oversight

Human Capital: A Self-Assessment Checklist for Agency Leaders

Published by the Government Accountability Office on 1999-09-01.

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

                 United States General Accounting Office

GAO              Discussion Draft




September 1999
                 HUMAN CAPITAL
                 A Self-Assessment
                 Checklist for Agency
                 Leaders




GAO/GGD-99-179
Preface


                The federal government employs a diverse and knowledge-based
                workforce, comprised of individuals with a broad spectrum of technical
                and program skills and institutional memory. They are the government’s
                human capital, its greatest asset.

                To attain the highest level of performance and accountability, federal
                agencies depend on three enablers: people, process, and technology. The
                most important of these is people, because an agency’s people define its
                character and its capacity to perform.

                Social, economic, and technological changes have become a constant in
                our society and our world. These changes inevitably affect the way
                government must do business and have made federal agencies acutely
                aware of how much they rely on their human capital to do the people’s
                work. To meet the changing environment, federal agencies need to give
                human capital a higher priority than ever before and modernize their
                human capital policies and practices. Modern human capital policies and
                practices offer the federal government a means to improve its economy,
                efficiency, and effectiveness to better serve the American people. As the
                nation’s largest employer, the federal government needs to take the
                initiative on human capital and seize the opportunity to lead by example.

                During the 1990s, Congress responded to long-standing shortcomings in
                the way federal agencies were managed by creating a framework for more
                businesslike and results-oriented management. The three major areas
                addressed by the reforms were financial management, information
                technology management, and performance-based management. The
                consensus needed to fill the remaining gap in that framework—strategic
                human capital management—has not yet emerged. But even in the
                absence of fundamental legislative change, agency leaders can still take
                practical steps to improve their human capital practices. The first step to
                this end is self-assessment.

                Two principles are central to the human capital idea. First, people are
What Is Human   assets whose value can be enhanced through investment. As with any
Capital?        investment, the goal is to maximize value while managing risk. As the
                value of people increases, so does the performance capacity of the
                organization, and therefore its value to clients and other stakeholders.
                Second, an organization’s human capital policies must be aligned to
                support the organization’s “shared vision”—the mission, vision for the
                future, core values, goals, and strategies by which the organization has
                defined its direction and its expectations for itself and its people. All




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                      Preface




                      human capital policies and practices should be assessed by the standard of
                      how well they help the organization pursue its shared vision.

                      At most federal agencies, the lion’s share of operating costs is devoted to
                      the workforce. For this reason, employees traditionally have been viewed
                      through the budgetary lens, and therefore they have often been seen as
                      costs to be cut rather than as assets to be appreciated. However, high-
                      performance organizations in both the private and public sectors recognize
                      that an organization’s people largely determine its capacity to perform.
                      Therefore, the value of the organization is dependent on the value of its
                      people.

                      Enhancing the value of employees is a win-win goal for employers and
                      employees alike. The more an organization recognizes the intrinsic value
                      of each employee; the more it recognizes that this value can be enhanced
                      with nurturing and investment; the more it recognizes that employees vary
                      in their talents and motivations, and that a variety of incentive strategies
                      and working arrangements can be created to enhance each employee’s
                      contributions to organizational performance, the more likely the
                      organization will be to appreciate the diversity of employee needs and
                      circumstances and to act in ways that will make sense in both business
                      and human terms.

                      Self-assessment is the starting point for creating “human capital
Why Should Agencies   organizations”—agencies that focus on valuing employees and aligning
Do Human Capital      their “people policies” to support organizational performance goals. Part
Self-Assessment?      of the impetus for creating human capital organizations comes from the
                      Government Performance and Results Act (GPRA), which requires
                      agencies to pursue performance-based management, including strategic
                                                                                            1
                      planning, results-oriented goalsetting, and performance measurement.

                      Although GPRA gives agencies the impetus for tailoring their human
                      capital systems to their specific missions, visions for the future, core
                      values, goals, and strategies, it is up to the agencies themselves to follow
                      through on the opportunity. If high performance and accountability
                      depend on the three enablers—people, process, and technology—then it is
                      useful, first and foremost, for any agency to have a clear and fact-based
                      understanding of its human capital situation. There is no single recipe for
                      successful human capital management. However, there are a number of
                      human capital elements and underlying values that are common to high-

                      1
                       Executive Guide: Effectively Implementing the Government Performance and Results Act
                      (GAO/GGD-96-118, June 1996).




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                          Preface




                          performance organizations, and federal agencies that seek to comply with
                          the spirit of performance-based management should scan their human
                          capital systems to see if these elements have been addressed.

