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Because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. United States Government Accountability Office: Securing Our Future Requires Tough Choices Today The Honorable David M. Walker: Comptroller General of the United States: National Reconnaissance Office: Charyk Lecture: Chantilly, VA: September 22, 2005: The Case for Change: Government is on a "burning platform," and the status quo way of doing business is unacceptable for a variety of reasons, including: * Past fiscal trends and significant long-range challenges; * Rising public expectations for demonstrable results and enhanced responsiveness; * Selected trends and challenges having no boundaries; * Additional resource demands due to the war against terrorism and additional homeland security needs; * Government performance/accountability and high risk challenges, including the lack of effective human capital strategies. GAO’s High-Risk List: 2005: Addressing Challenges in Broad-based Transformations: High-Risk Areas: Protecting the Federal Government's Information Systems and the Nation's Critical Infrastructures; Year Designated High Risk: 1997. High-Risk Areas: Strategic Human Capital Management[A]; Year Designated High Risk: 2001. High-Risk Areas: U.S. Postal Service Transformation Efforts and Long- Term Outlook[A]; Year Designated High Risk: 2001. High-Risk Areas: Managing Federal Real Property[A]; Year Designated High Risk: 2003. High-Risk Areas: Implementing and Transforming the Department of Homeland Security; Year Designated High Risk: 2003. High-Risk Areas: Establishing Appropriate and Effective Information- Sharing Mechanisms to Improve Homeland Security; Year Designated High Risk: 2005. High-Risk Areas: DOD Approach to Business Transformation[A]; Year Designated High Risk: 2005. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Supply Chain Management (formerly Inventory Management); Year Designated High Risk: 1990. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Weapon Systems Acquisition; Year Designated High Risk: 1990. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Business Systems Modernization; Year Designated High Risk: 1995. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Financial Management; Year Designated High Risk: 1995. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Support Infrastructure Management; Year Designated High Risk: 1997. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Personnel Security Clearance Program; Year Designated High Risk: 2005. Managing Federal Contracting More Effectively: High-Risk Areas: DOE Contract Management; Year Designated High Risk: 1990. High-Risk Areas: NASA Contract Management; Year Designated High Risk: 1990. High-Risk Areas: DOD Contract Management; Year Designated High Risk: 1992. Management of Interagency Contracting; Year Designated High Risk: 2005. Assessing the Efficiency and Effectiveness of Tax Law Administration: High-Risk Areas: Enforcement of Tax Laws[A, B]; Year Designated High Risk: 1990. High-Risk Areas: IRS Business Systems Modernization[C]; Year Designated High Risk: 1995. Modernizing and Safeguarding Insurance and Benefit Programs: High-Risk Areas: Medicare Program[A]; Year Designated High Risk: 1990. High-Risk Areas: HUD Single-Family Mortgage Insurance and Rental Housing Assistance Programs; Year Designated High Risk: 1994. High-Risk Areas: Medicaid Program[A]; Year Designated High Risk: 2003. High-Risk Areas: Modernizing Federal Disability Programs[A]; Year Designated High Risk: 2003. High-Risk Areas: Pension Benefit Guaranty Corporation Single-Employer Insurance Program[A]; Year Designated High Risk: 2003. Other: High-Risk Areas: FAA Air Traffic Control Modernization; Year Designated High Risk: 1995. [A] Legislation is likely to be necessary, as a supplement to actions by the executive branch, in order to effectively address this high-risk area. [B] Two high-risk areas-Collection of Unpaid Taxes and Earned Income Credit Noncompliance-have been consolidated to make this area. [C] The IRS Financial Management high-risk area has been incorporated into this high-risk area. [End of table] 21st Century Challenges Report: Issued February 16, 2005. Based on GAO's work for the Congress. Provides background, framework, and questions to assist in reexamining the base. Covers entitlements & other mandatory spending, discretionary spending, and tax policies and programs. Twelve Reexamination Areas: MISSION AREAS: * Defense; * Education & Employment; * Financial Regulation & Housing; * Health Care; * Homeland Security; * International