said that the timeliness of their
                                        output decreased. Conversely, 6 (25 percent), 15 (62 percent), and 15
                                        (62 percent) of the managers said that their units’ volume, accuracy, and




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                                        timeliness, respectively, either had not been affected by the redeployment
                                        or had increased.


Figure 2.2: Losing Supervisors’ Views
on How Redeployment Affected Their           Number of reporting supervisors
Units’ Productivity
                                        20
                                                                      18



                                        15
                                                                                                13
                                                                                           12


                                        10                                 9 9




                                                                                    5
                                         5
                                                   3
                                                             2
                                             1
                                                                                                        0     0    0
                                         0

                                                 Increased             Decreased        Not affected        Not applicable



                                                         Volume

                                                         Accuracy

                                                         Timeliness



                                        Source: GAO-structured interviews with 24 losing supervisors.




                                        The 30 gaining supervisors we interviewed also had mixed views on how
                                        the redeployment process affected their unit’s productivity. As shown in
                                        figure 2.3, decreased volume, accuracy, and timeliness were reported by 10
                                        (33 percent), 7 (23 percent), and 11 (37 percent), respectively, of those
                                        supervisors. Conversely, 16 (54 percent), 18 (60 percent), and 15
                                        (50 percent) of them said their units’ volume, accuracy, and timeliness,
                                        respectively, either had not been affected by the redeployment or had
                                        increased.




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Figure 2.3: Gaining Supervisors’ Views
on How Redeployment Affected Their            Number of reporting supervisors
Units’ Productivity
                                         20

                                                                                               17


                                         15                                                           14



                                                                                   11
                                                                          10
                                         10                                             9

                                              7                                7

                                                                                                                 5
                                          5                                                                4            4



                                                       1 1

                                          0

                                                  Increased                Decreased        Not affected       Not applicable



                                                             Volume

                                                             Accuracy

                                                             Timeliness



                                         Source: GAO-structured interviews with 30 gaining supervisors.




                                         Moreover, 4 of 16 gaining supervisors and 11 of 20 losing supervisors
                                         whose units normally used overtime said redeployment had increased
                                         their use of overtime. Similarly, 4 of 16 gaining supervisors and 8 of 18
                                         losing supervisors whose units normally used temporary details from
                                         other units said that their use of details had also increased due to
                                         redeployment.

                                         We also asked supervisors whose employees were redeployed how this
                                         loss affected their unit’s service to taxpayers. Of the 24 supervisors, 10
                                         (42 percent) said the loss of employees degraded their service to
                                         taxpayers. The degraded services mentioned most often included
                                         (1) taking longer to answer telephone calls and correspondence from
                                         taxpayers, (2) increases in the number of calls waiting and abandoned, and
                                         (3) growing backlogs of cases to be processed.




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    Service center and district officials we interviewed also mentioned that
    productivity and taxpayer service had declined with the erosion of unit
    experience. For example:

•   A customer-service branch chief at one center said that the branch was
    answering only 83 percent of its scheduled calls in June 1995, due to
    inexperienced employees and their requirement for training time, which
    had not been considered in developing the work schedule.
•   A collections branch chief said that all the movement of employees
    associated with redeployment had reduced the branch’s timeliness in
    answering correspondence. In June 1995, the branch’s cumulative rate was
    8.4 days over the 21-day standard. And, in some peak months, the rate rose
    as high as 40.1 days.

    Officials made similar comments in unit self-assessment reports of
    redeployment results. For example, one district’s June 1995 assessment of
    its first-year redeployment results, said that

    “Redeployment losses have had a major impact on the Problem Resolution Program [PRP].
    It is well known that PRP caseworkers do not become truly efficient for 2 - 3 years; the
    training curve is slow because of the difficulties of the cases. Many of the more
    experienced caseworkers were the first to be selected as compliance hires. Even though
    we replenish the staff, they continue to apply for redeployment positions. The result in
    Taxpayer Service was a reduction in PRP productivity in 1995 from .5 [cases] per hour (one
    of the highest rates in the country) to .2 [cases] per hour.”


    The most significant productivity declines may have been experienced
    within the service center processing divisions. Two internal IRS studies
    confirmed that the processing divisions lost productivity because
    employees who were experienced in processing returns were redeployed
    to compliance and customer-service jobs and replaced by inexperienced
    employees who were either newly hired or reassigned from other
    functional areas.25




    25
      Consistent with this finding, in our report on the 1995 filing season (The 1995 Tax Filing Season: IRS
    Performance Indicators Provide Incomplete Information About Some Problems, GAO/GGD-96-48,
    Dec. 29, 1995), we noted declines in some of the indicators IRS uses to track the performance of its
    service centers in processing individual income tax returns. For example, the accuracy of returns
    processed by data transcribers declined from 95.84 percent in 1994 to 93.93 percent in 1995, and the
    average number of days it took the centers to process individual income tax returns declined from a
    range of 5 to 7 days in 1994 to a range of 5 to 9 days in 1995.



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According to a 1995 IRS study of service center productivity, redeployment
hurt service center productivity by “encouraging [permanent] pipeline
employees to transfer out of the Processing Division.”26

According to the study, as illustrated in figure 2.4, the percentages of
permanent employees transferring out of returns processing jobs in the
1995 filing season increased substantially from the prior filing season at 8
of the 10 service centers, and the increases were much larger at centers
that have not been designated to continue as processing centers.




26
 Permanent employees are those appointed to career or career-conditional status and can include
employees with seasonal and nonseasonal work schedules. Unlike term or temporary employees,
permanent employees do not have specified limits on their employment with IRS.



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Figure 2.4: Permanent Employee Transfer Rates at Submission and Nonsubmission Processing Centers

Percentange of employees transferring

25


                                                                                 21
20
                                                                18.8


                                                15.4
15                             14.6



                                                                          10.1                                                                                     10.5
10
        8.6                                                                                                                                           8.4
                        8                                                                                      8                7.8         7.4
                                                                                                                                                            6.1
               5.6                        5.3
 5                                                       4.1                                    4.1
                                                                                                                       2.6
                                                                                                       1.9
                                                                                         1
 0
                                                                           en
                           a




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     Nonsubmission processing centers                                                  Submission processing centers

     Types of service centers
              1994
              1995


                                                                Source: IRS Analysis and Studies Division memorandum on the impact of personnel policies on
                                                                service center pipeline productivity, April 17, 1995.