                          Another advantage to doing a human capital self-assessment is that it will
                          help agency leaders understand the strengths and limitations of their
                          human capital data systems. Any self-assessment should be based—to the
                          extent possible—on valid and reliable data regarding such matters as
                          hiring, diversity, retention, promotions, succession cycles, and
                          performance incentives. (See app. III for a list of useful quantitative
                          measures.) These data can help the agency produce a profile of its human
                          capital, providing useful historical and prospective views. Doing a human
                          capital self-assessment will give agency leaders an idea of the adequacy of
                          the data being collected and of the gaps that may need to be filled.

                          Our approach to self-assessment is based primarily on the two principles,
The Bases for the Self-   mentioned earlier, that are central to the human capital idea: investing in
Assessment Checklist      employees and aligning “people policies” to fulfill the organization’s shared
                          vision. Our approach to self-assessment (1) emphasizes investment in
                          enhancing the value of individual employees and of the agency workforce
                          as a whole; and (2) asks whether the agency has established and clearly
                          defined and communicated a shared vision (i.e., a mission, a vision for the
                          future, core values, goals, and strategies) and aligned its components and
                          systems to support them.

                          These and other related human capital values underlie the framework we
                          have constructed for self-assessment. We drew these values, first, from our
                          work with leading organizations in the private sector and among
                          governments at the state and local levels and abroad. (See “Eight
                          Principles for Managing People,” app. I.) Second, we drew from the
                          Malcolm Baldrige National Quality Award Program and the President’s
                          Quality Award Program. Both awards feature human capital values that
                          are consistent with those we have identified in our work with leading
                          organizations. (See “Baldrige Award and Presidential Quality Award
                          Values,” app. II.)

                          In developing an approach to self-assessment, we drew on other sources
                          as well. These sources included (1) relevant parts of title 5 U.S.C.,
                          “Government Organization and Employees” and 5 CFR , “Administrative
                          Personnel”; and (2) GPRA, along with agency guidance contained in OMB
                          Circular No. A-11.




                          Page 3                                           GAO/GGD-99-179 Human Capital
Preface




We also plan to consult with officials from various federal agencies,
including the Office of Personnel Management (OPM) and the Office of
Management and Budget (OMB), as well as experts from such
organizations as the National Academy of Public Administration (NAPA)
and the Society for Human Resource Management (SHRM).

Just as the government has begun adopting a more businesslike approach
this decade involving financial, information technology, and performance-
based management reforms, it will be necessary to consider what human
                                                                       st
capital approaches will best position the federal government for the 21
century. When enough agencies have assessed their human capital
systems and identified both the opportunities available to them and
whatever barriers may stand in the way of improvement, perhaps a better
consensus will emerge on the needed reforms.

As we have all learned, changing times demand new thinking and new
approaches to the way federal agencies do business. Designing,
implementing, and maintaining effective human capital strategies will be
critical to enhancing the goal of improving the performance and
accountability of government.

We are issuing this discussion draft as a way of seeking further advice and
feedback with which to refine our human capital self-assessment tool. If
you have comments or questions, please direct them to Nancy R.
Kingsbury, Acting Assistant Comptroller General, General Government
Division, at (202) 512-2700 or kingsburyn.ggd@gao.gov.




David M. Walker
Comptroller General
of the United States




Page 4                                          GAO/GGD-99-179 Human Capital
Page 5   GAO/GGD-99-179 Human Capital
Contents



Preface                                                                                         1
                      What Is Human Capital?                                                    1
                      Why Should Agencies Do Human Capital Self-                                2
                        Assessment?
                      The Bases for the Self-Assessment Checklist                               3


Framework for Human                                                                             7
                      The Five-Part Framework                                                   7
Capital Self-         Cross-Cutting Considerations                                              7
Assessment
Strategic Planning                                                                             10
                      Strategic Planning: Establish the Agency’s Mission, Vision               10
                        for the Future, Core Values, Goals, and Strategies


Organizational                                                                                 12
                      Organizational Alignment: Integrate Human Capital                        12
Alignment               Strategies With the Agency’s Core Business Practices


Leadership                                                                                     14
                      Leadership: Foster a Committed Leadership Team and                       14
                        Provide Continuity Through Succession Planning


Talent                                                                                         16
                      Talent: Recruit, Hire, Develop, and Retain Employees                     16
                        With the Skills for Mission Accomplishment


Performance Culture                                                                            18
                      Performance Culture: Enable and Motivate Performance                     18
                        While Ensuring Accountability and Fairness for All
                        Employees


Appendixes            Appendix I: Eight Principles for Managing People                         22
                      Appendix II: Baldrige Award and Presidential Quality                     23
                        Award Values
                      Appendix III: Useful Measures for Human Capital                          25
                        Management




                      Page 6                                          GAO/GGD-99-179 Human Capital
Framework for Human Capital Self-
Assessment

                 Our self-assessment framework has five parts. Each part contains at least
The Five-Part    two key questions for a quick assessment of the agency’s human capital
Framework        policies and practices in the respective area. The questions are followed
                 by suggested sources of information or indicators; not every agency will
                 have these sources on hand, and most of the conclusions that users arrive
                 at can be expected to be somewhat subjective. (See app. III for a list of
                 useful quantitative measures.)

