Civil Service and Agency Organizations Subcommittee - First Year on the Job: Chief Human Capital Officers

Federal News Service May 18, 2004 Tuesday

May 18, 2004 Tuesday

HEADLINE: HEARING OF THE CIVIL SERVICE AND AGENCY ORGANIZATIONS SUBCOMMITTEE OF THE HOUSE GOVERNMENT REFORM COMMITTEE

SUBJECT: FIRST YEAR ON THE JOB: CHIEF HUMAN CAPITAL OFFICERS

CHAIRED BY: REPRESENTATIVE JO ANN DAVIS (R-VA)

WITNESSES PANEL I:

KAY COLES JAMES, DIRECTOR, U.S. OFFICE OF PERSONNEL MANAGEMENT;

PANEL II:

CHRIS MIHM, MANAGING DIRECTOR OF STRATEGIC ISSUES, U.S. GENERAL ACCOUNTING OFFICE;

DR. REGINALD WELLS, DEPUTY COMMISSIONER, HUMAN RESOURCES, SOCIAL SECURITY ADMINISTRATION;

KEVIN SIMPSON, EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL, PARTNERSHIP FOR PUBLIC SERVICE

LOCATION: 2154 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.

BODY:

REP. JO ANN DAVIS (R-VA): We have some other members that are on their way, but for sake of time we're going to go ahead and get started, and the Civil Service Subcommittee is called to order. Thank you for being here today.

An important provision of the Homeland Security Act of 2002 created the position of chief human capital officer, otherwise known as CHCO, at major federal agencies to improve the federal government's ability to select, train and manage a high-performing workforce. In creating this new position, Congress recognized that federal employees are the government's biggest asset and drive its performance. I've called this oversight hearing to examine how the Chief Human Capital Officers Act has been implemented in the federal government's major departments and agencies since enactment a year ago, and to make sure that the CHCO Council consists of high-quality CHCOs committed to strategically managing their workforce.

Congress intends that the CHCO positions will make a positive difference in the performance of the federal government bringing the most efficient and effective service at the best value to the taxpayers. CHCOs' duties include working closely with the agency head to develop and implement an effective personnel policy. Workers should be treated fairly, and the mission of the agency must become the top priority of every employee. Balancing both priorities is crucial and requires an official to understand both the needs of employees and a broader view of how well an agency is serving the American public. Because of this, it was Congress's intent that CHCOs be placed amongst agency leadership, underscoring the importance of personnel policy.

Furthermore, the Homeland Security Act created the Chief Human Capital Officers Council to elevate the importance of personnel policy government-wide. The federal government is moving towards a personnel system that is increasingly merit-based. With a majority of federal workers moving to new pay systems under the Departments of Defense and Homeland Security, it is imperative to have top-level leadership guide this transition. During this time it will be essential for the chief human capital officers to bridge that crucial gap between agency heads and human resources departments.

With all of this in mind, the subcommittee will today look at how the addition of the CHCO position and the CHCO Council has impacted our federal agencies. There are certainly lessons to be learned and successes to be shared since enactment a year ago. Additionally, and maybe more importantly, our witnesses will also give us a glimpse of what we're to expect in the months and years to come.

Thank you all for being here today and thank you for your patience while we did the transition from one subcommittee hearing to another. And we look forward to hearing all of your testimony.

I will now turn to our ranking member, Danny Davis, for any opening statements.

REP. DANNY K. DAVIS (D-IL): Thank you very much, Madam Chairman. I want to thank you for calling this hearing.

As we know, chief human capital officers will assist agency heads in carrying out the agency's responsibilities for selecting, developing, training and managing a high-quality, productive workforce in accordance with the merit system's principles. The best part of the federal government is the thousands of dedicated men and women who work on behalf of taxpayers each and every day. All of the services Americans rely upon-rely on their government to provide, from protecting our homeland to regulating our markets, will be severely threatened unless we improve the way government manages its most important asset, its workers.

CHCOs must have the vision and leadership skills to integrate the agency's human capital needs with its mission and program goals, while balancing the needs and rights of the workforce. Having been engaged in public interest work for more than 30 years, I believe there is no more fulfilling profession than working for the government in helping to improve the lives of all Americans, particularly those who are less fortunate. It is troubling then when I hear that young people are indifferent to the notion of public service.

