Sept14-2002_d011070.txt

United States General Accounting Office
Ranking Member, Subcommittee on



Oversight of Government Management,
Restructuring, and the District of Columbia, Committee on
Governmental Affairs, U.S. Senate

September 2001
HUMAN CAPITAL



Practices That Empowered and Involved
Employees
a


GAO-01-1070

Contents


Related GAO Products

A
United States General Accounting Office Washington, D.C.
20548
September 14, 2001
The Honorable George V. Voinovich Ranking Member Subcommittee on
Oversight of Government
Management, Restructuring, and the District of Columbia
Committee on Governmental Affairs United States Senate
Dear Senator Voinovich:
People are the federal government's most valuable asset in
managing for results, and you have emphasized the importance of
empowering and involving employees to help agencies achieve their
goals and improve government operations. As our studies of private
and public sector organizations have shown, high-performing
organizations focus on valuing and investing in their
employees--human capital--and on aligning their "people policies"
to support organizational performance goals. However, strategic
human capital management is a pervasive challenge in the federal
government, and is one of the governmentwide areas that we have
identified as high risk.1
In addition, the Administration's emphasis on workforce planning
and restructuring will require federal agencies to examine how they
can flatten their organizational hierarchy and improve their work
processes. The Office of Management and Budget's May 8, 2001,
bulletin called for agencies to use workforce planning to
redistribute higher-level positions to front-line, service delivery
positions that interact with citizens.2 Effective workforce
planning and restructuring efforts will build upon implementation
of the Government Performance and Results Act of 1993 (GPRA) to
address results-oriented goals, improve performance, and assure
accountability. To optimize the provision of services to citizens,
it is crucial that employees understand the connection between
their daily work activities and the results their organizations
seek to achieve.
1 High-Risk Series: An Update ( 
GAO-01-263, Jan. 2001).
2 Office of Management and Budget, Bulletin No. 01-07, Workforce
Planning and Restructuring, May 8, 2001.




At your request, this report examines selected experiences five
agencies have had in implementing practices that helped empower or
involve frontline employees. Our objectives were to (1) identify
and provide examples of the key practices agencies used to empower
and involve employees,
(2) identify some of the barriers that these agencies
experienced and strategies they used to address them, and (3)
provide examples of reported performance improvements from
empowering and involving employees. As agreed, we have examined
selected employee empowerment and involvement practices at specific
components within the Federal Aviation Administration (FAA), the
Federal Emergency Management Agency (FEMA), the Internal Revenue
Service (IRS), the Office of Personnel Management (OPM), and the
Veteran's Benefits Administration (VBA). The practices we examined
at specific agency components were selected from those initiatives
agency officials identified that had, in their view, successfully
empowered and involved employees.
The organizations we reviewed used six key
practices in the initiatives that



Results In Brief
we reviewed to empower and involve employees. Figure 1
identifies the practices and provides some examples of how the
organizations used them.

Figure 1: Six Practices Used to Help Empower and Involve
Employees


•
Demonstrating top leadership commitment. Top leadership
commitment is crucial in instilling a common vision across the
organization and creating an environment that is receptive to
innovation. Leaders of the agency organizations we reviewed
envisioned needed changes, communicated openly with employees, and
instituted organizational changes. For example, the Director of the
FAA Logistics Center decided that the Center needed to operate more
like a private sector business. He met in open forums with
employees to discuss his vision and, with the help of employees and
union representatives, reorganized the Center.


•
Engaging employee unions. Effective labor-management
relations help to achieve consensus and solve problems
expeditiously. In some cases the unions participated in
predecisional discussions with agency management before changes
were implemented. For example, IRS involved its employees' union in
pre-decisional discussions about proposed new policies.


•
Training employees to enhance their knowledge, skills,
and abilities. All five agencies provided formal or on-the-job
training to employees to support the changes that were being made.
For example, OPM provided on-the-job cross training to a retirement
processing team so that the team could adjudicate retirement claims
under both the Civil Service Retirement System (CSRS) and the
Federal Employees' Retirement System (FERS).


•
Using employee teams to help accomplish agency missions.
All five agencies used teams to help accomplish agency missions.
Teams helped flatten organizations by merging divisions and
enhanced flexibility in meeting job demands. For example, VBA
regional offices created self-directed employee teams and merged
divisions to process veterans' benefits claims from beginning to
end. Team members learned new skills and had more flexibility to
help each other accomplish tasks.


•
Involving employees in planning and sharing performance
information. The agencies involved employees to varying degrees in
planning and shared performance information with them. For example,
one IRS division used an employee team to help develop its
strategic plan and shared performance information. One way that
FAA's Logistics center shared performance information was by
posting performance data in charts, graphs, and tables throughout
the building so employees could see the Center's progress toward
achieving organizational goals.


•
Delegating authorities to front-line employees. Employees
at each of the agencies had been delegated authorities. In some
instances employees were formally authorized to approve specified
dollar levels of program assistance or procurements. For example,
FEMA's public assistance coordinators were authorized to approve up
to $100,000 in financial assistance to citizens adversely affected
by natural disasters or other emergencies. In other instances,
teams of employees were provided new authorities to make decisions
related to their work processes, workloads, training needs, and
work schedules.


For the initiatives we reviewed, the agencies undertook changes
that represented a significant shift from their traditional
operations and, as such, encountered organizational and cultural
barriers that needed to be overcome as they sought to empower and
involve employees. These barriers included a lack of trust,
resistance to change and lack of buy-in
Page 3 GAO-01-1070 Human Capital
from front-line employees and managers, and a variety of
implementation issues, such as workload demands. The agencies
developed strategies to address these barriers, such as maintaining
open communication and reassigning and hiring personnel. Managers
and employees adapted to the changes at their agencies over time,
particularly once they perceived benefits, such as improved
communication, from the new practices.
In implementing the practices to empower and involve employees,
agencies identified a range of examples to demonstrate the
performance improvements these efforts have accomplished.
Performance improvements cited included increased efficiency and
improved customer satisfaction. For example, operating as a team
has allowed FAA's Logistics Center to substantially reduce the time
needed to make emergency radar repairs.
FAA, IRS, OPM, and VBA generally agreed with the contents of
this report. FEMA did not comment on the report.



