The 2014 State of Human Capital Management Report

Creating the Next Generation of Federal Human Capital

The 2014 State of Human Capital Management Report 2

In addition to the more than 200 respondents to the survey, this whitepaper contains five interviews with federal leaders in human capital management who provided valuable feedback on the major trends discussed in this report. All quotes, advice, and insights quoted in this report came directly from these executives.

Robert N. Goldenkoff Director, Strategic Issues Government Accountability Office

Peter Shelby Associate Dean National Intelligence University

John Palguta Vice President Policy of the Partnership for Public Service

David Krieg Human Capital Officer Internal Revenue Service

Yvonne Jones Director Government Accountability Office

Whitepaper Participants

“Succession planning is about preparing for the future. If agencies are not doing that or are not doing it well, it could exacerbate the issues going forward as more and more folks retire. The important thing to understand about succession planning, where agencies often miss the boat, is that it’s not a question of duplicating what you are now and backfilling vacancies. It’s thinking about what your future needs and what the requirements are. What’s your mission going to be in the years ahead?” Robert N. Goldenkoff, Director, Strategic Issues, Government Accountability Office

Participants in the Whitepaper ................................................. 2

Introduction ............................................................................ 3

The Findings ............................................................................ 7

Part I: Greatest Need for Staff Development ............................ 7

Part II: Top Priorities for 2014 ................................................... 8

Part III: Scope of Investments: Succession Planning and Training .............................................................10

Part IV: Through Which of These Methods do You Deliver Training Content .................................................12

Part V: Where We Are vs. Where We Need to Be .....................13

Part VI: Top Barriers to Goals...................................................14

Going Forward: Shifting Culture to Foster Change ..................15

About HCMG .........................................................................17

About Cornerstone OnDemand ..............................................17

About WBR ............................................................................18

About WBR Digital .................................................................18

Sources ..................................................................................19

Table of Contents

The 2014 State of Human Capital Management Report 3

Human capital – the collective talent, skills, and capabilities of individuals who create value and productivity in an organization – is one of, if not the, most important drivers in a federal agency’s overall success. As a wave of retirements continues to hit the federal sector, developing an effective long-term strategy to address turnover, recruit and develop people with needed skills, and create the most value with the talents of the remaining workforce is critically important. There is no one-size-fits-all approach when it comes to succession planning, but the consequences of a lack of a concerted, unified effort could be dire.

Building and executing an effective succession planning strategy is imperative for federal government agencies, but these efforts come with overwhelming challenges. In the face of insufficient funding, budget uncertainty, and increased regulation, the task of finding, developing and retaining talent for the future is an uphill battle for the federal sector.

At Worldwide Business Research’s (WBR) recent Human Capital Management for Government (HCMG) conference, 200 human capital professionals answered questions about human capital management in the federal sector. According to the responses, 80 percent of government executives said that the

greatest impediment to achieving their goals, apart from budget, was the management culture of their organizations. In the survey, organized by the research team at HCMG and partner Cornerstone OnDemand, a talent management solutions provider, only 20 percent of respondents reported their succession planning efforts as successful. In addition, 49 percent reported that they are not looking to invest in specific succession planning strategies over the next few years. Human capital professionals are focusing on individual, siloed projects rather than building strategic, unified efforts toward planning for the future. Lacking a strategic, integrated plan for hiring new talent, evaluating and engaging current employees, and developing future leaders could risk the core foundation of human capital in federal agencies in the years ahead.

Creating the Next Generation of Federal Human Capital

of government executives said that

the greatest impediment to achieving

their goals, apart from budget, was the management culture of their organizations.

of respondents reported their succession

planning efforts as successful. In addition, 49 percent reported that they are not looking

to invest in specific succession planning strategies over the next few years.

80%

Only 20%

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Introduction

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The 2014 State of Human Capital Management Report 4

“Agencies aren’t doing effective workforce planning, succession planning, or are not investing in training and development,” said Robert N. Goldenkoff, Director, Strategic Issues, Government Accountability Office (GAO), in response to the survey results. “It raises the risk of skills gaps which could affect the ability of agencies to cost-effectively carry out their missions.”

The shortcomings in human capital management found in HCMG’s benchmark are not only felt on the management level. According to the 2013 Office of Personnel Management’s (OPM) Federal Employee Viewpoint Survey (FEVS), federal employees reported declining satisfaction across all aspects of their employment: their work experiences, their supervisors, and their agencies. Despite their dedication to their work, with more than 90 percent reporting their willingness to put in extra effort to do their job better, the 2013 respondents reported a significant decline in employee satisfaction. These responses extend a similar decline across a majority of 2012’s questions.

Federal respondents reported job satisfaction at 64 percent, a two percent decrease from 2012. Job satisfaction on the whole had the greatest decrease, with respondents only giving a 59 percent rating of satisfaction In 2013 – a four percent decrease from the year prior. i This is in line with the findings of HCMG’s survey wherein 76 percent of federal human capital executives reported that current programs and procedures for employee management initiatives fall short of where they need to be. Human capital management programs are not only viewed as falling short by their agency executive assessments but also more importantly, by employees.

