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Title: The Public Service
Subtitle:
Report No.: GAO/OCG-93-7TR Date: December 1992
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Author: United States General Accounting Office
Office of the Comptroller General
Addressee: Transition Series
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CONTENTS
Public Service Issues
Modernizing Employment Practices
- Improving Recruiting and Hiring
- Meeting the Changing Needs of Our Workforce
- Equipping Agencies to Downsize the Federal Workforce
Enhancing Federal Workforce Management
- Intensifying Efforts to Diversify the Federal Workforce
- Allowing Agencies to Manage Performance More Flexibly
- Improving Labor-Management Relations
- Reforming Health Benefits
- Choosing Between Employees and Contractors
Fully Implementing Pay Reform
Rebuilding a Positive Public Image
Related GAO Products
- Modernizing Employment Practices
- Enhancing Federal Workforce Management
- Fully Implementing Pay Reform
- Rebuilding A Positive Public Image
Transition Series
- Economics
- Management
- Program Areas
Office of the Comptroller General
Washington, DC 20548
December 1992
The Speaker of the House of Representatives
The Majority Leader of the Senate
In response to your request, this transition series report discusses a topic
that is critical to the successful implementation of the government's
programs--the need to acquire and retain a competent and motivated federal
workforce. The issues described in this report include modernizing employment
practices, enhancing federal workforce management, fully implementing pay
reform, and rebuilding a positive public image for the public service to
restore public confidence in government and make it an attractive career
choice.
The GAO products upon which this report is based are listed at the end of the
report.
We are also sending this report to the President-elect, the Republican
leadership of the Congress, the appropriate congressional committees, and the
Director-designate of the Office of Personnel Management.
PUBLIC SERVICE ISSUES
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In our 1988 transition series, we reported that the government was faced with
a people problem that impeded agencies in their efforts to achieve their
missions. We said that the negative image of public service--due largely to
years of criticism of federal employees and unethical conduct by government
officials--and the inadequacy of federal compensation were significant
barriers to attracting and retaining a high-quality workforce.
Important progress has been made in the past 4 years. Criticism of federal
employees has subsided somewhat, major ethics reform legislation has been
enacted, and a new pay-determining process has been put into place to help
narrow the ever-widening gap between federal and private sector pay.
If the government is to be able to attract and retain high-quality people,
meet the public's performance expectations, and regain a positive public
image, it is important not only to sustain the initiatives begun during the
past 4 years but also to respond to other emerging issues.
One such issue is reducing the size of workforces. Federal managers do not
always have the flexibility, systems, or processes they need to downsize
effectively while both meeting their mission requirements and treating
employees fairly.
Clearly, the federal government faces stiff competition from other employers,
who also want the best and brightest. Competitive dimensions (in addition to
pay) include recruiting and hiring processes, benefits structures, and
approaches to downsizing when workforces must be reduced. Many employers have
more progressive approaches in these areas than the federal government.
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IMPROVING RECRUITING AND HIRING
The Office of Personnel Management (OPM) is improving many aspects of the
government's recruiting and hiring programs, but significant problems remain.
Federal recruitment efforts at the nation's colleges and universities have
been most notable for their absence. Federal employment information at
colleges and universities is often inadequate, and service has sometimes been
poor at OPM's job information centers. Information on federal job openings is
not always available or easy to locate, and the application process remains a
mystery to many. OPM needs to continue working with agencies to strengthen
federal recruiting efforts, particularly at colleges and universities, and to
make information on federal employment readily accessible nationwide. Closer
working relationships among OPM, federal agencies, and college placement
personnel and increased involvement by agency program managers in recruitment
would also help greatly.
Federal hiring mechanisms are burdensome and complex. Many personnel officers
and program managers believe that the time it takes to hire someone is a
significant problem. Rules have been designed to ensure merit; increase the
employment of women, minorities, and veterans; and give managers some
flexibility. However, these rules often do not meet their objectives;
sometimes they conflict and overwhelm both managers and applicants.
The government needs a new hiring process, but designing one will not be easy.
Federal agencies, the Congress, and other interested parties must all work
together to solve this problem. We have ongoing efforts aimed at identifying
potential solutions.
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MEETING THE CHANGING NEEDS OF OUR WORKFORCE
Dramatic changes in the demographic composition of the nation's workforce are
presenting serious challenges to all organizations in their efforts to be
effective, competitive employers. More and more women are working, and the
proportion of families with both spouses in the labor force has increased
greatly. Furthermore, the workforce is aging. The median age of the workforce
rose by more than 2 years from 34.3 in 1980 to 36.6 in 1990 and is predicted
to increase by another 4 years by 2005.
