oversight

Opportunities Exist to Improve Hiring and Retaining Employees With Information Technology Expertise

Published by the Office of the Treasury Inspector General for Tax Administration on 2021-06-02.

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

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION




     Opportunities Exist to Improve Hiring and Retaining
      Employees With Information Technology Expertise


                                  June 2, 2021

                    Report Number: 2021-20-028




              TIGTACommunications@tigta.treas.gov | www.treasury.gov/tigta   1
                     HIGHLIGHTS: Opportunities Exist to Improve Hiring and Retaining
                             Employees With Information Technology Expertise
                        f
Final Audit Report issued on June 2, 2021        f                          Report Number 2021-20-028

Why TIGTA Did This Audit              What TIGTA Found
As of May 2020, the Information       The Office of Personnel Management states that, to help ensure the
Technology organization had           most efficient and effective means of mission accomplishment,
7,237 employees compared to           agencies should incorporate strategies for employee recruitment,
7,042 employees in July 2015, an      retention, and training and development. The Human Capital Office
increase of 195 employees. In         reports on mission-critical skill gaps that can be accessed by
May 2020, the IRS reported that       front-line managers. However, not all Information Technology
50.2 percent of the Information       organization managers review the skill gap reports. TIGTA reviewed
Technology organization’s             skill gap reports for 335 individuals hired during Fiscal Year 2020 and
workforce is eligible to retire       determined that 281 (84 percent) have deficiencies in one or more
within the next three years, which    mission-critical skills for their position and only 54 (16 percent) have
could create a significant            no mission-critical skill gaps. Of the 335 individuals, 82 (24 percent)
knowledge and experience gap.         have deficiencies in all of the mission-critical skills for their position.
                                      Skill gap mitigation reports summarize skill gaps at the Information
Hiring and retaining a workforce
                                      Technology organization function level and outline how the functions
with the appropriate information
                                      need to address deficiencies (e.g., through training), by level of
technology skillsets is critical to
                                      importance. However, the Information Technology organization
ensure that modernization efforts,
                                      does not require all of its functions to participate in skill gap
technology upgrades, and system
                                      mitigations.
maintenance are completed on
schedule.                             Individuals access job announcement templates when applying
                                      online for an IRS position. Job announcement templates are
This audit was initiated to
                                      sufficiently detailed to target the job skills necessary for the positions
evaluate the IRS’s efforts to hire
                                      and are reviewed timely. In addition, the Information Technology
and retain skilled Information
                                      organization primarily used surge hiring as a strategy along with
Technology organization
                                      direct-hire authority to fill 2,427 positions from Fiscal Years 2017
personnel.
                                      through 2019. During this time, applicant interviews were not
Impact on Taxpayers                   performed. Finally, the Information Technology organization does
A decline and turnover in             not administer hiring assessments whereby an applicant must
Information Technology                demonstrate his or her job qualifications.
organization staffing could lead      The IRS retention strategy focuses on employee engagement and
to gaps in addressing system          includes a retention incentive policy that the Information Technology
security issues, performing           organization used twice in the last six years. Within the next
necessary system maintenance          three years, 619 information technology employees with expert-level
and upgrades, and developing          skills are eligible to retire.
modernized tools and systems to
                                      What TIGTA Recommended
enhance the taxpayer experience
and improve operational               The Chief Information Officer should develop policies and procedures
efficiency.                           to ensure that mission-critical skill gap reports are reviewed by
                                      managers to address training needs and that all Information
                                      Technology organization functions participate in skill gap mitigations;
                                      ensure that interview and hiring assessments are performed on all
                                      potential employees; and consider using retention incentives when
                                      an employee with unusually high or unique qualifications would be
                                      likely to leave Federal service, significantly affecting the mission.
                                      The IRS agreed to enhance its skills gap mitigation process and
                                      strategically administer retention incentives. However, the IRS did
                                      not agree to perform interviews and hiring assessments on all
                                      potential Information Technology organization employees.
                                          U.S. DEPARTMENT OF THE TREASURY
                                                  WASHINGTON, D.C. 20220



TREASURY INSPECTOR GENERAL
  FOR TAX ADMINISTRATION



                                              June 2, 2021


MEMORANDUM FOR: COMMISSIONER OF INTERNAL REVENUE



FROM:                        Michael E. McKenney
                             Deputy Inspector General for Audit

SUBJECT:                     Final Audit Report – Opportunities Exist to Improve Hiring and Retaining
                             Employees With Information Technology Expertise (Audit #202020018)

