Human Capital:

Posthearing Questions Related to Assessing Progress in Human Capital Management

GAO-04-1072R: Published: Sep 3, 2004. Publicly Released: Sep 3, 2004.

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On July 20, 2004, GAO testified before the Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia, Senate Committee on Governmental Affairs on "Building the 21st Century Federal Workforce: Assessing Progress in Human Capital Management." This letter responds to committee members' request that GAO provide answers to follow-up questions.

A key reason GAO has sought additional human capital flexibilities is that while our people account for about 80 percent of our costs, they constitute 100 percent of our real assets. We have emphasized that in addressing their human capital challenges, agencies should first identify and make use of the flexibilities already available under existing laws and regulations and seek additional flexibilities only when necessary and based on sound business cases. Leading by example, GAO based its recent requests for additional flexibilities on demonstrated business cases. We have reported that educating agency managers and employees--including human resources professionals--on the availability and use of human capital flexibilities is a key practice to ensure they are used most effectively. The Chief Human Capital Officers (CHCO) Council can play a key role in helping agencies develop strategies to train their human resources workforce. While we have not done a recent comprehensive review of federal law enforcement retirement, classification, and pay, our work and the work of others continues to show that agencies need and want greater leadership from the Office of Personnel Management (OPM) in helping them address their human capital challenges. OPM recognizes the importance of exerting a stronger and more visible leadership role. While we have not taken an inventory of all agencies' hiring practices, we reviewed the activities of five agencies: the U.S. Geological Survey, the U.S. Census Bureau, and the Department of the Army, as well as the Agricultural Research Service and the Forest Service. We generally found that the changes these agencies implemented are actions that all agencies have the authority to implement. We have not conducted work with the private sector to determine whether companies are using any new work-life programs that federal agencies could adopt. We are studying the implementation of the pay adjustment provision that would allow us to determine the amount of the current annual across-the-board pay adjustment. This provision is designed, among other reasons, to afford additional flexibility to the Comptroller General to increase the funding for performance-based compensation. Leading by example, we have adopted safeguards that help to ensure that our performance-based pay program is fair, effective, and credible. Our work noted that selected agencies are using a variety of alternative service delivery options, in addition to contracting with the private sector, to address a wide range of human capital activities. "Alternative service delivery (ASD)" is the use of other than internal staff to provide a service or to deliver a product. Public sector providers are one of the primary ASD options agencies are using to accomplish traditional human capital service delivery, such as employee assistance programs, as well as training and advisory services. While we did not take a position in our report on the appropriateness of using ASD for various human capital activities, we do think there are opportunities to use contractor personnel to conduct at least some of the activities involved in functions such as classification appeals and administrative investigations. The Comptroller General and other GAO executives engaged in a broad range of outreach and consultation activities with GAO staff on the Human Capital II legislation as it was being developed. GAO will continue to solicit input from employees and incorporate their views as appropriate as part of the implementation process. While agencies need to develop and effectively implement the human capital approaches that best meet their needs, resources, context, and authorities, we are concerned that a pass/fail system does not provide enough meaningful information and dispersion in ratings to recognize and reward top performance, help everyone attain their maximum potential, and deal with poor performers.

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