oversight

Employment Service: Leadership Needed to Improve Performance

Published by the Government Accountability Office on 1990-10-16.

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

                       U&d      Shhtes General Accounting Once
                       Testimony




For Release            Employment       Service:        Leadership
on Delivery            Needed     to   Improve     Performance
Expected     at
9:30 a.m. EDT
Tuesday
October     16, 1990


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                       Statement  of
                       Franklin  Frazier,    Director
                       Education  and Employment             Issues
                       Human Resources    Division


                       Before    the
                       Subcommittee     on Efnployment          Opportunities
                       Committee     on Education   and         Labor
                       House of Representatives




GAO/T-HRD-91-4
                                                                                GAO Form 160 (1 z/87)
                   S-Y     OF TESTIMONY BY F'RANKLIN FRAZIER
                     ON THE NEED FOR LT3ADERSHIP TO IMPROW
                        EMPLOYMENTSERvICEPERFORMANCE

An effective       labor exchange system enhances economic productivity
by facilitating        entry into the job market and the matching          of
workers with jobs.           The federal  government,   in partnership     with
states,     supports    this process through     a network of 1,700
Employment Senrice          (ES) offices.   In recent years,     the Department
of Labor has given state governments            broad authority     to implement
ES programs in ways that best meet community needs.
ES PLACEMENT PERFORMANCEVARIES DRAMATICALLY As GAO previously
reported,      Employment Service        placement     performance    varies
dramatically        across states      and local   offices.       For example,     some
local    offices      placed over a third      of their      job seekers,    while
other offices         found jobs for less than 10 percent            of the job
seekers using their          services.      The variance       in ES performance     was
not random, but was related,             at least    in part,     to state   and local
practices      within     the control    of ES managers.
STATE AND Ix)CAL PRACTICES RELATED TO ENHANCED ES PERF'ORMANCE
State management practices               associated       with better       performance
included    setting     measurable        performance         goals and providing
incentives     to recognize        local     office      achievements:       and conducting
frequent    on-site     monitoring        of local       offices.        GAO also found
certain    aspects of local          office      operations       improved performance
including,     attentiveness         to employer and applicant               needs,
extensive    interaction       with the JTPA program,                and separation     of ES
and local Unemployment           Insurance        office      functions.       However, many
state and local        ES programs have not adopted these or similar
practices.
LIMITED FEDERAL OVERSIGHT AND ASSISTANCE The Department                       of Labor,
in partnership      with the states,          is responsible     for ensuring       that ES
operates   an effective         labor exchange system.         However, Labor has
found it difficult        to balance its oversight           needs against      its
concern to limit       federal      intrusion     into state affairs.       Currently,
Labor's   oversight      activities       provide    little  substantive    information
about how states manage their               ES programs and how local       offices
operate.
While ES programs in some states        have flourished      without              federal
assistance,   wide variations     in local   office   performance               indicate
that some states    may need Labor's     help to improve the
effectiveness    of their   programs.
Labor needs to increase          its leadership      role to encourage poor
performing    states    to adopt practices        such as those identified            in
our analysis.       Labor could accomplish         this by working        proactively
with the states      to obtain      and analyze additional         information       on ES
performance     and factors      associated    with variations        in performance,
increasing    technical      assistance,    and more actively         sharing
information     on effective       state and local      practices.
Mr.   Chairman   and Members of the      Subcommittee:

We are pleased to be here today to discuss           our work on the U.S.
Employment Service       (ES) basic labor exchange program that is
federally   funded and principally      administered    by the statesI.
Given that the Department       of Labor has recently     requested    comments
on the appropriate      role for the Employment Service,       it seems even
more important     that your Committee review the role of the
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Employment Service      at this time.