                                                                The study also said that new processing employees were significantly less
                                                                productive than experienced employees. It estimated that employees in
                                                                their second filing season were 20 percent more productive than in their
                                                                first.

                                                                According to a November 1995 IRS internal audit report,27


                                                                27
                                                                 National Office Oversight Provided to the Service Centers During the 1995 Filing Season, Nov. 14,
                                                                1995 (reference no. 060702).



                                                                Page 29                                               GAO/GGD-97-24 IRS’ Redeployment Experiences
                    Chapter 2
                    Redeployment Procedures Led to Premature
                    Reassignments and Operational
                    Inefficiencies




                    “During the 1995 filing season, processing functions in the service centers expended
                    40 percent more overtime hours than during 1994. In addition, the time expended by
                    employees who were detailed-in from non-processing jobs increased by 19 percent in
                    1995.”


                    Internal Audit attributed the above results, in part, to an inexperienced
                    workforce.28 According to the report,

                    “. . . Processing functions nationwide suffered a significant experience drain prior to the
                    beginning of the 1995 filing season. Management indicated that between 1400 and 1800
                    employees had been moved from Processing Divisions to fill Customer Service and
                    Compliance jobs . . .”


                    The report explained that redeployed or newly hired replacements could
                    not perform some processing steps at rates used to schedule the work.


                    Before the Redeployment Understanding was terminated, IRS and NTEU had
IRS and NTEU Made   taken some actions designed to minimize the loss of employee experience
Some Changes to     during the transition to the new business vision. IRS and NTEU had also
Reduce Experience   been discussing (1) whether to migrate related work, workers, and funding
                    together into the new customer-service environment, and (2) the need to
Loss                curtail personnel turnover and the resulting erosion of experience and
                    productivity. According to a National Office official, as of June 1996, IRS
                    was also validating skill assessment tools that it hoped to use in the
                    redeployment process.

                    In October 1994, the Redeployment Resolution Council withdrew the
                    designation of resources management employees in grades GS-9 and
                    above at host sites29 as redeployment eligible. Although the Council
                    decided not to withdraw the designation of employees who were
                    occupying positions that would, over time, be transformed into the new
                    customer-service positions, it did restrict the lateral movement of
                    employees out of these new positions after they had used their
                    redeployment eligibility to move into them.

                    In the meantime, the Council authorized district offices to staff their
                    continuing customer-service sites with volunteers from closing ACS and TPS

                    28
                      Other contributing factors cited by Internal Audit included an increase in the number of individual
                    tax returns that had to be processed at the centers, mostly due to a shift from electronic returns to
                    paper returns, and the need to manually transcribe data from forms 1040EZ because automated
                    scanning systems were unable to process the scheduled volume of those returns.
                    29
                      Resources management host sites are those that will serve multiple IRS locations.



                    Page 30                                          GAO/GGD-97-24 IRS’ Redeployment Experiences
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              Redeployment Procedures Led to Premature
              Reassignments and Operational
              Inefficiencies




              sites before using normal redeployment procedures. Similarly, as
              discussed earlier, the Council authorized four service centers to fill up to
              30 percent of their new customer-service positions with volunteers from
              ACS and TPS sites that were closing in nearby districts instead of using
              normal redeployment procedures. Although only on a voluntary basis,
              these exceptions to the established redeployment process helped to
              minimize the loss of ACS and TPS employees who were experienced in
              performing customer-service functions.

              In April 1995, IRS customer-service officials were planning to request an
              exception to the redeployment process that would have allowed the
              phased migration of related work, workers, and funding, concurrently, into
              customer service, in accordance with customer-service workload
              migration plans. According to IRS officials, this exception request was
              never formally sent to the Redeployment Resolution Council. Instead,
              officials said the matter was informally discussed among IRS and NTEU
              council members. We were told in February 1996 that IRS and NTEU were
              still working informally on how best to deal with excessive turnover and
              experience loss IRS-wide, resulting from procedures specified in the
              Redeployment Understanding.


              Although it seems reasonable to expect some operational inefficiencies as
Conclusions   an inherent part of any redeployment process, those inefficiencies were
              exacerbated at IRS, in our opinion, by redeployment procedures that made
              employees eligible for redeployment too soon and prevented IRS from
              redirecting employees to new jobs on the basis of their related work
              experiences. Redeployment occurred long before the expected large-scale
              displacement of employees associated with the implementation of planned
              modernization projects and consolidation efforts. Consequently, many of
              the jobs vacated by redeployed employees had to be filled again by newly
              hired employees. Thus, IRS’ first redeployment experience came too early
              to be very effective in achieving the goal of redeployment—which is to
              move employees out of jobs that would not be needed in the new
              environment and into jobs that would. Because employees experienced in
              certain areas were often redeployed to areas requiring very different skills
              and were, in turn, replaced by inexperienced staff, IRS lost valuable
              experience and in some instances incurred training cost twice, especially
              at its service centers.

              Before the Redeployment Understanding was terminated, IRS and NTEU had
              worked together to resolve a number of problems, but they had not yet



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                          Chapter 2
                          Redeployment Procedures Led to Premature
                          Reassignments and Operational
                          Inefficiencies




                          agreed on using current job experience in making redeployment decisions.
                          Unless future redeployments are structured in a way that allows IRS to
                          redirect current employee experience and skills to jobs in the new
                          environment, considerable experience could be lost during the transition,
                          bringing about further increases in training costs and declines in
                          productivity and customer service. For that same reason, it is also
                          important that future redeployment be timed to coincide more closely
                          with the implementation of modernization projects and consolidation
                          efforts to better ensure that experienced employees are not vacating jobs
                          long before those jobs are eliminated.


                          We recommend that the Commissioner of Internal Revenue—should
Recommendation to         future redeployment procedures be developed—address the problems
the Commissioner of       identified in this report, including
Internal Revenue
                      •   limiting redeployment eligibility to employees whose current jobs have
                          been or are about to be substantially altered or eliminated, so that
                          redeployment of employees is timed closely with the implementation of
                          modernization projects or consolidation efforts and
                      •   allowing IRS to redirect employees who are currently and successfully
                          performing existing jobs to redesigned jobs that are substantially the same
                          before seeking volunteers from unrelated functions (similar to the
                          exceptions made for district ACS and TPS employees).