                 The checklist is intended to be a relatively simple diagnostic tool rather
                 than a methodologically rigorous evaluation. It is meant simply to capture
                 senior leaders’ informed views of their agencies’ human capital policies
                 and practices. Users may wish to develop a kind of “status check” of
                 their agency’s human capital situation, in which case they may wish to
                 respond to the questions with answers ranging from “not at all” to
                 “generally not” to “partially” to “generally yes” to “comprehensively (or
                 completely) yes.” However, regardless of whether senior leaders choose
                 to record their views in these terms, the overall picture that emerges
                 through use of the checklist should help them begin a more systematic, in-
                 depth, and continuous effort to evaluate and improve their agency’s human
                 capital systems.

                 The five parts of the human capital framework are as follows:

                 1. Strategic planning: Establish the agency’s mission, vision for
                    the future, core values, goals, and strategies.

                 2. Organizational alignment: Integrate human capital strategies
                    with the agency’s core business practices.

                 3. Leadership: Foster a committed leadership team and provide
                    continuity through succession planning.

                 4. Talent: Recruit, hire, develop, and retain employees with the
                    skills for mission accomplishment.

                 5. Performance Culture: Enable and motivate performance while
                    ensuring accountability and fairness for all employees.



                 Although the self-assessment framework has five parts, certain unifying
Cross-Cutting    considerations should be kept in mind across all five:
Considerations

                 Page 7                                         GAO/GGD-99-179 Human Capital
Framework for Human Capital Self-Assessment




All aspects of human capital are interrelated. The principles of
effectively managing people are inseparable and must be treated as a
whole. Any sorting of human capital issues may have a sound rationale
behind it, but no sorting should imply that human capital issues can be
compartmentalized and dealt with in isolation from one another.

Trust requires transparency. To effectively pursue this shared vision,
the agency must earn the trust of its workforce by involving employees in
the strategic planning process and by ensuring that the process is
transparent—that is, consistently making it clear that the shared vision is
the basis for the agency’s actions and decisions.

Merit principles and other national goals still apply. Performance-
based management does not preclude the merit principles or other
                                            1
national goals, such as veterans preference. A modern merit system will
achieve a reasonable balance among taxpayer demands, employer needs,
and employee interests.

Constraints and flexibilities need to be understood. The purpose of
human capital self-assessment is to help agencies target areas in which to
make changes in support of their organizational missions and other needs.
Agencies that identify areas for improvement need to learn what
                                                                          2
constraints exist that apply to them and what flexibilities are available.

Fact-based human capital management requires data. Federal
agencies typically do not have the data required to effectively assess how
well their human capital approaches have supported results. A more fact-
based approach to human capital will entail the development and use of
data that demonstrate the effectiveness of human capital policies and
practices.

The adoption of best practices requires prudent decisionmaking.
Identifying best practices and benchmarking against leading organizations
are both potentially useful and important pursuits. Federal agencies must
be careful to recognize the unique characteristics and circumstances that
make organizations different from one another and to carefully consider
the applicability of practices that have worked elsewhere.



1
 The Excepted Service: A Research Profile (GAO/GGD-97-72, May 1997); and HRM Policies and
Practices in Title 5-Exempt Organizations (Office of Personnel Management, MSE-98-4, Aug. 1998).
2
    For example, see HR Innovators’ Tool Kit, Office of Personnel Management.




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Framework for Human Capital Self-Assessment




Attention to human capital must be ongoing. Human capital is not a
problem to which management can supply an answer and then move on.
Agencies must continually monitor and refine these approaches to ensure
their ongoing effectiveness.




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Part 1

Strategic Planning


                          High-performance organizations begin by defining what they want to
Strategic Planning:       accomplish and what kind of organization they want to be. They define a
Establish the Agency’s    “shared vision”—i.e., a mission, a vision for the future, core values, goals,
Mission, Vision for the   and strategies—and communicate that shared vision clearly, constantly,
                          and consistently. The agency’s shared vision provides the standard for
Future, Core Values,      assessing the appropriateness and effectiveness of everything the agency
Goals, and Strategies     does. In the area of human capital, for example, the agency should
                          develop strategies to enhance the value of its employees and focus their
                          efforts on the agency’s shared vision. The effect should be in the best
                          collective interests of employer and employees alike: the agency’s
                          capacity to achieve its shared vision will increase, while its employees will
                          benefit from the incentives—tangible and intangible—of working for a
                          high-performance organization

Key Questions             1. Shared vision. Does the agency have a clearly defined and well-
                             communicated “shared vision”—that is, a mission, vision for the future,
                             core values, goals, and strategies by which the agency has defined its
                             direction and its expectations for itself and its people?

