The Human Touch

he General Accounting Office-that bastion of knowledge that reports to Congress on all things going wrong at federal agencies-has often been a thorn in the sides of seasoned government executives. Over GAO's 80-year history, many a federal manager has received a pounding from his or her agency's authorizing committees because of alleged mismanagement uncovered by GAO auditors and investigators. Critical reports are still a big part of what GAO does, but the agency also is generating an increasing number of reports highlighting good federal and private-sector management practices that agencies can emulate. In the process, GAO is spurring high-level debate about the fundamental systems that define a well-managed agency.

These days, Comptroller General David Walker-an outspoken, gregarious leader, by all accounts-is focusing that debate on federal personnel. He has spent the better part of his nearly two years in office proclaiming "human capital" as one of the most pressing federal management concerns.

"The federal government faces a human capital crisis of significant proportions," he says. "The federal workforce is smaller. It is older. It is, in many cases, out of shape and faces serious succession planning and skills imbalance challenges. Steps need to be taken to recognize that in order to maximize performance and ensure the accountability of government, you can't do it without people, and you can't do it without making human capital strategy a top priority."

But Walker is doing more than just preaching the perils of overlooking human capital matters. He is leading a quiet but vast transformation of GAO's structure and management culture in an effort to lead by example. Central to his reforms has been serious attention to GAO staff-who they are, what their skills are and how much they contribute to the agency's mission. Having studied who's there, by late July he was deep in the process of reconfiguring and streamlining the agency. He also was awaiting congressional action on a package of proposed personnel flexibilities that would give him considerable power to shape his workforce to more effectively do the agency's work. Walker's plans, which haven't come without controversy, may offer valuable lessons and, indeed, a preview of what could be in store for agencies across government.

It's Philosophical

Walker's motivation is "more philosophical than anything else," he says. "We are the agency that has the responsibility to review and evaluate others. In order to be credible and to otherwise be effective, it's important that we be as good or better than anybody we review. Otherwise we're hypocrites." One of the first things he discovered upon joining GAO was that the agency often didn't apply to itself the various recommendations put forth in its reports. "But now it is the rule and not the exception that we apply these tools and methodologies to ourselves as well," Walker says.

Given GAO's unique strengths-more than half its workforce has master's degrees or doctorates, and the agency staff is a manageable size at 3,200-Walker feels obligated to create a model of good government management. At the broadest level, this means overseeing changes of structure and mindset. In the past, "GAO tended to be more hierarchical, more process-oriented, more siloed, more inwardly focused than it should be," he says. "I am trying to work with our leadership team to [make the agency more] results-oriented, integrated and externally focused," and to encourage partnering between groups within GAO and between GAO and outside organizations.

For starters, Walker has injected private-sector lingo into the agency's management vocabulary. He refers to himself as the chief executive officer and wants congressional permission to rename certain Senior Executive Service positions with titles such as chief operating officer and managing director. He's also pushing the "team" concept and has cut GAO's 31 issue areas to 11 teams, though the agency's work still covers the same breadth of subjects.

The team leaders report directly to Walker and his deputy, as do the heads of several new units focusing on agencywide challenges-including one devoted to strategic studies and one for product and process improvement. Having eliminated one layer of management, Walker hopes GAO staff can spend more time performing important studies and less time reviewing them. He also has cut the number of field offices from 16 to 11 as part of the reorganization.

At a micro level, becoming a model organization means repairing damage wrought by the downsizing and hiring freezes of the mid-1990s. Beginning in late 1998, Walker began assembling a human capital profile of his workforce. His management team studied the size, shape and makeup of GAO back as far as 1989 and projected forward based on historical trends. They discovered many of the same problems now facing most of government.

"We found that the average age of our workforce has increased six years in the last six years, that the average age of the GAO worker is 48, that 55 percent of our executives will be eligible to retire within four years, and that a third of our workforce will be eligible to retire in four years," Walker says. Also apparent were gaping holes where GAO needed more experts-in the health-care and information technology areas, for example. In addition, over the years GAO had become a top-heavy organization, with lots of experienced staff but less young talent. The conclusion: Unless GAO revamps its methods of recruiting, training and evaluating employees and sets up a succession-planning framework to cultivate future leaders, the agency could be at risk of long-term failure.

A big part of the solution, in Walker's view, is a new performance appraisal system. "We found that we had suffered from grade inflation in our performance evaluation program over the years in a way that the result of the program did not provide enough meaningful information to individuals or to management and that we needed to basically scrap the [program]," he says.

