	Impact of Emerging Trends and Fiscal Challenges

Periodic reexamination and reevaluation of federal agencies’ activities has  never been more important than it is today. The federal government must  address and adapt to major trends in our country and around the world. At  the same time, our nation faces a serious, long-term fiscal challenge. Our country’s transition into the 21st century is characterized by a number  of key trends, including:  the national and global response to terrorism and other threats to our  personal and national security;  the increasing interdependence of enterprises, economies, markets, civil  societies, and national governments, commonly referred to as  globalization;  the shift to market-oriented, knowledge-based economies;  an aging and more diverse U.S. population;  rapid advances in science and technology and the opportunities and  challenges created by these changes;  challenges and opportunities to maintain and improve the quality of life  for the nation, communities, families, and individuals; and  the changing and increasingly diverse nature of governance structures  and tools. Fundamental reexamination of federal agencies’ roles, functions, and  structure is never easy. Reorganizing government can be an immensely  complex and politically charged activity. Those who would reorganize  government must make their rationale clear and build a consensus for  change if proposed reorganizations are to succeed. All key players must be  involved in the process—the Congress, the President, affected executive  branch agencies, their employees and unions, and other interested parties,  including the public. Need to Reassess How Federal Agencies Do Business

Regardless of the number and nature of federal entities, the government’s  goal should be to create high-performing organizations. We need to look at  not only at what business we are in, but how we do business. Practices that  were good 50 years ago may not make sense today. Old, outdated practices  and systems result in inefficiency and waste of resources that we cannot  afford. Management reform  will be vitally important for agencies to transform their cultures to address  the changing role of the government in the 21st century. Importance of Strategic Human Capital Management

Strategic human capital management should be a centerpiece of any  serious change management initiative or any effort to transform the  cultures of government agencies. It is a vital element to the success of any  government restructuring efforts, whether within an existing agency or  across current agency boundaries. People are an agency’s most important  organizational asset. An organization’s people define its character, affect its  capacity to perform, and represent the knowledge base of the organization. The Congress and the executive branch have taken a number of steps  to address the federal government’s human capital shortfalls. This has been the case at GAO. We need to reassess how the federal  government does business. We cannot afford  unnecessary redundancy and inefficient operations, and taxpayers deserve  better.
Why GAO Did This Study

GAO has sought to assist the Congress and the executive branch in considering the actions needed to support the transition to a more high-performing, results-oriented, and accountable federal government. GAO provided perspectives on the federal government's overall structure and the need for reorganization to improve performance.

What GAO Found

Through normal evolution and inertia over the years, the United States now has a government that is weighed down by organizations with significant performance and management problems as well as duplicative and overlapping missions and functions. This situation is exacerbated by ways of doing business that, in some cases, are better suited for the beginning of the 20th century than the 21st century. Given the changed circumstances and stark fiscal realities, the nation simply cannot afford unnecessary, redundant, or inefficient organizations, programs, or operations. Periodic reexamination and reevaluation of federal agencies' activities have never been more important than they are today. The federal government must address and adapt to major trends in the nation and around the world. At the same time, our nation faces serious, long-term fiscal challenges. Fundamental reexamination of federal agencies' roles, functions, and structure is never easy. Reorganizing government can be an immensely complex and politically charged activity. Those who would reorganize government must make their rationale clear and build a consensus for change if proposed reorganizations are to succeed. All key players must be involved in the process--the Congress, the President, affected executive branch agencies, their employees and unions, and other interested parties, including the public. Regardless of the number and nature of federal entities, the government's goal should be to create high-performing organizations. The federal government needs to look not only at what business it is in, but how it does business. Practices that were good 50 years ago may not make sense today. Old, outdated practices and systems result in inefficiency and waste of resources that the nation cannot afford. Management reform will be vitally important to agencies in transforming their cultures to address the changing role of the government in the 21st century. Strategic human capital management should be a centerpiece of any serious change management initiative or any effort to transform the cultures of government agencies. It is a vital element to the success of any government restructuring efforts, whether within an existing agency or across current agency boundaries. People are an agency's most important organizational asset. An organization's people define its character, affect its capacity to perform, and represent the knowledge base of the organization.