Progressive nonfederal employers are ahead of the federal government in
adapting to changing times. For example, flexible benefits are becoming
increasingly available in nonfederal organizations but are generally not
available to federal employees. Also, unlike employees in many nonfederal
organizations, federal employees are generally not permitted to use any
portion of accumulated sick leave to care for family members who are ill
unless they have a contagious disease. Some companies have begun programs to
extend older employees' careers and rehire retirees to fill temporary needs.
Other programs that appear to have wide applicability, such as adoption
assistance or sick-child care, are available in only a few agencies or for
certain employees.
OPM has established a new office to concentrate on work/family issues. This
office needs to monitor demographic changes and develop and promote proposals
that will not only enable the government to catch up with other employers but
also enable it to become a leader in the work/family arena.
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EQUIPPING AGENCIES TO DOWNSIZE THE FEDERAL WORKFORCE
Organizations often rely on attrition when they need to reduce their
workforces. When the size of the reduction needed is relatively small and
sufficient time is available, attrition can work well for both the employer
and the employee. However, when significant reductions are needed over
relatively short time frames, attrition alone may not be enough.
Such is the situation facing the federal government. The Department of Defense
(DOD) is in the process of reducing its workforce by over 200,000 by fiscal
year 1997 from its level in 1987. Given the federal budget deficit, many
civilian agencies could face large reductions as well.
Federal workforce downsizing of the magnitude expected will create a major
challenge to delivering quality programs and services to the public. Federal
approaches to achieve voluntary reductions have met with limited success. Both
managers and employees have criticized methods for dealing with involuntary
employee separations as costly, unfair, and possibly discriminatory.
What is the problem? Unfortunately, there are many. The government has not
created sufficient incentives to induce voluntary moves; the process for
reductions in force (RIF) is inflexible and has multiplier effects on the
number of persons affected; and job placement programs are likely to be hard
pressed to place a high proportion of registrants in jobs. Federal managers
also claim that the rigid rules for offering early retirement and conducting
RIFs often frustrate their attempts to shape a workforce needed to accomplish
their agencies' missions.
Recent legislation dealing primarily with DOD downsizing provides new
financial incentives to encourage early retirements and resignations; advance
notice, expanded job training, and placement assistance to employees facing
involuntary separations; and various other forms of transition assistance. It
is important that these additional tools be implemented to lessen the
financial and emotional effects on displaced employees and minimize adverse
organizational impacts. Civilian agencies also need to be given appropriate
tools to deal with downsizing, and all downsizing approaches need to be
evaluated to see if they are equitable and do not adversely affect mission
accomplishment.
More specifically, the new administration and the Congress will have to
address several questions.
-- Are additional incentives needed to induce separations among those persons
already eligible for early retirement?
-- Will the implementation of voluntary separation incentives recently
authorized for DOD effectively increase attrition without being
discriminatory while allowing managers the flexibility to shape their
workforces to meet their needs?
-- Should voluntary separation incentives recently authorized for DOD or other
incentives be provided to civilian agencies?
-- Will current job placement programs be able to match sufficient numbers of
displaced employees with other government vacancies without placing new
restrictions on civilian agency managers' discretion in hiring?
-- Are statutory and/or regulatory changes needed to minimize the expected
adverse impact of involuntary separations on women and minorities?
ENHANCING FEDERAL WORKFORCE MANAGEMENT
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The public expects and has every right to receive high-quality services at
reasonable costs from a government workforce that (1) reflects the people it
serves, (2) operates efficiently and effectively, and (3) is held accountable
for results. Too often, limited top-management attention or complex and
restrictive laws, regulations, and processes have hampered the government's
ability to effectively manage its workforce toward meeting these objectives.
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INTENSIFYING EFFORTS TO DIVERSIFY THE FEDERAL WORKFORCE
The federal government has made strides toward attaining a workforce that
reflects the nation's diverse population, but much more needs to be
accomplished. Although women and minorities comprise the majority of the
federal workforce at grades 2 through 11, their presence decreases to about 30
percent for grade 13 positions and continues downward to about 17 percent for
the Senior Executive Service (SES). Moreover, 1990 federal workforce data show
that one or more women or minority groups were underrepresented in 97 percent
of 261 key jobs--jobs that lead to middle- and upper-level management
positions.
Management commitment at all levels of government and continued monitoring are
needed if the federal government is to achieve a diverse workforce. Agencies
frequently do not set measurable affirmative employment goals. At agencies we
have reviewed, SES performance workplans do not specifically hold managers
accountable for meeting affirmative employment objectives. Specificity is
needed to truly gauge how successfully the executives are carrying out their
affirmative employment responsibilities. Furthermore, many agencies have
submitted late or incomplete program plans to the Equal Employment Opportunity
Commission (EEOC). EEOC has often approved these plans even though they lacked
such important elements as certain workforce analyses needed to determine
progress in achieving a representative workforce.
