Risky-Business: Human Capital Remains High-Risk Area

By on January 26, 2005 in Current Events with 0 Comments

In the Government Accountability Office’s just-released 2005 High-Risk Update, federal human capital, designated a high risk area in 2001, remains on the list. For many federal employees, a federal human capital crisis means different things. To some, it simply means the federal government stopped hiring new college graduates a generation ago. As a result, as these career federal employees move into retirement, their leaving represents a knowledge and skills gap that cannot be replaced by a new employee, a problem facing many agencies in 2005.

To others, it is the fact that an abnormally high percentage of the federal workforce is eligible for retirement now and in the next few years. The question, or the crisis, is what the federal government will do if they all decide to leave at the same time. And yet for more the human capital crisis more refers to the process of managing human capital in a changing environment. Recruiting, retention and results-driven management are among those ideals tied to a human capital crisis.

There is truth to all scenarios, and the result is that once again GAO has designated human capital as a high risk area. So what does this mean?

GAO, which assesses and updates its high-risk report every two years, indicated that human capital remains high-risk because federal human capital strategies still do not meet current and emerging challenges or drive the transformations necessary for agencies to meet these challenges.

“For example, human capital considerations are a critical element for the intelligence organizations and related homeland security organizations that are undergoing a fundamental transformation in the aftermath of September 11, 2001,” the report indicated.

GAO did agree that the executive branch and Congress had taken steps to address the human capital shortfalls – citing the President’s Management Agenda which identified human capital management as a top priority.

Furthermore, the Office of Management and Budget reported that agencies are making improvements in addressing key human capital challenges. Congress also elevated human capital crisis issues within federal agencies with the creation of Chief Human Capital Officer positions and a council to advise and assist agency leaders in their human capital efforts. Several agencies have been given authorities to design and manage their own human capital systems as well and Congress has authorized agencies to use additional flexibilities such as specific hiring authorities. The Office of Personnel Management is also working agencies to make the government more competitive for top talent by speeding up the hiring process. Performance management and compensation systems for senior executives have been reformed to better link the institutional, unit and individual performance and reward systems.

While GAO stated that more progress had been made in the last few years than in the previous 25, ample opportunity exist for agencies to improve their strategic human capital management to achieve results and respond to current and emerging challenges:

• Leadership: Agencies need sustained leadership to provide the focused attention essential to completing multiyear transformations.

• Strategic Human Capital Planning: Agencies need effective strategic workforce plans to identify and focus their human capital investments on the long-term issues that best contribute to results.

• Acquiring, Developing, and Retaining Talent: Agencies need to continue to create effective hiring processes and use flexibilities and incentives to retain critical talent and reshape their workforces.

• Results-Oriented Organizational Cultures: Agencies need to reform their performance management systems so that pay and awards are linked to performance and organizational results.

Office of Personnel Management Director Kay Coles James applauded GAO for leaving human capital management in the high-risk zone.

“I applaud and fully support the decision of Comptroller [David] Walker to maintain Human Capital on the high-risk list for 2005. The opportunity to completely reshape the federal workforce, to recruit and retain a new generation of talented Americans and to build agency capacity in the face of massive retirement waves demand sustained and energetic leadership at the agency level,” James said, issuing a challenge to federal leaders.

“Nearly one million federal employees will soon be working under contemporary human resources systems at the Department of Homeland Security and the Department of Defense. New programs such as the Federal Career Development Program will help some of the outstanding talent already in government become even more effective executives for the future.

“These are critical first steps to improving a personnel system that is properly rooted in proven merit principles and Veterans Preference. But for applicants who are qualified and who wish to serve their nation — yet find themselves faced with vacancy announcements that require deciphering, positions that have been inappropriately been walled off to only those with previous government experience, agencies that fail to make aggressive use of the flexibilities granted to them by the Congress, managers who are poorly trained in the use of incentives and expedited hiring models and who must still wait for months for an acknowledgement or answer — we must do more to honor their interest and commitment.

“Once again, I applaud Comptroller [David] Walker and Congressional leaders for helping keep human capital at the forefront and I challenge agencies to redouble their efforts to better manage the federal government’s most important resource…its people.”

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.