                          We requested comments on a draft of this report from the Commissioner
Agency Comments           of Internal Revenue and the National President of NTEU, or their designees.
and Our Evaluation        We received written comments from IRS’ Chief, Management and
                          Administration, on September 11, 1996, and from NTEU’s National President
                          on September 17, 1996. The written comments from IRS and NTEU are
                          reprinted as appendixes V and VI, respectively. We also met with both
                          parties, separately, on September 13, 1996, to discuss their comments.

                          While agreeing that future redeployments should be better targeted and
                          timed, IRS said that our discussion of the timing of past redeployments
                          oversimplified the issue. According to IRS, it did, in retrospect, allow
                          reassignments to occur too soon but that the result would have been
                          different if IRS’ modernization plans had proceeded on the schedule
                          envisioned when the Redeployment Understanding was signed. We do not
                          agree. We considered IRS’ modernization plans and schedules in making
                          our assessment, and we cited specific examples in our report where



                          Page 32                                    GAO/GGD-97-24 IRS’ Redeployment Experiences
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Redeployment Procedures Led to Premature
Reassignments and Operational
Inefficiencies




reassignments occurred well before sites were to be closed or
implementation of a new system was to begin. IRS did not provide any
information to contradict the scheduling information cited in our report
and noted in its comments that the information in our report was generally
factual.

IRS also commented on the relationship between redeployment and the
hiring initiative, under which Congress authorized thousands of new
compliance and customer-service positions. According to IRS, that
initiative provided an opportunity to redeploy many employees who were
in noncontinuing positions and that if it “had not used these new positions
for redeployment, and instead filled them with external hires, the number
of employees still occupying non-continuing positions when the transition
was scheduled to occur would have been much larger.”

We recognize that the timing of the hiring initiative was partly responsible
for increased training requirements and reduced productivity, since over
4,000 additional jobs were made available to redeployment-eligible
employees in fiscal year 1995—well before large-scale employee
displacement was expected. Nevertheless, we still believe that IRS would
have experienced less disruption in fiscal years 1994 and 1995 had
redeployment procedures focused on finding new jobs for employees as
their displacement became imminent and allowed IRS to redeploy
employees with related experience before those without such experience.
More importantly, we believe that the lessons learned from IRS’ early
redeployment experience will help it establish procedures aimed at
minimizing disruption in the future, when there is no guarantee of
additional hiring initiatives.

In its comments on our draft report, NTEU said that the report is “flawed in
its design, particularly with regard to its first stated objective, and that it
fails to present any data to support the majority of the conclusions that are
reached.” As an example, NTEU cited our conclusion that the redeployment
procedures led to premature reassignments and operational inefficiencies.
We disagree. Our conclusion about premature reassignments was based on
an analysis of staffing and reassignment data for IRS service centers and for
ACS and TPS sites; discussions with IRS officials and with service center and
district office supervisors who lost redeployed employees; and reviews of
IRS’ modernization and site closure plans. In our opinion, the results of that
work, which are discussed on pages 16 to 21, provide a sufficient basis for
concluding that the redeployment procedures led to premature
reassignments. We reached our conclusion about operational



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inefficiencies after interviewing officials and supervisors in many of the
affected organizational units and reviewing various documentation
including several internal IRS reports and studies. Again, we believe that
the results of our work, which are discussed on pages 21 to 30, provide
sufficient data to support our conclusion.

NTEU  also said that to draw such a conclusion we would need to present
some comparative analysis of the operational impact of the Redeployment
Understanding versus some alternative selection procedure, such as the
traditional competitive selection process. We did not intend to suggest in
our report that IRS should have used the traditional competitive process in
lieu of the redeployment procedures. That process, like the lateral
redeployment process, can also result in the selection of employees
without related experience, since a key factor in ranking employees is the
appraised performance in their current jobs, which may not be related to
the jobs being filled. Conversely, we also did not intend to suggest that IRS
should be precluded from using competitive procedures in filling its new
jobs. Such procedures would have to be used when redeploying employees
to new jobs having higher career ladders than their current jobs. They
might also have to be used when the number of employees with related
experience or skills is less than the number of new positions.

What we are suggesting is that the redeployment should have been more
focused and better timed. While we acknowledge in the report that some
operational inefficiencies can be expected with any redeployment process,
we believe that the process would have been more efficient if the
procedures were structured to (1) allow management to give priority to
employees occupying positions that were closely related to the types of
positions being filled and (2) time employee eligibility more closely to the
dissolution of their jobs. We did not do a comparison of the operational
impact of the Redeployment Understanding versus a redesigned
redeployment that would have been more focused and better timed
because it would have been highly speculative on our part to have
attempted to quantify what the results would have been if IRS had used
different redeployment procedures. Nevertheless, we think it is reasonable
to assume that the Redeployment Understanding, by making too many
employees eligible for redeployment too soon and by limiting IRS’ abililty
to take full advantage of employees’ job experience, resulted in a greater
level of inexperience than might have otherwise been the case and thus
led to more training, less productivity, and less service to taxpayers.




Page 34                                    GAO/GGD-97-24 IRS’ Redeployment Experiences
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Inefficiencies




NTEU suggested that our conclusions were based on an “erroneous
assumption that the IRS could have simply reassigned, either voluntarily or
involuntarily, its most qualified and most experienced employees” into the
new compliance and customer-service jobs “without any further
consideration and without any negative impact on processing division
productivity.” NTEU said that such an assumption was incorrect because
(1) involuntary reassignment has a “negative impact on employee morale,
overall performance, and productivity;” (2) the requirement that an
employee cannot be noncompetitively reassigned to a position having a
higher career ladder than that of the employee’s current position greatly
reduces the field of eligible employees outside of the processing division;
and (3) we apparently assumed that IRS would not have had to backfill any
of the vacancies created by filling the new compliance and
customer-service jobs with employees who had related experience.