Workforce planning is especially important as agencies are facing a wave of baby boomer retirements, referred to by government industry executives as “the silver tsunami.” The size of the aging boom is staggering. According to the 2013 GAO survey, roughly 30 percent of federal employees on board at the end of fiscal year 2011 will be eligible to retire by 2016.ii Of those, 58 percent are currently high-ranking senior executives.

With the silver tsunami in its early phases, workforce planning has been top of mind for federal agencies. That’s why the majority of respondents from the HCMG survey (71 percent) said that identifying/closing skills gaps in their workforce is their number one priority for 2014, coming ahead of the other major components of succession planning strategies: recruitment (60 percent) and training and development (53 percent).

An overarching concern among human capital managers is that strategies for succession planning are not uniform across departments or organizations within an agency. This concern is not unfounded as only four percent of respondents saw their succession planning efforts as successful. Though ample resources are being applied toward the components of succession planning, agencies are not working together to combine their efforts into a successful strategy. These “siloed efforts,” which

I Can’t Get No “Job” Satisfaction

Predicting the Fallout from the Silver Tsunami

“Employee turnover, especially retirements,

are trending upwards and the talent bench

is thinner than it should be terms of finding

individuals ready to move up to higher levels of

responsibility or into management roles. None

of this bodes well for employee engagement,

productivity, or efforts to manage well. That

doesn’t mean that it will be impossible to

improve in any or all of these areas, but the

degree of difficulty associated with making

improvements has certainly increased.”

John Palguta, Vice President, Policy of the Partnership for Public Service

we will examine further, are derailing their projects’ overall success. As human capital managers work independently on their own projects, instead of working in conjunction with one another, they are unable to connect their combined resources and bridge the gap toward building a successful succession strategy.

reported that current programs and procedures for employee management initiatives fall short

76%

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of federal human

capital executives

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The 2014 State of Human Capital Management Report 5

have relatively inexperienced managers supervising employees [who are] still learning the ropes in some areas.”

According to HCMG’s research, it is clear that federal agencies are not adequately preparing employees to ascend into leadership roles and become the next generation of agency managers and leaders. These findings should serve as an important warning about the long-term development of the workforce, the consequences of not aligning approaches within agencies, and the risks of insufficient planning for the development of future leaders.

The declining and alarming numbers in job satisfaction, coupled with the upcoming wave of retirements, speak to how critical human capital management is for the federal government. The research suggests that the siloed efforts currently in place to build and cultivate the federal workforce are falling flat. Without developing and executing a more predictable and responsible succession plan, agencies risk losing their most talented employees and future leaders.

Preparing current employees for future roles and additional responsibilities is especially important in today’s human capital environment. If agencies can begin to break down silos and integrate their resources and efforts around talent management initiatives, they will be better positioned to take full advantage of the government’s most important resource – its human capital. So, what is standing in the way of this type of preparation? 80 percent of respondents said management culture.

“If the number of employees in the federal

workforce that are eligible to retire actually

do retire, federal agencies will be at risk for

achieving their missions. The twofold impact

on management is that government agencies

will have relatively inexperienced managers

supervising employees [who are] still learning

the ropes in some areas.”

David Krieg, Human Capital Officer, Internal Revenue Service

as a top priority, only 45 percent

reported that they were actively

working on it at this time.

78%

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of respondents

While identifying and closing

skills gaps was cited by

The potential loss of leadership and institutional knowledge as a result of massive retirement waves underscores the importance of a strategic and efficient approach to developing and retaining individuals with the critical skills needed to lead the country in the coming years. That’s why 77 percent of HCMG’s respondents also cited adaptability to changing needs and leadership development as the greatest need for staff development in 2014.

While succession planning should be top of mind for federal agencies given the wave of retirements in coming years, HCMG’s survey found that only 38 percent of human capital managers cited succession planning as one of their top three priorities. These same respondents identified the individual components of succession planning as priorities, but not succession planning as a whole. Siloed efforts are leading managers away from strategic planning and successful execution of their initiatives. This may explain why some organizations’ goals are not in line with the actual investments that are being made. While identifying and closing skills gaps was cited by 78 percent of respondents as a top priority, only 45 percent reported that they were actively working on it at this time.

“If the number of employees in the federal workforce that are eligible to retire actually do retire, federal agencies will be at risk for achieving their missions – not only because of the number of employees, but because of the loss of institutional knowledge and skills that employees developed,” said David Krieg, Human Capital Officer, Internal Revenue Service, in response to the survey’s findings. “The twofold impact on management is that government agencies will

5%

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37%

40%

The 2014 State of Human Capital Management Report 6

An agency’s ability to successfully execute its current and future missions is dependent upon its ability to enable the succession of leadership; an active, strategic approach is crucial for the years ahead. Leaders must utilize training across the government to help employees garner the specific skill-sets needed to address the complex challenges that the federal workforce is charged with, such as national security, disaster response, and economic security. HCMG and Cornerstone’s research indicates that an overarching problem in federal workforce management is the lack of a uniform plan of succession to bridge the knowledge gap from point A to point B. Individual, siloed efforts are not strategic and are not designed with long-term success in mind. Lacking a unified effort across agencies wastes resources and does a disservice to the workers involved. As previously stated, working together to develop the best leadership will allow the federal workforce to meet its full potential.