This report presents the results of our review to evaluate the Internal Revenue Service’s efforts
to hire and retain skilled Information Technology organization personnel. This review is part of
our Fiscal Year 2021 Annual Audit Plan and addresses the major management and performance
challenge of Implementing Tax Law Changes.
Management’s complete response to the draft report is included as Appendix II.
Copies of this report are also being sent to the IRS managers affected by the report
recommendations. If you have questions, please contact me or Danny R. Verneuille, Assistant
Inspector General for Audit (Security and Information Technology Services).
                                                 Opportunities Exist to Improve Hiring and Retaining
                                                  Employees With Information Technology Expertise




Table of Contents
Background .....................................................................................................................................Page         1


Results of Review .......................................................................................................................Page                1

            Hundreds of Skilled Employees Are Nearing Retirement
            Eligibility ..................................................................................................................................Page 1
            Skill Gap Review and Mitigation Is Not Required ....................................................Page 2
                         Recommendation 1: ...................................................................Page 5

                         Recommendation 2: ...................................................................Page 6

            Job Announcements Are Detailed and Reviewed Timely .....................................Page 6
            Assessments That May Assist in Hiring Qualified
            Individuals Are Not Performed .......................................................................................Page 7
                         Recommendation 3: ...................................................................Page 9

                         Recommendation 4: ...................................................................Page 10

            Retention Strategy Focuses on Employee Engagement .......................................Page 10
                         Recommendation 5: ...................................................................Page 12


Appendices
            Appendix I – Detailed Objective, Scope, and Methodology ................................Page 13
            Appendix II – Management’s Response to the Draft Report...............................Page 15
            Appendix III – Glossary of Terms....................................................................................Page 21
            Appendix IV – Abbreviations ...........................................................................................Page.22
                                      Opportunities Exist to Improve Hiring and Retaining
                                       Employees With Information Technology Expertise




Background
According to Internal Revenue Service (IRS) officials, from Fiscal Year (FY) 2015 through FY 2020,
the Information Technology (IT) organization lost between 344 and 390 employees each year,
with an attrition rate ranging between 4.93 and 5.50 percent. The IT organization primarily used
surge hiring 1 as a strategy along with direct-hire authority to fill 2,427 positions from FYs 2017
through 2019. As of May 2020, the IT organization had 7,237 employees, compared to
7,042 employees in July 2015 (an increase of 195 employees). In May 2020, however, the IRS
reported 2 that 50.2 percent of the IT organization’s workforce is eligible to retire within the next
three years, which could create a significant knowledge and experience gap. Hiring and
retaining a workforce with the appropriate information technology skillsets is critical to ensure
that modernization efforts, technology upgrades, and system maintenance are completed on
schedule.
The Office of Personnel Management states that, to help ensure the most efficient and effective
means of mission accomplishment, agencies should incorporate strategies for employee
recruitment, retention, and training and development. The Human Capital Office’s (HCO)
mission is to support the IRS workforce and stakeholders through progressive human capital
services and solutions. The HCO supports efforts to identify, recruit, hire, and advance a
workforce with the competencies necessary to achieve current and future organizational
performance goals. For example, the HCO oversees the IT organization’s candidate review
process for potential and existing employees, reviews and updates job descriptions for online
job announcements, and develops Service-wide guidance on engaging and retaining
employees. In addition, the HCO plays an important role in helping the IT organization achieve
the IRS Strategic Plan goal of cultivating a well-equipped, diverse, flexible, and engaged
workforce. 3



Results of Review

Hundreds of Skilled Employees Are Nearing Retirement Eligibility
We analyzed IT organization staffing data and identified 619 employees with expert-level skills
who are eligible for retirement within the next three years. There are no other employees with
these expert-level skills in the IT organization. Figure 1 provides a breakdown by IT organization
function for employees with expert-level skills who are eligible for retirement within the next
three years. 4



1
    See Appendix III for a glossary of terms.
2
    IRS, IT Human Resources Board Succession Management Update (May 22, 2020).
3
    IRS, Publication 3744, Internal Revenue Service Strategic Plan – Fiscal Year 2018-2022 (Revised Apr. 2018).
4
  HCO data for expert-level skills are as of August 5, 2020. Retirement eligibility data are as of July 18, 2020;
therefore, employees included in this figure are eligible to retire on or before July 17, 2023.
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                  Figure 1: Number of Employees Eligible for Retirement Within the
                 Next Three Years by IT Organization Function and Expert-Level Skills




Source: Our analysis based on HCO data of expert-level skills by IT organization function.
Collectively, the 619 employees account for 13,520 skills for which the employee is the only
person in the branch within one of the seven IT organization functions with that skill at the
expert level. We requested evidence of an action plan to mitigate the risk of losing
retirement-eligible people with expert-level skills. The HCO provided a November 2020 report
that outlined several recommendations for the IT organization’s consideration, including
focusing on training and the transfer of knowledge, especially in the area of legacy system
programming. We are unable to evaluate the effectiveness of the risk mitigations because the
HCO is in the early stages of implementing its recommendations.