Background
No management issue facing federal agencies could be more
critical to their ability to serve the American people than their
approach to strategic human capital management, including
attracting, retaining, and motivating their employees.
High-performing organizations in the private and public sectors
have long understood the relationship between effective "people
management" and organizational success. However, the federal
government, which has often acted as if federal employees were
costs to be cut rather than assets to be valued, has only recently
received its wake-up call. As our January 2001 Performance and
Accountability Series reports made clear, serious federal human
capital shortfalls are now eroding the ability of many federal
agencies-and threatening the ability of others-to economically,
efficiently, and effectively perform their missions.3 The problem
lies not with federal employees themselves, but with the lack of
effective leadership and management, along with the lack of a
strategic approach to marshaling, managing, and maintaining the
human capital needed for government to discharge its
responsibilities and deliver on its promises.4
All five of the agencies we reviewed have experienced challenges
in managing their human capital. Each has implemented management
changes in response to the challenges they face, including
implementing strategies to empower and involve employees.
FAA faces challenges, including the need to enhance
communication and teamwork, and to provide employees with the
training and skills they need to operate effectively. For example,
we have reported on FAA's implementation of management reforms,
including delegating authorities to teams, to improve its
rulemaking processes.5 In our July 2001 report on aviation
rulemaking we recommended, among other things, that the FAA
Administrator take steps to (1) empower team members by giving them
the authority to coordinate with the associate administrators
(which would eliminate a separate review and approval step), (2)
empower team
3 Performance and Accountability Series-Major Management
Challenges and Program Risks: A Governmentwide Perspective ( 
GAO-01-241, Jan. 2001). In addition, see the 
accompanying 21 reports, numbered GAO-01-242 through
GAO-01-262 on specific agencies.
4 Human Capital: Meeting the Governmentwide High-Risk Challenge 
(GAO-01-357T,Feb. 1, 2001).
5 Aviation Rulemaking: Further Reform Is Needed to Address
Long-Standing Problems

(GAO-01-821, July 9, 2001).

members by permitting them to set their own schedules and
deadlines, and
(3) hold staff and management accountable for ensuring that
schedules are realistic.
At IRS we identified the challenges the organization faces in
revamping its human capital policies to help achieve its
congressionally mandated transformation to an agency that better
balances service to the taxpayers with enforcement of the tax
laws.6 IRS has made major changes to modernize its organization and
operations and comply with the IRS Restructuring and Reform Act of
1998.7 These changes present major management challenges and will
require considerable time to successfully implement them, and IRS
managers and employees are still learning how to work effectively
in the new environment. In revamping its performance management
system, for example, we reported that IRS' new system is weakest at
the front line, where interactions with taxpayers occur.8 However,
IRS officials told us that IRS is conducting customer satisfaction
surveys to enhance its knowledge about what IRS employees can do to
better meet taxpayers' needs.
6 Human Capital: Taking Steps to Meet Current and Emerging Human
Capital Challenges

(GAO-01-965T, July 17, 2001).

7 P.L 105-206, July 22, 1998.
8 Follow-up to the May 8, 2001, Hearing Regarding the IRS
Restructuring Act's Goals and IRS Funding ( 
GAO-01-903R, June 29, 2001), and IRS Modernization:
Continued Improvement in Management Capability Needed to Support
Long-Term Transformation

(GAO-01-700T, May 8, 2001).

VBA faces challenges in processing veterans' benefit claims
accurately and in a timely manner. In its fiscal year 2000
performance report, the Veterans Administration reported that
performance declined with respect to its rating-related
claims-processing timeliness and national accuracy rate. Among the
reasons it cited for this decline was underestimating how long it
would take to realize the impact of initiatives such as increased
staffing and improved training.9 We reported that many experienced
claims-processing staff are expected to retire and that VBA's
training and recruitment programs may not be adequate to ensure a
sufficient workforce of competent claims processors.10 VBA
officials told us that, in response to the concern we raised that
many of the training modules might not be available in time to
train new employees, VBA has stepped up implementation of its plans
to use a new Training and Performance Support System (TPSS).11 This
system is intended to provide standardized training to new
employees who will replace the wave of employees expected to retire
during the next several years. According to VBA officials, they are
currently using TPSS training modules to facilitate the training of
some new employees, but the training modules needed for other newly
hired employees will not be available until November 2001. In the
interim, VBA is using a web-based "field guide" to train those
employees. The field guide uses a variety of delivery mechanisms
including satellite broadcasts, video teleconferencing and
centralized and localized classroom instruction.
FEMA also faces special mission-related challenges, including
providing timely responses to disaster aid requests, preventing or
reducing harm and losses from future disasters through
cost-effective mitigation efforts, and working effectively with
other federal, state, and local programs. To address its strategic
human capital management challenges, FEMA has started an initiative
to reduce middle management layers and streamline its
organization.12
9 Veterans Affairs: Status of Achieving Key Outcomes and
Addressing Major Management Challenges ( 
GAO-01-752, June 15, 2001).
10Major Management Challenges and Program Risks: Department of
Veterans Affairs

(GAO-01-255, Jan. 2001).

11 Veterans' Benefits: Training for Claims Processors Needs
Evaluation 
(GAO-01-601, May31, 2001).
12 Federal Emergency Management Agency: Status of Achieving Key
Outcomes and Addressing Major Management Challenges 
(GAO-01-832, July 9, 2001).


Scope And Methodology
The fifth agency we report on-OPM-downsized significantly during
the 1990s. Among its many responsibilities, OPM receives tens of
thousands of federal employee claims for retirement and insurance
benefits each year. Although its processes have not changed
significantly since the 1980s, OPM plans to modernize its
retirement systems. This modernization is OPM's central strategy to
meet the long-term customer service and financial management
objectives for CSRS and FERS. In its fiscal year 2002 performance
plan OPM reported that, beginning in fiscal year 2002, it will
phase in a new business model for retirement claims
processing.13
To meet our objectives, we asked officials at five agencies to
identify initiatives they had that empowered or involved employees.
From the inventories of the initiatives they developed in response
to our request, we asked agency officials to identify those agency
components and initiatives that, in their view, had successfully
involved and empowered employees. We sought to identify practices
that were commonly implemented by the agencies within the past 5
years. In some cases, agencies focused our attention on practices
that began earlier.
We interviewed agency executives, managers, supervisors,
front-line employees, and union representatives to discuss how
agencies had implemented these practices to empower and involve
employees, and we analyzed related documents and information they
provided. We did not attempt to verify the performance data that
agencies provided.
We included FAA in our review because it has certain exemptions
from the Federal Acquisition Regulations designed to facilitate
delegating procurement authorities to lower levels. We included IRS
and OPM in our review, given IRS' exemption from certain title 5
personnel provisions and OPM's human capital leadership role in the
federal government. FEMA and VBA were selected because a literature
review of relevant articles indicated that front-line employees
from those agencies had been empowered or involved in key agency
decisions or operations.
Because we were seeking to review initiatives that had
successfully empowered and involved employees, we asked
headquarters officials to identify organizational components for
our review. Our FAA work was
13 Office of Personnel Management: Status of Achieving Key
Outcomes and Addressing Major Management Challenges ( 
GAO-01-884, July 9, 2001).
Page 8 GAO-01-1070 Human Capital