How can leaders bridge the gap between where they are now and where they want to be? “Organizations need to be realistic about their goals and priorities,” Krieg said. “They need [to] fight for the critical factors that will enable success. Employees are the most important element for organizational success and we need to support, appreciate and empower them as much as possible.” Krieg advocates finding low-cost, high-impact alternatives to the classroom, such as shadow assignments and increased coaching and mentoring, to help employees step into leadership and management roles. Increased flexibility and creativity could also be the key to solving the challenges highlighted in this report. “Overly regulated and structured processes and policies will no longer be effective in an ever-changing and increasingly complex environment,” Krieg continued. “Organizations need to empower employees with the freedom to approach problems in different ways.”

The team behind WBR’s HCMG training series, with help from an advisory board of senior-level employees with talent management expertise, along with partner Cornerstone OnDemand, created a

benchmarking questionnaire for HCMG’s 2013 human capital manager audience. The survey was distributed at the HCMG Conference, where more than 200 leaders answered questions about strategic human capital planning, workforce management strategies, talent management, and best-in-class strategies for building a results-oriented culture. Their roles included Chief Human Capital Officer, Senior Vice President, Deputy Assistant Attorney General, President, and Chief Executive Officer. They represented agencies or organizations as diverse as the U.S. Department of Defense, Department of Homeland Security, NASA, and the Environmental Protection Agency. This report details the results of the survey and comments on the trends for the future success of human capital management in government.

Cultivate Leaders of Tomorrow, Today

Preparing current employees for future roles

and additional responsibility is especially

important in today’s human capital

environment. If agencies can begin to break

down the silos and integrate their resources

and efforts around talent management

initiatives, they will be better prepared to

take full advantage of the governments most

important resource: its human capital.

The 2014 State of Human Capital Management Report 7

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The Findings

For human capital managers in the federal sector, adapting to the changing workforce is a key component of staff development. Doing “more with less” is the slogan for the government, stemming from factors such as a three-year pay freeze, sequestration, and reductions in training to keep in line with ongoing budget cuts.iii The real challenge for human capital managers is around filling skills gaps and ensuring organizational efficiency to prepare for the organizations’ future. These challenges, in conjunction with limited resources, make it all the more difficult for agencies to ensure that they provide new and necessary resources without breaking the bank.

HCMG’s research found that 77 percent of human capital managers cited adaptability to changing needs and leadership development when asked about the greatest need for development in their organizations. In other words, the challenges of the current budget environment are making it difficult for agencies to break out of their current siloed molds in order to prepare employees to meet future demands and to lead their agencies.

HCMG’s findings are not groundbreaking; adaptability to changing needs will always be key for success in any organization. Change is fast and uncertain. Human capital managers in particular are tasked with developing strategies amid uncertainty and must put forth new initiatives that can keep pace with the speed of change in the federal sector.

“Any new initiative or program intrinsically has to be ever-evolving and ever flexible to change as needed,” said the IRS’ Krieg. “Organizations need to anticipate changes in the environment and take considered risks rather than react only to the status quo. They then must keep working to react to changes and update their strategy.”

Human capital managers are working on their own individual projects instead of working in conjunction with one another strategically to reach their ultimate goals. Their siloed efforts may lead to a disconnect in the long run, and time may be wasted as internal departments simultaneously and unknowingly reinvent the wheel. If individual departmental efforts are better combined, organizations might see more substantial progress toward achieving the common goals of developing future leadership.

The results of the HCMG survey show a stark departure from the core values of some the survey’s respondents. For instance, according to the U.S. Marine Corps leadership manual, “adaptability” means a willingness to deviate from normal, accepted practices – even from doctrine – if that is what it takes to win on the battlefield. Soldiers are trained for uncertainty, and they encounter it daily. Their resources in terms of troops and arms can change radically without warning, and they need to adapt quickly to achieve their missions.

The government agency landscape, on the other hand, is no battlefield. Employees entering the workforce have not been trained to adapt to the uncertainty of an unlevel playing field, and human capital professionals must keep this in mind when developing, executing, and implementing training for their employees.

Where do you see the greatest need for staff development within your organization?

of respondents saw their

succession planning efforts as

very successful.

Only 4%76%

10%

10%4%

The 2014 State of Human Capital Management Report 8

Leaders in the federal sector are attempting to empower staff to “do more with different,” a term first coined by Peter Shelby, Associate Dean of the National Intelligence University. In order to do more with different, leaders must find new ways to be more self-sufficient in what they do and not rely on external vendors when budgets are cut. They must learn to build their strategic training plans together and share resources to keep pace with the new realities for job expectations in the federal sector.