                              Look for: A clear and coherent portrayal of the agency’s shared vision
                              in its strategic plan, annual performance plan, or other guiding
                              documents. Guidance on GPRA requirements is available in Executive
                              Guide: Effectively Implementing the Government Performance and
                              Results Act (GAO/GGD-96-118, June 1996); and in Agencies’ Strategic
                              Plans Under GPRA: Key Questions to Facilitate Congressional Review
                              (GAO/GGD-10.1.16, May 1997).

                          2. Human capital focus. Has the agency created a coherent human
                             capital strategy—that is, a framework of human capital policies,
                             programs, and practices specifically designed to steer the agency
                             toward achieving its shared vision—and integrated this strategy with
                             the agency’s overall strategic planning?

                              Look for: Discussions of the agency’s human capital strategies in its
                              strategic plan and annual performance plans or a separate strategic
                              human capital planning document. An indication that agency leaders
                              have given human capital a high priority and involved line managers
                              and appropriate employees at all levels in creating a human capital
                              focus. Established measures that provide meaningful data on the full
                              range of human capital policies and practices and how these practices
                              promote mission accomplishment. An indication that the agency has
                              identified best practices or benchmarked against high-performance
                              organizations with similar missions, and identified the constraints and



                          Page 10                                           GAO/GGD-99-179 Human Capital
Part 1
Strategic Planning




    flexibilities available to it. An evaluation of the agency’s human
    resource information system (HRIS) and its capacity to provide
    relevant and reliable data for fact-based decisionmaking on human
    capital.




Page 11                                         GAO/GGD-99-179 Human Capital
Part 2

Organizational Alignment


                       High-performance organizations choose the best strategies for integrating
Organizational         their organizational components, activities, core processes, and resources
Alignment: Integrate   to support mission accomplishment. Likewise, high-performance agencies
Human Capital          align their human capital systems—from the organizational level down to
                       individual employees—with their strategic and program planning. This
Strategies With the    requires workforce planning that is explicitly linked to the agency’s
Agency’s Core          “shared vision.” It also requires that what has traditionally been called the
Business Practices     “personnel” or “human resources (HR)” function to be an integral part of
                       the top management team. Human capital professionals must have the
                       knowledge and skills to provide effective mission support and to
                       participate as partners with line managers and staff in developing and
                       implementing human capital approaches. Further, line managers who may
                       be given greater decisionmaking authority in the human capital area must
                       be sufficiently prepared and trained to be accountable for their decisions.

Key Questions          1. Workforce planning. Does the agency have an explicit workforce
                          planning strategy, linked to the agency’s strategic and program
                          planning efforts, to identify its current and future human capital needs,
                          including the size of the workforce, its deployment across the
                          organization, and the knowledge, skills, and abilities needed for the
                          agency to pursue its shared vision?

                           Look for: A discussion of workforce planning in the agency’s
                           strategic or annual performance plans or a separate workforce
                           planning document linked to the agency’s strategic and program
                           planning. Information from agency personnel files on such indicators
                           as distribution of employees by pay level, attrition rates, retirement
                           rates and projected eligibility by pay level, and ratios of managers to
                           employees. Indications that the agency has identified the roles and
                           core competencies needed to support its shared vision. An agency
                           skills inventory identifying current and future skills needs and gaps,
                           and including information on skills by demographic cohort. Industry
                           benchmarks in such areas as skills, education levels, and demographic
                           trends.




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Part 2
Organizational Alignment




2. Integrating the “HR” function. Does the agency rely on its
   “personnel,” “HR,” or human capital (HC) professionals to (1)
   contribute a human capital perspective to the agency’s broader
   strategic planning process; (2) provide integrated mission support and
   participate as partners with line managers through facilitation,
   coordination, and counseling; and (3) lead or assist in the agency’s
   workforce planning efforts and develop human capital policies,
   programs, and practices that will help the agency achieve its shared
   vision?

    Look for: Testimonial evidence that personnel, HR, or HC
    professionals were meaningfully involved in developing the agency’s
    shared vision and in aligning the agency’s human capital strategies with
    its strategic and program planning. Indications that the personnel, HR,
    or HC function is appropriately staffed—both in numbers and
    competencies—to partner with others in the agency; sources may
    include industry benchmarks on the size and competencies of their HC
    offices, including the ratio of personnel staff to line employees, or the
    agency’s own skills inventory.