Affairs; * Natural Resources, Energy & Environment; * Retirement & Disability; * Science & Technology; * Transportation. CROSSCUTTING AREAS: * Improving Governance; * Reexamining the Tax System. Themes: * Changing Security Threats; * Increasing Global Interdependence; * Demographic Shifts-Aging Population; * Promoting Growth in a Knowledge-Based Economy; * Governance Challenges. Generic Reexamination Criteria and Sample Questions: Relevance of purpose and the federal role: Why did the federal government initiate this program and what was the government trying to accomplish? Have there been significant changes in the country or the world that relate to the reason for initiating it? Measuring success: Are there outcome-based measures? If not, why? If there are outcome-based measures, how successful is it based on these measures? Targeting benefits: Is it well targeted to those with the greatest needs and the least capacity to meet those needs? Affordability and cost effectiveness: Is it using the most cost-effective or net beneficial approaches when compared to other tools and program designs? Best practices: Is the responsible entity employing prevailing best practices to discharge its responsibilities and achieve its mission? Illustrative 21st Century Questions: How should the historical allocation of resources across services and programs be changed to reflect the results of a forward-looking comprehensive threat/risk assessment as part of DOD's capabilities- based approach to determining defense needs? Given the growing encumbrance of pay and benefit costs, especially health care, within DOD's budget, how might DOD's recruitment, retention, and compensation strategies (including benefit programs) be reexamined and revised to ensure that DOD maintains a total military and civilian workforce with the mix of skills needed to execute the national security strategy while using resources in a more targeted, evidence-based, and cost-effective manner? What criteria should be used to target federal funding for homeland security in order to maximize results and mitigate risk within available resource levels? Does DOD need to create a senior management position responsible and accountable for taking a strategic, integrated, and sustained approach to managing the day-to-day business operations of the department? Transformation: Webster's definition: An act, process, or instance of change in structure appearance, or character. A conversion, revolution, makeover, alteration, or renovation. The Objective of Transformation: To create a more positive future by maximizing value and mitigating risk within current and expected resource levels. Four Key Transformation Dimensions: Key Actions: To make prudent budget & long-term fiscal decisions; Primary Responsibility: The President and the Congress; Secondary Responsibility: Agency leadership (both political and career). Key Actions: To enable key transformation efforts while providing protection from abuse of authority; Primary Responsibility: The Congress and the President; Secondary Responsibility: Agency leadership (both political and career). Key Actions: To lead key transformation efforts with existing authorities and within existing resource levels; Primary Responsibility: Agency leadership (both political and career); Secondary Responsibility: OMB and other selected government-wide agencies. Key Actions: To evaluate reform efforts and conduct continuous improvement initiatives; Primary Responsibility: Agency leadership (both political and career); Secondary Responsibility: Congress, OMB and selected government-wide agencies. [End of section] Key Transformation Elements: * Planning; * People; * Process; * Partnerships; * Technology; * Environment. The most important of the five is PEOPLE -- an agency's human capital. Transformation: A New Model for Government Organizations: Government organizations will need to: * Become less hierarchical, process-oriented, stovepiped, and inwardly focused. * Become more partnership-based, results-oriented, integrated, and externally focused. * Achieve a better balance between results, customer, and employee focus. * Work better with other governmental organizations, non-governmental organizations, and the private sector, both domestically and internationally, to achieve results. * Focus on maximizing value, managing risk and enhancing responsiveness within current and expected resource levels. Keys to Making Change Happen: * Commitment and sustained leadership; * Demonstrated need for change (i.e., burning platform) Start at the top and with the new