Six Key Practices Helped Empower And
Involve Employees
concentrated at the Mike Monroney Aeronautical Center in
Oklahoma City, OK. Our FEMA work was done at the National Security
Affairs Office, the Response and Recovery Directorate, and the
Operations Support Directorate within FEMA headquarters in
Washington, D.C., and at FEMA's
U.S. Fire Administration in Emmitsburg, MD. Our work at IRS was
done at the Wage and Investment Division in IRS' headquarters in
Washington, D.C., and at the Accounts Management, Submissions
Processing, and Compliance branches at the Ogden, UT, Service
Center. Our OPM work was conducted at its Retirement and Insurance
Service locations in Washington, D.C., and Boyers, PA. Our VBA work
was conducted at VBA's regional offices in Los Angeles, CA;
Muskogee, OK; and Phoenix, AZ. Our selection process was not
designed to provide examples that could be considered
representative of all the employee empowerment and involvement
initiatives at the agencies reviewed or the federal government in
general.
We conducted our work from October 2000 through August 2001 in
accordance with generally accepted government auditing
standards.
The five agencies we reviewed implemented key empowerment and
involvement practices as part of making organizational changes
intended to realign organizations and processes to improve
performance. The practices were (1) demonstrating top leadership
commitment; (2) engaging employee unions in making changes; (3)
training employees to enhance their knowledge, skills, and
abilities; (4) using employee teams to help accomplish agency
missions; (5) involving employees in planning, and sharing
performance information; and (6) delegating authorities to
frontline employees.

Demonstrating Top Leadership
Commitment
Top leadership commitment is crucial in developing a vision,
initiating organizational change, maintaining open communications,
and creating an environment that is receptive to innovation. In
earlier reports and testimonies, we observed that top leadership
must play a critical role in creating and sustaining
high-performing organizations. Without the clear and demonstrated
commitment of agency top leadership, organizational cultures will
not be transformed, and new visions and ways of doing business will
not take root.14
Consistent attention to employee empowerment and involvement
issues helps to ensure that changes are sustained. Agency leaders
need to commit their organizations to valuing and investing in
their employees by empowering, involving, and providing them the
tools to do their best, and by implementing the modern performance
management and incentives systems needed to focus employees'
efforts on achieving agency missions and goals. Top leadership
commitment entails time, energy, and persistence in providing
incentives and establishing accountability. Agency leaders must
commit their organizations to valuing and investing in their
employees and focusing their employees' efforts on achieving stated
agency missions and goals.15 While top leadership commitment can be
demonstrated in many ways, the following are examples employees and
managers identified for the selected initiatives we reviewed at
these agencies.
• Think strategically about areas where innovation would make
good business sense. Leaders conceptualized new approaches to
improve performance and engaged employees and managers in shaping
the implementation of that vision. For example, the Director at
FAA's Logistics Center saw the need for operating more like a
private sector business and envisioned the organizational and
operational changes that would be required to do that. The
Logistics Center's Director helped to ensure that all employees
shared his vision by discussing proposed changes with his top-level
managers and by meeting with front-line
14 Managing for Results: Federal Managers' Views Show Need for
Ensuring Top Leadership Skills 
(GAO-01-127, Oct. 20, 2000); Management Reform: Using
the Results Act and Quality Management to Improve Federal
Performance 
(GAO/T-GGD-99-151, July 29, 1999); and Management
Reform: Elements of Successful Improvement Initiatives 
(GAO/T-
GGD-00-26, Oct. 15, 1999).
15 
GAO-01-965T.
Page 10 GAO-01-1070 Human Capital
employees and union representatives to obtain their input about
potential changes.


•
Reorganize and integrate operations. Leaders implemented
their visions by realigning their organizations to improve
performance and increase the coordination of mission-related
activities. For example, a Branch Chief in OPM's Retirement and
Insurance Service enabled a new team to improve claims processing
by, among other things, providing cross-training for the team to
handle both CSRS and FERS claims.


•
Create an environment of trust and honest communication.
Leaders made themselves available to employees and unions, promoted
open and constructive dialog, and were receptive to ideas and
suggestions from employees at all levels. Following an approach to
change management that is transparent and highly participatory is a
key element in involving and empowering employees. For example,
several of the agencies held town-hall meetings with employees to
discuss workplace issues and provide a forum for input and
feedback. IRS employees said that they felt that management used
the information they provided about proposed changes.


•
Target investments and provide incentives to facilitate
change.


Leaders provided funding and created financial and other
incentives to support new ways of working and to encourage
employees to attain the agencies' goals and objectives. For
example, the FAA Logistics Center Director committed to providing
every Logistics Center employee with a $500 cash award if the
Center met all of its performance targets for fiscal year 2001. At
the time of our review, the Logistics Center was on track to meet
or exceed its goals.
• Participate in efforts to benchmark successful
organizations.
Some leaders visited organizations that were models for
enhancing organizational flexibility and maintaining quality
standards. By visiting and benchmarking model performance
practices, leaders demonstrated to employees their personal
commitment to making the changes needed for their offices or units
to become high-performing organizations.16 For example, the
Director of one VBA regional office visited several private sector
organizations to observe how they processed claims and ensured
accuracy. The insights gained were factored into the changes made
in regional office claims operations.
16 Benchmarking is a critical part of an effective improvement
program because it helps an organization identify outstanding
levels of performance that have actually been achieved.
Benchmarking therefore helps define specific reference points for
setting goals for improving performance. See Managing for Results:
Critical Actions for Measuring Performance 
(GAO/T-GGD/AIMD-95-187, June 20, 1995).
Page 11 GAO-01-1070 Human Capital
• Use a 360-degree performance feedback system. One leader used
input from team members to improve the team's performance. An OPM
Branch Chief who supervises the cross-trained claims processing
team implemented a 360-degree feedback system for assessing both
her and her team members' performance. Under that system, team
members provide her with input on her performance as a team coach
as well as input on the performance of other team members. She then
uses that information for self-assessment and in providing
performance feedback to individual team members.
Engaging Employee Unions Involving employee
unions, as well as involving employees directly, is crucial to
achieving success. Major changes can involve redesigning work
processes, changing work rules, developing new job descriptions,
establishing new work hours, or making other changes to the work
environment that are of particular concern to employees' unions.
Obtaining union cooperation and support through effective
labormanagement relations can help achieve consensus on the planned
changes, avoid misunderstandings, and more expeditiously resolve
problems that occur. The following are examples of how agencies
engaged employee unions.