We did not assume that IRS could reassign its most qualified and
experienced employees without any negative impact on productivity. To
the contrary, as noted earlier, we believe that some decrease in
productivity can be expected even with a well-timed and properly targeted
redeployment. We did not attempt to assess the relative effects of
voluntary and involuntary reassignment on employee morale,
performance, or productivity nor are we implying that all reassignments
should be done on an involuntary basis. Under the procedures envisioned
by our recommendation, IRS could try the voluntary process before using
the involuntary process or the normal competitive process. If it became
necessary to use the competitive process to fill certain jobs, IRS could
narrow the areas of consideration to certain groups of employees (e.g.,
those within the local commuting area, those in immediate jeopardy of
losing their jobs, or those with current and directly related experience or
skills). In addition to minimum qualification requirements, IRS could also
apply selective ranking factors requiring directly related experience. By
contrast, the Redeployment Understanding required IRS to fill a new job
with the most senior volunteer for lateral assignment, even if that
volunteer had no related experience or skills. Thus, IRS was precluded
from selecting a less-senior volunteer who had related experience or skills.

We agree with NTEU that the number of employees eligible for lateral
redeployment might not have been enough to fill all of the new compliance
and customer-service jobs without some impact on the processing
division. However, we believe that the impact would have been minimized
if procedures had (1) made employees eligible for redeployment only
when the event that was to displace them became a near-term reality and



Page 35                                    GAO/GGD-97-24 IRS’ Redeployment Experiences
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Reassignments and Operational
Inefficiencies




(2) allowed IRS, in filling jobs laterally, to give preference to employees
who were in immediate jeopardy of being displaced from their current
positions and who had related experience. If additional positions remained
to be filled, we agree that IRS might have had to select some processing
division employees.

We did not assume that no vacated position would have to be backfilled.
However, although the redeployment of employees with related
experience before those without such experience could still require filling
some of the jobs vacated by the experienced employees, we believe that
the need to do this could be less, using the kind of procedures suggested in
our recommendation. For example, those procedures would allow the
concurrent and phased migration of customer-service-related work and
workers as planned by IRS and as done in initially staffing the
customer-service prototype at the Fresno Service Center. Thus, IRS would
be transferring positions rather than creating vacancies.

In summary, we are not suggesting that IRS should be precluded from
staffing any new jobs using employees whose jobs are not in jeopardy or
who are not the most experienced. What we are saying is that
redeployment procedures should apply to employees who are expected to
be displaced by the imminent implementation of modernization projects or
reorganization efforts. They should also be structured to give preference
to employees whose jobs are in immediate jeopardy and to those who
have experience related to the jobs being filled. Instead, the procedures
adopted by IRS and NTEU made virtually all service center employees
eligible for redeployment, without regard to when their jobs were to be
eliminated or redesigned and required IRS to fill new jobs at the same
grade, using the most senior volunteers from both related and unrelated
areas throughout the center before using other options, such as directed
reassignments.

Our responses to other comments made by IRS and NTEU can be found in
appendixes V and VI.




Page 36                                    GAO/GGD-97-24 IRS’ Redeployment Experiences
Chapter 3

Redeployed Employee Job Satisfaction and
Initial Performance Results Were
Encouraging
                           To obtain some input on redeployment from those most affected and to
                           identify other issues that might warrant IRS’ attention in future
                           redeployments, we interviewed some redeployed employees and some of
                           their new supervisors.30 Those interviews identified some concerns
                           relating to such things as training and the amount of redeployment
                           information provided to employees; but they also indicated that employees
                           were generally satisfied with their new jobs, and supervisors were
                           generally satisfied with their new employees. While there is room for
                           improvement, as evidenced by the interviews and the declining
                           productivity discussed in chapter 2, the reactions of employees and
                           supervisors were encouraging.


                           Of the 30 supervisors we interviewed, the great majority were either very
Most Redeployed            satisfied (11) or generally satisfied (15) with their new employees. The
Employees Were             supervisors also said that 92 percent (or 320) of their 346 new employees
Meeting Performance        were meeting established standards for a “fully successful” level of
                           performance—the minimum acceptable level for performance appraisal
Standards and Were         purposes. While we recognize the limitations associated with
Satisfied With Their       self-reporting, we also asked employees about their performance. Of the
                           177 employees we interviewed who had received feedback, 155
New Jobs                   (88 percent) said that they were performing at or above the “fully
                           successful” level.31

                           Some of the 22 employees we interviewed who said they were performing
                           below the fully successful level offered suggestions on what would help
                           them improve their performance. The most frequently cited suggestions
                           were

                       •   more job knowledge, skills, or experience;
                       •   more or better training; and
                       •   consistent guidance and/or more feedback from their supervisors or
                           managers.

                           Some employees who were unable to perform successfully in their new
                           positions had returned to their former positions. In one district, an official
                           we interviewed who coordinated the redeployment at that site told us that
                           12 (8 percent) of 150 employees were reinstated in their old jobs after
                           “failing to make the transition” to their new jobs. And, at least at that site,

                           30
                            We interviewed 188 employees who had been redeployed and 30 managers who supervised a total of
                           346 employees who had been redeployed.
                           31
                             Eleven of the 188 had not received feedback on their performance and thus could not characterize it.



                           Page 37                                          GAO/GGD-97-24 IRS’ Redeployment Experiences
Chapter 3
Redeployed Employee Job Satisfaction and
Initial Performance Results Were
Encouraging




employees who returned to their old jobs were redesignated as eligible for
redeployment. Some of the supervisors included in our sample said that
employees who are unable to meet performance standards will be
reassigned to other positions. At some sites, employees may be given an
“opportunity period” of 1 year to improve their performance, at which time
they may be reassigned.

Of the 188 employees we interviewed, 70 percent (131 employees) were
satisfied with their new jobs, as shown in figure 3.1. Commonly mentioned
reasons for this satisfaction included (1) the type of work or the work
environment, (2) the challenging or interesting nature of the work, and
(3) the sense of teamwork among coworkers and managers in their new
units.

The reasons most frequently cited by the 17 percent (32 employees) who
were dissatisfied included (1)inadequate training; (2) unrealistic
productivity expectations, especially for employees with little or no
related experience; and (3) stress and fatigue from the length of time spent
on the telephone or at a computer terminal.




Page 38                                    GAO/GGD-97-24 IRS’ Redeployment Experiences
                                    Chapter 3
                                    Redeployed Employee Job Satisfaction and
                                    Initial Performance Results Were
                                    Encouraging




Figure 3.1: Redeployed Employees’
Job Satisfaction                                                                          As satisfied as dissatisfied

                                                                                          Dissatisfied




                                               • 17%


                                         • 13%


                                                                   70% •                  Satisfied




                                    Source: GAO interviews of 188 redeployed employees.



