Reality Check

May 15, 2002

According to the Bush administration, federal HR managers have a long way to go before they can pat themselves on the back. Bush's fiscal 2003 budget proposal, issued in February, assigned red lights to human resources management at all but three agencies. The Social Security Administration, Labor Department and OPM got yellow lights. Agencies that have been analyzing workforce trends for several years have learned some valuable lessons. The 62,000-employee Social Security Administration first conducted a study of employee retirements in 1998. It found that the agency would be hit with a large retirement wave in the second half of this decade, losing nearly 3,000 employees a year from 2007 to 2009. That would be double the retirement rate for 2000. To prevent an abrupt end-of-decade exodus, HR chief Paul Barnes decided to flatten the wave by offering early retirements. Nearly 1,400 took early outs in 1999, followed by 730 in 2000 and 660 in 2001. The early outs, along with the revelation that Social Security employees tend to retire at age 61 instead of age 55 (when they first become retirement-eligible), led Barnes' staff in 2000 to lower its retirement projections by about 500 a year, to 2,500 employees a year from 2007 to 2009. One way to get behind the numbers is to ask employees about their work and their plans. In the very decentralized agencies included in this year's Federal Performance Report-the IRS, EPA, FAA, SSA and the INS-communication can be tough. That problem may in part explain the HR survey mania sweeping the government. HR leaders want to know what employees think about their agencies, what managers think about the quality of their employees and what both employees and managers think about the service they get from their agencies' HR offices. The IRS, for example, sends out a 52-question survey each year to all of its employees. In their responses, IRS employees have complained heavily about a lack of appropriate and adequate training. That feedback helped push the agency to double its training budget last year. Richard Smith, a human resources consultant with PricewaterhouseCoopers Consulting in Arlington, Va., says private sector organizations are moving away from measuring employee satisfaction-in part because blindly measuring satisfaction does not differentiate between the happiness of poor performers and high performers. "Organizations are less interested in 'Are you happy?' than in 'Are you performing?'" Smith says. To that end, questions such as, "How satisfied are you with your job?" are less helpful than questions such as, "Do you have the tools to do your job?" and "Do you understand how your work helps the organization achieve its strategic goals?" Smith says, "When you take care of performance, satisfaction takes care of itself." Many federal human resources managers and executives would like to spend more time analyzing workforce needs, trying to fill those needs and measuring the results. But most HR leaders also oversee mundane traditional HR work involving benefits, payroll processing and job classification. HR administration eats up time that could be spent doing more strategic work.

Federal agencies turn to statistics, surveys and performance measures to figure out the real story behind the government's alleged human capital crisis.

eople are hard to predict. After a new employee completed 12 weeks of training for a position in Rebecca Chiaramida's division at the Internal Revenue Service, Chiaramida was relieved: She had one less job vacancy to worry about. Then the newly trained worker took a higher-paying job in another division. "She went back to the organization she came from," sighs Chiaramida, head of the compliance services division at the IRS Cincinnati Service Center in Covington, Ky. Chiaramida had to start from scratch.

Through a Herculean recruiting effort, Immigration and Naturalization Service managers have hired hundreds of Border Patrol agents every year for the past several years-including 1,700 in fiscal 2000 and 1,475 in 2001-and sent them to a five-month training program at the Border Patrol Academy in Glynco, Ga. During their successful hiring run, the INS managers couldn't have predicted that suddenly, in 2002, thousands of jobs would open up at a new agency called the Transportation Security Administration. The new agency was hiring air marshals-and paying them more than the Border Patrol pays many of its agents. Now, many Border Patrol agents are applying for higher-paying jobs at the new agency, forcing INS managers to re-fill vacated agent positions.