•
Develop and maintain an ongoing working relationship with
unions. Agencies worked cooperatively with employee unions and
found that an ongoing relationship enhanced communication. For
example, OPM maintained a continuous dialog through weekly meetings
of management and union representatives to share information and
address workplace issues. Officials at OPM's Retirement Operations
Center at Boyers, PA, and the American Federation of Government
Employees (AFGE) said that their excellent working relationship
helped facilitate the adjustments made to incorporate new
technology at the Center. They said when new technology reduced the
Center's need for file clerks, union and management officials
worked together to ensure that affected employees received advance
notice about upcoming changes, training in new skills, and
information about available job opportunities.


•
Document formal agreements. Agencies had formal
agreements to serve as a foundation setting forth the manner in
which labor and management would work together. For example, the
agreement between IRS and the National Treasury Employees Union
(NTEU) was designed to ensure that employees are adequately
represented and informed of proposed new policies and have input
into the proposals.




Training Employees to Enhance Their
Knowledge, Skills, and Abilities
The agreement also provides for continuous improvement in IRS
operations in part by providing employees the authority, resources,
and other inputs they need to effect changes and to be accountable
for performing effectively, and provides for NTEU participation in
various forums, such as business process improvement teams and
cross-unit committees.


•
Build trust over time. Some agencies have undertaken a
long-term effort to create an environment of trust and openness in
working cooperatively with unions. For example, both IRS and NTEU
officials credited the excellent working relationship they
developed over the last decade for helping to reorganize IRS.
Officials at IRS stated that the reorganization has resulted in
operating divisions that are focused on serving taxpayers and
flatter decision-making structures with clear end-to-end
accountability. The NTEU President said that the union was willing
to expedite some negotiations on mission-critical issues because a
trusting relationship had developed and IRS employees felt that
management used the information they provided in shaping the new
IRS.



•
Participate jointly in making decisions. Agencies
involved unions and incorporated their input into proposals before
finalizing decisions. For example, several unions provided
suggestions about how agencies should share performance information
with employees. In another instance, OPM's Operations Center and
AFGE worked jointly on predecisional matters, such as the hiring of
a new director of the Operations Center.

Both employees and managers viewed training as a critical
factor in learning how to work in new and different ways. To
improve customer service, employees may need new skills, such as
the ability to analyze and improve work processes or the ability to
work effectively together on teams. In addition to job-specific
skills and work processes, training in teamwork and communications
and encouragement and coaching through mentoring and networking can
help employees adapt to new ways of working that involve changes in
their roles and job expectations. VBA officials, for instance, told
us that, along with providing various training modules, employees
also need on-the-job training, coaching and mentoring to enhance
their expertise through actual experience in processing claims. The
following are examples of how agencies trained employees in new
processes.


•
Provide a mix of on-the-job and formal training. Agencies
used a variety of training techniques to help employees adjust to
organizational and operational changes. For example, OPM provided
on-the-job cross training so that a claims processing team could
adjudicate both CSRS and FERS claims. According to the Branch
Chief, because the team received cross-training, it was able to
help another division reduce its backlog of FERS cases. OPM also
provided formal training to teams in how to make decisions in
setting goals, planning and assigning work, and scheduling overtime
and training.



•
Provide training on building team relationships and new
ways of working. When making significant changes to their
operations, agencies provided training to help facilitate change.
For example, when IRS undertook a major reorganization, its Ogden,
UT, Service Center trained its employees in the new ways of
conducting business. The training workshops included (1) learning
how effective teams function;



(2)
improving working relationships among peers, managers and
employees, and managers and union stewards; (3) enhancing effective
communications among employees, union stewards, and
managers;


(4)
increasing discussions about ways to improve work
processes and meet customers' needs; and (5) creating a more
positive workplace environment. The employees we interviewed said
that training on effective working relationships was especially
beneficial because they got to know their co-workers and gained an
appreciation for each others' views.




•
Commit sufficient funding and time to training. Agencies
considered training needs in budget decisions and their workforce
planning. For example, as FAA's Logistics Center was being
reorganized to operate in a more businesslike manner, it trained
employees about the need for, as well as on how to develop, quality
work processes. This enabled employees to document information that
was required for the Logistics Center to receive International
Organization for Standardization (ISO) 9000 certification for
quality work processes.17 To receive this certification, an
organization must show that it has standardized, high-quality
processes that result in products and services that are provided in
a timely manner.


17ISO is a worldwide federation of national standards bodies
representing 140 countries. ISO 9000 certification recognizes
standardized quality processes established by organizations to
produce consistently high-quality products or services.
Page 14 GAO-01-1070 Human Capital