                                    As discussed in chapter 2, IRS field officials indicated that redeployment
Some Employees,                     had increased their training requirements. The impact on training was also
Especially Those Who                evident from our interviews of redeployed employees and the supervisors
Lacked Related                      who gained redeployed employees.

Experience, Required                Nearly a fifth of the redeployed employees we interviewed required more
Additional Training                 training than that which is normally provided for their positions. Many of
                                    these employees lacked related experience. Furthermore, although the
                                    Redeployment Understanding authorized only one additional training
                                    opportunity for employees who are not successful the first time, some
                                    supervisors said that they were told to allow as many training
                                    opportunities or as much time as necessary.

                                    Almost all of the redeployed employees included in our sample received
                                    classroom and/or OJT training.32 However, many of them either had their
                                    formal training period extended or had to repeat some or all of the training


                                    32
                                      OJT is a period of formal instruction whereby employees begin performing the duties required of the
                                    job but with an instructor’s supervision.



                                    Page 39                                         GAO/GGD-97-24 IRS’ Redeployment Experiences
Chapter 3
Redeployed Employee Job Satisfaction and
Initial Performance Results Were
Encouraging




segments. In that regard, 32 (17 percent) of the employees we interviewed
said they received additional training. Similarly, the gaining supervisors we
interviewed said that 47 (14 percent) of their redeployed employees
required additional training. According to a report by IRS headquarters
officials after visiting one district office,33 6 of 25 redeployed employees
training to be revenue agents in that district failed the 12-week second
phase of OJT twice. The six employees were either returned to their former
positions or transferred to other compliance jobs. A supervisor we
interviewed at another site said that she had an employee who had been
on OJT for almost 1 year, and that, before redeployment, he probably would
not have been allowed more than 6 months of OJT. The supervisor was told
that since the employee was obtained through redeployment, he would
continue OJT “indefinitely.”

Employees without related experience often required the most training.
For example, employees at one service center who were training for the
customer-service representative position were divided into three groups
on the basis of their knowledge of tax law and the computer system used
to adjust taxpayer accounts (i.e., IDRS). The group with the least amount of
knowledge required almost twice as much training as the group with the
most knowledge. At another service center, where employees were trained
together to minimize costs, officials told us they saw a correlation between
related or unrelated experience and performance in training. For example,
according to training records, employees redeployed from unrelated areas,
who comprised about half of the class, failed tests more than twice as
often as employees redeployed from related areas. Additionally, more than
half of the employees from unrelated areas were still receiving OJT nearly 4
months after completion of classroom training, while those from related
areas had completed their OJT in as little as 1 month and, in no case, more
than 3 months.

Of the 30 gaining supervisors included in our sample, 18 said that previous
experience was a factor in the amount of training needed by new
employees. One supervisor said that three of his four redeployed
employees were receiving almost twice as much OJT as they would have if
they had the related experience needed to perform the work.

Some employees also needed training in basic skills to be able to perform
their new jobs. Of 184 employees who responded to our question, 54
(29 percent) said that they needed skills training in areas such as math,


33
 IRS headquarters officials provided reports of their visits to one service center and 10 districts made
between April and June 1995 to assess the progress of redeployment.



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                      Chapter 3
                      Redeployed Employee Job Satisfaction and
                      Initial Performance Results Were
                      Encouraging




                      language, or communications to perform successfully in their new
                      positions. Of the 54 employees, 46 said that they received at least some of
                      the needed skills training. According to an IRS report on the results of a site
                      visit, “Some of our employees don’t have the basic skills needed to be
                      successful in these new positions, and we can’t underestimate the
                      magnitude of the training investment need[ed] to support the transition.”
                      Also, selection standards were sometimes relaxed. For example, according
                      to one district’s June 1995 assessment of its first-year redeployment
                      results,

                      “The requirement to select low-ranking redeployment eligibles from competitive
                      certificates has had a negative impact on the Compliance functions as well as several
                      employees. . . . Many of the employees would not have been selected under normal
                      circumstances because of mediocre evaluations, or marginal interviews. This mandatory
                      selection created ’false hopes’ for the employees—setting them up to fail. These mandatory
                      selections have resulted in several class failures, exorbitant training expenditures, [and]
                      disgruntled employees who have had to return to ACS and TPS.”




                      We asked employees to rate the adequacy of various aspects of the
Many Employees        redeployment process including (1) the assistance—such as career
Found Redeployment    counseling, skill assessments, and job placement services—IRS provided in
Assistance,           helping them find new positions; (2) the information IRS provided to
                      explain the redeployment process; and (3) training—both classroom and
Information, and      OJT. Of the 188 employees we interviewed, 95 said that they experienced
Training Inadequate   problems in at least one of those areas.

                      As shown in table 3.1, 44 of the 187 employees (24 percent) who
                      responded to our question found the redeployment assistance inadequate,
                      while 51 employees (27 percent) said they had no basis to comment on the
                      adequacy of the assistance because they did not receive assistance. Of the
                      76 employees who cited specific inadequacies,34 most said they needed
                      help in understanding the redeployment process, accessing job
                      announcements, determining the qualifications required for jobs, and
                      researching their available options.




                      34
                       Thirty-three employees cited inadequacies even though they did not characterize redeployment
                      assistance as inadequate. Conversely, one employee who characterized assistance as inadequate did
                      not provide a reason.



                      Page 41                                        GAO/GGD-97-24 IRS’ Redeployment Experiences
                                          Chapter 3
                                          Redeployed Employee Job Satisfaction and
                                          Initial Performance Results Were
                                          Encouraging




Table 3.1: Redeployed Employees’ Opinions on the Adequacy of Redeployment Assistance, Information, and Training
                           Assistance               Information            Class training                  OJT
                       Number of Percentage     Number of Percentage     Number of Percentage     Number of Percentage
Opinion              respondents     of total respondents     of total respondents     of total respondents     of total
Adequate                      63               34             104             57             113          60           111          59
As adequate as
inadequate                    29               16              35             19              29          15            24          13
Inadequate                    44               24              36             20              29          15            31          16
No basis to judge             51               27                8             4              17           9            22          12
Total                        187              100a            183            100             188         100a          188         100
                                          a
                                              Percentages do not total to 100 because of rounding.