Despite the unpredictability of human behavior, human resources executives at federal agencies have begun an unprecedented effort to analyze employment statistics, forecast attrition rates and identify gaps in skills and recruitment needs to better match their workforces with their agencies' missions. The workforce planning push has been coupled with the creation of surveys, scorecards, checklists and "maturity models" that agencies can use to figure out whether their human resources offices are performing up to snuff. Over the past 12 months:

Office of Management and Budget Director Mitch Daniels ordered each major agency to conduct a workforce analysis including age, grade, and retirement eligibility of all employees; the number of people likely to leave through retirement and attrition over the next five years; the number and occupations of all seasonal, temporary and intermittent employees; an assessment of employees' skills; and the occupational title, grade level, geographic location and supervisory ratio for every manager in the agency.
As part of the Bush administration's management agenda, OMB and the Office of Personnel Management issued a scorecard using red, yellow and green lights to rate agencies on their strategic management of human capital. To win a green light, an agency has to have a human capital strategy aligned with organizational goals and a performance appraisal system that differentiates between high and low performers. So far, the administration says, no agency has met this test.
The governmentwide Human Resources Management Council developed a scorecard that delves into more specific measures than does the OMB scorecard, including training effectiveness, diversity, recruitment and retention targets and distribution of workers to front-line service positions rather than to back-end administrative jobs. OPM also ordered all agencies to develop human resources accountability systems to track the successes and deficiencies of HR offices.
The General Accounting Office issued a "maturity model" agencies can use to measure themselves on a three-level scale for eight factors. One of the factors is the use of data, rather than anecdotes, in making HR decisions.
OPM developed a 113-question survey about employees' satisfaction with workforce management at their agencies. "Measurement can drive change. OPM's goal is to help agencies truly know whether they're making a difference on human capital, to develop a set of core human capital measures they can use to know whether they're making progress," says Sandra Payne, director of strategic planning at OPM.

THE SCORE

The narratives accompanying the red lights had little nice to say: "Education has not completed an inventory of its staff's current skills or a workforce restructuring plan to align its workforce with its mission and goals. . . . [Health and Human Services] has not implemented the comprehensive restructuring reforms needed to create a citizen-centered department. . . . Treasury has not developed a coordinated strategy that addresses skills imbalances in mission-critical occupations."

When they speak of strategic human capital management, officials at the agencies included in this year's Federal Performance Report speak mostly in the future tense. Like the government as a whole, they are just beginning efforts to measure the effectiveness of their HR shops. The discipline of workforce planning still is nascent in even the most advanced HR shops, such as those at SSA and the IRS. Jane Moore, acting chief of the EPA's Office of Administration and Resources Management, says the agency is facing the loss of many veteran scientists. "More than 50 percent of our senior scientists are eligible to retire in the next six years," Moore says. "We're trying to think about these retirements as an opportunity to rethink the skills the agency needs. We're trying to put a workforce assessment strategy into play."

The EPA put a new human resources management system in place last year to collect information on skills and competency. "It was a huge investment, but we needed it," Moore says. "Workforce analytics here had previously been done seat of the pants." EPA predicts that only five offices will be using the workforce data by fiscal 2003.

"Clearly there's a lot of work to be done in order to align the workforce requirements with the missions and the rapidly evolving business processes agencies are using," says Robert O'Neill, president of the National Academy of Public Administration. O'Neill reviewed agencies' workforce analyses for OMB Director Daniels last summer. "For some agencies who had been at workforce planning for a while, [Daniels' order] was a fairly routine request," O'Neill says. "But for some agencies the request to focus on workforce needs over time was something they had only begun to think about."

ANALYZE THIS

Barnes also used the retirement projections to come up with a hiring plan aimed at having experienced workers in place before the end of the decade. It takes about three years for an employee to be considered "experienced" at Social Security. The agency hired 3,500 new workers in 2000 and 3,500 more in 2001. The new employees are training with veteran employees before they retire later in the decade. Both Social Security and IRS managers have learned that retirement rates paint an incomplete picture of workforce needs. Other forms of attrition-terminations, resignations and layoffs-must be factored in. Even the most unforeseeable factor, death, is relatively predictable on a large scale. In the past five years, federal employees have died at a stable rate of about 3,000 a year, with a difference of only 173 between the highest and lowest years.

Other factors HR planners must consider include changing missions, the impact of technology on productivity, gaps in training and competition among federal agencies and with the private sector for certain types of workers.