EEOC must provide stronger leadership. It must work with federal agencies to
help them better identify and address barriers to the entry and progression of
women and minorities. We have made a number of recommendations to EEOC for
improving the government's affirmative employment program. These include the
need for better guidance to agencies on required workforce analyses and the
need for EEOC to withhold approval of agency plans until substantive
requirements are met. EEOC has begun to address our concerns. It needs to
continue to work with agencies to strengthen accountability for results.
Although stronger leadership from EEOC is essential, the President and the
Congress need to emphasize to agency heads that they must have programs in
place and hold their senior managers accountable for achieving a
representative workforce, particularly at higher grade levels.
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ALLOWING AGENCIES TO MANAGE PERFORMANCE MORE FLEXIBLY
The government's performance management system is commonly perceived as not
working well. Often, it does not meet its objectives to improve and motivate
employees' performance, achieve individual accountability, and instill
employees' trust in the assessment process.
One reason is that the government's performance management system has been and
continues to be too rigid. Consistent with private sector trends, many federal
agencies are beginning to move away from rigid, centralized, and
individual-oriented management approaches to the more flexible, decentralized,
team-oriented, and customer-based approaches similar to those embodied in the
principles of total quality management (TQM). The government needs to continue
moving toward a flexible performance management system that agencies can
tailor to their own missions, work environments, and workforces.
Another reason the system is not working well is that the link between
performance and pay is considered by many to be too weak to motivate, reward,
or penalize employees. For example, many employees believe that the amount of
money provided through performance awards is not sufficient to serve as a
motivator, and employees who continue to perform poorly over a long period are
often not penalized through reductions in pay. Consistent with the principles
of TQM, some managers would like to have greater ability to reward team
efforts.
In addition, as we noted in our 1988 transition series report on the Public
Service, the lack of measurable goals and objectives makes it difficult to
know whether important programs and initiatives are succeeding. Our more
recent work shows this to be a continuing problem. It is difficult to hold
organizations or people accountable without clear results-oriented goals and
good performance measures to gauge progress in achieving those goals.
Performance management is one of the most difficult and complex issues in
human resource management. While there appears to be a consensus on what the
specific problems are, there does not appear to be a consensus on specific
solutions. Thus, the executive and legislative branches need to work on an
approach for (1) giving agencies the flexibility they need to develop
solutions that will work for them, (2) linking performance and pay in a manner
that will better motivate and reward employees, and (3) establishing
results-oriented goals and better using performance measures to gauge
progress.
Labor-management relations experts as well as agency and union representatives
across the country agree that the federal labor-management relations program
is not working well. They say that the program is too adversarial and that it
suffers from excessive litigation over procedural and minor matters. In
addition, processes used to resolve disputes are viewed as too slow and
complex.
Comprehensive reform is essential to the effective conduct of the public's
business, including implementation of the quality improvement initiatives that
emphasize employee involvement and teambuilding being sought by federal
agencies. Because the perceived problems are systemic and widespread,
convening a panel of participants in the federal program and nationally
recognized experts in labor relations could be the best approach for
developing a viable reform proposal.
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REFORMING HEALTH BENEFITS
The Federal Employee Health Benefits Program (FEHBP) is the largest
employer-sponsored health insurance program in the United States. In fiscal
year 1993, it will provide health benefits for about 9 million federal
employees, annuitants, and their dependants at an estimated cost of
$16 billion. Over the years, the Congress, OPM, federal employees, and
employee unions have expressed concerns about FEHBP's structure and cost and
have called for reform.
The debate on FEHBP reform has appropriately focused on issues related to
program design, availability of choice among plans, and cost of health
benefits. At the Congress' request, others have examined and reported on these
issues, essentially reinforcing the call for reform. Also at the Congress'
request, we have looked at the program's administrative costs, almost all of
which are incurred by contractors.
At a cost of over one-half billion dollars annually, contractors'
administration of FEHBP is an important consideration. We believe that as much
as $200 million annually could be saved if FEHBP's administrative costs were
reduced to the levels of other large health benefits programs we reviewed.
However, to achieve savings of that magnitude, it would be necessary to
legislate a more uniform benefits structure and allow for the procurement of
administrative services under competitive, fixed-price contracts that would
periodically be rebid. Currently, benefits vary widely among plans, and OPM
uses essentially noncompetitive, self-renewing contracts with carriers.
The new Congress and administration need to continue the debate on FEHBP and
reach consensus on reform, including the potential for saving up to $200
million annually in administrative costs. In the meantime, OPM could save up
to $35 million yearly by better managing administrative costs under the
current FEHBP structure. We believe that more thorough OPM analyses and
comparisons of operational costs among plans could identify opportunities for
cost savings.
OPM has been responsive to our recommendations but has been hampered by
limited staffing in its efforts to better oversee program administrative costs
as well as combat fraud and abuse in the program. The Congress and the
administration need to work with OPM to ensure that reasonable staffing levels
are available.