                                          Source: GAO interviews of redeployed employees.



                                          Of the 183 employees who responded to our question on the adequacy of
                                          redeployment information, 36 (20 percent) considered it inadequate. Of
                                          those who gave reasons, almost all said that IRS did not explain the
                                          redeployment process well enough for them to fully understand it.
                                          Employees wanted to know the policies and procedures so they could
                                          better determine what their options were.

                                          The third aspect of redeployment that many employees found inadequate
                                          was the quality of training. For example, 31 of 188 employees (16 percent)
                                          said that OJT was inadequate. The most frequently mentioned reasons were

                                      •   OJT instructors lacked either sufficient subject knowledge or the
                                          communication skills to be able to teach the practical application of the
                                          classroom instruction and
                                      •   too many employees were assigned to each instructor for employees to
                                          receive adequate attention to individual needs.

                                          Although such complaints may not be unique to a redeployment situation,
                                          we believe that they may have been partly the result of overextending
                                          training resources to respond to the increase in training requirements
                                          discussed in chapter 2.

                                          A slightly lower percentage of employees—29 of 188 (15 percent)—found
                                          classroom training inadequate. The most frequently mentioned reasons
                                          were that




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                                       Redeployed Employee Job Satisfaction and
                                       Initial Performance Results Were
                                       Encouraging




                                   •   the amount of time allotted for classroom training was insufficient,
                                       particularly for those with little or no related experience and
                                   •   the subject coverage was inadequate or the training lacked a “hands-on”
                                       component for the related computer systems.


                                       As table 3.2 shows, 13 of the 30 gaining supervisors and 9 of the 24 losing
Many Supervisors                       supervisors said that they were dissatisfied with the way IRS handled the
Were Also Dissatisfied                 redeployment process.
With the
Redeployment
Process


Table 3.2: Gaining and Losing
Supervisors’ Opinions of How IRS                                           Gaining Supervisors             Losing Supervisors
Handled the Redeployment Process                                        Number of       Percentage of  Number of      Percentage of
                                       Opinion                        respondents        respondents respondents       respondents
                                       Satisfied                                  11                37            5              21
                                       Neither satisfied nor
                                       dissatisfied                                5                17            9              38
                                       Dissatisfied                               13                43            9              38
                                       No basis to judge                           1                3             1               4
                                       Total                                      30               100           24             100a
                                       a
                                           Does not total to 100 percent because of rounding.

                                       Source: GAO interviews of gaining and losing supervisors.



                                       The gaining supervisors most frequently cited the following reasons for
                                       their dissatisfaction with the redeployment process:

                                   •   redeployment allowed movement by seniority (the amount of time the
                                       employee had been with the federal government) rather than by work
                                       experience, and thus some of the employees redeployed were unqualified
                                       for the positions and
                                   •   redeployment resulted in too much personnel turnover.

                                       The reasons cited by losing supervisors were similar to those cited by the
                                       gaining supervisors. They said that




                                       Page 43                                           GAO/GGD-97-24 IRS’ Redeployment Experiences
                          Chapter 3
                          Redeployed Employee Job Satisfaction and
                          Initial Performance Results Were
                          Encouraging




                      •   their units received inexperienced employees through redeployment;
                      •   they lost experienced employees; and
                      •   communication between IRS management and employees was poor.


                          Overall, the results of our interviews of redeployed employees and their
Conclusions               supervisors suggested that many employees can be successfully
                          redeployed to meet new job requirements. While it may take some time for
                          redeployed employees to become fully productive in their new jobs, the
                          vast majority of the redeployed employees included in our sample, and
                          many more who were represented by the supervisors we interviewed,
                          were reportedly meeting new job performance standards for their
                          experience levels, although some needed supplemental training.

                          Our results also suggested some dissatisfaction with the information,
                          assistance, and training provided as part of the redeployment process to
                          better prepare employees for jobs in the modernized environment.
                          Although most redeployed employees were satisfied with their new jobs,
                          many were dissatisfied with the quality and availability of redeployment
                          information, assistance, and training. These employees said that they
                          needed a more consistent, thorough, and understandable explanation of
                          the redeployment process and how and when their jobs would be affected.
                          They also said that they needed (1) information on available assistance,
                          training, and job vacancies; (2) job placement assistance, including help in
                          determining the qualifications required by the new jobs; and (3) more and
                          better qualified OJT instructors.


                          We recommend that, as a part of managing any future redeployment effort,
Recommendation to         the Commissioner of Internal Revenue consider ways to improve
the Commissioner of       management communications with employees concerning redeployment
Internal Revenue          assistance, information, and training. In doing so, IRS might ask itself such
                          things as whether it is providing information that clearly explains
                          (1) redeployment policies and procedures; (2) which jobs are expected to
                          be eliminated, continued, and redesigned and when; and (3) the nature and
                          extent of available redeployment assistance.


                          We requested comments on a draft of this report from the Commissioner
Agency Comments           of Internal Revenue and the National President of NTEU, or their designees.
and Our Evaluation        We received written comments from IRS’ Chief, Management and
                          Administration, on September 11, 1996, and NTEU’s National President on



                          Page 44                                    GAO/GGD-97-24 IRS’ Redeployment Experiences
Chapter 3
Redeployed Employee Job Satisfaction and
Initial Performance Results Were
Encouraging




September 17, 1996. We also met with both parties, separately, on
September 13, 1996, to discuss their comments. Neither party raised any
objection to our recommendation or to the factual content of this chapter.




Page 45                                    GAO/GGD-97-24 IRS’ Redeployment Experiences
Appendix I

IRS Staffing in January 1994 and January
1996

Table I.1: IRS Staffing in January 1994
and January 1996                                                                                    Staffing as        Staffing as
                                          Appointment type                                             of 01/94           of 01/96
                                          Career and career conditional/nonseasonal                    100,558             99,164
                                          Career and career conditional/seasonal                        24,261             21,634
                                          Term/nonseasonal                                                 506                612
                                          Term/seasonal                                                  2,318              2,401
                                          Temporary/nonseasonal                                          2,949              2,465
                                          Temporary/seasonal                                               230                168
                                          Totals                                                       130,822            126,444
                                          Source: GAO analysis of IRS staffing data.