Young people seeking job stability will continue to be indifferent to federal employment when they find that their jobs can be contracted out. Contracted out. And the weakening of basic civil service protections will certainly not draw young people and highly- skilled workers to federal civil service. CHCOs will have to confront and overcome these challenges. The CHCO must help agencies adopt a long-term commitment for higher implementation, professional development, performance awards, and retention approaches that support the agency's mission and create a result-oriented culture.

I look forward to hearing how we've done so far, how CHCOs have been developed, organized and put together in order to fulfill this mission. I seriously believe, Madam Chairman, that the notion that government cannot do its work as well as those outside of government is one that needs to be dispelled, and the only way that we can do it is to make sure that we recruit, retain and develop the most highly motivated, most highly prepared and most highly dedicated workforce that we can put together.

I thank you again for calling this hearing and look forward to hearing the witnesses.

REP. J. DAVIS: Thank you, Mr. Davis. And I totally concur with your last couple of statements and appreciate having you on this committee for that reason.

I ask unanimous consent that all members have five legislative days to submit written statements and questions for the hearing record and that any answers to written questions provided by the witnesses also be included in the record. Without objection, it is so ordered. I ask unanimous consent that all exhibits, documents and other materials referred to by members and the witnesses be included in the hearing record and that all members be permitted to revise and extend their remarks, and without objection, it is so ordered.

On the first panel we are going to hear today from the Honorable Kay Coles James, director of the United States Office of Personnel Management. It's standard practice for this committee to administer the oath to all witnesses, and if all the witnesses on both panels could please stand, I will administer the oath to all of you at one time. If you'll please raise your right hand. Do you swear that the testimony you will give today is the truth, the whole truth and nothing but the truth, so help you God?

(Witnesses sworn.)

Let the record reflect that the witnesses have answered in the affirmative and you may be seated.

Director James, it's a pleasure to have you here today and we look forward to hearing your testimony. I know you're on a bit of a time crunch, so with that we'll let you go ahead and get started and you're recognized for five minutes.

MS. KAY COLES JAMES: Thank you, Madam Chairman. I want to thank you and the other committee members for the opportunity to be here today. I am going to give an abbreviated statement, but I would ask that the full text be entered into the record.

REP. J. DAVIS: Without objection, so ordered.

MS. JAMES: The passage of this important legislation reconfirms a goal that we all share: providing a government of service to the American people envisioned by our president in his management agenda. The CHCO Act provides additional conduits for advancing this very important agenda.

First, the statute requires the heads of 24 departments and agencies to appoint a chief human capital officer. And in April of 2003, OPM issued a memo on the designation of these important new positions. The memo noted that chief human capital officers will require different competencies from those traditionally found in an agency's human resources staff function. We also advised that although not required by statute, the spirit of the law would best be fulfilled by designating individuals as CHCOs who serve as integral members of the agency's leadership team.

I am pleased to report that the individuals selected as chief human capital officers are talented professionals who bring a wealth of experience to their position. Many have served the federal government with distinction as career senior executives, while others serve as top-level political appointees. Demonstrating a longstanding need for high-level attention to be focused on human resources issues, several agencies not listed in the act embraced its spirit and designated chief human capital officers as well. These include the Central Intelligence Agency, Federal Labor Relations Authority, Internal Revenue Service, and the Peace Corps.

Second, as the act establishes a Chief Human Capital Officers Council, I, as the OPM director, am honored to serve as the chair of that council. Under the statute, the council is composed of Cabinet Department chief human capital officers and others designated by the OPM director. Employing this authority, I asked the chief human capital officers of several large executive agencies and a representative sample of small agencies to serve on the council as well.

The council has had a very active first year. Less than three weeks after the act took effect, I convened its inaugural meeting. To emphasize the importance that the president placed on the strategic management of human capital, we met for our first meeting in the Indian Treaty Room at the White House. In calling the meeting to order, I described the new body as a "make stuff happen" kind of council. And it has, in fact, been just that.

Since last June, the council has met six times, adopted a charter, established an executive committee to help steer the council, and initiated five subcommittees to address important government-wide human capital issues. We've conducted a two-day retreat, drafted a tactical plan for the current fiscal year, created a Chief Human Capital Officers' Academy, and this is a forum for members to share their best practices, and appointed an executive director to oversee the daily operations of our council. And let me say that probably one of the best things we did was to get Mike Dovilla, who actually, I think, was involved in drafting that legislation, from Senator Voinovich's staff. I think he's forgiven me for that, but he is serving very well in that capacity and has a vested interest in its success and making sure that it is active.

