Major Management Challenges at the Office of Personnel Management
The Office of Personnel Management (OPM) has made some progress in addressing the four key management challenges and program risks GAO identified in January 2003�leading strategic human capital management governmentwide, overseeing agency human capital management systems, transforming OPM and managing its internal operations, and administering the retirement and health insurance programs�but challenges remain in each area. GAO continues to monitor OPM initiatives across these areas but has not conducted a comprehensive assessment of OPM's efforts to transform and improve its management of internal operations or administer the insurance programs since January 2003.
OPM continues to take steps to exercise broad leadership over federal human capital management. OPM advises agencies on the strategic management of human capital, a critical part of the President's Management Agenda for improving federal management and performance. According to OPM data, 19 of 22 agencies had made substantive improvements in human capital management by the end of fiscal year 2004. In addition, OPM serves as a consultant to the Departments of Homeland Security and Defense as they design and redesign their human capital programs. The Director of OPM also chairs the Chief Human Capital Officers (CHCO) Council, which advises and coordinates member agency human capital activities, such as systems modernization, improved data quality, and proposed legislation. During its first year, the council focused on getting organized; creating a CHCO academy; and establishing subcommittees to address the hiring process, performance management, leadership development and succession planning, employee conduct and poor performers, and emergency preparedness. GAO's work suggests that the council should also address agencies' need for guidance, assistance, knowledge, and information on leading practices in several other key areas�developing the capabilities to successfully implement human capital reform, improving strategic human capital planning, and transforming the human capital office and its processes to more fully contribute to key agency decisions.
In May 2003, GAO also recommended that OPM take actions to assist agencies in improving the federal hiring process and strengthening their use of various human capital flexibilities, and OPM has taken a number of steps in response. For example, OPM identified 10 ways to improve the hiring process using existing, more flexible authorities, such as on-the-spot hiring. The agency also has taken significant steps to modernize job vacancy announcements and develop the government's recruiting Web site. It has issued a handbook on other flexibilities agencies can use to help manage their human capital, such as job sharing and other than full-time permanent positions. OPM also has identified legislative options for additional flexibilities that would help agencies manage their workforces. For example, OPM suggested legislation that would more broadly apply various flexibilities across agencies, as well as certain alternative personnel systems that have been tested and evaluated through pilot projects over the past two decades. However, GAO also has stated that OPM could more successfully aid agencies by providing more comprehensive information on when, where, and how they can use flexibilities most effectively, such as more frequently using direct hire and category rating procedures to accelerate their hiring efforts. OPM also needs to develop, and help agencies develop, improved hiring assessment tools, for example, by linking agencies with similar occupations to form consortia that would develop more reliable and valid tools to assess job candidates.
OPM also has taken steps to increase its oversight of agencies by reducing its audit cycle of large agencies to a 3-year cycle, rather than a 4-year cycle, although GAO has not assessed the impact of this change. OPM also has sought to strengthen the link between senior executive performance and pay by issuing criteria agencies must meet to certify that their performance management systems for their senior executives result in meaningful distinctions among those executives based on their relative performance. Once OPM has reviewed an agency's system and made this certification with concurrence from the Office of Management and Budget (OMB), the agency can raise the pay cap for its senior executives. In its comment letter on OPM's draft regulations, GAO suggested that OPM should require agencies to build in safeguards as part of their Senior Executive Service appraisal systems when linking pay to performance to ensure fairness and guard against abuse. For example, communicating the overall results of the performance management decisions to the senior executives, while protecting individual confidentiality, could help enhance the transparency in the performance management process. OPM's interim final regulations, which were effective immediately, state that agencies should consider communicating the overall results of performance management decisions to senior employees, if individual confidentiality can be assured.
On the need to transform itself and manage its internal operations , OPM reported that it made a number of organizational changes and leadership appointments to help strengthen its support to agencies, although we have not comprehensively assessed the impact of these reforms. OPM formed a Division for Human Capital Leadership and Merit Systems Accountability that includes human capital officers who are to coordinate with OMB to help agencies develop strategic human capital management plans. OPM also formed a Division for Strategic Human Resources Policy that includes a human resources studies unit that will perform in-depth planning and analysis to identify policy needs. In addition, OPM is continuing its efforts to upgrade its personnel security program.