“We have to realize that sequestering may go on for the next ten years,” said Shelby. “This is a new paradigm. It’s a shift in the way of doing business that’s going to be for the long term. How are we going to accomplish the same amount or more work with what we have? In order to grow, we have to become very, very targeted, and [have to] focus on the core mission. A lot of the ‘nice to haves’ have gone away.”

is where agencies often miss the boat – is that it’s not a question of duplicating what you have now and backfilling vacancies. Agencies sometimes don’t get that.”

With the wave of retirements looming, the potential loss of leadership could be devastating. This potential loss of institutional knowledge underscores the importance for agencies to find a uniform, strategic, and efficient approach to acquiring and retaining individuals with the critical skills needed to lead the country in coming years.

It is not hard to see why closing skills gaps and succession planning are top priorities for federal agencies. What is surprising is the reality of where agencies are investing their money in relation to what

In an industry rife with hurdles and challenges, one might think that deciding on “mission critical” federal issues would be incredibly complex. Surprisingly, these decisions are quite simple.

In preparation for the impending silver tsunami, workforce planning is top of mind for federal agencies. When asked to identify their top three priorities for 2014, respondents of the HCMG survey cited identifying/closing skills gaps in their workforce as the number one priority for 2014 (71 percent), coming ahead of recruitment (60 percent), and training and development (53 percent).

With the GAO predicting that 30 percent of federal employees will retire by 2016, a lack of focus on succession planning could be devastating. Preparing employees for future roles and responsibilities is crucial for the success of human capital management in the government. iv

“Succession planning is about preparing for the future,” said Goldenkoff of the GAO. “If agencies aren’t doing that or are not doing that well, it could exacerbate the issue going forward as more and more folks retire. The important thing to understand about succession planning – and this

What are your organization’s top priorities for 2014?

“This is a new paradigm. It’s a shift in the way

of doing business that’s going to be for the

long term. How are we going to accomplish

the same amount or more work with what we

have? In order to grow, we have to become

very, very targeted, and [have to] focus on the

core mission. A lot of the ‘nice to haves’ have

gone away.”

Peter Shelby, Associate Dean, National Intelligence University

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71% Identifying/Closing Skills Gaps

60% Recruiting People with the Right Skills for the Job

53% Training and Development for All Staff

21% Annual Performance Reviews

16% Continuous Feedback

40% Identifying/Retaining Top Performers

38% Succession Planning

The 2014 State of Human Capital Management Report 9

they cite as their apparent goals. While identifying and closing skills gaps was cited by 78 percent of respondents as a top priority, only 45 percent reported that they are actively working on related projects.

“It is almost axiomatic that when budgets are tight or are being reduced, training and development efforts are among the first items to go,” said John Palguta, Vice President, Policy of the Partnership for Public Service (PPS). “For some agencies last year, for example, it was a choice between additional days of unpaid furlough for some employees or deferring training. It’s not that agency leaders and chief human capital officers don’t understand the need to close skills gaps or to invest in the development of their employees, it’s more of a case of deferred maintenance of the workforce. Unfortunately, as we know, if maintenance is deferred for too long, there is danger of a breakdown or, in this case, mission failure.”

In the limited budget environment, federal agencies feel that they are lacking the resources needed to adequately prepare employees for leadership roles as the next generation of agency managers and leaders. The survey findings serve as an important warning about the need for long-term workforce development, the consequences of not aligning resources across agencies to meet mission critical goals, and the risks of insufficient planning and development of future leaders. “I think this is illustrative of a larger issue with talent management and the level of sophistication and knowledge of how to do talent management within the government,” said Goldenkoff. “It really varies across agencies. This goes back to the importance of workforce planning and understanding your workforce dynamics. Knowing who’s coming and who’s going, what skills are needed. [Knowing] what

your mission is, not just now, but what your mission is going to look like five years in the future.”

In the current human capital environment, federal agencies’ goals are not in line with the actual investments that are being made. This disconnect, HCMG’s survey found, is demonstrated throughout the workforce planning cycle. While 60 percent of human capital managers cited recruiting people with the right skills for the right job as one of their top three priorities for 2014, only 46 percent are currently investing in projects related to hiring employees with the right skills for the job. What is more surprising, given the pending wave of retirements, is that only 38 percent of human capital managers cited succession planning as one of their top three priorities, coming in fifth out of the seven options listed in the survey. Only 31 percent of human capital managers are actively working on succession planning at their organizations. Nearly half (49 percent) are reducing the investment in this area or not working on it at all.

The findings again illuminate the need to break down siloed, individual efforts on projects related to a single component of succession planning and work strategically together with long-term success in mind.

HCMG’s findings are not unusual. Over the past 13 years, the GAO has followed the federal sector’s increasing focus on closing skills gaps to address workforce challenges in government. In a recent report, the GAO found that, in order to address emerging mission critical skills shortages, strategic human capital planning is necessary.v To ensure that agencies are on pace with their succession planning efforts, the report highlighted the need to involve top management employees and identify critical skills and competencies needed to achieve current and future program results, develop strategies tailored to address skills gaps, build internal capabilities needed to address administrative and training support for workforce planning strategies, and include plans to monitor and evaluate agencies’ progress toward meeting human capital goals.