The council subcommittees are focused on some of the key areas for federal civil service modernization. We all know that one of our biggest issues right now is to fix the hiring process, and so that was one of the first subcommittees that we named. And to complement OPM's efforts to encourage agencies to adopt a 45-day hiring model, the subcommittee on the hiring process is also exploring ways to expedite the recruitment and evaluation and appointment of top talent to federal positions, and Dr. Chu from the Defense Department heads up that particular subcommittee.

We believe that one of the most important issues facing the federal workforce today is our emergency preparedness and the safety of our federal workforce. Gail Lovelace from the Department of-GSA, is preparing and helping us to ensure agencies how to best protect our federal workforce, and she is doing a fantastic job as that. Otto Wolff is heading the Subcommittee on Performance Management, and the full council has played a very integral role in developing regulations for the new SES performance-based compensation plan under their leadership of that particular subcommittee.

Bill Leidinger from Education is heading the Subcommittee on Leadership Development and Succession Planning and is considering individual training and development as a part of the strategic plans for our workforce, and is looking at our long-term strategic needs for leadership. The Subcommittee on Employee Conduct and Poor Performers is reviewing statutes and regulations for ways to streamline the process needed to counsel, and if necessary, terminate employees who are not performing at an acceptable level. Pat Pizzella from the Department of Labor is working on that subcommittee.

The CHCO Academy is proving a very productive forum. While these subcommittees are working, we're also having a monthly meeting with this particular academy. It is, in fact, discussing human resource issues in the Cabinet meets. The forum meets monthly to consider such topics as current workforce flexibilities, compensation reform. Next month I will be leading a session on some of the potential options that are being considered for the next wave of reform of the American civil service.

In addition to these accomplishments, the council already has become more than a body that simply discusses issues. OPM is actively including the council in considering and making policy recommendations. Draft regulations to implement the president's recent executive order establishing the Presidential Management Fellows Program includes language that will give an important role to the chief human capital officers. Chief human capital officers are assisting agency heads in enforcing OPM's policy that there is no place in the federal employment or in our government at all for degrees or credentials from diploma mills, so the chief human capital officers are playing an important role in that issue.

Our CHCOs are communicating internally our policies on adjudication of background investigations and security clearances, also a very important function that we have, and having someone in the agencies at a very high level that has that as a part of their agenda is very important. CHCOs are playing an integral role in observing veterans' preference statutes and regulations as they higher new employees. Next week the council will hold a joint meeting with veteran service organizations on the important issues of veterans' preference in hiring. I though it was very important to do this in conjunction with our government-wide celebrations of Memorial Day.

This event will take place at Walter Reed Army Medical Center, and it's a very appropriate location to reflect on the valuable contributions many of our nation's veterans have made in the service and after their military service providing them opportunities for the American civil service.

With a quick look ahead, next week's meeting will celebrate the body's first anniversary, and prominently features on our agenda is a dialogue with representatives of several federal employee labor unions, providing the council valuable input from these important stakeholders. Our first annual report to Congress is forthcoming, and this document will contain information about the council's progress during the first fiscal year. To enhance our communications among the chief human capital officers and with external stakeholders, OPM will soon launch a website containing key information about the council.

The Chief Human Capital Officers Council is adding value to the public policy dialogue on the future of America's civil service. The appointment of CHCOs across the federal government has elevated the institutional profile of the strategic management of human capital as never before. This important law is having a positive effect on how we manage the government's most important resource, people. The members of the council take seriously these important responsibilities, and with continued attention to the president's charge to achieve results, our civil service will only grow stronger as it continues to provide the nation with critical services that our citizens expect.

Thank you again for the opportunity to discuss OPM's progress in implementing the Chief Human Capital Officers Act and I would be pleased to respond to any questions that you may have.

REP. J. DAVIS: Thank you very much, Director James.

I will turn now to our ranking member, Mr. Davis, for questions.

REP. D. DAVIS: Thank you very much.

Madam Director, it's clear that implementation of the human capital officers' activity has hit the ground running. I mean, you've done a lot of things in-my question is how do stakeholders-internal stakeholders, how do they fit into the scheme of things and how do we make sure that they have input into the processes?