As we reported        to you in 1989*, there is wide variation       in how
well states       and the 1,700 local ES offices      perform   the basic ES
program objective        of placing  individuals   in jobs.     For example,
200 local     offices    found jobs for one of every three people that
sought ES assistance,         while 200 other offices     found jobs for less
than one in ten job seekers.           Similarly,  we found that about 400
local   offices     placed most people in temporary       jobs, while another
400 offices      placed 3 out of 4 in permanent jobs.

As requested      by your Subcommittee,       we examined (1) factors
influencing     the wide variations      in local ES office       placement
performance3      and (2) the Department       of Labor's    management
practices.      For our study, we used regression          and other
statistical     analyses    and held discussions     with about 40 employers
to identify     factors   influencing    ES placement     performance.      We also
collected    information      on Labor's   program oversight      and technical

1 The Employment Service also performs          numerous other
functions,   such as administration       of the Unemployment   Insurance
work test,   certification    for the Targeted     Jobs Tax Credit
program,   and administration     of Alien Labor Certification.
* See Emnlovment Senrice:
Performance      (GAO/HRD;89-116BR,    Aug. 3, 1989) and mlovment
Service:    Preliminarv:Analvsis      of Policies and Practices   Related
to Performance       (GAO/T-HRD-90-5,   Oct. 31, 1989).
3 We measured program performance      by 3      indices:   1) placement
rate,   2) permanent placement  rate-- the       percentage   of placements
expected to last over 150 days, and 3)           placement   wage ratio--the
average placement    wage as a percentage        of the average community        wage.
assistance   at the national         office   and four regional    offices        --
Atlanta,   Boston, Chicago,         and Dallas   -- covering    25 states.

In summary,   we found       the   following:

--   State management practices        were associated       with local    office
     placement   performance.     Better    performance      occurred    when
     states   set measurable    goals,   provided     performance     incentives
     and conducted     frequent  on-site    monitoring.

--   Certain    local    office    practices also were associated           with
     better    performance.        Increased attentiveness        to employer and
     applicant      needs, more extensive      interaction       with the Job
     Training     Partnership      Act (JTPA) program,       and greater      ES
     separation      from the local Unemployment          Insurance    office
     resulted     in better     performance.

IS
     The Department       of Labor in partnership             with the states   is
     responsible     for ensuring     effective         labor exchange operations,
     but current    Labor management,         information         and technical
     assistance    activities     provide     little       help to state and local
     offices    to improve ES placement            performance.



SOME STATE PRACTICES IMPROVED ES PERFORMANCE

Some local   offices  were clearly              stronger    performers  and these
offices  tended to be concentrated                 in states    that adopted program
management strategies     that

--   set measurable         program performance    goals and provided            perfor-
     mance incentives          to recognize  local  office'achievements,             and

--   included    frequent      on-site     monitoring      to evaluate   local    office
     performance.


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                                                                                              F


     For example,    in areas of high unemployment,     local     office
     performance   was almost 40 percent higher      in states     that adopted
     both of these program management practices,        compared to local
     offices   in states   that did not adopt either    practice.

                                        .       .
           Performance      croals and incentives

     Several     state officials       told us that performance         goals provide     a
     focus or direction         for ES staff.        Performance   incentive     programs
     that reward local         offices     for achieving    measurable     goals further
     reinforce      results.      We found that local       office   performance     was
     about 17 percent        higher    in states     that provided    performance
     incentives,       compared with states        that did not use them.

           $%-site     monitorinq

Many state officials        told us that on-site      monitoring      visits     are
critical    to achieving      high performance.      They said that such
visits   instill   staff   with the importance       placed on performance           and
provide    an opportunity       for state and local     staff    to exchange
views.     Our analysis    showed that local     office      performance     was
about 38 percent      higher      in states that visited      most local     offices
each year.                                                                                    i
                                                                                              :i

1           0                                                        E

We also found certain    aspects of local    office                 operations     that
increased  placement  performance,  including

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           increased     attentiveness        to employer     and applicant      needs,

-c
           more extensive       interaction      with    the JTPA program,       and

-a
           greater     ES autonomy       from the    local   Unemployment     Insurance
           office.