Using Employee Teams To Help Accomplish
Agency Missions
Adopting a teams-based approach to operations can improve
employee morale and job satisfaction by creating an environment
characterized by open communication, enhanced flexibility in
meeting job demands, and a sense of shared responsibility for
accomplishing agency goals and objectives. Using teams can also
assist in integrating different perspectives, flattening
organizational structure, and streamlining operations. In a prior
GAO report on best practices, we said that commercial firms began
using integrated product teams in the 1980s as a way to get better
results faster.18 An integrated product team is a concentration of
product expertise within a team of employees who, together, have
the authority to design, develop, test, manufacture, and deliver a
product. In examining FAA's efforts to modernize its air traffic
control systems, we stated that although FAA has identified an
integrated team approach as key to the agency's efforts to deploy
systems that meet performance goals, major offices still tended to
function in stovepipes that inhibit an integrated team
approach.19
The following are examples of how teams were used in the agency
initiatives we reviewed.
• Create teams of employees who represent multiple
organizational functions and different grade levels. Agencies
flattened their organizational structures by including employees
from various organizational functions and grade levels on teams.
For example, VBA consolidated regional office operations by merging
two divisions and creating teams with members from both functions
who could process claims from beginning to end. In some cases,
forming teams provided opportunities for front-line employees to
assume leadership roles. FEMA's teams at the U.S. Fire
Administration provided opportunities for front-line employees to
lead teams whose members included a mix of employees and
supervisors. Agencies also took steps to streamline their processes
by using a team approach. For example, VBA streamlined its claims
process by allowing one employee to handle all aspects of a claim,
instead of requiring employees to write referrals and wait for
responses from other divisions. VBA's team approach also
18 Best Practices: DOD Teaming Practices Not Achieving Potential
Results 
(GAO-01-510,Apr. 10, 2001).
19 Air Traffic Control: Role of FAA's Modernization Program in
Reducing Delays and Congestion ( 
GAO-01-725T, May 10, 2001).
Page 15 GAO-01-1070 Human Capital
enhanced accountability to veterans because team members were
responsible for handling specific claims.


•
Establish an integrated working environment with common
goals. When agencies established teams, this provided an
environment in which individual team members were encouraged to
work together toward achieving team goals. For example, FEMA's U.S.
Fire Administration teams had members from units throughout the
organization. The teams met on a weekly basis and identified ways
to implement over 170 Board of Visitors recommendations for
improving the Fire Administration's operations. These teams
facilitated communications and employee involvement by maintaining
a focal point for the organization, working toward consensus, and
posting performance data showing progress toward addressing these
recommendations.


•
Assign team responsibilities and provide an environment
for learning. Agencies assigned a broad range of responsibilities
to teams and allowed members to help each other and learn new
skills. For example, VBA's claims-processing teams were responsible
for controlling claims from when first received until finally
adjudicated. That required the team to conduct a full range of
claims functions, including receiving and controlling the claims,
contacting veterans and hospitals to obtain information, and making
benefit decisions. Team members were able to assist other team
members when needed, which helped develop team members' skills in
functions they did not previously perform. To enable the team to
efficiently meet their objectives, the teams were also responsible
for setting their work schedules and managing their
workload.


•
Hold teams accountable for results. The agencies held
teams accountable for accomplishing their work, and working
together in a team environment encouraged team members to share
accountability. When teams made decisions about how to do their
work, employees told us they felt greater accountability for the
teams' overall performance. For example, members of the FAA
Logistics Center's integrated product teams were accountable for
all aspects of the Center's products, including maintenance,
repair, storage, and shipping. The teams' performance was measured
on a regular basis, providing direct feedback to the
teams.




Involving Employees in Planning and
Sharing Performance Information
• Physically collocate team members when appropriate. Agencies
collocated team members when the employees had been working in the
same building or facility. Although technology is being used to
help bring teams that are geographically dispersed together in a
virtual environment, to the extent that team members are already
located nearby, moving team members to a shared location improved
communication and enhanced efficiency.20 For example, collocating
OPM's retirement team members facilitated the sharing of
information among members and led to improved work processes and
customer satisfaction.
Involving employees in planning and sharing performance
information can help employees understand what the organization is
trying to accomplish and how it is progressing in that direction.
Involving employees in the planning process helps to develop agency
goals and objectives that incorporate insights about operations
from a front-line perspective, as well as increases employees'
understanding and acceptance of organizational goals and
objectives. Involving front-line employees in the goal-setting
process also helps create a clear "line of sight" throughout the
organization so that everyone understands what the organization is
trying to achieve and the goals it seeks to reach. Employees we met
with appeared committed to working toward the goals of their
agencies and to providing high quality service.
20 Advances in the use of information technology and the
Internet are continuing to change the way federal agencies
communicate, use, and disseminate information, deliver services,
and conduct business. See Electronic Government: Challenges Must Be
Addressed With Effective Leadership and Management ( 
GAO-01-959T, July 11, 2001).
Page 17 GAO-01-1070 Human Capital
Sharing performance information can provide employees with a
more meaningful perspective about how their day-to-day activities
contribute toward the organization's goals and objectives. Sharing
performance information also allows supervisors to provide clearer
and more specific feedback to teams and front-line employees on
their expectations, progress, and performance. Agencies' use of
performance information can be improved. In May 2001, we reported
that, based on a survey of federal managers at 28 agencies, at no
more than 7 of the 28 agencies surveyed did 50 percent or more of
the managers respond that they used performance information to a
great or very great extent.21 However, at the agencies we visited,
managers used performance information and shared this information
with front-line employees through various mechanisms. Some of these
agencies, such as VBA and IRS, used a balanced scorecard approach,
which is intended to provide a balanced perspective regarding
agency results, customer satisfaction, and employee feedback. At
one of VBA's regional offices, for example, computerized
information is continuously displayed on video screens providing
employees with current performance information.
The employees we met with were aware of their agencies' and
their units' performance goals and objectives, and they said that
sharing performance information had enhanced communications across
all levels of the organization. Employees told us that sharing
performance information provided everyone with a focus to work
toward and a status report on their progress. They also said that
sharing performance information generated more performance-related
discussions, including at town-hall meetings, other meetings with
managers, and during team meetings.
The following are examples of how agencies involved employees in
planning and sharing performance information.
• Create mechanisms to involve employees in the planning
process.
Agencies used various mechanisms to develop strategic plans,
gather feedback from internal stakeholders for identifying gaps in
existing strategic plans, and obtain employee input and feedback.
For example, one IRS division used an employee team to help to
develop its strategic plan. The team ensured that all division
employees had opportunities to
21 Managing for Results: Federal Managers' Views on Key
Management Issues Vary Widely Across Agencies 
(GAO-01-592, May 25, 2001).
Page 18 GAO-01-1070 Human Capital


Delegating Authorities to Front-line
Employees
provide input, and the agency used that input as part of its
efforts to develop a balanced set of goals and objectives for the
division.
• Post performance information throughout the workplace.
Agencies shared performance information with employees by
posting it through a variety of means, including charts, graphs,
newsletters, and agency intranet postings. For example, FAA's
Logistics Center posted performance charts and graphs in the entry
foyers of its buildings and at the entrances to its organizational
units. Such postings permitted employees to easily see how their
units' performance was contributing to agency goals and objectives.
The Logistics Center also had a monthly newsletter for sharing
organizational performance information and providing an arena for
employees to share information.


