The Human Factor

f all the numbers government chief financial officers must crunch when looking at their agencies' fiscal health, few are more disturbing than these: Today, as many as 30 percent of federal accountants could retire if they wanted. In another five years, that number will jump to about 50 percent.

"For the entire federal sector, this is a very serious worry," says Sallyanne Harper, chief mission support officer at the General Accounting Office. Throughout the 1990s, to achieve personnel reduction targets in the federal workforce as painlessly as possible, many agencies cut back on recruiting and offered early retirements. Such policies left many organizations with an imbalance of skills and a shortage of young professionals entering the career pipeline. As a result, a huge cadre of senior professionals are now on the verge of retirement, threatening to leave agencies with a shortage of needed talent.

"This is really a crisis situation," says Harper, not only in the area of finance and accounting, but in information technology, which bears directly on financial management. Virtually every federal agency is in the process of developing or upgrading computer systems to handle data necessary to meet new financial reporting requirements. Further exacerbating the situation, says Harper, is the fact that fewer young people entering college are choosing careers in accounting. And those who do are being heavily recruited by private firms, due to the booming economy. As a result, the pressure is on agencies.

"We have to look at our ability to attract people into government service," says John Callahan, assistant secretary for management and budget at the Department of Health and Human Services. "We need to look at giving people incentives to postpone retirement, and we need to look at ways of permitting people to move back and forth between the private sector and government." With so much antipathy for the "revolving-door syndrome" where people move from government to the private sector and back, the government makes it needlessly hard for itself to hire mid-career people from the private sector, Callahan argues. "That's something we really need to look at."

Agencies are not just facing a shrinking talent pool from which to draw workers. They also are struggling with a growing workload resulting from laws passed over the last decade requiring federal agencies to report and manage their finances in entirely new ways. So they must not only attract new workers, but provide the current workforce with the skills needed to meet the new requirements.

Raising the Bar

The CFO Council was concerned enough about the looming crisis to establish a human resources committee to assist CFOs in addressing their personnel needs. The committee has focused on three areas: finding more effective means for recruiting financial management personnel; improving training and professional development opportunities; and raising the qualification standards for finance and accounting personnel.

The committee, with support from the Joint Financial Management Improvement Program, established a Core Competencies Review Board to identify the knowledge, skills and abilities needed for various positions in federal financial management, such as budget analysts, accountants and financial managers. The council also outlined strategies for helping employees achieve those core competencies. "That provided the foundation for everything we've tried to do," says Kenneth Bresnahan, CFO at the Labor Department and chairman of the human resources committee. "You have to address professional development needs and recruiting based on those core competencies."

The Office of Personnel Management has revised qualification and classification standards for some financial management positions, and is exploring other revisions in a pilot program. The revised standards focus on qualitative measures, such as demonstrated skills, rather than quantitative measures, such as accounting credit hours earned or years of experience.

Professional development initiatives are critical if agencies are to give employees the tools they need to meet the evolving standards for finance and accounting positions. The council is participating in the Federal Training Technology Initiative, a governmentwide task force that seeks to create an electronic marketplace for educators and the financial management community to exchange information. The human resources committee is also working to catalog existing training opportunities that meet the new core competency standards.

One of the most far-reaching professional development initiatives is taking place at the Defense Department. This spring, the Defense Finance and Accounting Service launched a professional and leadership certification program for employees at the GS 13-15 level, designed to improve and institutionalize skills across the agency, reward professional achievement and keep employees current with financial management trends.

Employees who are selected for the program will develop, with their supervisors, individual development plans tailored to meet their professional needs and objectives. Program participants will receive both leadership and professional training at undergraduate and graduate levels. Those who successfully complete the program will become certified public accountants or certified government financial managers-professional designations that will greatly improve promotion opportunities.

The certification program will reward motivated employees and go a long way toward raising the level of professionalism and expertise across the agency, says Nelson Toye, DoD's deputy CFO.

Reaching Out

To compete with the private sector, the federal government must maintain a visible presence on college campuses, and it must reach out even to freshmen and sophomores. By offering summer internships and other work opportunities, agencies can introduce students to career possibilities they might not otherwise learn about.

Managers frequently complain that they can't compete with the private sector for talent because they don't have the flexibility in hiring and can't offer the same pay. Private accounting firms are able to make job offers to college seniors months before they have completed their degrees, for example. Bresnahan agrees the private sector can move faster, but says federal managers have more authority than many of them realize in hiring and rewarding employees. "Managers already have a lot of tools that they don't take advantage of," he says.

Financial managers must work cooperatively with their agencies' human resources offices if they are to improve recruiting and professional development opportunities, says Bresnahan. At the Labor Department, such cooperation led to an agreement with the University of Maryland University College to offer employees financial management courses through a distance learning program.

"Surveys show that career development opportunities are as important to employees as salary," says Kim Green, director of continuous learning at Labor's Career Management Center. By working together with Bresnahan's staff, Green says her office was able to establish a memorandum of understanding with the University of Maryland to offer coursework that meets the Labor Department's specific training needs. The department underwrites the training costs and allows employees to use government facilities and spend up to four hours per week during working hours on the education program.

"We've been trying to rebuild relationships with colleges and universities," says Bresnahan. "Because we have been out of the business of recruiting for so long, colleges and universities don't tend to think of us. And as we think about the kinds of skills we would like to have, it is important that there are places where they are being taught." Bresnahan recently has increased the amount of time he spends visiting campuses, educating both students and faculty to the opportunities and needs of the federal government. He encourages schools to offer courses on federal financial management and standards in their curriculums and to consider the opportunities for careers in public service.

Attracting new employees is only one of the personnel challenges for improving federal financial management. Some CFOs say they believe it will become increasingly difficult to attract future CFOs, for two primary reasons: The salary is not commensurate with that for CFOs in the private sector, and the confirmation process itself is degrading and frustrating.

"I think the Clinton administration has done a remarkable job in bringing in people with financial backgrounds into the CFO position," Harper says. "Heretofore, you really had a mixed bag of people. Some people had no financial background whatsoever." But Harper is concerned that future administrations may not be able to build on that success. "The confirmation process has tended to be rather brutal these last few years," She says. Financial disclosure rules, restrictions on what appointees can do in terms of sitting on boards and maintaining involvement in private organizations, and the partisan nature of the process-where appointees are often drawn into unrelated political battles-all serve to discourage potential candidates from joining the ranks of federal service.

"We have seemed to be able to attract people who are at the tail end of their careers in the private sector," Harper says. "They are [taking the jobs] to give something back. There's nothing wrong with that if they're qualified, if they're capable. But you want a mix. You need diversity of all types of backgrounds and talents."

Edward Powell, CFO at the Department of Veterans Affairs, agrees that the process discourages people from serving in government at the peak of their careers. "The disclosure issues go way beyond what is reasonable," he says. "Why does the public need to know if [an appointee] has set up a trust fund for his child? It's that sort of thing that I find very troubling." While Powell believes such disclosure may be appropriate for a vetting committee, to make an appointee's entire financial profile available to the public-in some cases published on the Internet-is not only wrong, but could be dangerous to an appointee and his or her family.

"The [confirmation] process has disintegrated into an endurance test that leaves its participants exhausted, embarrassed and confused," says Paul Light, director of government studies at the Brookings Institution. Light co-authored a recent report on the appointments process for the Presidential Appointee Initiative, a project funded by the Pew Charitable Trusts.

Still, CFOs say they wouldn't hesitate to recommend an appointment to a friend. Says Harper: "This is an opportunity to make a profound difference in the way government operates."