Skill Gap Review and Mitigation Is Not Required
Standard operating procedures 5 state that the HCO is responsible for implementing,
coordinating, and monitoring the IT organization skills assessment. The HCO identifies technical
skills of IT organization employees by performing skills assessment surveys. The surveys are
performed every two years and are comprised of both mission-critical and nonessential skill
questions. 6 The HCO uses the Information Technology Workforce Tool, which is a centralized
database that captures the technical skills of IT organization employees using web-based
assessments. The skills assessment survey is based on the Skills Framework for the Information
Age, which is an industry standard model for describing and managing skills and competencies
for information technology professionals and provides a method of mapping an individual’s
professional skill level to a set of standard definitions. The surveys are mandatory for all General
Schedule employees. The most recent assessment was completed by employees during FY 2019
and the first quarter of FY 2020.
The skill gap reports summarize the skills captured in the skills assessments for each of the
seven functions within the IT organization. While the skills assessment survey includes both
mission-critical and nonessential skill questions as defined by each IT organization function, skill

5
    IRS, IT Skills Assessment Procedures (Feb. 1, 2019).
6
    The term mission-critical skills is interchangeable with technical parts.
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gap reports only include the mission-critical skills from the skills assessments. The
IT organization has identified 14 mission-critical skills, 7 and the number of mission-critical skills
for each IT organization function varies based on the specific needs of that function. Each
mission-critical skill is made up of multiple competencies, and each competency is made up of
multiple questions. The skill gap reports compare an individual’s skill level in a particular area to
the industry’s standard and identifies strengths and deficiencies. For example, one assessment
question may ask for an individual’s skill level in understanding acquisition management
systems. An individual may have a skill level of “2” in this area. However, if the industry
standard for that skill requires a level of “4,” the individual would be considered deficient in that
skill.

Management review of skill gap reports is not required
The HCO shares the skill gap reports with IT organization management which can be accessed
by front-line managers. Because managers have access to individual results, they can identify
skill gaps for each of their employees. This allows managers to work with their staff to ensure
that all needed skill gaps are addressed with training tailored to their positions. However, the
IT organization does not require management to review all staff members’ skill gaps in the skill
gap reports. We judgmentally sampled 12 (33 percent) of 36 managers from one of the seven IT
organization functions to evaluate whether, in the absence of a requirement, the managers
review skill gap reports. Of the 10 responses we received, only two managers said that they
track and review all skill gaps related to each staff member’s job duties, and eight said they did
not.
In addition, we analyzed skill gap reports for 335 individuals hired into the seven IT organization
functions during FY 2020 to help determine whether the IT organization hired individuals
qualified to perform their job duties based on mission-critical skills.8 As of August 21, 2020, we
determined that 281 (84 percent) of 335 employees included in the skill gap reports have
deficiencies in one or more mission-critical skills for their IT organization functions, and
only 54 (16 percent) have no deficiencies in mission-critical skills. Of the 335 employees,
82 (24 percent) have deficiencies in all mission-critical skills for their IT organization functions.
Figure 2 summarizes our analysis of the IT organization new hire skill gaps.




7
 The 14 mission-critical skills are: Acquisition, Architecture, Cybersecurity, Data Analysis, Finance, Information
Systems, Policy and Law, Process Improvement, Project Management, Software, Strategic Planning, System
Development, Technical Services, and Technical Support. Software is not included in the skill gap reports.
8
    We did not validate the accuracy and reliability of the data within the skill gap reports.
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          Figure 2: FY 2020 IT Organization Function New Hire Skill Gap Analysis
                                                New Hires With
                                                 Skill Gaps in       New Hires With      New Hires With No
                  Mission-    New Hires That     One or More         Skill Gaps in All    Skill Gaps in Any
                  Critical   Completed Skills   Mission-Critical     Mission-Critical     Mission-Critical
   IT Function     Skills      Assessment            Skills                Skills                Skills

  Applications
                     4               46                 40                    8                  6
  Development
  Cybersecurity      3               79                 55                  31                  24
   Enterprise
                     9               79                 75                    4                  4
   Operations
   Enterprise
    Program
                     5               17                 17                    0                  0
  Management
     Office
    Enterprise
                     8               19                 19                    4                  0
     Services
   Strategy and
                     7               12                 12                    4                  0
     Planning
    User and
    Network          5               83                 63                  31                  20
    Services
      TOTAL                        335                281                   82                  54
Source: Our analysis of data as of August 21, 2020, provided by the HCO.
Without established procedures that require IT organization management to review skill gap
reports, managers may not conduct reviews of their employees’ deficiencies. We acknowledge
that there will be some variation in how deficiencies are addressed with employees because
expert-level skills are not always required for entry-level positions, for example. We did find
some commonalities in the reports we reviewed, however, such as that the reports for all
12 managers show staff with deficiencies in Project Management, which is a mission-critical skill
for all IT organization functions. If the managers do not address skill gaps, their employees may
not meet the job requirements or further develop the skills needed for their positions to enable
the IT organization to effectively and efficiently meet its mission.

