	Sustained Leadership is Essential to Successful Human Capital Management

Effective leadership is the key driver of successful human capital  management. As one example, in  September 2011, OPM and the CHCO Council, as part of ongoing  discussions between OPM, OMB, and us on progress needed to address  the federal government’s human capital high risk area, established a  working group to identify and mitigate critical skills gaps. Our preliminary findings show that the working group has, to date, taken  some important steps forward, including developing a framework and  timeline for identifying and addressing both government-wide and  agency-specific skills gaps. If successfully implemented, initiatives  such as the CHCO working group and Pathways could help agencies  identify and close critical skills gaps. Strategic Human Capital Planning is Critical to Addressing Workforce Challenges

Strategic human capital planning that is integrated with broader  organizational strategic planning is essential for ensuring that agencies  have the talent, skill, and experience mix they need to cost-effectively  execute their mission and program goals. Likewise, certain  occupations face the potential of large numbers of retirements. not carefully monitored and managed, as experienced employees leave,  gaps could develop in an organization’s leadership and institutional  knowledge. Talent Management Remains a Federal Workforce Challenge

Progress in talent management has been made on a number of fronts. However, our work had identified additional actions federal agencies can  take to recruit, develop, and retain personnel with the skills essential to  maintaining a workforce that will help agencies meet their vital missions. Both Congress and OPM have taken a series of important actions over  the years to improve recruiting and hiring in the federal sector. In 2005, and again in 2008, OPM issued guidance on the use of hiring  authorities and flexibilities, in 2006 developed the Hiring Toolkit to assist  agency officials in determining the appropriate hiring flexibilities to use  given their specific situations, and in 2008 launched an 80-day hiring  model to help speed up the hiring process. Individual agencies have also taken actions to meet their specific needs  for acquiring the necessary talent. Our recent work has also  underscored the value of collaborative training. We  recommended, among other things, that OPM improve guidance and  assistance to agencies in establishing a process for setting and  prioritizing training investments; improve the reliability of agency training  investment information; and identify the best existing courses that fulfill  government-wide training requirements and offer them to all agencies  through their existing online training platform or another appropriate  platform. Results-Oriented Cultures

Leading organizations have found that to successfully transform  themselves they must often fundamentally change their cultures so that  they are more results-oriented, customer-focused, and collaborative in  nature. We have found that having a  performance management system that creates a “line of sight” showing  how unit and individual performance can contribute to overall  organizational goals helps individuals understand the connection between  their daily activities and the organization’s success. To ensure that the federal government is  well positioned to become a model employer of individuals with  disabilities, we recommended that the Director of OPM incorporate  information about agency deficiencies in hiring individuals with disabilities  into its regular reporting to the President on implementing the executive  order; expedite the development of the mandatory agency training plans  required by the order; and assess the accuracy of the data used to  measure progress toward the order’s goals.recommendations and is taking steps to implement them. When we first identified strategic human capital management as a high  risk area in 2001, it was because many agencies faced challenges in key  areas including leadership; workforce planning; talent management; and  creating results-oriented organizational cultures. Through a variety of  initiatives, Congress, OPM, and individual agencies have strengthened  the federal human capital infrastructure. As a result of these  improvements, in 2011 we narrowed the focus of our high risk  assessment to closing current and emerging critical skills gaps. Making greater progress requires agencies to continue to address their  specific personnel challenges, as well as work with OPM and through the  CHCO Council to address critical skills gaps. Office of Personnel Management: Retirement Modernization Planning  and Management Shortcomings Need to Be Addressed. Human Capital: Opportunities to Improve Executive Agencies’ Hiring  Processes. Washington, D.C.:   January 2001.
Why GAO Did This Study

GAO designated strategic human capital management as a governmentwide high risk area in 2001 because of a long-standing lack of leadership.
Since then, important progress has been made. However, the area remains high risk because of a need to address current and emerging critical skills gaps that undermine agencies' abilities to meet their vital missions.
The federal government is facing evolving and crosscutting challenges that require a range of skills and competencies to address. Moreover, 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.
This testimony is based on a large body of GAO work from January 2001 through September 2012 and focuses on the progress made by executive branch agencies, the CHCO Council, and OPM, and the challenges that remain in four key areas of human capital management: (1) leadership; (2) strategic human capital planning; (3) talent management; and (4) resultsoriented organizational culture.

What GAO Found

Since 2001, Congress, the Office of Personnel Management (OPM), and executive branch agencies have taken action to address the government's human capital challenges. For example, in 2002, Congress passed legislation creating the CHCO Council, composed of the Chief Human Capital Officers (CHCO) of 24 executive agencies and chaired by the Director of OPM. In 2004, through the Federal Workforce Flexibility Act, Congress provided agencies greater hiring flexibilities. OPM issued guidance on hiring reforms, developed the Hiring Toolkit, and launched an 80-day model to speed the hiring process.
Leadership:
The CHCO Council advises and coordinates the activities of member agencies on current and emerging personnel issues. Among its recent initiatives, OPM and the CHCO Council established a working group in September 2011 to identify and mitigate critical skills gaps. To date the group has taken important steps, including developing a framework and timeline for identifying and addressing government-wide and agency-specific skills gaps. However, the substantive work of addressing skills gaps remains, including defining workforce plans, implementing recruitment and retention strategies, and measuring the effects of these initiatives.
Strategic human capital planning:
Integrating human capital planning with broader organizational strategic planning is essential for ensuring that agencies have the talent and skill mix needed to cost-effectively execute their mission and program goals. If not carefully managed, anticipated retirements could cause skills gaps to develop further and adversely impact the ability of agencies to carry out their diverse responsibilities. GAO's work has identified skills shortages in areas government-wide, such as cybersecurity, acquisition management, and foreign language capabilities.
Talent management:
Ensuring that federal agencies are able to recruit, develop, and retain personnel with the necessary skills is essential to closing any skills gaps and maintaining a workforce that will meet its vital missions. Congress, OPM, and some individual agencies have taken important actions, such as providing and using flexibilities, to improve the hiring process and making investments in training and development. However, much work remains. For example, GAO recently reported that OPM can improve its guidance and assistance to agencies in establishing a process for setting and prioritizing training investments.
Results-oriented organizational culture:
Leading organizations have found that to successfully transform themselves they must often fundamentally change their cultures to be more results-oriented, customer-focused, and collaborative. As part of that, GAO has shown that agencies need to create clear "lines of sight" that align organizational and individual performance. These lines of sight help individual staff understand the connection between their daily activities and agency success.

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 agencies' actions to implement key recommendations.