It’s not that agency leaders and chief human

capital officers don’t understand the need to

close skills gaps or to invest in the development

of their employees, it’s more of a case of

deferred maintenance of the workforce.

Unfortunately, as we know, if maintenance

is deferred for too long, there is danger of a

breakdown or, in this case, mission failure.”

John Palguta, Vice President, Policy of the Partnership for Public Service

Recruiting People With The Right Skills For The Job

Identifying/Closing Skills Gaps

Training And Development For All Staff

Annual Performance Reviews

Continuous Feedback

Identifying/Retaining Top Performers

Succession Planning

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z z Yes – working on it nowz z Maybe – considering in next 24 monthsz z No – not at this timez z Yes – but reducing current investment

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10% 12% 16%19% 20%

45% 46% 45%55%

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The 2014 State of Human Capital Management Report 10

As previously stated, workforce planning is especially important as agencies are facing a wave of retirements. According to the GAO, 58 percent of senior executives will be eligible for retirement as of 2016.vi The potential loss of leadership and institutional knowledge, coupled with fiscal pressures, underscores the importance of a uniform, strategic, and efficient approach to acquiring, developing, and retaining individuals with needed critical skills across agencies.

HCMG’s survey found that only four percent of agencies view their succession planning efforts as successful, the lowest response rate across all seven initiatives. Succession planning initiatives garnered the most negative feedback on the survey, with a full 20 percent of the respondents reporting succession planning projects as unsuccessful, coming ahead of continuous feedback (12 percent) and identifying/retaining top performers (11 percent). These findings suggest that federal agencies’ siloed and independent projects are impeding their ability to succeed with succession planning strategies. As a result, agencies are not adequately building a leadership pipeline and are underpreparing the next generation of agency leadership.

Palguta spoke to some the factors contributing to unsuccessful succession planning initiatives:

Many agencies [have] seen increased workloads and decreased resources relative to that workload. It’s difficult to plan when there is uncertainty over funding levels or when one is trying to accommodate to an across-the-board reduction in spending levels along with an increase in workload. Many federal organizations have seen workloads increase and relative resources decrease. Employee

Is your agency currently investing in projects related to any of the following initiatives?

Respondents of the

HCMG survey cited

identifying/closing skills

gaps in their workforce

as the number one

priority for 2014 (71%),

coming ahead of recruitment (60%) and training/

development (53%)

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45% reported to be actually working on this project at this time

Identifying and closing skills gaps was cited by

78% of respondents as a top priority, but only

Identifying/Closing Skills Gaps

Recruiting People With The Right Skills For The Job

Training And Development For All Staff

Annual Performance Reviews

Continuous Feedback

Identifying Top Performers

Succession Planning

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z z Unsuccessfulz z Not Very Successfulz z Somewhat Successfulz z Very Successful

turnover, especially retirements, are trending upwards and the talent bench is thinner than it should be terms of finding individuals ready to move up to higher levels of responsibility or into management roles. None of this bodes well for employee engagement, productivity, or efforts to manage well. That doesn’t mean that it will be impossible to improve in any or all of these areas, but the degree of difficulty associated with making improvements has certainly increased.

“Organizations need to be realistic about their goals and priorities, but they also need to fight for the critical factors that will enable success,” said IRS’s Krieg. “Employees are the most important element for organizational success and we need to support, appreciate, and empower them as much as possible.”

What’s most telling about HCMG’s findings is that 63 percent of the human capital professionals surveyed said that they view their succession planning efforts as “not successful.” With agency priorities aligned to training, development, and closing skills gaps, why are agencies feeling like they are coming up short?

In a word, training.

6% 16% 12% 19% 4% 7% 4%

57%57%

56%54%

41% 44%33%

28% 21% 26%19%

41% 38%

43%

9% 6% 6% 8% 12% 11% 20%

The 2014 State of Human Capital Management Report 11

While training and development was reported to be one of the top three priorities for all respondents of the HCMG study, only 45 percent claimed to be working on this now. Thirty-four percent of human capital executives reported to actually be reducing their investments and only 12 percent reported to be “very successful” in this pursuit. If this is a top priority, and 88 percent of respondents feel that they currently are unsuccessful in this regard, why is less being done instead of more?

“The disconnect between desire and execution on the training and development front is very much resource related,” said Palguta. “Not only [do agencies have] limited training dollars, but [also have] limitations on related travel and on the amount of time an organization can afford to have an employee away from the job. The pendulum has very much moved to the too little training and development side of the equation and one can only hope it will at least slowly move to the ‘close to almost adequate’ range on the scale. Again, federal leaders know that it can be penny wise and pound foolish to under-invest in their employees but in some cases they’ve only had pennies.”

“Unfortunately, training is often considered discretionary and not ‘mission critical,’” said Krieg. “The challenge is to establish the importance of training while looking for cost-effective solutions that provide the necessary knowledge and skills. We are investing in online learning and virtual classes to maintain our employees’ skills.”