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CHOOSING BETWEEN EMPLOYEES AND CONTRACTORS
In today's environment of tight budgets, agencies face tough challenges
accomplishing their missions. A key issue is whether to use contractors or
expand the workforce. This issue has two major components. One relates to the
flexibility agencies have to make these decisions. The other relates to the
core expertise agencies need to oversee and control contractors.
Federal managers have not often had sufficient flexibility to choose between
hiring employees or contractors because of restrictive legislation or
personnel ceilings imposed by the Office of Management and Budget (OMB) or the
Congress. Agencies frequently must use contractors even when they believe it
would be more appropriate to use employees because of the nature of the work
involved or because it would be less costly to use employees.
For example, legislative and budgetary restrictions on the Environmental
Protection Agency's (EPA) Superfund Program necessitated the use of
contractors rather than employees. According to EPA officials, it is easier to
get OMB's approval for contract dollars than for employee positions for
various agency programs. Also, personnel ceilings imposed by OMB were a major
factor inhibiting the Department of Energy (DOE) from achieving substantial
savings by having government employees rather than contractors perform support
service functions.
Another problem sometimes faced by agencies, due at least in part to
restrictions on hiring employees, is the lack of sufficient staff capability
to oversee and control contractors. The lack of this capability has
contributed to serious problems in government programs, such as safety
problems at nuclear weapons production plants and in the nation's space
program.
Although OMB has indicated that it is willing to authorize additional employee
positions, the use of personnel ceilings as a control device has left agencies
with the perception that OMB is still reluctant to do so. The Congress and OMB
need to provide agencies with the authority and flexibility to use government
employees rather than contractors when employees would be more appropriate,
considering the nature of the work involved, or could more cost effectively
carry out agencies' missions.
Four years ago, it was generally recognized that inadequate salaries were a
primary cause of the government's recruitment and retention problems. In 1990,
the Bush administration and the Congress reached agreement on a comprehensive,
long-term pay reform program designed to ultimately make federal salaries
competitive with the private sector. The program was enacted into law and has
been favorably received. The basis for this legislation was well founded,
namely, that high-quality people needed to effectively run government programs
were finding employment elsewhere.
But budgetary constraints could jeopardize full implementation of pay reform.
Achieving a consensus between the administration and the Congress was a long,
arduous process that would be difficult to reestablish if the current program
were to become sidetracked. Full implementation of pay reform is a key
building block of a more effective government and important to the
government's ability to attract and retain a highly qualified and motivated
workforce. If the size of the workforce, coupled with budget deficits, makes
pay reform too difficult to fund, the Congress and the administration may want
to consider the option of reducing the size of the workforce to allow full
implementation of pay reform.
REBUILDING A POSITIVE PUBLIC IMAGE
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Public respect for and confidence in government have been diminishing. News
reports of alleged misconduct by government officials or efforts by former
federal officials to influence decision-making have not helped project a
positive image of government.
In 1989, the Congress and President Bush forged a consensus on ethics reform
in the federal government and enacted the Ethics Reform Act of 1989. The act
strengthened federal conflict-of-interest statutes and employee financial
disclosure requirements, with a view toward achieving greater uniformity in
ethics rules among all three branches of the government. All three branches
have also been given additional authority and responsibility to ensure
effective program implementation.
Federal agencies in the executive branch have varied in the intensity and
effectiveness of their efforts to prevent, detect, and deal with conflicts of
interest between employees' official duties and their private interests. The
effectiveness of the ethics program has been impeded by insufficient
top-management emphasis on implementing effective employee financial
disclosure reporting and inadequate review of employees' activities outside
the government.
Agencies' efforts to address employees' conflicts of interest have also been
impeded by shortages of staff assigned to review disclosure reports and by the
failure of some agencies to require employees holding positions vulnerable to
conflicts of interest to file disclosure reports (or to report outside
activities). Furthermore, the executive branch's supervising ethics office,
the Office of Government Ethics (OGE), has been hampered in its monitoring and
enforcement efforts by limited staff and authority. Recent legislation
authorized more staff and enforcement powers.
Agency heads must aggressively pursue strong ethics programs, including
requirements for producing effective employee disclosure of financial and
outside interests and a sufficient number of properly qualified staff assigned
to review these interests and ensure that they are appropriate.
Problems with financial disclosure programs also exist in the legislative and
judicial branches, so they, too, need to continuously improve their efforts.
Another dimension of strong ethics programs in the executive branch is the
willingness and ability of employees to report misconduct without fear of
retaliation and with the understanding that their allegations will be properly
investigated. Many federal employees do not have this sense. In 1992, about 70
percent of the employees we surveyed reported that they had little or no
knowledge about how the whistleblower law protects them and said that they did
not know where to report misconduct. One solution to this problem would be to
have agencies provide information on where to report misconduct during
OGE-required ethics training programs.