people (transformation takes 7+ years); * Process matters (e.g., employee involvement) -- Don't fight a two- front war; * 15-percent rule; * Identifiable and measurable progress over time; * Communication, communication, communication; * Figure out what's right versus what's popular; * Patience, persistence, perseverance to pain before you prevail. Keys to Making Change Happen: Several other actions needed: * Strategic Plan; * Core values; * Organizational alignment; * Recruiting, development, and succession planning strategies; * Modernizing and integrating institutional, unit and individualized performance measurement and reward systems; * Employee empowerment and effective communications. Selected GAO-Related Activities: * Speeches and Outreach Efforts; * CG Forums; * High Risk Update Report; * 21st Century Challenges Report; * Various Congressional Consultation and Assistance Efforts; * Public Education Assistance; * Constructive engagement efforts (e.g., best practices guides, self assessment tools, benchmarking statistics); * Leading by example. GAO: Leading by Example (Change, Performance, and Human Capital Management): * Mission and vision clarification; * Core values: accountability, integrity, reliability; * Strategic planning; * Organizational realignment; * Definitions of success; * Multi-tasking and matrix management; * Procurement, contracting, and acquisition; * Human capital; * Information technology; * Knowledge management; * Financial management; * Client service/external agency relations and protocols; * Enhanced products and services; * Constructive engagement with agencies; * Partnering with other accountability and “good government” organizations. What Is DOD Transformation? Creating the future of warfare and protecting our national security while improving how the department, including all of its various component parts, does business in order to support and sustain our position as the world's preeminent military power within current and expected resource limits. Selected Cultural Challenges At DOD: * Past vs. future (e.g., threats); * Today vs. tomorrow (e.g., budgets); * Too many silos and layers; * Get the money and spend the money (e.g., use it or lose it); * Plug-and-pray approach to weapons acquisitions; * Me vs. we (e.g., services); * Approve vs. inform (e.g.,deployments). The Way Forward: Selected Potential DOD Related Actions: * Revise the current approach to developing national military strategy (e.g., order, integration). * Take a longer range approach to program planning and budget integration (e.g., life cycles, opportunity costs). * Employ a total force management approach to planning and execution (e.g., military, civilian, contractors). * Revise the process for developing and communicating key changes (e.g., DOD transformation, NSPS legislative proposal). * Reduce the number of layers, silos and footprints. * Strengthen emphasis on horizontal and external activities (e.g., partnerships). * Differentiate between war fighting and business systems development, implementation and maintenance (e.g., resource control, project approval). * Make it okay to pull the plug or reduce quantities of weapon systems when the facts and circumstances warrant it. * Recognize the difference between approving and informing. * Create a Chief Management Officer to drive the business transformation process. * Get the design and implementation of the NSPS right, including modernizing and integrating the DOD, Service, domain, unit and individual performance measurement and reward systems. * Employ a more targeted and market based approach to compensation and other key human capital strategies. * Streamline yet strengthen current commercial contracts (e.g., incentives, transparency and accountability mechanisms). * Provide for longer tours of duty in connection with key acquisitions and operations positions (e.g., responsibility and accountability). * Focus on achieving real success in connection with financial management efforts (e.g., systems, controls, information, compliance and opinions). * Employ a more reasonable and material approach to business information system efforts and financial audit initiatives. Intelligence Reform Legislation: The Intelligence Reform and Terrorism Prevention Act of 2004 established the position of the Director of National Intelligence (DNI) to manage the entire U.S. intelligence community. * Ambassador John Negroponte was confirmed as the DNI in April 2005. The Intelligence Reform Act provides the DNI with "enhanced" budgetary authority. * Authority to develop and determine National