Though training programs were identified as one of the top three priorities for organizations in the federal sector, only 14 percent of those surveyed reported that they are increasing their investments in this area. What’s more, 44 percent are reducing their current investments in training for the coming year. With agency priorities aligned to training and development/closing skills gaps, there is clearly a disconnect between their goals and their realities.

“With respect to the spending more or less money on training, I think that agency training budgets have been and continue to be affected by budgetary funding,” said Yvonne Jones, Director, GAO. “Some agencies have continued to put quite a bit of emphasis on training and some, I think, feel that they’ve been forced to. You need to know what an agency’s goals and objectives are and how training fits into that in order to understand the impact of budgetary funding for training.”

“[The fact] that agencies aren’t doing effective workforce planning, succession planning or not investing in training and development raises the risk of skill gaps in the future,” said Goldenkoff. “This could affect the ability of agencies to cost-effectively carry out their missions.”

Are you investing in a more comprehensive training program for 2014 than you had in 2013?

While 60% cited recruiting

people with the right skills for

the right job as one of their

top 3 priorities, only 46% are currently investing in projects hiring employees with the right skills for the job

Training programs were identified

as one of the top three priorities

for organizations in the federal

sector, but only 14 percent reported that they are increasing their investments in this area. What’s more, 44 percent are reducing their current investments in training for the coming year.

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“The challenge is to establish the importance

of training while looking for cost-effective

solutions that provide the necessary knowledge

and skills. We are investing in online learning

and virtual classes to maintain our

employees’ skills.”

David Krieg, Human Capital Officer, IRS

42%

14%

44%

64%46%

The 2014 State of Human Capital Management Report 12

According to the survey responses, 89 percent of managers are currently using online courses to deliver training content over classroom training (82 percent) and live streaming (78 percent). The findings indicate that human capital executives are using any and all methods possible to deliver training content in the most effective way.

“Training is a critical strategy to ensure employees have the skills they need to perform their jobs – as technicians or as leaders,” said Krieg. “However, the impact of federal budget cuts is two-fold, both in terms of finding effective low-cost training, and in terms of time to step away from regular work responsibilities. This is particularly true with emerging leaders, because meaningful leadership training and development requires more than class time, [it also requires] experiential learning. We have to find low-cost, high-impact alternatives to the classroom, such as shadow assignments and increased coaching and mentoring.”

Even in a limited budget environment, training is of the utmost importance for future leaders. More than three-quarters of all respondents are currently investing in, open to investing in, and/or already using all of the listed methods to deliver content to their workers. However, agencies are falling short when they try to bridge the gap between where they currently are and where they need to be. Siloed efforts again may be to blame.

“There are many different kinds of training and training investments that takes place in the federal government,” said Jones. “Some training would be for future leaders of agencies, but some of the training would be for lower level [employees] who haven’t been in the federal workforce very long. Some training is to deepen the skills of technical employees. There’s such a huge range of training that’s taking place that the training needs to be closely coordinated with the agency’s overall objectives. If we look at this in terms of bridging critical skills gaps, an agency needs to look not only at its broad goals but look at the kinds of people with the kinds of skills they need now.”

Building a reliable, skilled workforce must first begin with actively identifying talent and assessing internal and external candidates for the right skills, competencies, and experience to fill both unanticipated and expected vacancies. Only through an effective succession planning program can human capital professionals ensure that they have an adequate pipeline of skilled professionals to eventually lead when it becomes their time to do so.

Through which of these methods do you deliver training content?

Individual Instruction

Online Courses

Live Streaming Content/Webinars

Blended Learning

Peer-to-Peer Learning

Membership Program

Classroom

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of managers are currently using online courses to deliver training content, coming ahead of classroom training (82%) and live streaming (78%).

89%

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73% 89% 78% 72% 70% 63% 82%

11%7%

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6% 2% 5% 7% 5% 7% 3%

89% 82% 78%

The 2014 State of Human Capital Management Report 13

More than 76 percent of respondents said that they are falling short of where they need to be in their employee management initiatives.

These findings, again, are not isolated to the HCMG survey. Every year, the OPM surveys federal workers on their job satisfaction, sense of mission and sense of morale. Of the 376,500 federal workers surveyed across industries, the satisfaction rate of federal employees is currently at 59 percent, down from 63 percent in 2012 and 67 percent in 2010. vii

“The current situation is not encouraging in terms of making improvements in these areas, but neither is it hopeless,” said Palguta. “Few federal organizations can do ‘more with less,’ but they can do ‘less with less’ by setting priorities and through innovation and collaboration. They may also be able to ‘do something different’ to accomplish their mission more effectively or efficiently.”