                                          Page 46                                      GAO/GGD-97-24 IRS’ Redeployment Experiences
Appendix II

Overview of IRS’ Redeployment Planning


                  In July 1994, we reported that the fundamental human resource planning
                  tasks facing IRS included

              •   identifying its workforce requirements—the number of workers, types of
                  positions, and skills needed to operate in the new environment;
              •   assessing the knowledge, skills, and abilities of its existing workforce;
              •   determining the gap between existing workforce capabilities and those
                  required for the new environment; and
              •   developing detailed recruiting, training, retraining, and redeployment
                  plans to meet projected workforce requirements while providing
                  continued employment for its current workforce.35

                  IRS has taken several steps toward satisfying those recommendations and
                  related ones made in earlier reports by us and the National Research
                  Council. Specifically, IRS developed independent models that produced
                  initial estimates of future workforce requirements for key functions such
                  as customer service, submission processing, and resources management
                  support services. The outputs from the various workforce requirements
                  models then became inputs for a redeployment model, which compared
                  these estimated workforce requirements to the estimated supply of
                  workers (i.e., the existing workforce, adjusted for expected attrition), by
                  site, job series, and grade for fiscal years 1995 through 2001.

                  Outputs from the redeployment model were then used as the starting
                  points for site-specific redeployment plans, which were approved in
                  October 1994. These plans had to be consistent with redeployment policies
                  and procedures established by IRS and NTEU.

                  According to IRS officials, the workforce requirements models and the
                  redeployment model will be refined and reused periodically to keep
                  human resource plans in sync with modernization plans and schedules.

                  In November 1995, according to the IRS official in charge of the Business
                  and Employees Competency Reengineering Project, IRS acquired
                  off-the-shelf skill assessment tools for eight core jobs.36 In June 1996, the
                  same official said that IRS had completed the testing needed to confirm the
                  validity of these tools in assessing the skills and other competencies
                  needed to effectively perform the eight core jobs and was awaiting test

                  35
                    GAO/GGD-94-159.
                  36
                   According to the IRS official, the eight core jobs are revenue agent, revenue officer, tax auditor,
                  customer-service representative, taxpayer service representative, ACS tax examiner, service center
                  collection tax examiner, and nonpipeline tax examiner.



                  Page 47                                          GAO/GGD-97-24 IRS’ Redeployment Experiences
Appendix II
Overview of IRS’ Redeployment Planning




results. After some experience using these tools to identify training needs
for individuals redeployed to core jobs, and provided that NTEU concurs,
IRS intends to use skill assessment results to help select individuals for
redeployment to the core jobs. Because many returns processing
employees whose jobs will no longer be needed are lower-graded clerical
employees who lack basic communication or math skills, such tools could
prove useful in determining training needs and making redeployment
selections.




Page 48                                  GAO/GGD-97-24 IRS’ Redeployment Experiences
Appendix III

Information on How We Selected the IRS
Sites We Visited and the Employees and
Supervisors We Interviewed
               To do this study, we visited IRS service centers in Atlanta, Brookhaven,
               Cincinnati, and Fresno and district offices in Atlanta, Baltimore,
               Cincinnati, and San Francisco. At those locations, we administered
               structured interviews to a total of 188 employees who had been
               redeployed to new jobs, 30 supervisors who had gained a total of 346
               redeployed employees, and 24 supervisors who had lost a total of 412
               redeployed employees.

               We selected the Atlanta and Fresno service centers because IRS had
               estimated that each would lose nearly 3,000 jobs as their
               returns-processing functions were phased out. Fresno was also a
               prototype customer-service center and the first operational
               customer-service units were established there in January 1994. We
               selected the Brookhaven and Cincinnati service centers because initial
               customer-service units were rolled out at these sites in the fall of 1994.

               We selected the Atlanta, Cincinnati, and San Francisco district offices
               because their TPS and ACS call sites were scheduled to be phased out in
               conjunction with the planned consolidation of customer-service locations.
               We selected the Baltimore District Office because it had been designated
               as a continuing customer-service site. Furthermore, unlike the Atlanta,
               Cincinnati, and San Francisco areas, which were designated as host sites
               for resources management support services, the Baltimore area was
               designated as a client site for such services. This meant that resources
               management positions in Baltimore were being eliminated.

               In the absence of a centralized IRS database that identified the universe of
               redeployed employees, we worked with IRS to develop, for each of the
               eight locations, a database of employees who were reassigned between
               November 1993 (the date of the Redeployment Understanding) and
               April 1995. Temporary reassignments were not included in the databases.
               For sampling purposes, we selected employees who changed their job
               series and/or work unit. From these databases, we judgmentally selected a
               cross section of redeployed employees to interview, considering such
               factors as their previous functional area experience and grade level.

               We used April 30, 1995, as the cutoff point to help ensure that the
               redeployed employees would have had several months to adjust to their
               new jobs by the time our structured interviews were administered. We
               administered those interviews from August through December 1995.
               Subsequent analysis showed that the 188 employees had been in their new
               jobs from about 4 to 22 months, and, on average, about 11 months.



               Page 49                              GAO/GGD-97-24 IRS’ Redeployment Experiences
Appendix III
Information on How We Selected the IRS
Sites We Visited and the Employees and
Supervisors We Interviewed




As agreed with IRS, for the service centers we visited, we selected
employees reassigned to compliance functions as tax examiners and
correspondence examiners and to customer-service units as tax
examiners. For the district offices, we selected employees reassigned as
revenue agents, revenue officers, tax auditors, and tax examiners. In
addition, we administered structured interviews to a few employees who
were redeployed to various types of jobs in newly established District
Office Research and Analysis units.37

The results of our employee interviews are not projectable because
statistical sampling methods were not used. We judgmentally selected
samples because, among other things, (1) a centralized universe of
redeployed employees was not available when we began our work and
(2) the use of statistical sampling methods would have required
considerably more audit time and resources, with the results only
projectable on a site-by-site basis.

In selecting supervisors to interview, we generally attempted to (1) select
gaining supervisors who had received at least one of the employees
included in our sample of redeployed employees and (2) select losing
supervisors who were in the functional areas at each location that had lost
the greatest number of redeployed employees.

Table III.1 shows the numbers and types of structured interviews done at
each site.