Just as IRS manager Becky Chiaramida found herself re-filling a vacancy when a new employee left for another job in the agency after only four months, her fellow managers are losing employees to newly opened positions as the agency goes on a four-year hiring spree to increase its ranks from 97,000 in 2000 to 101,000 in 2003. As GS-8 jobs open in customer service, GS-7 compliance workers move up. When vacancies occur in the unit that audits large businesses, staffers in the small business unit apply. "From a budget standpoint, internal migration has no effect," says IRS Chief Human Resources Officer Ronald Sanders. "But when an employee moves from one division to another, it can create an entry-level vacancy with a two- or three-year pipeline." So the IRS has developed planning models that account for internal migration.

No workforce analyst can make perfect projections. The art of workforce analysis is in figuring out why projections were off and how they can be made more accurate in the future, reducing the chance that the agency will be caught off guard and unable to complete its mission. For example, last year, OPM statisticians projected that 50,771 federal employees would retire in fiscal 2001. Only 41,543 actually retired, a 20 percent difference. That difference could be chalked up to any number of factors, including the sluggish economy, employees' desire to keep working, and hopes that the stock market (and the federal Thrift Savings Plan's stock funds) would rebound. Some Defense Department workers say they're waiting for the department to offer them cash buyouts of up to $25,000. Whatever the reasons, getting behind the numbers is a key challenge for HR offices as they start to compile the data the Bush administration and OPM are seeking.

TRUE CONFESSIONS

However, some union officials say the extra money is not being spent on the right kinds of training. They say IRS training planners don't get employees involved in developing training, so they end up focusing on the wrong issues. Surveys are fine, but what the agency needs is more employee involvement, union officials say.

On a governmentwide level, OPM has developed a 113-question survey to track agencies' performance against the human resources scorecards that the Bush administration and OPM have developed. In the survey, employees will be asked whether they agree or disagree with several statements about their work units. Such statements include:

In my work unit, human capital strategies are targeted to achieve my agency's missions and objectives.
I receive timely personnel services.
Personnel decisions affecting me are made fairly.
I have sufficient resources to get my job done.

WAG THE DOG

At the INS, the administrative workload will grow as the agency staffs up to improve homeland security. At SSA and EPA, retirement waves will create much more processing work because HR offices will be dealing with more retirements and finding more workers. Automation and outsourcing have helped HR officers handle the processing overload, but so far they have not solved the problem. For now, many HR offices see OPM and OMB measurement mandates simply as more work on top of their growing processing loads.

Despite that, OPM Director Kay Coles James is adamant about the need for improving HR management. "The strategic management of human capital is far more now than just answering questions about the benefits-although that's vital and important," James says. "It's far more than just trying to figure out how to hire people-which is absolutely essential and we've got to be better and faster at it-and it's far more than just explaining to someone how to fill out the forms and get them in on time. I've been saying to the HR community, we need to ratchet up the level of expertise, the skills sets and the knowledge base of those in the HR community because they need to be co-managers with the budget directors and with the strategic thinkers and planners."

How can federal HR managers fulfill James' vision as they drown in paperwork? The agencies included in this year's Federal Performance Report still are trying to figure that out. One answer may be the approach the IRS has taken: Split yourself in two. Since Sanders took over as chief human resources officer, responsibility for HR paper processing has been moved to the agency's administrative support division, while responsibility for strategic management resides in Sanders' office. "The day-to-day operational management could absorb you," Sanders says. "It's nice to be able to look forward and deal with HR strategy without having to worry about micro-level execution."

Rating Criteria

Does the agency have sufficient numbers of people, with the right skills and abilities to carry out the mission?

Is the agency able to allocate its personnel, by mission or geographically, in a way that maximizes its ability to achieve its mission?

Does the agency engage in workforce planning that is designed to determine future human resource requirements, and are employees and stakeholders involved in these planning efforts?

To what extent does the agency provide line managers with the capability to hire, fire, reward and train the people who work for them?

NEXT STORY: Bridging the Gap