In comparing the GS system to these key attributes, during our ongoing  work we found a number of examples of how the current system’s design  reflects some of these key attributes but falls short of achieving them in  implementation. Agency officials assign a grade level to a position after  analyzing the duties and responsibilities according to the factor evaluation  system.occupation and grade level across different agencies, providing simplicity  and internal equity to the system, and may help employees move across  agencies. Making clear distinctions between these occupations may be  nuanced, as the basis for them hinges on, for example, how agency  officials determine the degree of complexity of the work. 2. 3. Opportunities Exist to Strengthen Performance Management and Deal with Poor Performers

		Efforts to Improve Performance Management

Our past work has shown that a long-standing challenge for federal  agencies has been developing credible and effective performance  management systems that can serve as a strategic tool to drive internal  change and achieve results. In 2011, various federal agencies, labor  unions, and other organizations developed the Goals-Engagement- Accountability-Results (GEAR) framework to help improve performance  management by articulating a high-performance culture; aligning employee and organizational performance management;  implementing accountability at all levels;  creating a culture of engagement; and  improving supervisor assessment, selection, development, and  training. However, OPM  officials said that while they will continue working with the CHCO Council  to promote GEAR and to encourage other agencies to adopt the  framework, it is unclear if any additional agencies have formally adopted  GEAR to date. Efforts to Address Poor Performers

As our past work has demonstrated, effective performance management  systems can help create results-oriented organizational cultures by  providing objective information to allow managers to make meaningful  distinctions in performance in order to reward top performers and deal  with poor performers. Sustained Attention Is Needed to Address Current and Emerging Critical Skills Gaps

Since we first narrowed the strategic human capital high-risk area to  focus on identifying and addressing government-wide mission critical  skills gaps in February 2011, executive agencies and Congress have  continued their efforts to ensure the government takes a more strategic  and efficient approach to recruiting, hiring, developing, and retaining  individuals with the skills needed to cost-effectively carry out the nation’s  business. At the same time, we have recommended numerous actions  individual agencies should take to address their specific human capital  challenges, and we have also made recommendations to OPM to  address government-wide human capital issues. For example, in September 2011 OPM and the CHCOs—as part of  ongoing discussions between OPM, the Office of Management and  Budget (OMB), and GAO on the steps needed to address the federal  government’s human capital challenges—established the Chief Human  Capital Officers Council Working Group (Working Group) to identify and  mitigate critical skills gaps. As we reported in February 2013, extent to which OPM and agencies develop the infrastructure to sustain  their planning, implementation, and monitoring efforts. These refinements can include   further progress will depend on the  identifying ways to document and assemble lessons learned, leading  practices, and other useful information for addressing skill gaps into a  clearinghouse or database so agencies can draw on one another’s  experiences and avoid duplicating efforts; examining the cost-effectiveness of delivering tools and shared  services such as online training for workforce planning to address  issues affecting multiple agencies;  reviewing the extent to which new capabilities are needed to give  OPM and other agencies greater visibility over skills gaps  government-wide to better identify which agencies may have  surpluses of personnel in those positions and which agencies have  gaps, as well as the adequacy of current mechanisms for facilitating  the transfer of personnel from one agency to another to address those  gaps as appropriate; and determining whether existing workforce planning and other tools can  be used to help streamline the processes developed by the Working  Group. that these were important areas for consideration and is taking steps to  implement them. Management Challenges and Strategies to Help Agencies Meet Their Missions in an Era of Highly Constrained Resources

In addition to mission critical skills gaps, our recent work has identified  other management challenges that, collectively, are creating fundamental  capacity problems that could undermine the ability of agencies to  effectively carry out their missions. Although the way forward will not be  easy, agency officials said these same challenges have created the  impetus to act and a willingness to consider creative and nontraditional  strategies for addressing issues in ways that previously may not have  been organizationally or culturally feasible. The strategies included the following:  Strengthening collaboration to address a fragmented human capital  community. Using enterprise solutions to address shared challenges. Creating more agile talent management to address inflexibilities in  the current system. Through a variety of initiatives, Congress, OPM, and individual agencies  have strengthened the government’s human capital efforts since we first  identified strategic human capital management as a high-risk area in  2001. Still, while much progress has been made over the last 13 years in  modernizing federal human capital management, the job is far from over.
Why GAO Did This Study

Strategic human capital management plays a critical role in maximizing the government's performance and assuring its accountability to Congress and to the nation as a whole.
GAO designated strategic human capital management as a government-wide high-risk area in 2001 because of a long-standing lack of leadership. Since then, important progress has been made. However, retirements and the potential loss of leadership and institutional knowledge, coupled with fiscal pressures underscore, the importance of a strategic and efficient approach to acquiring and retaining individuals with needed critical skills. As a result, strategic human capital management remains a high-risk area.
This testimony is based on preliminary findings of GAO's ongoing work on the classification system and a body of GAO work primarily from 2012 to 2014 and focuses on the progress made by OPM and executive branch agencies in key areas of human capital management, including: (1) how the GS classification system compares to the attributes of a modern, effective classification system, (2) the status of performance management and efforts to address poor performance, (3) progress addressing critical skills gaps, and (4) strategies to address human capital challenges in an era of highly constrained resources.

What GAO Found

Serious human capital shortfalls can erode the capacity of federal agencies and threaten their ability to cost-effectively carry out their missions. While progress has been made, continued attention is needed to ensure agencies have the human resources to drive performance and achieve the results the nation demands. Specifically, additional areas needing to be addressed include:
Classification
GAO's preliminary work has found eight key attributes of a modern, effective classification system, such as: internal and external equity, transparency, and simplicity. The attributes require trade-offs and policy choices to implement. In concept, the General Schedule's (GS) design reflects some of the eight attributes, but falls short of achieving them in implementation. For example, the GS system's grade levels provide internal equity by making it easy to compare employees in the same occupation and grade level across different agencies. However, the number of grade levels can reduce transparency because making clear distinctions between the levels may be nuanced, as the basis for them hinges on, for example, how officials determine the complexity of the work.
Performance management
Effective performance management systems enable managers to make meaningful distinctions in performance in order to reward top performers and deal with poor performers. In 2011, five agencies piloted the Goals-Engagement-Accountability-Results (GEAR) framework to help improve performance management. GEAR addressed important performance management practices, such as aligning individual performance with organizational goals. However, while Office of Personnel Management (OPM) officials said they are working with the Chief Human Capital Officer's Council to promote GEAR, it is unclear if any additional agencies have adopted the GEAR framework.
Critical skills gaps
Since GAO included identifying and addressing government-wide critical skills gaps as a high-risk area in 2011, a working group led by OPM identified skills gaps in six government-wide mission critical occupations including cybersecurity and acquisition, and is taking steps to address each one. To date, officials reported meeting their planned level of progress for three of the six occupations. Additional progress will depend on the extent to which OPM and agencies develop the infrastructure needed to sustain their planning, implementation, and monitoring efforts for skills gaps, and develop a predictive capacity to identify newly emerging skills gaps.
Strategies for an era of highly constrained resources
Agency officials have said that declining budgets have created the impetus to act on management challenges and a willingness to consider creative and nontraditional strategies for addressing human capital issues. GAO identified strategies related to (1) strengthening coordination of the federal human capital community, (2) using enterprise solutions to address shared challenges, and (3) creating more agile talent management that can address these challenges.

What GAO Recommends

Over the years, GAO has made numerous recommendations to agencies and OPM to improve their strategic human capital management efforts. This testimony discusses some actions taken to implement key recommendations.