Intelligence Program budget. * Limited budgetary authority over DOD's intelligence elements and the other two intelligence programs. Irrespective of these changes, the intelligence community needs to undergo a transformation effort. * Although the intelligence community is in a different line of business, its business transformation challenges are very similar to those being faced by all federal agencies and professional service organizations, including GAO. Intelligence, Surveillance & Reconnaissance Challenges: NRO and Beyond: New threats that traditional means do not effectively collect against (e.g.,weapons of mass destruction, hard and deeply buried targets). Using limited assets to meet wide array of demands for intelligence (strategic to tactical war-fighting): * Communications bandwidth; * Information sharing and data management: Industrial base and infrastructure; * U.S. vs. global; * Government vs. commercial; * Aging infrastructure: Workforce planning and integration challenges: Conquering cost and schedule problems (e.g., future imagery architecture): GAO's Strategic Plan: [See PDF for image] - graphic text: Serving the Congress and the Nation: GAO's Strategic Plan Framework: Mission: GAO exists to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people. Themes: * Long-term Fiscal Imbalance; * National Security; * Global interdependence; * Changing Economy; * Demographics; * Science and Technology; * Quality of Life; * Governance; Goals and Objectives: Provide Timely, Quality Service to the Congress and the Federal Government to Address Current and Emerging Challenges to the Well-Being and Financial Security of the American People related to: * Health care needs and financing; * Education and protection of children; * Work opportunities and worker protection; * Retirement income security; * Effective system of justice; * Viable communities; * Natural resources use and environmental protection; * Physical infrastructure; Respond to Changing Security Threats and the Challenges of Global Interdependence involving: * Emerging threats; * Military capabilities and readiness; * Advancement of U.S. interests; * Global market forces; Help Transform the Federal Government's Role and How It Does Business to Meet 21st Century Challenges by assessing: * Roles in achieving federal objectives; * Government transformation; * Key management challenges and program risks; * Fiscal position and financing of the government; Maximize the Value of GAO by Being a Model Federal Agency and a World- Class Professional Services Organization in the areas of: * Client and customer service; * Strategic leadership; * Institutional knowledge and experience; * Process improvement; * Employer of choice; Core Values: * Accountability; * Integrity; * Reliability; Source: GAO. GAO Strategic Plan 2004-2009. [End of strategic plan framework] Selected Success Measures: * Results; * Clients/customers; * People; * Partnerships. Annual Performance Measures (1998 and 2004): Performance measure: Financial benefits (billions); FY 1998 (Actual): $19.70; FY 2004 (Actual): $44. Performance measure: Other benefits; FY 1998 (Actual): 537; FY 2004 (Actual): 1197. Performance measure: Past recommendations implemented; FY 1998 (Actual): 69%; FY 2004 (Actual): 83%. Performance measure: Return on investment (ROI); FY 1998 (Actual): 58:1; FY 2004 (Actual): 95:1. Performance measure: Financial benefits per employee (millions); FY 1998 (Actual): $6.10; FY 2004 (Actual): $13.70. Performance measure: Timeliness; FY 1998 (Actual): 93%; FY 2004 (Actual): 97%. [End of table] Client Feedback: Fiscal Years 2002-05: [See PDF for image] -- graphic text: Bar graph with four items. Fiscal year: 2002; Percent favorable: 92%. Fiscal year: 2003; Percent favorable: 96%. Fiscal year: 2004; Percent favorable: 97%. Fiscal year: 2005 (5/13); Percent favorable: 98%. Response rates were: 46% in FY02, 31% in FY03, 34% in FY04, and 30% in FY05. [End of figure] GAO Benchmarking Results for 2004: GAO exceeded the latest private sector and Office of Personnel Management (OPM) benchmark measures in the following four questions, as shown below. Personal Experiences: I am given a real opportunity to improve my skills in my organization; Private Industry 2004: 62%; OPM 2004: 63%; GAO 2004: 70%. Personal Experiences: My job makes good use of my skills and abilities; Private Industry 2004: 74%; OPM 2004: 67%; GAO 2004: 71%. Personal Experiences: My work gives me a feeling of personal accomplishment; Private Industry 2004: 75%; OPM 2004: 71%; GAO 2004: 79%. Personal Experiences: Considering everything, how