•
Share performance information in meetings. Agencies
frequently held town-hall and other meetings to discuss program
performance and organizational issues. Agencies used town-hall
meetings to help employees better understand how their work efforts
contributed to overall organizational success. The town-hall
meetings also provided a forum in which employees and managers
could discuss organizational changes and suggest operational
improvements. For example, IRS' Ogden, UT, Service Center employees
we interviewed said that for the first time regular and effective
communications between Center managers and employees was occurring.
They said that, in addition to listening, managers were taking
action on employees' suggestions, which made the employees see that
their input was valued. Frequent team meetings provided employees
an opportunity to obtain feedback about agency performance. For
example, VBA teams shared performance information at weekly
meetings, information that helped the teams assess their progress
in meeting performance goals.


•
Survey employees on their views regarding organizational
direction. Agencies used surveys to obtain employees' views, such
as input regarding the direction of organizational changes. IRS'
Wage and Investment Operating Division surveyed employees on the
strengths, opportunities, and priorities for each of the division's
branches, shared survey results with employees, and implemented
changes as a result.


Delegating authorities to front-line employees involves the
transfer of authorities from managers to those employees who are
closer to citizens and provide services and information as part of
their day-to-day activities. Providing delegated authorities can
enable employees to control their own work processes and schedules.
Delegating authorities also gives employees the opportunity to look
at customer needs in an integrated way
Page 19 GAO-01-1070 Human Capital
and effectively respond to those needs. Delegating authorities
can benefit agency operations by streamlining processes.
Furthermore, delegating authorities to front-line employees gives
managers greater opportunities to concentrate on problems or
policy-level issues. If employees believe they have the authority
to tackle goals and objectives beyond their formal job descriptions
and assigned units, then when customers have legitimate complaints,
empowered front-line employees can "make it right" immediately
rather than having to wait for management to get involved.
The following are examples of how agencies delegated authorities
to frontline employees.


•
Empower on-site staff with authority to make decisions.
Agencies delegated authorities and empowered front-line employees
to exercise responsibilities to more fully address customer needs.
For example, FEMA public assistance coordinators are on-site at the
disaster or emergency to observe the conditions and to coordinate
public assistance. They were delegated the authority to determine
applicants' eligibility, to approve up to $100,000 in public
financial assistance, and to help to ensure that applicants are
kept fully informed throughout the public assistance
process.


•
Eliminate layers of review. Agencies reduced the number
of approvals needed for various activities and delegated greater
authority to front-line employees to make decisions. For example,
FAA's Aeronautical Center delegated authorities to its audiovisual
teams to make decisions while on location, such as the need to
visit locations in addition to those originally planned and
approved. This allowed the audiovisual teams to more efficiently
meet customer needs. At FEMA, delegating authority to the Public
Assistance Coordinators eliminated two additional state reviews of
applications for assistance and two other reviews by
FEMA.


•
Provide more time for managers to focus on problem areas
or policy matters. Agencies targeted managers' skills on more
difficult problems or policy areas by delegating some authorities
to front-line employees. For example, VBA managers said they were
able to use their time more efficiently after delegating day-to-day
claims-processing authorities to the teams. They said that by
delegating these authorities, they could concentrate on policy
matters and more difficult problems that the teams were unable to
handle.


•
Establish a new position with appropriate authority. Some
agencies identified situations in which new positions of authority
could help benefit operations. For example, VBA, as part of its
efforts to





Agencies Addressed Barriers To Efforts
That Empowered And Involved Employees
reengineer its claims processing, established a new decision
review officer position and provided employees in those positions
the authority to review and change claims decisions that veterans
appealed. Prior to this, veterans' appeals were addressed under a
formal hearing process. Because decision review officers have more
flexibility to address appeals informally, creating this new
position provided the opportunity to streamline the process and
save time.
The agencies we reviewed undertook changes that represented a
significant shift from their traditional operations and, as such,
encountered organizational and cultural barriers that needed to be
overcome as they sought to empower and involve employees. Some of
the barriers included a lack of trust, resistance to change and a
lack of buy-in, and implementation issues. Despite encountering
these barriers, the employees and managers we met at each of the
five agencies perceived benefits from the employee empowerment and
involvement practices that their agencies had implemented. To
address the barriers, the agencies used such strategies as open
communication, a commitment to change, and providing performance
feedback.
All of these efforts entailed cultural transformations, and
therefore there was some natural resistance that took time and
effort to overcome. Nevertheless, the experiences of these agencies
demonstrate that organizations can make progress in addressing
barriers to empower and involve their employees. The following are
some examples of the barriers encountered and the strategies used
to address them.
Lack of Trust The agencies identified a
lack of trust as a barrier they experienced in their efforts to
empower and involve employees. A lack of trust can frustrate agency
attempts to implement major changes in employees' day-to-day
working environment. Throughout our review, managers, unions, and
employees continuously emphasized the importance of trust in
gaining acceptance for changes. For example, some employees feared
for their job security as FAA's Logistics Center began to implement
more business like operations. However, they told us that they
learned to trust the Logistics Center's Director as they recognized
the need for the changes.
Some employees were skeptical that managers would listen to
their input for planning purposes. They were also concerned that
performance data

Resistance to Change and Lack of
Buy-in
would be used to justify punitive actions, rather than to
increase employees' understanding about the direction of the
agency's performance. In addition, working in a more open
environment requires employees to trust and help each other, which
some employees said initially was a barrier to working as a team.
Maintaining an open door policy that encouraged employees to share
their views and demonstrating a vision and commitment to change
were two approaches that agencies used to develop trust.
Another barrier that agencies experienced was resistance to
change and a lack of buy-in. Employees and managers resisted making
changes because they had to work in new and unfamiliar ways. Some
employees found it difficult to transition from working under
direct supervision to working on a team with little direct
supervision. For example, according to FEMA officials, some team
members continued to seek leadership and guidance from management,
did not trust other team members, and were reluctant to speak out
in the team environment until they eventually adjusted to working
in a team environment.
According to officials from the five agencies, some managers
found it difficult to operate in a new environment of more open
communication and feedback. Some FEMA managers and supervisors were
reluctant to allow employees to have delegated authorities in areas
such as budgeting, procurement, and time and attendance report
approval. At FAA's Aeronautical Center, some employees with
contracting responsibilities were initially uncomfortable
exercising newly delegated procurement authority to purchase goods
or services up to a certain dollar amount without supervisory
approval. The employees said that they gained confidence as they
became more experienced in exercising the new authority, and some
of the employees and managers who initially resisted changes
adjusted to them gradually over time. In some cases, the offices we
visited made managerial and supervisory changes when individuals
were unable to adjust to a more open work environment.
A lack of buy-in resulted in some employees and managers being
reluctant to fully participate in training. They tended to view the
changes being made as another "flavor-of-the-month" initiative.
Thus, they were not as open to receiving new information or
adopting new ways of working. IRS provided an example of a solution
to this barrier. To encourage managers to buy into team concept
training, IRS has decided to train section chiefs who will then
train employees in their work units.