                                                 3
        attentiveness      to emdover                 .
                                            and aoolicant        needs


High performing        local    offices had better      communication       with
employers,       more individualized     attention      for jobseekers        applying
for ES services,         and job placement     services      that facilitated         the
referral      process.     In addition,   offices      performed    better     when
local    office    managers were extensively         involved     in services       for
employers       and applicants.

Employers         said that ES offices        that had a clear sense of
employers'         needs were more likely          to refer    applicants      that met
their     job requirements.           We found offices        performed     better    when
staff     spent a significant          amount of time calling           employers,
writing       letters    and visiting      employers     to solicit      job openings.
For example,          the permanent job placement           rate was about 12 percent
higher      in local     offices    that spent substantial           time on these
activities,          compared to local      offices    where staff       spent little      time
with employers.

State officials      told us that one-on-one         interviews     also facilitate
the match between applicants           and employer job requirements,            because
they yield     more complete     information      on applicant     skills   and
interests.      We found that high performing           ES offices      were more
likely     to conduct individual       interviews    with job seekers       when they
apply for ES services.

Employers  said that   quick applicant          referral  is essential.
Providing  job seekers    direct     access to job information          and using
computers  to match applicant        skills     and employer  job requirements
can speed up the referral        process.       We found these practices
improved local  office   placement        performance.

Local   office   performance     was higher when local     office    managers
were more involved       with employers     and job seekers.      For example,
when local   office     managers were extensively     involved     in ES client
services,  the local      office   placement   rate was about 43 percent

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higher   than offices   with little     manager involvement.      As one state
ES director     told us, increased    involvement      can give managers a
better   understanding   of how their     local   offices   can best meet their
client   needs.

      Involvement      with   the JTPA Pro&q

Extensive       interaction       with the JTPA program was associated             with
better     local     office    performance..         ES needs to have a ready pool of
applicants        to meet the skill           requirements    for job openings;      and
several      state officials         said that JTPA provides         employers    with a
pool of job ready individuals.                    We found that local     offices    with
extensive       interaction      with the JTPA title          II-A program4 had an 11
percent      higher      local  office      placement     wage ratio  compared with
offices     having little         interaction        with this JTPA program.

      SeDaration     of ES and Unemplovment          Insurance
      office   functions

Employers     said that people often think          of ES as an "unemployment"
office   that provides       compensation     to laid off workers.          As a
result,    they said some people do not think            of ES as a place to
find a job.       In addition,    during periods       of rising   unemployment,
when ES offices      are co-located       with the Unemployment      Insurance
office,    ES staff   may be reassigned         to process benefit     claims
rather  than help people find jobs.

We found that ES offices       separated    from the Unemployment       Insurance
office  had better    local ES office     placement      performance.     From a
public  relations   viewpoint,     this separation       recognizes   ES as the
"employmentB' rather     than llunemploymentM     office.       This may make the
office  appear more attractive        to employers     and job seekers.


4 JTPA Title       II-A is the largest    single       program under JTPA
atid provides    job training    and employment        assistance primarily        to
disadvantaged      adults   and youth.

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JJMITED FEDERAL OVERSIGHT

The Department     of Labor in partnership    with the states    is
responsible    for ensuring   that the Employment Service     provides an
effective   labor exchange system.       Labor oversees state ES programs
bY

--     approving    state program plans consisting             of goals and
       descriptions      of how states will provide           basic labor exchange
       activities,     and                                                                    1

--     assessing  state      and local program        operations    through     on-site
       program reviews       and the collection        of quarterly     data    on state
                                                                                              1
       program activities       and performance.                                              I

However, Labor has found it difficult             to balance its needs to know
about state ES programs against          its concern to limit            federal
intrusion    into state affairs.       Currently,        Labor's    oversight
activities     provide   little  substantive      information       about how states
manage their      ES programs and how local         offices     operate.