satisfied are you with your job? Private Industry 2004: 71%; OPM 2004: 68%; GAO 2004: 76%. Source: Federal Human Capital Survey 2004 analysis. [End of table] Key GAO Partnerships: INTOSAI; National Audit Forum; Good Government Organizations; Professional Associations; GAO Advisory Groups; Others; [End of figure] Federal Human Capital Reform: * People are critical to successful transformation; * However, the existing federal personnel system is outmoded and a barrier to transformation needed to address 21st Century challenges; * GAO placed strategic human capital management on the high risk list in 2001 to focus attention on needed reforms; * More progress on reform has been achieved in the last 5 years than in the previous 20: - Legislative reforms; - President's Management Agenda; - Individual agencies' efforts. Federal Human Capital Reform: Tailored flexibilities have been granted to a number of agencies: DHS, DOD, NASA, GAO, etc. GAO is sharing its knowledge and experience to help inform other agencies in their efforts and to avoid pitfalls. How GAO Has Addressed Its Human Capital Challenges: * HQ realignment & field office restructuring; * Self-assessment checklist; * Human capital profile; * Workforce & succession planning; * Employee feedback survey & suggestion program; * Employee Advisory Council; * Enhanced employee communications & participation; * Skills & knowledge inventory; * Employee preference survey; * Frequent flyer miles; * Student loan repayment; * Recruitment & college relations; * Phased retirement initiative; * Training/development; * Recognition & rewards; * Business casual dress & business cards; * Enabling technologies; * Opportunity/inclusiveness; * Mentor/buddy programs; * Commuting subsidy; * Competency-based employee appraisal system; * Human Capital Officer; * Office of Opportunity & Inclusiveness; * Flexitime and telework; * Total compensation communications; * Classification and compensation review; * Human Capital Strategic Plan. Legislation Addressing GAO's Human Capital Challenges: Past: * Broad-banding system for mission staff; * Expedited hiring authority (e.g., internship program); * Special pay rates; * Senior level for technical staff; * Targeted early out and buyout authority (3 years); * Revised RIF rules. Recent: * Targeted early out and buyout authority (permanent); * Annual pay adjustment rates; * Pay retention provisions; * Relocation benefits; * Increased annual leave for upper level employees; * Executive exchange program; * Re-designation of "General Accounting Office" to "Government Accountability Office." GAO Elements of Reform: Modern, Effective, Credible, and Validated Performance Management System: * Focuses on core competencies; * Helps to communicate employee performance expectations; * Creates a "line of sight" linking institutional team/unit and individual performance; * Makes meaningful distinctions in employee performance; * Provides for competency-based results automatically and relative peer group standing on request. Modern Classification and Compensation System: * Uses pay bands; * Is market-based; * Is performance-oriented. Safeguards, transparency, and accountability built in: * Provisions for employee participation; * Pre-and post-implementation consultation and communications strategy incorporated; * Internal pre-decisional revenues and reasonable post-decisional transparency; * Avenues for adverse action appeals, both internally and externally. Competency-Based Performance Appraisal: Objective of new system are to provide a: * Clear link to our strategic plan, professional standards, protocols and core values; * Fair, honest, accurate and non-discriminatory assessment of performance based on standards that are valid, properly applied, and transparent to employees; * A sound basis for enhancing the performance capacity of all staff, rewarding high-performing staff, and dealing with "below expected" performers. Competency Model: * Achieving Results; * Maintaining Client and Customer Focus; * Developing People; * Thinking Critically; * Collaborating with Others; * Presenting Information Orally; * Presenting Information in Writing; * Leading Others. Promotions; Recruitment; Work Assignments; Performance Management; Pay Decisions; Career Planning; Training; Succession Planning; Analyst/Specialist Appraisal Scores (1984-2004): Analyst/Specialist Appraisal Scores (1984-2004): Combination bar/line graph with 21 items. Year: '84; Ratings = 4.7 and above: 7; Ratings = 5.0: 2; Average Rating (5-point scale): 3.84. Year: '85; Ratings = 4.7 and above: 7; Ratings = 5.0: 1; Average