Walker discounts rumors that under the new approach, for every person who receives the highest rating someone would have to receive the lowest rating. "I don't believe in forcing bell-shaped curves," he says, but adds: "I do believe it's important to get some dispersion. Therefore, you have to look at how individuals do based upon the [competency] standards, and you also have to consider their performance relative to their peer group." The new competency-based system, which is being designed by a contractor, should be in place for evaluators, investigators and auditors by January 2001 and soon after for lawyers and administrative staffers.

Employee Concern

Walker has convinced some influential lawmakers on both sides of the aisle that he can't properly modernize GAO without exemptions from certain civil service rules. Included in his proposal-which has been sponsored by Sens. Fred D. Thompson, R-Tenn., and Joseph I. Lieberman, D-Conn. (S 2595), and Reps. Dan Burton, R-Ind., and Joe Scarborough, R-Fla. (H.R. 4642)-are provisions to create an SES-equivalent supergrade for technical talent and to offer voluntary early retirements and buyouts to people whose skills are overrepresented or no longer needed. He also wants to revise the current rules governing reductions in force so that layoffs can be based on skills and performance rather than length of service, a request that has created anxiety among some employees.

Walker insists the change is critical not just to making his transformation work but also to preserving the agency. "We cannot afford, if we ever have to run RIFs again, to run them on the basis of the existing rules, because the existing rules serve to compound our injuries," he says. "They serve to make our workforce older, they serve to further increase our succession planning challenges, and they serve to decrease our ability to effectively recruit and retain new workers at any level for the future. My job as the head of this agency is not just to make sure GAO can get its job done today, but to make sure we can get our job done tomorrow."

The original proposal had been attached to the legislative branch appropriations bill but was dropped in late July. It is expected to be reconsidered as a stand-alone measure later this year. Given that there are Democratic and Republican supporters of the proposal in both houses, Walker is confident of its eventual passage.

Because GAO employees are not represented by a union, there has not been any large-scale mobilization against the RIF proposal. Still, unsettled employees contacted their elected representatives, who in turn registered the concerns with relevant committee chairmen. It's the uncertainty about exactly how the RIFs would take place that has caused the most concern, says Kyle Adams, chief of GAO's personnel operations branch and a member of the agency's Employee Advisory Council. "If there were more details, I think people would feel better about it," she added. GAO employees clearly are uncomfortable about the possible changes, says another staffer, but there's a general feeling that Walker "has done his due diligence" and is honestly trying to improve the agency.

Reacting to employee concerns, Sens. Paul S. Sarbanes, D-Md., Charles S. Robb, D-Va., and John W. Warner, R-Va., wrote a June 22 letter to Sen. Robert Bennett, R-Utah, chairman of the Appropriations Legislative Branch Subcommittee, stressing the need to hold hearings on the legislation, given that it could set a precedent for executive branch agencies. A similar letter signed by Washington-area congressmen went to Rep. Charles Taylor, R-N.C., who oversees the House legislative Appropriations panel.

Although the American Federation of Government Employees, the largest federal union, has not opposed Walker's legislation, union leaders have made it known that their stand would be different were AFGE-represented employees being directly affected. "If we did represent these workers, I can assure you that we would be up in arms about this," says Beth Moten, legislative director for AFGE. In her view, by implementing the RIF change, "you're basically trying to create a disposable workforce." Federal employees who have devoted long careers to public service should be rewarded for their loyalty, the union argues.

The Office of Personnel Management has also refrained from outright opposition to the legislation, but has expressed concerns. In June, when it appeared the House might soon take up the measure, OPM Director Janice Lachance wrote to members saying that although Congress may decide the changes are appropriate for GAO, "they would be inconsistent with the administration's policies for the executive branch. If Congress chooses to allow these changes for GAO, it must be clear in the legislative history that it has done so without precedence for the executive branch."

Misplaced Suspicion

All the negative attention has resulted from misunderstandings of his proposal, Walker believes. He fully intends to enforce employee protections such as veterans preference and appeal rights if he ever does have to carry out RIFs, he says, and the authority would be used only as a last resort. GAO management first would reassign staff based on individual skills and interests, provide "reasonable retraining" and conduct voluntary early outs and buyouts, he wrote in a June internal agency memo. "If after these actions we still had significant organizational skills and knowledge imbalances that needed to be addressed and that would not be corrected through normal attrition within a reasonable period of time, I would then consider using this additional authority," he wrote.