Not all IT organization functions are participating in skill gap mitigations
According to HCO management, the HCO works with IT organization management to develop
skill gap mitigation reports. Skill gap mitigation reports summarize skill gaps at the
IT organization function level and outline how the functions need to address their deficiencies
(e.g., through training), by level of importance. Skill gap mitigation reports assist the HCO and
IT organization to forecast skill gaps to determine the IT organization’s training needs. Because
the HCO cannot complete mitigations for all skill gaps within each IT organization function due
to limited resources, it assists in providing suggested mitigation strategies for the top
mission-critical skills of each function. The number of mission-critical skills reviewed is tailored
based on each IT organization function’s size. As a result, there could be more skills that need
to be addressed that are not addressed through skill gap mitigations. This further supports the


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need for IT organization management to review and assess all mission-critical skill gap reports
for their staff.
During July and August 2020, the HCO conducted lessons learned sessions for four of the
seven IT organization functions to get feedback on how to improve the skills assessment
surveys, skill gaps, and mitigations. The participants made several recommendations, including:
   •   Employees should update their skills assessments throughout the year or as skill sets
       change.
   •   Communication with management and subject matter experts needs to improve.
   •   Subject matter experts should have hands-on knowledge.
   •   Skills assessment questions need to be phrased more clearly so employees know exactly
       what is being asked.
Skill gap mitigation reports can be used to help ensure that employees are meeting job
requirements by identifying deficiencies that need to be addressed. However, the IT
organization does not require all functions to participate in skill gap mitigations. As a result,
one of the IT organization functions did not participate in the skill gap mitigations and has yet
to agree to participate. According to HCO management, instead of participating in the
mitigations, the IT organization function identified its own workforce concerns. If there is no
requirement for complete mitigation participation across the IT organization, each function may
create its own solution, or not have any solution, which would reduce the impact of
collaboration efforts between the HCO and the IT organization.

The Chief Information Officer should:

Recommendation 1: Develop policies and procedures that require management to track,
review, and assess mission-critical skill gap reports for their staff and work with their staff to
address formal and informal training needs.
        Management’s Response: The IRS agreed with this recommendation. The IT
        organization skills gap mitigation process is evolving, and the IRS is in a position to
        formalize enhancements through updating existing standard operating procedures.
        Updates include engaging IT organization senior leadership during the assessment and
        gap mitigation phases and establishing requirements for management to track and
        review mission-critical skill gap reports for their staff.
               Office of Audit Comment: While the IRS agreed with this recommendation, it
               states that employees may have one or more deficiencies in a critical skill that
               does not always correlate to a deficiency in a skill that is critical for their job
               position. Our report acknowledges that expert-level skills are not always required
               for every position. We also acknowledge that employees with expert-level skills
               nearing retirement eligibility may not have skills that are mission-critical for their
               current position and, therefore, would not cause work stoppage in the event that
               they retire when eligible. During our work, we requested an action plan that
               identifies how the IRS would mitigate the risk of losing retirement-eligible
               personnel with expert-level skills. The IRS provided a report with several
               recommendations to mitigate the risk. We were unable to evaluate the

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                    effectiveness of the risk mitigations because the HCO was in the early stages of
                    implementing the recommendations when the report was issued.

Recommendation 2: Require all IT organization functions to participate in the skill gap
mitigations.
           Management’s Response: The IRS agreed with this recommendation. The IT
           organization skills gap mitigation process is evolving, and the IRS is in a position to
           formalize enhancements through updating existing standard operating procedures.
           Updates include engaging IT organization senior leadership during the assessment and
           gap mitigation phases and establishing requirements for all IT organization functions to
           participate in the skill gap mitigation process.