Rating (5-point scale): 3.90. Year: '86; Ratings = 4.7 and above: 9; Ratings = 5.0: 1; Average Rating (5-point scale): 3.98. Year: '87; Ratings = 4.7 and above: 10; Ratings = 5.0: 1; Average Rating (5-point scale): 4.02. Year: '88; Ratings = 4.7 and above: 11; Ratings = 5.0: 2; Average Rating (5-point scale): 4.07. Year: '89; Ratings = 4.7 and above: 19; Ratings = 5.0: 3; Average Rating (5-point scale): 4.14. Year: '90; Ratings = 4.7 and above: 19; Ratings = 5.0: 3; Average Rating (5-point scale): 4.26. Year: '91; Ratings = 4.7 and above: 24; Ratings = 5.0: 4; Average Rating (5-point scale): 4.33. Year: '92; Ratings = 4.7 and above: 31; Ratings = 5.0: 6; Average Rating (5-point scale): 4.39. Year: '93; Ratings = 4.7 and above: 36; Ratings = 5.0: 7; Average Rating (5-point scale): 4.46. Year: '94; Ratings = 4.7 and above: 41; Ratings = 5.0: 10; Average Rating (5-point scale): 4.54. Year: '95; Ratings = 4.7 and above: 43; Ratings = 5.0: 12; Average Rating (5-point scale): 4.59. Year: '96; Ratings = 4.7 and above: 50; Ratings = 5.0: 16; Average Rating (5-point scale): 4.61. Year: '97; Ratings = 4.7 and above: 51; Ratings = 5.0: 16; Average Rating (5-point scale): 4.63. Year: '98; Ratings = 4.7 and above: 50; Ratings = 5.0: 18; Average Rating (5-point scale): 4.62. Year: '99; Ratings = 4.7 and above: 11; Ratings = 5.0: 2; Average Rating (5-point scale): 4.16. Year: '00; Ratings = 4.7 and above: 12; Ratings = 5.0: 2; Average Rating (5-point scale): 4.18. Year: '01; Ratings = 4.7 and above: 17; Ratings = 5.0: 2; Average Rating (5-point scale): 4.26. Year: '02; Average Rating (5-point scale): 2.19. Year: '03; Average Rating (5-point scale): 2.30. Year: '04; Average Rating (5-point scale): 2.34. Note: GAO's new competency-based performance management system was implemented in January 2002. There were no individual appraisal averages as high as 4.7 in FY02, FY03, or FY04. [End of figure] People Measures: Staff Development (Percent of staff responding favorably): Total; FY03: Percent of staff responding favorably: 67%; FY04: Percent of staff responding favorably: 70%; FY05: Percent of staff responding favorably: 72%. Question: Internal training (delivered by GAO staff or contractors); FY03: Percent of staff responding favorably: 63%; FY04: Percent of staff responding favorably: 68%; FY05: Percent of staff responding favorably: 70%. Question: External training/conferences; FY03: Percent of staff responding favorably: 85%; FY04: Percent of staff responding favorably: 86%; FY05: Percent of staff responding favorably: 88%. Question: On the job training I received; FY03: Percent of staff responding favorably: 69%; FY04: Percent of staff responding favorably: 72%; FY05: Percent of staff responding favorably: 75%. Question: Computer-based training delivered by Internet, IPTV or CD; FY03: Percent of staff responding favorably: 25%; FY04: Percent of staff responding favorably: 57%; FY05: Percent of staff responding favorably: 58%. [End of table] People Measures: Staff Utilization (Percent of staff responding favorably): People Measures: Staff Utilization (Percent of staff responding favorably): Total; FY03: Percent of staff responding favorably: 71%; FY04: Percent of staff responding favorably: 72%; FY05: Percent of staff responding favorably: 75%. Question: My job made good use of my skills and abilities; FY03: Percent of staff responding favorably: 71%; FY04: Percent of staff responding favorably: 72%; FY05: Percent of staff responding favorably: 75%. Question: GAO provided me with opportunities to do challenging work; FY03: Percent of staff responding favorably: 69%; FY04: Percent of staff responding favorably: 70%; FY05: Percent of staff responding favorably: 73%. Question: In general, I was used effectively; FY03: Percent of staff responding favorably: 73%; FY04: Percent of staff responding favorably: 74%; FY05: Percent of staff responding favorably: 78%. [End of table] Organizational Climate (Percent of staff responding favorably): People Measures: Organizational Climate (Percent of staff responding favorably): Total; FY03: Percent of staff responding favorably: 71%; FY04: Percent of staff responding favorably: 74%; FY05: Percent of staff responding favorably: 76%. Question: A spirit of cooperation and teamwork exists in my work FY03: Percent of staff responding favorably: 73%; FY04: Percent of staff responding favorably: 78%; FY05: Percent of staff responding favorably: 79%. Question: I am treated fairly and with respect; FY03: Percent of staff responding favorably: 74%; FY04: Percent of staff responding favorably: 77%; FY05: Percent of staff