The overall findings of the OPM survey, viii which are in line with HCMG’s results, are bleak at best and illustrate an important narrative of the current state of human capital management in the federal sector. The Department of Defense, Department of Housing and Urban Development, General Services Administration, and Environmental Protection Agency, for instance, reported to have some of the steepest declines in job satisfaction. “Lack of sufficient resources needed to get their

jobs done” was another significant bone of contention among federal employees. The increasing dissatisfaction, one could assume, contributed to fewer employees recommending their organizations as good places to work; these numbers dropped from 70 percent who did so in 2010 to 63 percent in 2013.ix

Katherine Archuleta, the acting director of the OPM, described the state of human capital management in the federal sector in the foreword of OPM’s report:

The survey results serve as an important warning about the long-term consequences of the sequestration and budget uncertainty. Without a more predictable and responsible budget situation, we risk losing our most talented employees, as well as hurting our ability to recruit top talent for the future.x

Any federal employer taking note of the significant decline in satisfaction, as demonstrated by the findings from the HCMG survey and the surveys, can see that across sectors, regardless of management level, federal employees are unhappy and dissatisfied.xi Factors such as an unprecedented three-year pay freeze, automatic reductions from sequester and reductions in training and other areas, as cited in the findings of the HCMG survey, are clearly taking their toll on the federal workforce.

When evaluating your current programs and procedures for your employee management initiatives, how do you feel what you have in place today compares to where you need it to be?

of respondents said that they are falling short of where they need to be in their employee management initiatives.

More than 76%

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“Few federal organizations can do ‘more

with less,’ but they can do ‘less with less’

by setting priorities and through innovation

and collaboration. They may also be able to

‘do something different’ to accomplish their

mission more effectively or efficiently.”

John Palguta, Vice President, Policy of the Partnership for Public Service

“If we look at this in terms of bridging critical

skills gaps, an agency needs to look not only at

its broad goals but look at the kinds of people

with the kinds of skills they need

now.”

Yvonne Jones, DirectorGAO

52%

21% 24%

3%

The 2014 State of Human Capital Management Report 14

An overwhelming majority of respondents said that agency culture was the biggest impediment outside of budget that prevents them from meeting their talent management goals. Of all the barriers listed, 79 percent of respondents listed “management culture” as their top barrier for 2014.

Why?

“The senior leaders in an organization are the people who define the goals of the organization and how to get there,” said Jones. “They are the people who often [are] most principally responsible for making it clear to employees how their work on the day to day basis fits in with the objectives of the organization and how they get there. [That’s why] the role of the leaders and the kind of culture that they define for the organization is so critical.”

The research and analysis done by the Partnership for Public Service (PPS) as part of its annual Best Places to Work in the Federal Government ranking confirms that effective leadership – or the lack thereof – is a major driver of employee satisfaction and commitment. Unfortunately, 2013 saw government-wide employee satisfaction reach its lowest level in the last 10 years. However, even in this climate, 24 percent of the 371 organizations in the survey managed to maintain or even improve employee engagement. It was not that those organizations received more funding, but more that senior leaders and managers in those organizations figured out how to engage their employees, even in tough times.

“The bottom line here is that good managers do have some control over the culture in an organization even when matters outside their control are having a negative impact,” said Palguta. “Improving the quality of federal supervisors and managers, therefore, can help a lot. It starts with how we select individuals to enter the ranks of management and then how we support and develop those individuals. A management culture, especially a poor one, can be very difficult to change but as an increasing number of managers leave government, this is a great time to focus on the next generation of leaders.”

HCMG’s findings illuminate a number of overarching issues that should be cause for concern moving forward. First, federal agencies are falling short

in how they manage and engage current talent. Seventy-six percent of respondents feel that employee management initiatives are falling short of where they need to be, and 49 percent said their agencies are not identifying and retaining top performers. Agencies are reducing training and development investments while ongoing training targeted at the aging workforce and younger workers are needed in order to bridge the age gap and keep the skills and knowledge of all workers up to date.xii

Second, federal agencies are not adequately preparing employees to step into leadership roles. Sixty-three percent of respondents view their succession planning efforts as unsuccessful even though 38 percent of respondents listed this as one of their top three priorities for 2014. Only four percent of agencies view their succession planning efforts as “very successful.”

Third, and perhaps most important, agency culture was cited as the most significant barrier to preventing agencies from reaching their goals, apart from budget, among the human capital executives surveyed. Investment is continuously focused on recruitment, not retention, and agency investment as a whole is not necessarily aligned with agency talent management priorities.

This study reveals that there is a lack of unified internal leadership and talent management across agencies. If siloed efforts within agencies continue, the agencies will continue on this same path without reaching achieve

What do you see as the top barriers, other than budget, that are preventing you from reaching your goals?

of respondents

listed succession planning as one of their top three priorities for 2014, even

though 63% of respondents view their succession planning efforts as unsuccessful. Of all of the respondents, only 4% of agencies view these efforts as very successful.

38%

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38% 63% 4%

The 2014 State of Human Capital Management Report 15

mission success. Without significant changes, this will continue to be a barrier going forward. This, coupled with simultaneous pressures to build talent and cut costs, exacerbates the need to look internally to make the most of talent and work together to accomplish the federal sectors’ goals. In the face of an aging infrastructure and shifting political realities, a very troubling reality is that the United States may have to settle for an adequate infrastructure instead of a great one if nothing is done to make significant improvements within government agencies.

What can we do to combat these challenges? First and foremost, HCMG’s findings illuminate the need for a cultural shift within agencies. Effective leadership is the key driver of successful human capital management. Simply put, the tone starts from the top. When 79 percent of government executives believe that the greatest impediment to achieving their goals is management culture, that culture needs to change.