Job Announcements Are Detailed and Reviewed Timely
The Internal Revenue Manual (IRM) 9 states that a standard position description is the official
description of management’s assignment of major duties, responsibilities, and supervisory
relationships to a position. The position description must be kept up to date and include
information about the job that is significant to its classification. The more detailed the
description of job duties and responsibilities is, the easier it will be for job applicants to identify
positions that align with their skillsets and for the hiring officials to determine whether
applicants can perform the job duties successfully. While position descriptions are internal
documents, individuals access Career Connector templates (hereafter referred to as job
announcement templates) when applying online for IRS job announcements. Each job
announcement template is associated with one or more internal position descriptions.
To determine whether the job descriptions and qualifications included in the job announcement
templates coincide with the skillsets required for the IT organization positions, we performed a
test to determine whether the content in the templates is specific enough to help ensure that
applicants meet the general qualifications. This detailed information in the job announcement
helps ensure that the individuals applying for a job adequately meet qualifications. Without this
detailed information, the hiring process could be impeded because hiring officials would need
to spend more time determining applicant qualifications, and the applications of unqualified
applicants would need to be considered. We selected a judgmental sample 10 of 10 job
announcement templates from the inventory of 360 templates in active status as of July 2020.
We found the templates were sufficiently detailed to target the job skills necessary for the
positions.
In addition, we evaluated whether the IRS regularly reviews the job announcement templates to
account for any changes, such as changes in occupation, to ensure that the templates are still
relevant to the IT organization. While there is no specific time requirement to update the
templates, HCO personnel stated that their goal is to review them every three to five years. HCO
personnel also stated that they receive a report early in the calendar year which identifies
templates that are three years old or older. We reviewed a job announcement template report
with an active status of templates between January 2015 and December 2020. This criteria


9
    IRM 6.511.1, Position Management and Classification Policy and Operational Guidance (Mar. 19, 2010).
10
     A judgmental sample is a nonprobability sample, the results of which cannot be used to project to the population.
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included eight of the templates from our judgmental sample. We determined that the HCO is
timely reviewing and updating job announcement templates.


Assessments That May Assist in Hiring Qualified Individuals Are Not
Performed
The IRM 11 states that a well-defined assessment strategy will allow candidates to exhibit the
competencies required for the job. The strategy provides the details on the methods or
systematic approach by which an applicant’s proficiency in the required competencies is
measured. The strategy can include a variety of assessment instruments to accomplish this, such
as structured interviews, work simulation, and traditional tests.

Interviews are not performed
Direct-hire authority allows Federal agencies to fill vacancies in specific occupations, grade
levels, and locations when there is a proven critical hiring need or a severe shortage of
candidates. In addition, it allows for an abbreviation of the normal hiring process. There is no
requirement for a job announcement, only a public notice is needed, and a person can be
selected outside of the competitive process. However, the IRS still must identify and use the
proper assessments for the positions being filled to determine the individuals who are qualified
for the approved positions. Interviews are considered a best practice by other government
agencies.
According to IRS management, the IT organization primarily used surge hiring as a strategy
along with direct-hire authority to target filling 2,427 positions from FY 2017 through FY 2019.
HCO management stated that surge hiring was created by the IT organization in FY 2017 and
was needed to fill critical information technology and Cybersecurity function positions and to
support tax reform legislation. 12 The first surge hiring process occurred between
December 2016 and January 2017. In March 2018, the IT organization initiated a nearly
two-year–long surge hiring process, which included direct-hire authorization to streamline hiring
external staff to support changes needed for tax reform legislation. The last stage of the hiring
surge began in August 2019 to fill the remaining positions for FY 2019. Figure 3 summarizes the
timeline of significant IT organization hiring initiatives.




11
     IRM 6.337.1, Alternative Rating and Selection (Nov. 3, 2009).
12
  Tax Cuts and Jobs Act of 2017. Pub. L. No. 115-97. Officially known as “An act to provide for reconciliation
pursuant to titles II and V of the concurrent resolution on the budget for Fiscal Year 2018.”
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                    Figure 3: Timeline of IT Organization Hiring Initiatives

                              Hiring         Targeted
           Date              Process      Positions to Fill                       Purpose

     December 2016 –                                           Hiring in anticipation of potential freeze on
                              Surge             981
       January 2017                                            Federal hiring in FY 2017.
                                                               Multipurpose, including hiring of critical
       March 2018 –
                              Surge            1,446           information technology and Cybersecurity
      December 2019
                                                               function positions and to support tax reform.
      August 2018 –           Direct      426 (subset of
                                                               Support for tax reform.
      December 2019            Hire        the 1,446)
      August 2019 –                       200 (subset of       Accelerated push to complete the hiring
                              Surge
     September 2019                        the 1,446)          surge before the end of FY 2019.
 Source: Our analysis of IT organization hiring initiatives.
HCO management stated that the IT organization did not perform interviews during these hiring
surges. The IRS decided to omit individual interviews in these cases and focus on assessing the
written materials submitted by each applicant. The IRS accepted the risk of having limited
information to assess applicants to mitigate the risk of having critical positions left vacant. We
interviewed six of eleven IT organization managers who were assigned new employees hired in
FY 2020 who no longer work at the IRS to discuss their experience with the hiring process and
whether or not these departed employees were qualified for the positions. Three of the
managers stated that the employee was not interviewed, one manager considered a phone
discussion with the employee an interview, and two did not know whether an interview was
performed. All the managers we interviewed told us these new employees were qualified for
their positions.
Interviews are an important step in the hiring process because they give the hiring manager an
opportunity to ask more in-depth questions about a candidate’s qualifications, skills, and
experience than the candidate’s application can answer. Interviews also allow the applicant to
obtain information to help determine whether it is suitable for them to accept the position.
Although the managers we interviewed believed the employees were qualified for their
positions, our analysis of the skill gap reports for 335 individuals hired into the IT organization
functions during FY 2020 indicated new employee skills deficiencies. Conducting interviews to
properly assess potential employees reduces the risk of hiring unqualified individuals and may
also reduce long-term employment and performance challenges and costs for the
IT organization.