responding favorably: 80%. Question: My morale is good; FY03: Percent of staff responding favorably: 67%; FY04: Percent of staff responding favorably: 69%; FY05: Percent of staff responding favorably: 71%. Question: Sufficient effort is made to get the opinions and thinking of people; FY03: Percent of staff responding favorably: 67%; FY04: Percent of staff responding favorably: 74%; FY05: Percent of staff responding favorably: 76%. Question: Overall I am satisfied with my job at GAO; FY03: Percent of staff responding favorably: 74%; FY04: Percent of staff responding favorably: 74%; FY05: Percent of staff responding favorably: 75%. [End of table] People Measures: Leadership (Percent of staff responding favorably): Total; FY03: Percent of staff responding favorably: 78%; FY04: Percent of staff responding favorably: 79%; FY05: Percent of staff responding favorably: 80%. Question: Gave me the opportunity to do what I do best; FY03: Percent of staff responding favorably: 79%; FY04: Percent of staff responding favorably: 79%; FY05: Percent of staff responding favorably: 81%. Question: Treated me fairly; FY03: Percent of staff responding favorably: 86%; FY04: Percent of staff responding favorably: 87%; FY05: Percent of staff responding favorably: 89%. Question: Acted with honesty and integrity toward me; FY03: Percent of staff responding favorably: 85%; FY04: Percent of staff responding favorably: 86%; FY05: Percent of staff responding favorably: 88%: Question: Gave me the sense my work is valued; FY03: Percent of staff responding favorably: 75%; FY04: Percent of staff responding favorably: 77%; FY05: Percent of staff responding favorably: 78%. Question: Ensured a clear link between my performance and recognition of it; FY03: Percent of staff responding favorably: 69%; FY04: Percent of staff responding favorably: 72%; FY05: Percent of staff responding favorably: 73%. Question: Provide meaningful incentives for high performance; FY03: Percent of staff responding favorably: 57%; FY04: Percent of staff responding favorably: 58%; FY05: Percent of staff responding favorably: 59%. Question: Implemented change effectively; FY03: Percent of staff responding favorably: 74%; FY04: Percent of staff responding favorably: 75%; FY05: Percent of staff responding favorably: 77%. Question: Dealt effectively with EEO and discrimination issues; FY03: Percent of staff responding favorably: 92%; FY04: Percent of staff responding favorably: 92%; FY05: Percent of staff responding favorably: 92%. Question: Demonstrated GAO's core values; FY03: Percent of staff responding favorably: 86%; FY04: Percent of staff responding favorably: 88%; FY05: Percent of staff responding favorably: 89%. Question: Made decisions in a timely manner; FY03: Percent of staff responding favorably: 76%; FY04: Percent of staff responding favorably: 77%; FY05: Percent of staff responding favorably: 77%. [End of table] Classification and Compensation System: Key Guiding Principles: * Enable GAO to attract and retain top talent; * Result in equal pay for work of equal value over time; * Be reflective of the roles and responsibilities that we expect GAO staff to perform; * Be reasonable; competitive; performance-oriented; and based on skills, knowledge, and role; * Be affordable and sustainable based on current and expected resources levels; * Be in conformity with applicable statutory limits; * Try to assure a reasonable consistency in ratings and related compensation results within and between teams. Pay Philosophy: Performance-Oriented and Market-Based: Historically: * Pay ranges followed the GS schedule; * Everyone could advance to the pay cap irrespective of their performance not a matter of if, but when. New Approach: * Pay ranges set to be competitive with the labor markets in which GAO competes for talent; * Everyone can advance to the pay cap but they must have performance in excess of a certain level to advance beyond a certain point of the pay range (e.g., 75th percentile); * Pay ranges may overlap in upper part of band pay range to adequately reward expertise, leadership, and performance. Classification and Compensation Review (CCR) Approach--Best Practices: Hired an experienced and top quality firm - Watson Wyatt: Followed an industry best practices process and methodology: * Early involvement of Career Stream Focal Points (including Employee Advisory Council representatives) to provide: - Knowledge and expertise on job content; - Insight regarding attraction and retention issues including turnover, recruitment sources, and mid-career hiring; - Hands-on review and confirmation