37
  District Office Research and Analysis units are to help IRS’ National Office of Research and Analysis
identify ways to improve compliance for segments of taxpayers that share certain characteristics or
behaviors.



Page 50                                          GAO/GGD-97-24 IRS’ Redeployment Experiences
                                        Appendix III
                                        Information on How We Selected the IRS
                                        Sites We Visited and the Employees and
                                        Supervisors We Interviewed




Table III.1: Structured Interviews by
Site                                                                                        Number of interviews
                                                                                                      Supervisors
                                                                                                      who gained        Supervisors who
                                                                               Redeployed              redeployed        lost redeployed
                                        Site                                    employees              employees              employees
                                        Atlanta District                                  25                       5                        5
                                        Atlanta Service Center                            25                       5                        5
                                        Baltimore Districta                               17                       4                        b

                                        Brookhaven Service Center                         25                       5                        5
                                                                                                                    c                       c
                                        Cincinnati District                               23
                                                                                                                    c                       c
                                        Cincinnati Service Center                         23
                                        San Francisco District                            25                       5                        4
                                        Fresno Service Center                             25                       6                        5
                                        Total                                            188                     30                        24
                                        a
                                          Fewer employee interviews were needed at Baltimore because generally only its resources
                                        management and information systems employees were eligible for redeployment.
                                        b
                                         We did not interview any losing supervisors because (1) we diverted staff to complete work at
                                        Brookhaven after we closed our New York Field Office and (2) we did not expect the relocation of
                                        resources management and information systems employees to have a direct effect on either the
                                        customer service or compliance function.
                                        c
                                          We were unable to complete the planned interviews at both Cincinnati locations because of the
                                        closure of our Cincinnati Field Office.




                                        Page 51                                        GAO/GGD-97-24 IRS’ Redeployment Experiences
Appendix IV

Changes in Staffing at Service Center
Processing Divisions


Table IV.1: Changes in Processing Division Staffing Between January 1994 and December 1994
                                                                          Changed
                                  As of                    To other   appointment From other                      New to            As of
Appointment type                  01/94       Left IRS    IRS areas           type       areas                      IRS             12/94
Career and career
 conditional                    18,282         (2,997)         (1,182)                 (6)           385               14          14,496
Term                             1,784             (828)          (17)               126                5          2,849            3,919
Temporary                          783             (352)            (2)             (120)               1             608            918
Totals                          20,849         (4,177)         (1,201)                               391           3,471           19,333
                                         Source: GAO analysis of IRS staffing data as of January 8, 1994, and December 10, 1994.




Table IV.2: Changes in Processing Division Staffing Between December 1994 and January 1996
                                                                         Changed
                                  As of                    To other   appointment From other                      New to            As of
Appointment type                  12/94       Left IRS    IRS areas          type        areas                      IRS             01/96
Career and career
 conditional                    14,496         (1,663)         (1,872)             1,562             397           3,872           16,792
Term                             3,919         (1,640)           (164)            (1,332)               3          1,053            1,839
Temporary                          918             (480)          (19)              (230)               0             713            902
Totals                          19,333         (3,783)         (2,055)                               400           5,638           19,533
                                         Source: GAO analysis of IRS staffing data as of December 10, 1994, and January 6, 1996.




                                         Page 52                                       GAO/GGD-97-24 IRS’ Redeployment Experiences
Appendix V

Comments From the Internal Revenue
Service

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




                             Page 53   GAO/GGD-97-24 IRS’ Redeployment Experiences
                  Appendix V
                  Comments From the Internal Revenue
                  Service




See comment 1.




See comment 1.




Now on page 11.
See comment 2.




Now on page 19.
See comment 2.




                  Page 54                              GAO/GGD-97-24 IRS’ Redeployment Experiences
                  Appendix V
                  Comments From the Internal Revenue
                  Service




Now on page 30.
See comment 2.




Now on page 32.
See comment 2.




                  Page 55                              GAO/GGD-97-24 IRS’ Redeployment Experiences
               Appendix V
               Comments From the Internal Revenue
               Service




               The following are GAO’ comments on IRS’ letter dated September 11, 1996.


               1. These developments, which occurred after we had completed our audit
GAO Comments   work, are reflected on pp. 2 to 3 and 10.

               2. These suggested changes have been made.




               Page 56                              GAO/GGD-97-24 IRS’ Redeployment Experiences
Appendix VI

Comments From the National Treasury
Employees Union

Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See comment 1.




                             Page 57   GAO/GGD-97-24 IRS’ Redeployment Experiences
Appendix VI
Comments From the National Treasury
Employees Union




Page 58                               GAO/GGD-97-24 IRS’ Redeployment Experiences
Appendix VI
Comments From the National Treasury
Employees Union




Page 59                               GAO/GGD-97-24 IRS’ Redeployment Experiences
               Appendix VI
               Comments From the National Treasury
               Employees Union




               The following are GAO’s comments on NTEU’s letter dated September 17,
               1996.


               1. We have reworded the statement to make our point more clear (see p. 4
GAO Comments   of the report). Pursuant to the Redeployment Understanding, IRS had to
               select volunteers on the basis of seniority. Thus, IRS had to select more
               senior, less experienced volunteers for positions before less senior but
               more experienced persons could be selected.




               Page 60                               GAO/GGD-97-24 IRS’ Redeployment Experiences
Appendix VII

Major Contributors to This Report


                        David J. Attianese, Assistant Director
General Government      James G. O’Donnell, Evaluator
Division, Washington,   Stuart M. Kaufman, Technical Assistant
D.C.
                        Robert V. Arcenia, Evaluator-in-Charge
Atlanta Field Office    Kim M. Rogers, Site Senior
                        Ronald J. Heisterkamp, Evaluator
                        A. Carl Harris, Tax Group Manager
                        Sara L. Bingham, Reports Analyst


                        George F. Degen, Evaluator
Boston/New York
Field Office
                        Laurie R. Housemeyer, Evaluator
Cincinnati Field        Lori A. Koehne, Evaluator
Office                  Thomas M. McDonald, Evaluator


                        Arthur L. Davis, Senior Evaluator
Seattle/San Francisco   Suzy Foster, Senior Evaluator
Field Office




(268651)                Page 61                             GAO/GGD-97-24 IRS’ Redeployment Experiences
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