Implementation Issues
Implementation issues, such as workload demands and performance
incentive issues, also presented barriers to change. Although
employees generally appreciated the changes made to work in a team
environment, high workload demands affected some team members'
ability to exercise their delegated authority. VBA, for example,
has a large, and growing, backlog of compensation and pension
claims. 22 Although team members had the authority to set their
schedules and determine their day-to-day work priorities, heavy
workload demands prevented them from being able to plan and manage
their work. Some of VBA's decision review officers also told us
that their ability to exercise their delegated authorities had been
limited by the claims-processing backlogs.
Another implementation issue that affected teams involved the
incentives that agencies provided to teams to encourage
performance. For example, some employees said that working on teams
was demotivating when poor performers obtained an equal share of
team rewards. Some employees and managers said that not enough
money was available for rewarding employees and teams that met
their goals and objectives. Such issues were commonly addressed in
team meetings and in individual performance feedback.
The timing of training was another implementation issue that
agencies cited as a barrier. For example, some team members told us
that it would have been helpful if they had received training
before being reorganized into teams, rather than after. Because
training was not provided prior to moving to a team environment,
the teams were immediately faced with the need for team members to
take time off of the front lines for training and skill building.
Providing training at the appropriate time for an employee can
achieve better results.
22 The accurate and timely processing of compensation and
pension claims is one of the major management challenges we have
identified at the Department of Veterans Affairs. See Major
Management Challenges and Program Risks: Department of Veterans
Affairs 
(GAO-01-255, Jan. 2001).
Page 23 GAO-01-1070 Human Capital
Agencies identified a range of examples to
demonstrate the different ways



Agencies Cited

performance can be improved in
implementing the practices to empower and involve employees. As we
have reported before when looking at Performance management reform
efforts, it is difficult to disentangle the effects of
numerous initiatives and external factors that affect each
agency'sImprovements environment.23 For example, external factors
such as legislative changes
that resulted in reopening nearly 100,000 veterans' claims and
the
increasing complexity of these claims have affected VBA's
results in
addressing its claims backlog.
Officials from the five agencies attributed improved operations
to the employee empowerment and involvement initiatives they had
implemented, and the specific offices we visited had achieved
successes in implementing the practices we reviewed in this report.
Therefore, these examples are presented to illustrate how
performance can improve through the contributions of empowered and
involved employees.
• FAA's Logistics Center Radar Product Division team addressed
emergencies, as well as routine tasks, more quickly. Established in
1998, this Division is an integrated product team of experts such
as engineers and electronic technicians, who perform all of the
functions required to repair ground-based radar systems. In April
2000, the airport surveillance radar at Boston's Logan Airport was
ripped from its mounting pedestal during severe weather conditions,
severely reducing the number of flights in and out of Logan
Airport. Working together, the team, along with other FAA and
non-FAA organizations, made extensive repairs and restored radar
service within 58 hours after the incident. In December 2000, a
similar problem occurred at New York's JFK airport, and the team
restored service within 56 hours.
According to Logistics Center officials, prior to working as an
integrated product team, it required longer for FAA to coordinate a
response to similar emergencies and fully restore service. FAA said
that collocating all of the logistics functions including
Engineers, Items Managers, Technicians, Equipment Specialists, etc,
allowed the team to work together on priority areas. Collocation
also eliminated communication barriers, such as the need to write
memos or leave voice mail messages
23 NPR's Savings: Claimed Agency Savings Cannot All Be
Attributed to NPR 
(GAO/GGD-
99-120, July 23, 1999).
Page 24 GAO-01-1070 Human Capital
to request services and wait for responses. Forming the team
also allowed FAA to reduce overlapping roles and responsibilities.
Logistics Center officials said that the Radar Product Division
team's coordinated operations saved time, including reducing the
average number of days required to obtain research assistance from
45 days to 1 day.



•
FEMA's customer surveys show improved satisfaction.
According to FEMA, one of its goals was to transform the public
assistance program into a customer-driven and performance-based
program, thereby improving the quality and delivery of service to
state and local applicants. Customer surveys conducted by FEMA
after each disaster where public assistance was provided showed
that customer satisfaction has improved. Fiscal year 2000 survey
results showed that

85.6 percent of the respondents were satisfied with the
assistance FEMA provided, an increase from the 81.4 percent
customer satisfaction level FEMA achieved in fiscal year 1999.
FEMA's fiscal year 2001 target is to increase its customer
satisfaction results up to 87 percent. FEMA officials we met with
said that delegating authority to the employees in Public
Assistance Coordinator positions had contributed to this
improvement.


•
OPM's retirement claims processing team helped another
Division in the Retirement and Insurance Service reduce a backlog
of retirement claims. In February 2000, there was a backlog of
about 12,000 FERS retirement claims, and OPM's management
instituted a seven-point plan to address this problem. One of the
components of the plan was to provide an existing group of CSRS
benefits specialists with cross training in FERS claims
adjudication. OPM said that the team's flexibility, attitude, and
work ethic played a significant role in the success of this effort,
which was OPM's first cross-training initiative. According to OPM,
the team's contribution, along with reallocating staff, hiring, and
improved automation, led to a 7,000 case reduction in the backlog
by March 2001.24


24 As reported in its fiscal year 2000 performance report, CSRS
claims processing time increased to 44 days from 32 days in fiscal
year 1999, and FERS processing times increased 
to more than 6 months from 3 months in fiscal year 1999 (see
GAO-01-884). OPM hasrecognized the need to address lagging
times in retirement claims processing. According to OPM, steps to
implement its modernization plan have reduced FERS processing
times, and development of a staffing plan will enable it to reduce
CSRS processing times.
Page 25 GAO-01-1070 Human Capital


•
IRS' Substitute for Return Authority has expedited
taxpayer compliance. In some cases, IRS employees are authorized to
prepare substitute tax returns for taxpayers that did not file or
filed a false return. Instead of referring requests to a different
office as was done in the past, IRS has delegated this authority to
revenue officers. This allows one-stop case resolution, because the
revenue officers now maintain complete control of the case through
collection of any balance due. By streamlining IRS' processes,
additional taxes are being assessed within 5 to 8 months, much
faster than the 30 months it usually took before. This also
benefits taxpayers, because the amount of penalties and interest
added to taxpayer accounts is reduced when assessments are more
timely. IRS reported that during a fiscal year 2000 pilot program,
revenue officers with delegated authorities prepared 257 non-filer
cases involving tax assessments of about $3.5 million.