of GAO job matches and 18 selected published survey sources. Multiple authoritative surveys used for determining competitive compensation data. Widely recognized local labor market data index used for local market categories. Extensive involvement throughout the study by the Executive Committee to: * Provide strategic guidance and input; * Confirm and approve job matches from selected published survey sources after consideration of recommendations from Career Stream Focal Points and Watson Wyatt. Proposed Compensation Ranges: Analysts: Washington DC Market-Based Compensation Ranges: Reference Range: 1; Expected Pay: Pay Range Minimum: $45,000; Range: Competitive Pay: $59,000; Above expected: 75th Percentile: $68,000; Pay Range: Maximum: $74,000. Reference Range: 2a; Expected Pay: Pay Range Minimum: $60,000; Range: Competitive Pay: $80,000; Above expected: 75th Percentile: $92,000; Pay Range: Maximum: $99,000. Reference Range: 2b; Expected Pay: Pay Range Minimum: $75,000; Range: Competitive Pay: $100,000; Above expected: 75th Percentile: $115,000; Pay Range: Maximum: $125,000. Reference Range: 3; Expected Pay: Pay Range Minimum: $86,000; Range: Competitive Pay: $114,000; Above expected: 75th Percentile: $131,000; Pay Range: Maximum: $135,500[NOTE 1]. [1] The maximum pay shown for Reference Range 3 is estimated. It will be adjusted to its final level when OPM determines the amount of the 2005 locality increase for Washington, DC. [End of table] Other Agencies' Elements of Reform: DHS and DOD reforms: Intend to include many of these same elements of a flexible and contemporary human capital management system; * Pay bands for more flexible classification, staffing, and compensation approaches; * More market based and performance oriented pay system; * Modern performance management systems. But many details still to be defined, and the agencies face multiple challenges: * Revisions to labor-management relations have been controversial; * Need to provide sustained and committed leadership, dedicated resources, pre-implementation training, and a post-implementation program evaluation strategy; * Need to assure that the necessary support infrastructure is in place before allowing agencies to implement certain authorities (e.g., performance-based pay); * Need to conduct appropriate studies over time (e.g., market-based compensation ranges). Going Forward: * Reforms to date recognize that one-size-fits-all approach is not appropriate to each agency's demands, challenges, and missions. However, a reasonable degree of consistency across the government is still desirable (e.g., principles, values, and safeguards). * Need to move forward with reform, but how it is done, when it is done, and on what basis it is done can make all the difference. * Future reforms should incorporate a phased approach, where agencies are authorized to implement reform only after they have shown they have the infrastructure in place and the resources to be successful (i.e., show-me approach). * As part of this approach, agencies must be able to make effective use of new authorities and have critical infrastructure in place: - Strategic human capital planning process linked to the agency's overall strategic plan; - Modern, effective, credible, integrated, and validated performance management system; - Adequate internal and external safeguards (e.g., reviews, appeal processes); - Adequate resources for training and evaluation. In the short term, reforms should, at a minimum, include select and targeted new authorities: * Allowing agency heads to make a limited number of term appointments awarded noncompetitively; * No guaranteed pay increases for persons who do not perform at an acceptable level; * Rightsizing and restructuring authorities that can place additional emphasis on factors such as knowledge, skills, and performance. Broader reforms should be guided by a framework consisting of a common set of: * Principles (e.g., merit principles); * Criteria (e.g., demonstrated business case); * Processes (e.g., preconditions, including adequate infrastructure in place). GAO continues to work with key clients and stakeholders on future of reform: * Forum on government-wide framework; * Testimony on DHS and DOD human capital designs; * Symposium on modern compensation systems; * Sharing our experience in implementing our reforms; * Ongoing dialogue with the Congress, OMB, OPM, and various agencies, professional groups, unions, and others. Three Key Ingredients Needed for These Challenging and Changing Times: * Courage; * Integrity; * Innovation. [End of slide presentation]