Hiring assessments are not administered
The IT organization does not administer preemployment skills assessments (hereafter referred to
as hiring assessments as defined by the IRS) whereby an applicant must demonstrate job
qualifications, although the IRS requires hiring assessments for some positions in other business
units. These assessments allow for the demonstration of skills and experience based on actual
simulations and could help determine skillsets prior to hiring. Currently, IT organization job
applicants are directed to respond to multiple choice questions related to their qualifications
and experience to help determine their qualifications. However, that is one of several methods
the IRS uses to consider a candidate’s potential to perform job duties. The IRS partnered with
an independent third party to develop an assessment exam consisting of four test types
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designed to evaluate the applicants’ knowledge, skills, and abilities needed to successfully
perform the duties of the job. For example, an exam may consist of: 1) situational judgment
test items; 2) multiple-choice writing items; 3) job simulation items; and 4) a writing sample item.
These exams can be used to evaluate an applicant’s judgment in critical situations that they may
encounter on the job.
There is no specific requirement for the IT organization to administer hiring assessments;
however, requiring applicants to demonstrate the skills of a job position based on minimum
qualifications could be beneficial. While nothing precludes the IT organization from using an
assessment to verify an applicant’s qualifications or potential to successfully perform in a
position, management stated they do not need to use hiring assessments to verify an applicant’s
qualifications because the IT organization is meeting its business needs.
In the technical field of information technology, demonstrating one’s experience and knowledge
is crucial. A hiring assessment allows management to further evaluate an individual’s experience
to determine whether a candidate has the minimum requirements necessary for the position
prior to being hired. Hiring assessments can also help ensure that more potential IT
organization hires have the mission-critical skills needed for the job duties within the hiring IT
organization functions. Finally, interviews and hiring assessments may provide potential hires a
greater appreciation and understanding of the job.
The lack of interviews and additional assessments may have contributed to employees being
hired with mission-critical skill gap deficiencies shown in Figure 3. For example, Project
Management is one of the mission-critical skills identified in all seven IT organization functions.
If the IT organization interviewed applicants and administered hiring assessments, the hiring
managers could consider whether an individual has Project Management skills prior to being
hired. While it is unlikely that all skill gap deficiencies can be eliminated, interviews and hiring
assessments may allow the IRS the opportunity to hire individuals who possess more of the
mission-critical skills required.

The Chief Information Officer should:

Recommendation 3: Ensure that interviews are performed as a best practice in the hiring
process for all potential IT organization employees.
       Management’s Response: The IRS disagreed to mandate interviews during the hiring
       process for all IT organization positions. Although the IRS agrees that interviews are a
       best practice, the agency needs to have flexibility around internal and external hiring. To
       ensure that flexibility, interviews are at management’s discretion and may be conducted
       as part of the normal hiring process for potential IT organizational employees.
               Office of Audit Comment: While the IRS agreed that interviews are a best
               practice and may be conducted in the normal hiring process, we believe
               interviews performed for all potential IT organization employees is an integral
               part of the hiring process, beneficial for both the IRS and the potential employee.




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Recommendation 4: Coordinate with the HCO to develop and deploy hiring assessments for
potential IT organization employees to demonstrate job qualifications prior to hiring.
           Management’s Response: The IRS disagreed with this recommendation. The IRS
           currently utilizes hiring assessments when developing questionnaire templates and
           assigns weights to them for every job posting. Applicants answer assessment questions,
           and the IRS considers their answers during the candidate screening process. To develop
           templates of assessment questions and responses for identified position descriptions,
           subject matter experts from the IT organization meet with personnel psychologists to
           discuss skill-targeted questions and apply weighted values to the responses. These
           questions along with the weighted responses serve as a screening assessment that
           separate applicants into quality categories. Candidates in the highest categories are
           referred and considered for selection. The collaboration between the HCO and the IT
           organization resulted in over 300 deployed assessment templates in Career Connector.
           Assessment templates are reviewed and updated periodically.
                     Office of Audit Comment: The recommended hiring assessments (or
                     preemployment skills assessments) allow the potential IT organization employee
                     to demonstrate skills and experience because they are based on actual
                     simulations. We believe that the demonstration of skills is a better assessment
                     method than answering questions. The recommended assessments would
                     benefit the IT organization by helping to determine a candidate’s actual skillsets
                     prior to hiring.