Finally, OPM has made, or is making, some changes in administering the federal health and retirement insurance programs. A mong other things, the agency has implemented flexible spending accounts to help federal employees meet their health care needs, and OPM is in the process of modernizing its retirement management systems by acquiring new technology, systems, and services. GAO is currently reviewing this effort and expects to issue a report in late February 2005.
Related GAO Products
Human Capital: Principles, Criteria, and Processes for Governmentwide Federal Human Capital Reform . GAO-05-69SP . Washington, D.C.: December 1, 2004.
Human Capital: Building on the Current Momentum to Transform the Federal Government . GAO-04-976T . Washington, D.C.: July 20, 2004.
Human Capital: Increasing Agencies' Use of New Hiring Flexibilities. GAO-04-959T . Washington, D.C.: July 13, 2004.
Human Capital: Additional Collaboration Between OPM and Agencies is Key to Improved Federal Hiring. GAO-04-797 . Washington, D.C.: June 7, 2004.
Human Capital: Status of Efforts to Improve Federal Hiring. Washington, D.C.: GAO-04-796T . June 7, 2004.
Human Capital: Observations on Agencies' Implementation of the Chief Human Capital Officers Act. GAO-04-800T . Washington, D.C.: May 18, 2004.
Human Capital: Key Principles for Effective Strategic Workforce Planning. GAO-04-39 . Washington, D.C.: December 11, 2003.
Senior Executive Service: Enhanced Agency Efforts Needed to Improve Diversity as the Senior Corps Turns Over. GAO-04-123T . Washington, D.C.: October 15, 2003.
Human Capital: Insights for U.S. Agencies from Other Countries' Succession Planning and Management Initiatives. GAO-03-914 . Washington, D.C.: September 15, 2003.
Human Capital: Opportunities to Improve Executive Agencies' Hiring Processes. GAO-03-450 . Washington, D.C.: May 30, 2003.
Human Capital: Key Practices to Increasing Federal Telework. GAO-04-950T . Washington, D.C.: July 8, 2004.
Human Capital: Selected Agencies' Use of Alternative Service Delivery Options for Human Capital Activities. GAO-04-679 . Washington, D.C.: June 25, 2004.
Human Capital: Senior Executive Performance Management Can Be Significantly Strengthened to Achieve Results. GAO-04-614 . Washington, D.C.: May 26, 2004.
Human Capital: Opportunities to Improve Federal Continuity Planning Guidance. GAO-04-384 . Washington, D.C.: April 20, 2004.
Human Capital: A Guide for Assessing Strategic Training and Development Efforts in the Federal Government. GAO-04-546G . Washington, D.C.: March 1, 2004.
Human Capital: OPM Can Better Assist Agencies in Using Personnel Flexibilities. GAO-03-428. Washington, D.C.: May 9, 2003.
Human Capital: Selected Agency Actions to Integrate Human Capital Approaches to Attain Mission Results. GAO-03-446 . Washington, D.C.: April 11, 2003.
Results-Oriented Cultures: Creating a Clear Linkage between Individual Performance and Organizational Success. GAO-03-488 . Washington, D.C.: March 14, 2003.
Comptroller General's Forum: High-Performing Organizations: Metrics, Means, and Mechanisms for Achieving High Performance in the 21st Century Public Management Environment. GAO-04-343SP . Washington, D.C.: February 13, 2004.
Human Capital: Succession Planning and Management Is Critical Driver of Organizational Transformation. GAO-04-127T . Washington, D.C.: October 1, 2003.
Results-Oriented Cultures: Implementation Steps to Assist Mergers and Organizational Transformations. GAO-03-669 . Washington, D.C.: July 2, 2003.
Administration of the Federal Retirement and Health Insurance Programs
No products issued