       State Dlans Provide        limited
       proqram information

Each year, states         submit program plans to Labor for review and
approval.      Federal and state officials                 described     these plans as
 Itsketchy   and lacking     substance";          and little      understanding    of state
program strengths         or weaknesses is gained from the plans.                   For
example,     ES regulations         require     program "goals or objectives"           in
each state plan, but plans may include                     only broad program mission
statements     without     measurable       goals.      Plans must also describe
basic labor exchange activities,                  such as how the "...match         between
jobseekers     and employers         will   be facilitated."           But again,   these
descriptions      provide    little       specific    information       on how states plan
to carry out program activities.


                                            6
      Shallow    procram   reviews

Labor's     annual on-site      reviews of state ES activities
focus only on compliance           issues.   For example, the reviews assess
whether states provided          basic labor exchange activities     to
applicants      and employers      needed to meet minimum federal
requirements.       However,     these reviews do not assess the quality     or
effectiveness      of these     activities.

Many Labor and state officials           told us that the reviews have been
a meaningless      exercise.      The review process seldom identified
state or local      offices    with performance    problems or uncovered
program activities        needing improvement.

One Labor regional          office,     on its own initiative,       used ES
compliance      reviews as a springboard          for gathering      qualitative
information       on state management practices            and local   operations.
It tried    this new approach in two states              and found that it helped
identify     innovative      program operations       and prompted positive
discussions      on how states        and local offices      could improve program      I


performance.        While Labor is considering           changes in the review
process to address more substantive              issues,      such as program quality
and outcomes,        little    progress    has been made in this effort.

Quarterly    state reports    provide   another vehicle   for learning      about
ES programs.      However, the usefulness      of these reports    as a
monitoring    tool is limited     because they only provide     state-level
data on ES activities      and performance.                                                 I




LABOR PROVIDES LITTLE ASSISTANCE TO HELP STATES
IMPROVE ES PERFORMANCE

For almost a decade, states      have had broad authority            to implement
ES programs in ways that best meet community needs.                  While program
performance  in some states    flourished      without federal         assistance,
other states   have not performed      as well.

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For example,     as I mentioned      earlier,    some states        established
measurable     goals and provided       performance      incentives,        and
conducted    frequent   on-site     monitoring    visits      to local      offices.
These states     had significantly        higher placement        performance        than
states   that did not do these things.            However, only 9 states               have
adopted these program management practices.                   Similarly,        many local
offices    do not operate      in ways that enhance their             program
performance.       For example, about a third          of the local         offices     did
not allow job seekers direct          access to information             on most job
openings and a quarter        still   used a manual,        instead      of an
automated job matching        technique.

Several    state officials         told us that more and/or better             technical
assistance      is needed.        This could encourage poor performing               states
to adopt better        practices.       Regions provided       some assistance        to
states,    for example through meetings             or informal      contacts,     but
additional      assistance      is needed.     Regional     staff    often lacked
specific    knowledge of ES operations            to provide      quality    assistance
because of limited         contact     with state and local        offices.       We also
found that a lack of resources              impeded Labor's       ability    to provide
technical     assistance.




Mr. Chairman,         it is clear that the Congress sought to improve ES
operations      by providing       state and local    offices       more
responsibility          for developing    and implementing       programs to meet
community needs.            However, under the current         approach,   performance
varies    considerably        among states   and local     offices.      Some states
and local      offices     have adopted practices      to improve placement
performance,        while others have not utilized          such practices.

We believe    Labor is in a unique position      to help states  and local
offices    adopt practices    that improve performance   without  impinging
on state and local      responsibilities.   To do so, Labor should

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increase   its leadership      role by working     proactively        with the states
to obtain    and analyze additional      information      on ES performance       and
factors   associated     with variations    in performance,         increasing
technical    assistance,     and more actively     sharing     information     on
effective    state and local practices.

Mr. Chairman,  that concludes        my prepared  statement. I will          be
happy to answer any questions         you or other members of the
Subcommittee  may have.




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