Strategic Management of Human Capital - High Risk Issue
Federal agencies face a number of challenges as they attempt to build a workforce, ensure effective leadership, strategically manage critical skills gaps, and manage employee performance. The skills gaps within individual federal agencies and government-wide are of particular concern because they can lead to costly, less-efficient government.
Because skills gaps within individual federal agencies—as well as across the federal workforce—can lead to costly, less-efficient government, the issue has been identified as the focus of the Strategic Human Capital Management GAO high-risk area since February 2011. Effective talent management, agency leadership, and performance management are all part of how agencies can ensure they have the right mix of skills to accomplish their missions.
Strategic Workforce Planning
Federal agencies must address critical skills shortages across the government, such as cybersecurity, acquisition management, and foreign language capabilities. Moreover, if not carefully managed, anticipated retirements could widen skills gaps or open new ones, adversely affecting agencies’ capabilities. As shown in the figure below, more than 31 percent of federal employees on board by the end of fiscal year 2017 will be eligible to retire in the next 5 years.
Federal Employees on Board at End of Fiscal Year 2017 Eligible to Retire in the Next 5 Fiscal Years, by Agency
Notes: Our calculations include permanent employees in the competitive service, the excepted service, and the senior executive service with all work schedules (e.g. full time, part time, seasonal, and intermittent). Retirement eligibility is not affected by work schedule. Temporary and term employees are excluded.
“Eligible to retire” is defined as the year in which a person is first eligible for retirement with unreduced annuity.
Data are from the OPM Enterprise Human Resources Integration (EHRI) database.
EHRI covers federal civilian employees at most Executive Branch agencies and some Legislative Branch agencies. Among those agencies excluded from EHRI are the Central Intelligence Agency and other intelligence organizations; the U.S. Postal Service; Tennessee Valley Authority; and the White House Office.
The total number of employees included in our calculations on Jan. 17, 2017 is 1,712,547.
Federal agencies need a hiring process that is applicant-friendly, flexible, and meets policy requirements, such as hiring on the basis of merit. The federal classification system (the GS system) was designed to (among other things) uphold the merit system principle of equal pay for equal work. However, the GS system has not kept pace with the government’s evolving requirements—it must modernize and become more effective at meeting the needs of the workforce.
Additionally, employee engagement can translate into higher levels of organizational performance. There are six drivers of federal employee engagement that can help strengthen engagement levels, such as support for constructive performance conversations, career development and training, and work-life balance.
Federal agencies must also train staff in accordance with key priorities. Cost-effective training programs can help develop necessary skills (particularly for federal leaders).
Human Capital Leadership
Federal agency leaders can support human capital management by implementing leading practices in areas such as strategic workforce planning, training, performance management, recruitment and hiring, and diversity management. Moreover, given the budgetary and long-term fiscal challenges facing the nation, agencies must identify options to meet their missions with fewer resources, such as strengthening coordination to address a fragmented human capital community and creating more agile talent management to address inflexibilities in the current system.
There are a number of tools that can help build a results-oriented culture within the federal government. For example, an effective employee performance management system—one that creates a clear link between individual performance and organizational results (particularly for federal leadership)—can drive internal change and achieve desired results. However, developing modern, credible, and effective employee performance management systems and dealing with poor performers have been long-standing challenges for federal agencies.
While many human capital issues apply to the whole federal government, others are unique to particular agencies. For example, the Department of the Interior should explore the expanded use of existing authorities, such as recruitment and retention incentives, to ensure that it has a sufficient number of geologists, petroleum engineers, and geophysicists to oversee oil and gas resources. Additionally, the Veterans Health Administration needs to evaluate the training of its recruiters to ensure an adequate and qualified nurse workforce, and the Small Business Administration should develop workforce assessments to reflect the reorganization of key loan processing functions.
GAO-16-521: Published: Aug 2, 2016. Publicly Released: Sep 1, 2016.
A hiring authority is the law, executive order, or regulation that allows an agency to hire a person into the federal civil service. Of the 105 hiring authorities used in fiscal year 2014, agencies relied on 20 for 91 percent of the 196,226 new appointments made that year. Office of Personnel Management (OPM) officials said they do not know if agencies rely on a small number of authorities because...
GAO-15-585: Published: Jul 14, 2015. Publicly Released: Jul 15, 2015.
From 2006 through 2014, government-wide engagement levels—as measured by the Office of Personnel Management's (OPM) Employee Engagement Index (EEI)—increased to an estimated high of 67 percent in 2011 and then declined to an estimated 63 percent in 2014. This decline is attributable to several large agencies—including the Department of Defense—bringing down the government-wide average. The...
GAO-15-191: Published: Feb 6, 2015. Publicly Released: Mar 9, 2015.
Federal agencies have three avenues to address employees' poor performance:Day-to-day performance management activities (such as providing regular performance feedback to employees) can produce more desirable outcomes for agencies and employees than dismissal options. However, supervisors do not always have effective skills, such as the ability to identify, communicate, and help address employee p...
