Office of Management and Budget

Congressional Testimony

STATEMENT OF THE HONORABLE SEAN O'KEEFE
DEPUTY DIRECTOR
OFFICE OF MANAGEMENT AND BUDGET
BEFORE THE
UNITED STATES SENATE
SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT, RESTRUCTURING AND THE DISTRICT OF COLUMBIA

JULY 17, 2001

Mr. Chairman and Members of the Committee:

Thank you for the opportunity to appear before the Committee to discuss the Administration's views on expanding flexible personnel systems government-wide. We welcome your interest and the continued opportunity to work with you to strengthen the quality of the Federal workforce so it can effectively serve the American people, both now and in the future.

I am pleased that the Senate confirmed Kay Cole James last week. We are anxious to work with her and the U.S. Office of Personnel Management (OPM) to jointly develop a plan for the strategic management of human capital.

The President's Management and Performance Plan

Strategic management of human capital is one of the key elements of the President's Management and Performance Plan. The Administration's effort to strengthen the quality of the workforce is being undertaken as part of a coordinated and coherent plan of Government reform to improve Federal management and deliver results that matter to the American people. The other government-wide elements of that plan include budget and performance integration, competitive sourcing, improving financial performance, and expanding e-government. These five initiatives not only work together, but also are mutually reinforcing. The combination of all of these initiatives pursued concurrently is far greater than the mere sum of the parts. Each is dependent on the others to assure maximum advantage.

Strategic Management of Human Capital

The President has proposed to make the Government more citizen-centered. This means ensuring that there is as little distance as possible between the citizens and decision-makers by flatting the Federal hierarchy, reducing the numbers of layers in Government, and using workforce planning to help agencies redistribute higher-level positions to front-line, service-delivery positions that provide value for citizens.

To accomplish this important goal, the Administration has asked each department and agency to prepare a five-year restructuring plan, based upon a workforce analysis, as part of the FY 2003 budget request and annual performance plan. This restructuring plan will outline how the agency will restructure its organizations and its workforce to get the job done as effectively and efficiently as possible. Agencies will reshape their organizations to meet a standard of excellence in attaining the outcomes important to the Nation.

Near-term strategy

Agencies must make better use of the flexiblities currently in place to acquire and develop (through recruitment, teaming, and reward strategies) excellent talent and leadership. Just last week, in the course of the first meeting of the President's Management Council, OPM discussed the flexiblities currently available to departments and agencies under current law. Most of the deputies, who function as the agencies' chief operating officers, were unfamiliar with these flexiblities, as well as the tools and resources available to them. Given that, there are now plans to disseminate best practices to allow agencies to take advantage of strategies available under current law.

There also are many human resources flexiblities that have been successfully tested through existing demonstration authorities. These flexiblities include broadbanding, pay for performance systems and simplified hiring processes. OPM is convening a workgroup to assess the successes and failures achieved under the demonstration projects and other exemptions from Title 5 to determine how well existing human resources strategies support agency mission, goals and other organizational needs.

Only when departments and agencies better understand and fully exercise the flexiblities currently available to them can we determine what works. Then it will become opportune to determine which demonstration projects should be considered for availability government-wide and what statutory changes are needed to enhance management flexibility, permit more performance-oriented compensation, correct skills imbalances, and provide other tools to recruit, retain, and reward a high-quality workforce.

The remaining challenge

The nature of the challenge we are facing is a civil service system that perpetrates a 20th century hierarchical and process-driven culture. Federal personnel policies and compensation tend to take a "one-size-fits-all" approach. Excellence goes unrewarded, while pay raises tend to be diluted across the entire Federal workforce. Federal pay systems do not reflect current labor market realities, and rewards are not strategically targeted to attract and retain a high performing Federal workforce. For example, under current law, the entire General Schedule that covers almost every kind of white-collar occupation must be adjusted by a single percentage in each of the 32 localities in the contiguous 48 States. Furthermore, procedures for removing unproductive employees are too cumbersome, often taking months to complete. High performance must become a way of life that defines the culture of the Federal service. The civil service system should demand and deliver sustained excellence and high levels of performance. It must use clear and carefully aligned performance incentives for its individual employees, for its teams, and for its leadership which are tied clearly to reaching their agency's mission objectives. The civil service system must comprise talented people who are attracted and retained by emphasizing the rewards of public service. Accountability for results must be clear and meaningful, with positive rewards of success and real consequences for failure.

Conclusion

I look forward to working with the Committee and Congress to reach our shared goal of building, sustaining and effectively deploying the skilled, knowledgeable, diverse, and high-performing workforce needed to meet the current and emerging needs of the Government and its citizens.