MS. JAMES: With the strategic management of human capital government-wide, one of the core values and principles of the management of human capital is that you must involve the stakeholders at every level. And so it would be incumbent upon each of the individual chief human capital officers when they come to the meetings, come prepared with that kind of input to enrich the dialogue. So it would be important that internally in each of the departments they are meeting with stakeholders, both inside and outside of their agencies and bringing that to the table as well.

As I suggested, also the legislation calls for us to be involved at least on an annual basis in a dialogue with our external stakeholders, and we will be doing that next week with what I believe to be a very important meeting out at Walter Reed, where we will have the representatives of labor, as well as the representatives of our veteran service organizations.

REP. D. DAVIS: I guess half of the CHCOs have other areas of responsibility, significant other areas of responsibility. Are we finding that there is ample time for them to be engaged in the other work that they've got to do, and still pay the kind of attention to human capital development that they've charged with the responsibility?

MS. JAMES: In all candor, Congressman, in every case-that's not true in every case. I am concerned that some of our chief human capital officers are stretched far too thin, and I am convinced that as we proceed with this through the year, that some of that may be corrected. We will see, I'm sure, that some of our chief human capital officers will say their plates are too full and there will be some adjustments made. I can't tell you that every chief human capital officer can focus as much as I would like to see them focus on these important issues. I think we're going through a shakedown cruise.

REP. D. DAVIS: There may be some way to wean or tease around to-and I think it's absolutely important activity. I mean, it's been my experience in life that those things which we give the time, energy and attention, that those are where the areas of accomplishment really are. And since we've programmed this in as something that we really want to do, then we'll have to find a way to make sure that those individuals have the ample opportunity to do that.

MS. JAMES: We have a pretty aggressive schedule that includes not only the meetings of the council but the subcommittee meetings, the Executive Committee meetings. And we never want to meet for the sake of meeting. If we are meeting, it's because there's some substantive policy issues to be discussed, decisions to be made, and as a result of that, it is important for people to be there and engaged, and in most cases, that is in fact the case.

REP. D. DAVIS: All right. Well, thank you very much. I don't have any other questions and I appreciate the implementation that is taking place and thank you very much for being here.

MS. JAMES: Thank you.

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REP. J. DAVIS: Thank you, Mr. Simpson.

I'm going to yield back my time now and go to our ranking member, Mr. Davis.

REP. D. DAVIS: Mr. Simpson and Mr. Mihm, how important do you think it is for CHCOs to report directly to their agency heads? I mean, do they-must report directly to the agency director. How important do you think that is?

MR. SIMPSON: In my mind it's very important. It signals a commitment from the very top of the agency to the importance of human capital as a matter of critical importance to the agency. Your agency mission is not going to be accomplished unless you have your human capital shop in order. Jack Welch, head of GE, used to say we spend 70 percent of our time on the people thing, and the day we get the people thing wrong, we've really messed up. And I think that's a model that should be emulated in the government space.

MR. MIHM: I would agree, Mr. Davis. It's important that they report to the highest levels of the organization. The thing that we need to keep in mind is that a number of management positions now report to the head of the agency. CFOs, CIOs, CHCOs. This has been given-this fact has given some impetus to the notion of creating chief operating officers within agencies, often at the deputy level or an equivalent, through which the various management functions could report up so that they are able to have the high level attention that they deserve, but it's not necessarily all going into the Office of the Secretary.

My understanding is the Select Committee on Homeland Security is considering that model with the Department of Homeland Security, creating a chief operating officer, basically elevating the entire management function up to the next level.

REP. D. DAVIS: And let me just ask each one of you, do you think that one can do this effectively on a part-time basis, that is with other duties and responsibilities as well? Perhaps I'll just start with you, Mr. Mihm, and go across.

MR. MIHM: Sure. I would take Director James's point that I think it will be exceedingly difficult over time to devote the necessary time and attention if it's dual-hatted or even triple-hatted with other functions. The key differences, she was pointing out, between an HR director and a chief human capital officer-and it's characterized by Dr. Wells's comments about seat at the table-is that it's much more than responsibility for the traditional HR categories, which are important enough. It's being able to be a real leader in much of the transformation that's going on within an organization. And if we are vesting with these top officials technology, financial management, administration, other management functions, it gets exceedingly difficult to see when they're going to be able to sleep.

MR. WELLS: Mr. Davis, I'm very happy that I wear both hats. That is I'm the deputy commissioner for Human Resources and the chief human capital officer, so I'm probably a little biased and I might struggle with doing a really good job at it, with that full responsibility. I think it is a full-time job. I appreciated the director's forthright remarks about some of the challenges that some of my colleagues face, and from talking to them, I can certainly appreciate that they do.