Retention Strategy Focuses on Employee Engagement
One way to effectively use limited resources is to retain those employees who possess the
necessary skills and expertise the agency requires to meet its mission. The IRM 13 states that the
IRS relies on the HCO Engagement and Retention office to develop Service-wide guidance on
engaging and retaining employees. Some of the Engagement and Retention office services also
include overseeing the administration of the Federal Employee Viewpoint Survey 14 and
collaborating with internal and external stakeholders on employee engagement initiatives. In
addition, the office creates annual corporate engagement guidance to commit to Service-wide
and business unit–specific engagement initiatives.
The goal of an employee retention program is to ensure that the right people are in the right
positions and that they have an opportunity to develop and grow throughout their career. The
IRS retention strategy 15 states that continually investing in employees throughout their careers
can influence retirement-eligible employees to stay with the organization and share their
knowledge with other employees. In addition, the strategy states that retaining employees
requires the organization to have a strong employee engagement strategy.


13
     IRM 1.1.22, Organization and Staffing, Human Capital Office (Nov. 2, 2017).
14
  The Federal Employee Viewpoint Survey is a once-a-year snapshot in time of how employees feel regarding their
work experience, leadership, and satisfaction with their job and agency. Survey results provide valuable insight into
the challenges organization leaders face in ensuring that the Federal Government has an effective civilian workforce
and how well they are responding.
15
     IRS, IRS Retention Strategy (Mar. 2017).
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The IRS implemented a Service-wide engagement strategy, 16 which provides meaningful
engagement actions that all business units should accomplish. The IRS Leadership Engagement
Action Plan focuses on the Office of Personnel Management’s recommended engagement
themes of Recognition and Empowerment, Motivation, Diversity and Inclusion, and
Communication. As a result of the IRS Leadership Engagement Action Plan, the IT organization
developed its FY 2020 Employee Engagement Action Plan, which is updated annually based on
the Federal Employee Viewpoint Survey results. Figure 4 summarizes the IT organization’s
FY 2020 Employee Engagement Action Plan based on the FY 2019 Federal Employee Viewpoint
Survey results for each of the four engagement themes.
                            Figure 4: Summary of the FY 2020 IT Organization
                                    Employee Engagement Action Plan




          Source: IRS, FY 2020 IT Organization Employee Engagement Action Plan.
The IRM 17 states that an employee may be considered for a retention incentive if the unusually
high or unique qualifications of the employee or a special need for the employee's services
makes it essential to retain the employee and the employee would be likely to leave the Federal

16
     IRS, FY 2019-2021 Leadership Engagement Action Plan (Oct. 1, 2018).
17
     IRM 6.575.1, IRS Recruitment, Relocation, Retention, and Extended Assignment Incentives (Mar. 3, 2020).
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service in the absence of a retention incentive. The IRS has several factors it must consider
before authorizing a retention incentive, including special or unique competencies required for
the position and the extent to which the employee’s departure would affect the IRS’s ability to
carry out an activity, perform a function, or complete a project that the IRS deems essential to its
mission.
In the last six years, the IRS approved use of its retention incentive policy for two IT organization
employees; the first request was in December 2014, and the second request was in August 2020
(both for a one-year period). The IRS recertified the first retention incentive request in
December 2015 for another year, but the employee retired in January 2016. We reviewed the
retention incentive request forms and verified that the IRS documented the factors it believed
warranted the authorization of the retention incentives. The retention incentives were approved
at a cumulative cost of $83,524. 18
According to HCO management, the retention incentive policy has not been used frequently in
recent years due to budget constraints. A loss of employees with expert-level skills could
negatively affect the IT organization’s ability to meet its mission. It could lead to insufficient
staff to address system security issues, perform necessary system maintenance and upgrades,
and develop modernized tools and systems to enhance tax administration.

Recommendation 5: The Chief Information Officer should consider using the retention
incentive when an employee with unusually high or unique qualifications would be likely to
leave Federal service, significantly affecting the mission.
         Management’s Response: The IRS agreed with this recommendation. The HCO will
         coordinate with the Chief Information Officer to communicate to IT organization
         leadership the availability of the retention incentive program and strategize how the IRS
         can broaden the use of this program. Additionally, the HCO and IT organization
         leadership will approach the administering of retention incentives from a strategic
         viewpoint by analyzing available data, including retirement-eligible employees with
         unusually high skillsets, particularly those who have a history of working significant
         additional hours beyond their tour of duty to accomplish critical deliverables.