GAO-15-223: Published: Jan 30, 2015. Publicly Released: Jan 30, 2015.
Lessons learned from initial efforts to try to close skills gaps could strengthen future approaches. For example, the Chief Human Capital Officer (CHCO) Council Working Group (Working Group) identified skills gaps in six government-wide occupations, such as cybersecurity and auditors. Although this effort was an important step forward, GAO's work has identified skills gaps in nearly two dozen occu...
GAO-14-677: Published: Jul 31, 2014. Publicly Released: Sep 2, 2014.
GAO's analysis of subject matter specialists' comments, related literature, and interviews with Office of Personnel Management (OPM) officials identified a number of important characteristics for a modern, effective classification system, which GAO consolidated into eight key attributes (see table below). GAO's analysis shows that in concept the current General Schedule (GS) classification system'...
GAO-19-181: Published: Mar 28, 2019. Publicly Released: Apr 29, 2019.
Technology, demographics, and attitudes toward work are evolving in the private and public sectors. But federal government employment policies were designed generations ago. As a result, the government may struggle to compete for talented workers—which is one reason why federal human capital management is an issue on our High Risk list. We reported on talent management strategies, among other t...
GAO-19-176: Published: Mar 26, 2019. Publicly Released: Mar 26, 2019.
Fewer individual and corporate tax returns have been audited in recent years, largely because IRS doesn't have the people it needs to enforce existing tax laws while implementing new laws. As a result, billions of dollars in taxes go unpaid every year. Enforcing tax laws, a High Risk area, is critical to promoting voluntary compliance and collecting unpaid taxes. IRS's workforce is the key to add...
GAO-17-627T: Published: May 18, 2017. Publicly Released: May 18, 2017.
As shown below, many federal employees are eligible to retire. As they do, agencies need to hire people with the right skills—not just replace those who leave. To recruit and retain a skilled workforce, the federal pay system may need to be reexamined. In this testimony, we discussed strategies high-performing organizations use to design pay systems, such as ensuring pay decisions are transpare...
GAO-17-233: Published: Apr 27, 2017. Publicly Released: Apr 27, 2017.
The Nuclear Regulatory Commission has reduced its staff since 2011after expected growth in the nuclear industry did not occur. However, we found that the agency hasn't used certain key practices that could improve how effectively it manages its workforce. Without using these practices, the NRC may not know what the appropriate size and composition of its workforce should be, now or in the future. ...
GAO-16-880T: Published: Sep 29, 2016. Publicly Released: Sep 29, 2016.
Avoiding a "brain drain" in the federal workforce With more than 30% of federal employees eligible to retire by 2019, a lot of jobs could open up that the current federal workforce can't fill. So, the government needs to recruit and retain the next generation of workers. Strong employee engagement—a positive feeling about one's employer and its mission—tends to help agencies hire and keep em...
GAO-16-384: Published: Mar 24, 2016. Publicly Released: Mar 24, 2016.
The Federal Protective Service (FPS)—which protects about 9,500 federal facilities—developed a Strategic Human Capital Plan ( Plan ) and engaged in related efforts that generally align with most key principles GAO identified for strategic workforce planning. Specifically, FPSsolicited input from key stakeholders, such as its employees and the National Protection and Programs Directorate (NPPD)...
GAO-15-529T: Published: Apr 16, 2015. Publicly Released: Apr 16, 2015.
GAO's ongoing work indicates that the recent government-wide decline in engagement, as measured by the Office of Personnel Management's (OPM) Employee Engagement Index (EEI) masks the fact that the majority of federal agencies either sustained or increased employee engagement levels during the same period. Government-wide, engagement has declined 4 percentage points from an estimated 67 percent in...
GAO-15-252: Published: Dec 29, 2014. Publicly Released: Jan 5, 2015.
Agencies' use of reemployed annuitants has increased, with the number of on-board retired uniformed and civil service annuitants increasing from over 95,000 in fiscal year 2004 to around 171,000 in fiscal year 2013 (from about 5 percent to 8 percent of the federal workforce). This is inclusive of reemployed annuitants with and without dual compensation waivers. The Department of Defense (DOD) acco...
GAO-14-565: Published: Jul 9, 2014. Publicly Released: Jul 9, 2014.
The Department of Defense's (DOD) Fiscal Year 2013-2018 Strategic Workforce Plan addressed or partially addressed 27 of the 32 statutory reporting requirements and did not address 5 of the requirements. The statute requires DOD, for example, to conduct assessments of critical skills and competencies, to assess gaps in the workforce, and to assess the appropriate mix of civilian, military, and cont...
GAO-14-168: Published: May 7, 2014. Publicly Released: Jun 6, 2014.
GAO convened a forum of chief human capital officers (CHCO) who described a number of difficulties their agencies face in maintaining the capacity to meet their missions during lean fiscal times. GAO's analysis identified three broad recurring human capital challenges and strategies to address them. While these challenges were not new nor exclusively a result of constrained budgets, reduced resour...