The suspicion that GAO's changes may set a precedent for other agencies is misplaced, Walker says. "What we are asking for is appropriate for GAO but may or may not be appropriate for other agencies within the executive branch," he says. Though he wants GAO to be a model of good management for all of government, Walker points out that, because GAO is a legislative branch agency with some attributes that are distinctly different from those of executive branch agencies, some of his changes may not make sense for other agencies.

"The comptroller general is a nonpartisan professional with a 15-year term who by definition will have to live with the results of any human capital actions," Walker notes. "Most executive branch agency heads are political appointees of a particular political party who have an allegiance to that party and that administration and who have an average term of two to three years. The opportunity for abuse in the executive branch is much greater, and the checks and balances are much fewer, because the agency head in many cases will not have to live with the consequences of [his or her] actions."

He understands the concerns, though. "Any time you have change, there's fear," Walker says. "But without change, there's no innovation. Without risk, there's no return."

Broader Implications

Walker may say his proposal is intended solely for GAO, but observers agree that the change indeed could set a precedent for other agencies. "It's not designed to be a precedent, and there are no plans to use GAO's experience as an exact model for executive branch activity," but if new RIF rules were to prove successful at GAO, other agency heads might request and receive the same power, says a House staffer.

That's exactly what many human resources experts would like to see. "It's every manager's dream to be able to make this kind of change," says Rosslyn Kleeman, executive-in-residence in The George Washington University's public administration department and former director of workforce issues at GAO. "I think it would be great for the whole executive branch." Kleeman doesn't buy the argument that longtime federal employees deserve extra job protections simply because of their seniority. If their skills are no longer needed and they are not willing or able to be retrained, she says, "they deserve a thank you for everything they've done," but not a guaranteed job.

Sally Marshall, a senior consultant with the National Academy of Public Administration and a former federal human resources executive, agrees. Managers must have the ability to hire and release people in a way that makes sense for an agency, she says. As long as adequate appeals protections are in place, skills and competency should be valued over seniority, she says. Marshall views GAO's effort as a pilot project that, if successful, "absolutely" should be expanded to other agencies.

GAO specifics aside, Marshall believes Walker's focus on human capital could lead to positive changes for all agencies. "It's going to make a major difference in people's opinion and the necessity to pay attention to these human resources and human capital issues," she says, noting that Walker's rounds on Capitol Hill are creating a groundswell of interest. Walker is making it clear that top management must be involved in personnel matters to rectify the current skills imbalances and help avoid future ones, Marshall adds.

Turning Heads

There's no doubt that Walker's message is compelling. Although there's been considerable attention to strategic planning, information technology and financial management in recent years, there's been virtually no focus on human capital, he repeatedly has told lawmakers. Indeed, the federal government still treats personnel as primarily part of the administrative domain. "What I'm talking about is something fundamentally different," Walker says. "I'm talking about human capital, or people, as the key enabler, as a critical part of overall strategic planning and effective performance management."

People in high places appear to be listening. In his fiscal 2001 budget request, President Clinton declared strategic human capital management an administration priority. And in June, he issued a memo to agency heads ordering them to incorporate human resources management goals into their annual performance plans beginning in October.

Congress, too, appears to be more engaged in federal personnel matters than it has been for some time. Civil service reform may be a long way off, but the issues are at least being aired. Sen. George Voinovich, R-Ohio, chairman of the Subcommittee on Oversight of Government Management, Restructuring and the District of Columbia, who has held a series of hearings focusing on federal human capital issues, shares Walker's concerns. "I believe the human capital crisis is one of the most urgent problems facing the government," Voinovich said during a May hearing that highlighted training shortcomings at agencies.

The attention clearly pleases Walker. "There's increasing recognition of the importance of this issue," he says. "There is also increasing recognition that agencies need to be doing more within the context of current law in this area." His hope is that by focusing on human capital matters at GAO, he can spur other agencies to take a hard look at their own challenges and try to address them within the confines of existing civil service rules. Gradually, common themes will emerge regarding what the problems are and how best to attack them. At that point, governmentwide reform will make sense.

For now, Walker is content with small victories. "I am very, very encouraged by recent actions, and I am very hopeful that we'll continue to make progress in this area," he says. "But it's going to take years. Fortunately, I have a 15-year term."