I think some of it depends, frankly, on the agency. I can see where that may play a role and the amount of support that a particular executive may have surrounding them. But I certainly feel that having direct access to the head of the agency is critical. If you don't have the seat at the table, if you're not able to have that direct access, it would strike me, as you indicated earlier in your remarks, that we sort of do things well, that we pay attention to and put effort into. So I would certainly agree with that.

MR. SIMPSON: My own sense, Congressman Davis, is it's a big portfolio. It's a substantial portfolio of responsibility for the chief human capital officers that that individual needs to focus on. If you look into the private sector and look at comparable positions, a chief people officer at a large corporation, for example, I doubt you'd find many models where those responsibilities are shared. One person has those responsibilities as well as significant other portfolios.

REP. D. DAVIS: I have no further questions. Thank you, Madam Chairman.

REP. J. DAVIS: Thank you, Mr. Davis.

We have four votes, but I believe we have time for five minutes for Ms. Norton to ask questions.

REP. NORTON: Well, let me quickly ask Mr. Mihm a question. You have indicated that, in addition to a central operation, there should be some focus on broader agency operation. I wonder if you saw any indication that the Emergency Preparedness Subcommittee or any part of CHCOs is looking beyond emergency matters. I ask that in light of what happened here, when anthrax occurred here in the Senate. There were many, many employees who simply couldn't work at all. Nobody had arranged for them to work from home. A lot of government waste occurred during that time. How will we avoid that under the president CHCO situation?

MR. MIHM: Yes, ma'am. In fact, we've done quite a bit of work on this. The issue first arose in the mind of members here in Congress in terms of requesting our work is that they had been noticing in an awful lot of the work on continuity of operations, and there had been discussions of critical infrastructure and the need to protect critical infrastructure, and it noted that, jeez, we're not considering people as part of our critical infrastructure. We're worrying about protecting technology and desks and office buildings, but we're not so much worried about people. And so we were asked to look at the people considerations within continuity of operations plans.

And here's the essential issue, is that emergency preparedness and response at the federal level, with both the FEMA guidance and the existing OPM guidance is actually pretty good from the standpoint of worrying about immediate health and safety issues of employees. And that's obviously what our overriding immediate concern needs to be. What we were identifying is a larger set of issue that I think exactly the question on point that you're suggesting is, is once we've had an incident and we have an emergency response team that's kind of re- standing up the agency, how do we reengage the broader group of employees that may be out there, whether through distributed workplaces or technology or alternative work locations or all the rest? We don't really know yet what the Emergency Preparedness Subcommittee of the CHCO Council is coming up with.

I mean, although, as I mentioned in my statement, we're making available to them certainly our work and our suggestions on what they should look at, we've been working with OPM in terms of giving them the earlier report, and have been working very closely with FEMA, and FEMA did accept our recommendations about the need to expand guidance on continuity of operations plans.

REP. NORTON: I certainly would like to see people able to work from home. I mean, talking about backup, we really do need-particularly since essential is very narrowly defined.

MR. MIHM: Yes, ma'am.

REP. NORTON: Finally, one brief question. You say in your testimony, Mr. Simpson, you humbly suggested good government groups such as your own be considered and this issuing could be leveraged to support. Are you saying you haven't been consulted?

MR. SIMPSON: We were just trying to make it clear that we were willing to be helpful to the administration if --

REP. NORTON: Well, I'm asking have you been consulted? Have you had any input?

MR. SIMPSON: We feel that we have had input into the process, yes, and to the-we consult regularly with the chief human capital officers and with the HR community, and we think it's a very free and open exchange. And one of the reasons that we formed our perspective, that, in fact, transition is going to present some real challenges coming up and we wanted to offer to be helpful, and somebody thought we could be helpful in that way.

REP. NORTON: Well, it looks like it's already happening then, Mr. Simpson. Thank you very much.

REP. J. DAVIS: Thank you, Ms. Norton.

And we are going to have to break for four votes, so rather than holding the panel, if members have additional questions for our witnesses today, they can submit them for the record, and if we could get the witnesses to agree to get them back to us for the record. And I'd like to again thank each and every one of you for being here and for your patience.

And with that, the hearing is now adjourned.

REP. D. DAVIS: Thank you.

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