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Part 3

Leadership


                       A committed senior leadership team is essential to fostering an agency’s
Leadership: Foster a   shared vision—i.e., its mission, vision for the future, core values, goals,
Committed Leadership   and strategies—aligning organizational components so that the agency can
Team and Provide       best pursue this vision and building a commitment to the vision at all levels
                       of the organization. To become a high-performance organization, an
Continuity Through     agency needs senior leaders who are drivers of continuous improvement
Succession Planning    and whose styles and substance are in accord with the way the agency
                       sees its mission and its own character. To create a workforce that shares
                       this vision and is aware of the contribution that each employee can and
                       must make toward achieving it, the agency’s senior leaders must work as a
                       team to convey a clear and consistent portrayal of this vision throughout
                       the organization through their words and deeds and the example they set.
                       Political appointees and career managers may bring differing values to the
                       team, but they must work at building mutual understanding and trust and
                       at committing themselves to a shared set of goals for their agency. These
                       goals can take years to achieve, so the agency must have a succession
                       planning strategy that ensures a sustained commitment and continuity of
                       leadership even as individual leaders arrive or depart.

Key Questions          1. Defining leadership. Has the agency defined the kind of leaders it
                          wants (i.e., their roles, responsibilities, attributes, and competencies)
                          and the broad performance expectations it has for them in light of the
                          agency’s shared vision?

                           Look for: An explicit alignment of leaders’ performance standards
                           with the agency’s shared vision, as contained in SES contracts or other
                           performance agreements between the head of the agency and top
                           executives. Indications that the agency uses its leadership standards
                           when making hiring and executive development decisions. Also,
                           industry benchmarks for executive-level performance management at
                           organizations with similar missions and circumstances.

                       2. Teamwork and communications. Do senior leaders pursue an
                          explicit strategy to build teamwork, communicate the agency’s shared
                          vision in clear and consistent terms to all levels of the organization,
                          and receive feedback from employees?

                           Look for: Efforts by the agency’s senior leaders to build teamwork,
                           reinforce a shared vision for leading the agency, and integrate political
                           and career leaders into a cohesive leadership team. A formal
                           agencywide communications strategy, including opportunities for
                           feedback from new, existing, and exiting employees. Results of focus
                           groups or employee surveys.



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Part 3
Leadership




3. Ensuring continuity. Does the agency take steps to ensure
   continuity of leadership through executive succession planning?

    Look for: A formal succession plan, or a discussion of succession
    planning in other agencywide strategic or human capital planning
    documents, that includes a review of its current and emerging
    leadership needs in light of its strategic and program planning and
    identifies sources of executive talent both within and outside the
    agency. Investments in an executive development program that
    includes planned developmental opportunities, learning experiences,
    and feedback for executive candidates. Selection criteria for executive
    candidates that are specifically linked to the agency’s shared vision and
    the competencies and broad expectations it has for its leaders.
    Information from personnel files on the attrition rates, retirement
    eligibility, and retirement rates for its executives. Statistics on the
    percentage of leaders brought in through external recruitment or
    promoted internally. Evidence that the agency has an active executive
    development program, supported by agency leaders through such
    means as mentoring and shadowing and making use of opportunities
    such as the Presidential Management Intern Program and the Federal
    Executive Institute.




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Part 4

Talent


                         A high-performance organization demands a dynamic, results-oriented
Talent: Recruit, Hire,   workforce with the talents, multidisciplinary knowledge, and up-to-date
Develop, and Retain      skills to enhance the agency’s value to its clients and ensure that it is
Employees With the       equipped to achieve its mission. Because mission requirements, client
                         demands, technologies, and other environmental influences change
Skills for Mission       rapidly, a performance-based agency must continually monitor its talent
Accomplishment           needs. It must be alert to the changing characteristics of the labor market.
                         It must identify the best strategies for filling its talent needs through
                         recruiting and hiring and follow up with the appropriate investments to
                         develop and retain the best possible workforce. Its compensation and
                         benefits programs, workplace facilities, and work/family arrangements
                         should be viewed from the perspective of how well they help the agency
                         compete for and retain the best talent available and then get the best
                         mission performance from that talent. In addition, this talent must be
                         continuously developed through education, training, and opportunities for
                         continued growth. The agency must match the right people to the right
                         jobs and, in the face of finite resources, be prepared to employ matrix
                         management principles, maintaining the flexibility to redeploy its human
                         capital and realigning structures and work processes to maximize
                         economy, efficiency, and effectiveness. Structures and work arrangements
                         must be fashioned to avoid stovepiping (or “siloing”) and draw upon the
                         strengths of the various organizational components. Cross-functional
                         teams, including “just in time teams” and “virtual teams” whose members
                         may not work in the same physical location, can be used as a flexible
                         means of focusing talent on specific tasks.

Key Questions            1. Recruiting and hiring. Does the agency have a recruiting and hiring
                            strategy that is targeted to fill short- and long-term human capital
                            needs and, specifically, to fill gaps identified through its workforce
                            planning efforts?