•
When VBA established its decision review officer
position, it first used a pilot program to test the new operational
approach at 12 locations. VBA found that during the pilot phase,
which ended December 31, 2000, the number of appeals resolved at
the regional office level increased by 10 percent. By implementing
this position nationwide, VBA projects there will be a 45 percent
increase in the number of appeals resolved at the regional offices
during fiscal year 2001. VBA attributes the increased number of
appeals resolved at the regional office level to the efforts of its
decision review officers.


As agencies plan and implement the
President's initiative to restructure


Conclusions
their workforces and streamline their organizations, they need
to recognize how human capital contributes to achieving missions
and goals. Effective changes can only be made and sustained through
the cooperation of leaders, union representatives, and employees
throughout the organization. All members of an organization must
understand the rationale for making organizational and cultural
changes because everyone has a stake in helping to shape and
implement initiatives as part of agencies' efforts to meet current
and future challenges. Agencies can improve their performance by
the way they treat and manage their people.
In this report we have identified six key practices used in
selected initiatives to help to empower and involve employees in
identifying and implementing needed changes. These practices
are


Agency Comments


•
providing sustained leadership commitment to open
communications and support culture change,


•
engaging unions to include all perspectives in achieving
consensus about needed changes,


•
using a variety of formal and on-the-job training
approaches to facilitate the development of new skills,


•
encouraging employees to combine their resources and
talents by working together in teams,


•
involving employees in planning and sharing performance
information so that employees help shape agencies' goals and better
understand how their day-to-day activities contribute to results,
and


•
empowering staff by giving them the authority they need
to make decisions and effectively conduct agency
operations.


Each federal agency will need to consider the applicability of
these practices within the context of its own mission, needs, and
culture. Nevertheless, we believe that agencies can improve their
performance, enhance employees' morale and job satisfaction, and
provide a working environment where employees have a better
understanding of the goals and objectives of their organizations
and how they are contributing to the results that American citizens
want. We believe that the practices we identified should be
considered by other agencies as they seek to improve their unique
operations and respond to the challenges they are facing.
We provided drafts of this report in August 2001 to the
Secretary of Veterans Affairs, the Secretary of Transportation, the
Commissioner of Internal Revenue, the Director of the Office of
Personnel Management, and the Administrator of the Federal
Emergency Management Agency, or their designees, for their review.
Cognizant agency officials from DOT, IRS, OPM, and FAA responded
orally and agreed with the contents of the draft report. In some
cases, they also provided written technical comments to clarify
specific points regarding the information presented. Where
appropriate, we have made changes to this report that reflect these
technical comments. FEMA did not provide comments on this
report.
As agreed with your office, unless you announce the contents of
this report earlier, we plan no further distribution until 30 days
after its issue date. At that time, we will send copies of the
report to the Chairman, Subcommittee on Oversight of Government
Management, Restructuring, and the District
Page 27 GAO-01-1070 Human Capital
of Columbia, Senate Committee on Governmental Affairs; the
Chairman and Ranking Member, Senate Committee on Governmental
Affairs; and the Chairman and Ranking Member, Subcommittee on
Security, Proliferation, and Federal Services, Senate Committee on
Governmental Affairs. We will also send copies to the Secretary of
Veterans Affairs, the Secretary of Transportation, the Commissioner
of Internal Revenue, the Director of the Office of Personnel
Management, and the Administrator of FEMA. In addition, we will
make copies available to others upon request.
If you have any questions about this report, please contact me
or Susan Ragland on [phone]. Others who contributed to this
report were
N. Scott Einhorn, Shirley Bates, Tom Beall, Gerard Burke, Renee
Chafitz, Sharon Hogan, Cassandra Joseph, John Lesser, Michelle
Sager, and Greg Whitney.
Sincerely yours,

J. Christopher Mihm Director, Strategic Issues


Related GAO Products
Managing For Results: Federal Managers' Views Show Need for
Ensuring Top Leadership Skills 
(GAO-01-127, Oct. 20, 2001).
Veterans Affairs: Status in Achieving Key Outcomes and in
Addressing Major Management Challenges 
(GAO-01-752, June 15, 2001).
Veterans Benefits: Training for Claims Processors Needs
Evaluation

(GAO-01-601, May 31, 2001).
Managing For Results: Federal Managers' Views on Key Management
Issues Vary Widely Across Agencies 
(GAO-01-592, May 25, 2001).
Best Practices: DOD Teaming Practices Not Achieving Potential
Results

(GAO-01-510, Apr. 10, 2001). High-Risk Series: An
Update 
(GAO-01-263, Jan. 2001).Major Management Challenges
and Program Risks: Department of
Transportation 
(GAO-01-253, Jan. 2001).
Major Management Challenges and Program Risks: Department of the
Treasury 
(GAO-01-254, Jan. 2001).Major Management Challenges
and Program Risks: Department of
Veteran Affairs 
(GAO-01-255, Jan. 2001).
Major Management Challenges and Program Risks: Department of
Veterans Affairs 
(GAO-01-255, Jan. 2001).Veterans Benefits
Administration: Problems and Challenges Facing
Disability Claims Processing 
(GAO/T-HEHS/AIMD-00-146, May 18, 2000).
Veterans Benefits: Promising Claims-Processing Practices Need to
be Evaluated 
(GAO/HEHS-00-65, Apr. 7, 2000).Veterans Benefits
Administration: Progress Encouraging, but Challenges
Still Remain 
(GAO/T-HEHS-99-77, Mar. 25, 1999).
Related GAO Products
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