	Sustained Leadership Is Essential to Successful Transformations

Leadership in agencies across the federal government is essential to  providing the accountable, committed, consistent, and sustained attention  needed to address human capital and related organization transformation  issues. OPM’s 2006  Federal Human Capital Survey (FHCS) results showed that the  government needs to establish a more effective leadership corps. For  example, slightly less than half of employees responding to the survey  reported a high level of respect for their senior leaders or are satisfied  with the information they receive from management on what is going on in  the organization. Similarly, only 38 percent of respondents agreed or  strongly agreed with the statement that leaders in their organization  generate high levels of motivation and commitment in the workforce. OPM plays a key role in fostering and guiding improvements in all areas of  strategic human capital management in the executive branch. However, in leading governmentwide human capital reform, OPM has  itself faced challenges in its capacity to assist, guide, and certify agencies’  readiness to implement reforms. We recently reported that OPM has made  commendable efforts in transforming itself from less a rulemaker,  enforcer, and independent agent to more a consultant, toolmaker and  strategic partner in leading and supporting executive agencies’ human  capital management systems. Strategic Human Capital Planning Is Critical to Agencies’ Transformation

Strategic human capital planning is the centerpiece of federal agencies’  efforts to transform their organizations to meet the governance challenges  of the 21st century. The long-term fiscal outlook  and challenges to governance in the 21st century are prompting  fundamental reexaminations of what government does, how it does it, and  who does it. Strategic human capital planning that is integrated with  broader organizational strategic planning is critical to ensuring agencies  have the talent they need for future challenges. An agency’s strategic human capital plan should address the demographic  trends that the agency faces with its workforce, especially pending  retirements. Acquiring, Developing, and Retaining Talent Remains a Federal Workforce Challenge

Faced with a workforce that is becoming more retirement-eligible and  finding gaps in talent because of changes in the knowledge, skills, and  competencies in occupations needed to meet their missions, agencies need  to strengthen their efforts and use of available flexibilities to acquire,  develop, motivate, and retain talent. This is a positive step on OPM’s part as we  continue to believe that more needs to be done to provide information to  help agencies meet these human capital needs. An effective performance management system is critical to  achieving this vital cultural transformation. Moreover, leading  public sector organizations both in the United States and abroad create a  clear linkage—line of sight—between individual performance and  organizational success and, thus, transform their cultures to be more  results-oriented, customer-focused, and collaborative in nature.
Why GAO Did This Study

The federal government is facing new and more complex challenges in the 21st century because of long-term fiscal constraints, changing demographics, evolving governance models, and other factors. Strategic human capital management, which remains on GAO's high-risk list, must be the centerpiece of any serious change management and transformation effort to meet these challenges. However, federal agencies do not consistently have the modern, effective, economical, and efficient human capital programs, policies, and procedures needed to succeed in their transformation efforts. In addition, the Office of Personnel Management (OPM) must have the capacity to successfully guide human capital transformations. This testimony, based on a large body of GAO work over many years, focuses on strategic human capital management challenges that many federal agencies continue to face.

What GAO Found

Federal agencies continue to face strategic human capital challenges in several areas. Leadership--Top leadership in agencies across the federal government must provide committed and inspired attention needed to address human capital and related organizational transformation issues. However, slightly less than half of respondents to the 2006 Federal Human Capital Survey reported a high level of respect for senior leaders while only 38 percent agreed or strongly agreed that leaders in their organizations generate high levels of motivation and commitment in the workforce. Strategic Human Capital Planning--Strategic human capital planning that is integrated with broader organizational strategic planning is critical to ensuring agencies have the talent they need for future challenges, especially as the federal government faces a retirement wave. Too often, agencies do not have the components of strategic human capital planning needed to address their current and emerging human capital challenges. Acquiring, Developing, and Retaining Talent--Faced with a workforce that is becoming more retirement eligible and finding gaps in talent, agencies need to strengthen their efforts and use of available flexibilities to acquire, develop, motivate, and retain talent. Agencies are not uniformly using available flexibilities to recruit and hire top talent and to address the current and emerging demographic challenges facing the government. (4) Results-Oriented Organizational Culture--Leading organizations create a clear linkage--"line of sight"--between individual performance and organizational success and, thus, transform their cultures to be more results-oriented, customer-focused, and collaborative. However, in many cases, the federal government does not have these linkages and has not transformed how it classifies, compensates, develops, and motivates its employees to achieve maximum results within available resources and existing authorities. Agencies are facing strategic human capital challenges in a period of likely sustained budget constraints. Budget constraints will require agencies to plan their transformations more strategically, prioritize their needs, evaluate results, allocate their resources more carefully, and react to workforce challenges more expeditiously in order to achieve their missions economically, efficiently, and effectively. OPM will continue to play a key role in fostering and guiding strategic human capital management improvements in the executive branch and in helping agencies meet transformation challenges. Although making commendable efforts in transforming itself to more a consultant, toolmaker, and strategic partner in leading and supporting agencies' human capital management systems, OPM has itself faced challenges in its capacity to assist, guide, and certify agencies' readiness to implement reforms.