                             Look for: A formal recruiting and hiring plan or discussion of
                             recruiting and hiring in other agencywide strategic or human capital
                             planning documents. An explicit link between the agency’s recruiting
                             efforts and the skills needs it has identified. An active recruiting
                             program, featuring the involvement of senior leaders and line
                             managers. Indications from managers that recruits are of high quality
                             and are being brought on board in a timely fashion. Statistics from
                             agency files on the average time taken to recruit and hire; comparable
                             industry benchmarks. Evidence that agency leaders are actively
                             overseeing recruiting and hiring programs to ensure fair and unbiased
                             hiring; demographic statistics on the the agency’s diversity profile over
                             time.



                         Page 16                                           GAO/GGD-99-179 Human Capital
Part 4
Talent




2. Training and development. Does the agency make appropriate
   investments in education, training, and other developmental
   opportunities to help its employees build the competencies needed to
   achieve the agency’s shared vision?

    Look for: A formal training and professional development strategy or
    a discussion of training and development in other agencywide strategic
    or human capital planning documents. Individual development plans
    for employees at all levels. An explicit link between the agency’s
    training offerings and curricula and the competencies identified by the
    agency for mission accomplishment. Testimonial evidence from
    employees that training and professional development are encouraged
    and that the available training is relevant and rewarded. Percentage of
    agency’s operating budget spent on training; comparable industry
    benchmarks.

3. Workforce deployment. Is the deployment of the agency’s
   workforce appropriate to mission accomplishment and keyed to
   efficient, effective, and economic operations?

    Look for: A discussion of workforce deployment in the agency’s
    workforce plan or other strategic planning documents, with decisions
    based on ensuring that the workforce is deployed appropriately—both
    geographically and organizationally—to support organizational goals
    and strategies. Indications that the agency makes flexible use of its
    workforce, putting the right employees in the right roles according to
    their skills, and relying on staff drawn from various organizational
    components and functions and using “just-in-time” or “virtual” teams to
    focus the right talent on specific tasks.




Page 17                                         GAO/GGD-99-179 Human Capital
Part 5

Performance Culture


                       High-performance organizations foster a work environment in which
Performance Culture:   people are enabled and motivated to contribute to continuous learning and
Enable and Motivate    improvement and mission accomplishment and that provides both
Performance While      accountability and fairness for all employees. A high-performance agency’s
                       approach to its workforce is inclusive and draws on the strengths of
Ensuring               employees at all levels and of all backgrounds. It maintains a workplace in
Accountability and     which honest two-way communications and fairness are a hallmark,
Fairness for All       perceptions of unfairness are minimized, and workplace disputes are
Employees              resolved by fair and efficient means. High-performance organizations also
                       have a holistic view of employees as key stakeholders, realizing that a
                       variety of services, facilities, activities, and opportunities can be
                       meaningful to employees and enhance their loyalty and commitment. A
                       commitment to continuous learning and improvement can help an agency
                       to not only respond to change, but to anticipate change, create new
                       opportunities for itself, and pursue a shared vision that is ambitious and
                       achievable. Incentives are particularly important in steering the workforce;
                       they must be results-oriented, client-based, realistic, and subject to
                       balanced measures that reveal the multiple dimensions of performance.
                       Incentives should be part of a performance management system under
                       which employees’ performance expectations are aligned with the agency’s
                       mission and in which personal accountability for performance is
                       reinforced by both rewards and consequences. Because agencies are
                       increasingly technology-driven and knowledge-based, high-performing
                       agencies ensure that their employees have the right information
                       technology resources to do their work and to gather and share
                       information.

Key Questions          1. Performance management. Is the agency’s performance
                          management system designed to steer the workforce toward
                          embodying and effectively pursuing the agency’s shared vision?

                           Look for: A description in the agency’s personnel policy manual or
                           other documents of the design and intent of its performance
                           management system, with explicit linkage to the agency’s shared
                           vision; a reflection of varied performance considerations, such as
                           client demands, resource limits, technology use, and level of individual
                           effort; and explicit performance-based rewards and consequences.
                           Descriptions of the agency’s means of aligning employees’
                           performance expectations with the agency’s mission, goals, and
                           strategies; of establishing valid, reliable, results-oriented measures of
                           individual and group performance; and of providing ratings and
                           feedback that meaningfully differentiate among performers and
                           provide the basis for effective performance incentives. Indications that



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Part 5
Performance Culture




    nonperformers are held accountable and that agency leaders support
    managers and supervisors who give employees frank and constructive
    feedback on performance and take performance actions where
    appropriate. Copies of evaluation forms for employees at various
    levels and positions. Analyses of data (mean, mode, and standard
    deviation) drawn from agency records or from the Civilian Personnel
    Data File of agency performance ratings. Feedback from managers
    and staff on the meaningfulness and effectiveness of the performance
    management system and its return on investment.