18
  The employee retired on January 8, 2016. Because the retention policy agreement was designated to be paid in
biweekly installments, we estimate the IRS paid approximately $1,120 towards the recertified retention incentive.
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                                                                                                   Appendix I
                       Detailed Objective, Scope, and Methodology
Our overall objective was to evaluate the IRS’s efforts to hire and retain skilled IT organization
personnel. To accomplish our objective, we:
       •   Reviewed employee separation and retirement eligibility data to determine whether the
           IT organization reviews data on attrition and staffing.
       •   Interviewed IT organization and HCO management, analyzed new hire skill gap reports,
           and reviewed skill gap mitigation reports to determine whether the IT organization and
           HCO management ensure that existing employees are qualified to perform their job
           duties and functions. We selected a judgmental sample 1 of 12 of 36 managers from
           one of the seven IT organization functions to evaluate whether the managers reviewed
           skill gap reports.
       •   Evaluated job announcement templates to determine whether they are specific enough
           to help ensure that applicants meet job qualifications. We selected a judgmental sample
           of 10 job announcement templates from the inventory of 360 templates in active status
           as of July 2020 to determine whether the templates are still relevant to the
           IT organization.
       •   Interviewed IT organization and HCO management, obtained hiring documentation, and
           analyzed skill gap reports of new hires to evaluate hiring efforts. We selected a
           judgmental sample of six of eleven IT organization managers assigned employees hired
           in FY 2020 who no longer work at the IRS to discuss their experience with the hiring
           process and the departing employees’ qualifications.
       •   Reviewed IRS Service-wide and IT organization policies and procedures on employee
           engagement and retention to determine whether the IRS has established written policies
           and procedures to improve employee retention.

Performance of This Review
This review was performed with information obtained from the HCO and the IT organization in
Washington, D.C., during the period February 2020 through March 2021. We conducted this
performance audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.
Major contributors to the report were Danny Verneuille, Assistant Inspector General for Audit
(Security and Information Technology Services); Jena Whitley, Director; Mike Mohrman, Audit
Manager; Chanda Stratton, Lead Auditor; Natalie Russell, Auditor; and Jonathan D. Elder,
Information Technology Specialist (Data Analytics).


1
    A judgmental sample is a nonprobability sample, the results of which cannot be used to project to the population.
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Internal Controls Methodology
Internal controls relate to management’s plans, methods, and procedures used to meet their
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance. We determined that the
following internal controls were relevant to our audit objective: IRM policies and procedures for
assessment strategies, management of position descriptions and their associated job
announcement templates, and retention incentives. In addition, we reviewed HCO standard
operating procedures for addressing skills assessments, skill gaps, and mitigations. We
evaluated these controls by interviewing IRS employees, reviewing employee skill gap data
obtained from IRS systems, and analyzing relevant documentation provided by the IRS.




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                                                             Appendix II
Management’s Response to the Draft Report




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                                                                                Appendix III
                                   Glossary of Terms

Term                     Definition

Attrition                The loss of employees due to retirement or separation.
                         The name of the Treasury-wide automated applicant management
Career Connector         system. It posts electronic job listings and allows candidates to
                         submit resumes via the Internet, i.e., online.
                         Approval that the Office of Personnel Management can give Federal
Direct-Hire Authority    agencies for filling vacancies when a critical hiring need or severe
                         shortage of candidates exists.
                         Any yearly accounting period, regardless of its relationship to a
Fiscal Year              calendar year. The Federal Government’s fiscal year begins on
                         October 1 and ends on September 30.
                         The classification and pay system that covers the majority of civilian
General Schedule         Federal employees (about 1.5 million worldwide) in professional,
                         technical, administrative, and clerical positions.
                         Provides strategies and tools for recruiting, hiring, developing, and
Human Capital Office
                         retaining a highly skilled and high-performing workforce.
                         An advertisement for applications for a position or for a roster for
Job Announcement
                         positions that are planned in the near future.
Mission-Critical Skill   Competencies essential to the operation of an organization.
                         The official description of management’s assignment of major duties,
                         responsibilities, and supervisory relationships to a position. The
Position Description
                         description of each position must be kept up to date and include
                         information about the job that is significant to its classification.
Retirement Eligibility
                         Determined by your age and number of years of creditable service.
(Retirement-Eligible)
                         Occurs when an employee leaves the IRS through retirement,
Separation
                         resignation, transfer, or death.
                         A strategy created by the IT organization that entails submitting a
Surge Hiring             small number of job announcements for a large number of positions
                         across multiple IT organization functions.




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                                                            Appendix IV
                  Abbreviations

FY    Fiscal Year
HCO   Human Capital Office
IRM   Internal Revenue Manual
IRS   Internal Revenue Service
IT    Information Technology




                                                                  Page 22
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