2. Performance incentives: Are meaningful performance incentives in
   place to support the performance management system?

    Look for: Performance incentives operating at the organizational,
    team, and individual levels. Indications that incentives are clearly and
    meaningfully linked to the performance management system and that
    incentives are results-oriented, client-based, realistic, and subject to
    balanced measures that reveal the multiple dimensions of
    performance. Feedback from managers and employees on the equity,
    adequacy, and effectiveness of the agency’s performance incentive
    system. Data on the agency’s investments in bonuses, spot awards,
    and other tangible incentives over time; benchmarking against high-
    performance organizations with similar missions and circumstances.

3. Continuous learning and improvement. Does the agency
   encourage and motivate employees to contribute to continuous
   learning and improvement?

    Look for: An explicit statement in the agency’s strategic plan or other
    documents of the value placed on employees and the importance of
    continuous learning and improvement. Training and mentoring
    programs specifically aimed at promoting continuous learning and
    improvement. Ongoing opportunities, such as employee suggestion
    programs, for employees to contribute their views on the shared vision
    and how to achieve it, including innovative ideas and process
    improvements. Indications that agency leaders act on employees’
    suggestions. Feedback from employees on their perceptions of the
    organization. Encouragement by leadership of benchmarking high-
    performance organizations as part of a continuous scan of the
    environment.




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Performance Culture




4. Managers and supervisors. Are managers and supervisors expected,
   prepared, and trained to help steer the workforce toward the pursuit of
   the agency’s shared vision?

    Look for: Indications drawn from managerial and supervisory
    position descriptions and performance evaluations that selections,
    promotions, and performance evaluations are based to a significant
    extent on the human capital competencies needed to support the
    agency’s shared vision. Availability of and requirements for training in
    legal responsibilities of supervisors and “people skills,” such as
    employee motivation and conflict avoidance and resolution. Feedback
    from employees, including 360-degree appraisals where appropriate,
    on the extent to which managers and supervisors show leadership in
    support of the agency’s shared vision and for motivating and enabling
    all employees to pursue it.

5. Structures, processes, and job support. Are organizational
   structures, job processes, workplace facilities, tools, work
   arrangements, and other resources and opportunities appropriately
   tailored to help employees effectively, economically, and efficiently
   pursue their work?

    Look for: Indications that decisions involving new organizational
    structures, core business processes, contracting decisions, resource
    allocations, and flexible working arrangements have been made with
    the goal of improving mission accomplishment.

6. Information Technology. Are employees making the best use of
   information technology to perform their work and to gather and share
   knowledge?

    Look for: The agency’s information technology plan, with emphasis
    on the alignment of the agency’s information technology programs
    with its mission, goals, and strategies. Feedback from employees that
    they have the opportunity, incentives, support, and training to make
    the appropriate use of technology to do their work and to acquire and
    share knowledge. Data on the agency’s investments—financial and
    human—in information technology over time and analysis of the return
    on these investments in terms of economy, efficiency, and service
    delivery. Benchmarking against organizations with similar missions,
    tasks, and service requirements.




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Performance Culture




7. Inclusiveness. Does the agency maintain an environment
   characterized by inclusiveness and diversity of styles and personal
   backgrounds and that is responsive to the needs of diverse groups of
   employees?

    Look for: A written diversity policy or discussion of diversity in the
    agency’s human capital plan or other documents. Training for staff in
    team building and conflict avoidance and resolution. Employee
    feedback on the tolerance and encouragement of diverse styles and
    personal backgrounds in the workplace and on perceptions of unequal
    treatment. Statistics on grievances and EEO complaints and findings
    over time. An alternative dispute resolution (ADR) program to help
    resolve workplace conflicts and lessen the incidence of formal EEO
    complaints.

8. Employee and labor relations. Are relations between the agency’s
   workforce and its management grounded in a mutual effort to achieve
   the agency’s shared vision?

    Look for: Feedback from employees on their commitment to the
    agency’s shared vision and their views of management’s efforts at
    communication and coordination. If the agency has collective
    bargaining agreements, feedback from managers, union
    representatives, and other employees on the extent to which they are
    in mutual agreement over the agency’s shared vision and means of
    achieving it.




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Appendix I

Eight Principles for Managing People


               In April 1995, GAO sponsored a 2-day symposium of 32 leaders from
               leading private sector organizations and governments at the state and local
               levels and abroad to discuss their approaches toward managing people—
               the principles they employed, the changes they had made, and the lessons
                                 1
               they had learned.

               According to many of the symposium participants, the demand for faster,
               cheaper, and better service delivery led their organizations to develop new
               and more flexible ways of managing people. On the basis of the
               symposium proceedings, GAO discerned eight interrelated principles
               common to these organizations:

               1. Value people as assets rather than as costs.

               2. Emphasize mission, vision, and organizational culture.

               3. Hold managers responsible for achieving results instead of
                  imposing rigid, process-oriented rules and standards.

               4. Choose an organizational structure appropriate to the
                  organization rather than trying to make “one size fit all.”

               5. Instead of isolating the “personnel function” organizationally,
                  integrate human resource management into the mission of the
                  organization.

               6. Treat continuous learning as an investment in success rather
                  than as a cost to be minimized.

               7. Pursue an integrated rather than an ad hoc approach to
                  information management.

               8. Provide sustained leadership that recognizes change as a
                  permanent condition, not a one-time event.

               As GAO reported at the time, the sense of the symposium participants was
               that the eight principles should be treated as a whole and that effective
               human resource management and effective business practices are
               inseparable.


               1
                Transforming the Civil Service: Building the Workforce of the Future—Results of A GAO-Sponsored
               Symposium (GAO/GGD-96-35, Dec. 20, 1995)




               Page 22                                                       GAO/GGD-99-179 Human Capital
Appendix II

Baldrige Award and Presidential Quality
Award Values

               The Malcolm Baldrige National Quality Award is given annually to
               recognize U.S. private sector organizations for performance excellence.
               The award promotes (1) awareness of performance excellence as an
               increasingly important element in competitiveness and (2) information
               sharing of successful performance strategies and the benefits derived from
               using these strategies. The Department of Commerce’s National Institute
               of Standards and Technology (NIST) manages the Baldrige Award
               program.

               The President’s Quality Award Program (PQA) is administered by the
               Office of Personnel Management. The program was created in 1988 and
               includes two awards: the Presidential Award for Quality and the Award for
               Quality Improvement. It was designed to recognize federal organizations
               that have documented high-performance management systems and
               approaches.

               Annually, each award program produces a set of criteria for applicants
                                                 1
               based upon a set of core values. The PQA, which is based on the Baldrige
               Award concept, features the same criteria, with relatively minor
               modifications to fit the federal sector context. These values include:

               1. Customer-driven quality

               2. Leadership

               3. Continuous improvement and learning

               4. Valuing employees

               5. Fast response

               6. Design quality and prevention

               7. Long-range view of the future

               8. Management by fact

               9. Partnership development


               1
                Baldrige National Quality Program, “1999 Criteria for Performance Excellence,” National Institutes of
               Technology; and The President’s Quality Award Program, “2000 Information and Application,” Office of
               Personnel Management.




               Page 23                                                          GAO/GGD-99-179 Human Capital
Appendix II
Baldrige Award and Presidential Quality Award Values




10. Public responsibility and citizenship

11. Results focus




Page 24                                                GAO/GGD-99-179 Human Capital
Appendix III

Useful Measures for Human Capital
Management

                        Agencies that want to assess and make fact-based decisions involving their
Useful Measures for     human capital may look at a variety of quantifiable data, including, but not
Human Capital           limited to, those listed below. Agency leaders may want to determine
Management              whether human capital data such as these are available, how frequently
                        they are updated, and whether they are used for planning and
                        decisionmaking.

                      • Size and shape of the workforce, including, but not limited to: the
                        distribution of employees by pay level, attrition rates, retirement rates and
                        projected eligibility by employee pay level, and ratio of managers to
                        employees.
                      • Attrition rates, retirement rates, and projected retirement eligibility of
                        agency leaders.
                      • Skills inventory, including, but not limited to: current and potential gaps in
                        skills, distribution of skills by demographic cohort, and level of education
                        of the workforce.
                      • Data on the dispersal of performance appraisal ratings, such as the mean,
                        mode, and standard deviation of scores.
                      • Average time required to fill vacancies.
                      • Acceptance rates among job candidates to whom positions are offered.
                      • Data on the number, size, and costs of bonuses, incentives, and other
                        awards.
                      • Data from employee satisfaction surveys and focus groups.
                      • Data from exit interviews.
                      • Information technology expenses, such as equipment costs, contractor
                        support, upgrades, and training.
                      • Statistics on grievances, EEO complaints, and findings over time.
                      • Number of cases handled and/or resolved via alternative dispute resolution
                        (ADR) programs.
                      • The agency’s total human capital cost in dollars and as a percentage of
                        total operating budget.
                      • Percentage of operating budget spent on recruitment.
                      • Costs of promotions, grade increases, and with-in grade increases.
                      • Percentage of operating budget spent on training and the amount per
                        employee.

                        In addition to reviewing internal data, agencies may find it useful to
                        benchmark their human capital data against those of high-performing
                        public and private sector organizations with comparable missions and
                        circumstances.




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