“The management culture will inevitably shift as current, long-time federal managers leave and newer managers from other generations take over,” Palguta said. “The trick is [to] manage that shift in the desired direction.

It also means investing in the development of those supervisors, managers, and leaders over the course of their careers. It means ensuring the agency leaders, including political leaders, understand and support the need for good managers and hold current managers accountable for engaging employees and achieving results. Finally, it also means that members of Congress need to understand that the American public really does want a government that works and that they have a major role to play in this regard.”

A results-oriented performance culture, as reported by the HCAAF Results-Oriented Performance Culture Index,xiii evolves out of the “policies and practices of the agency, the organization’s leadership at every level, and [the] management decisions that shape the work environment.” These elements touch employees each and every day and are directly responsible for the motivation and engagement of employees to “put forth their best effort possible, while weathering changes of an uncertain environment.”xiv

“Organizations will need to become more flexible and creative in how they accomplish work,” said Krieg. “Overly regulated and structured processes and policies will no longer be effective in an ever-changing and increasingly complex environment. Organizations need to empower employees with the freedom to approach problems in different ways. This is particularly important as the workforce becomes more diverse – in terms of different generational groups, and in how people think and work.”

Change is fast and uncertain. In a rapidly changing economic environment, organizations must continually assess the nature of the work that needs to be done and evaluate how this translates to what skill sets are needed

Going Forward: Evolving Culture to Foster Change

“Organizations will need to become more

flexible and creative in how they accomplish

work. Overly regulated and structured

processes and policies will no longer be

effective in an ever-changing and increasingly

complex environment. Organizations need

to empower employees with the freedom to

approach problems in different ways. This

is particularly important as the workforce

becomes more diverse – in terms of different

generational groups, and in how people think

and work.”

David Krieg, Human Capital Officer, Internal Revenue Service

of government executives believe that the greatest impediment to achieving their goals is management culture, that culture needs to change.

When79%

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79%

9%

9%3%

The 2014 State of Human Capital Management Report 16

moving forward to be productive and effective. Agencies also need to realize the technical infrastructure needed to remain competitive. To effectively utilize its human capital, an organization needs to understand the nature of its workplace, as well as the composition of its workforce.xv

“While technology, innovation, and creativity are all part of coping with the speed of change, none it works without making sure that the people part is working,” said Palguta, Vice President, Policy of the Partnership for Public Service . “It’s not just having the right people with the right skills for the jobs to be done, but also having a work environment that encourages and empowers employees to take responsibility for finding ways to better manage change and take some risks in looking for better ways to get the work done. It will take great managers to create that environment.”

The federal sector will need to change its practices in order to effectively respond to “environmental economic changes” while also looking internally to identify areas where attention to workforce needs can maximize productivity to respond to external competition demands. xvi

Workers who do not feel respected or valued have lower levels of engagement. As demonstrated in the FEVS survey, federal employees reported a reduction in recognition for high performance. Fewer employees

believe that their organizations are interested in helping them to improve their skills. The percentage of employees who recommend their agency as a good place to work continues to decline from 70 percent in 2010 to 63 percent in 2013.

The government has made strides in this respect but still has a long way to go. In 2002 and 2004, Congress provided agencies – individually and across the federal government – with additional authorities and flexibilities, such as the authority to offer recruitment bonuses. More recently, Congress enacted the Telework Enhancement Act of 2010, which is intended to provide opportunities for more federal employees to telework. According to OPM’s “2013 Status of Telework in the Federal Government: Report to Congress,” a growing number of agencies do use telework as a strategic tool and are poised to “achieve significant cost savings while meeting goals, achieving their mission and serving the American people.”xvii Sixty-eight percent of HCMG’s respondents listed teleworking as an initiative their organizations have put in place to elevate motivation and morale, ahead of non-monetary recognition (63 percent) and mentorship programs (46 percent).

The HCMG survey clearly highlights the need for better succession efforts in the federal sector and brings to light the other areas where there is definite room for improvement. While findings may paint a less than flattering picture of the current state of human capital management in the federal sector, they should be taken as merely a jumping off point for further improvement. What is most important, perhaps, is the federal workforce’s unwavering commitment to the public sector. According to the 2013 FEVS survey, “the Federal workforce [is resilient and shows a] strong commitment to government – employees are willing to put in extra effort to get the job done, find ways to do their job better, and emphasize the importance and quality of their work.”

Change cannot happen overnight. The federal sector has a long way to go before it can fully realize the goals for effective human capital management. Leadership is one of the key drivers for successful human capital management. An arsenal of talented, engaged employees with the drive to succeed is another. Only when the two combine will strategies emerge that consider the past and best plan for the future. It is then, and only then, that the federal workforce will be able to bridge the gap between where it is and where it wants to be.

“While technology, innovation and creativity are

all part of coping with the speed of change, none

it works without making sure that the people part

is working. It’s not just having the right people

with the right skills for the jobs to be done, but

also having a work environment that encourages

and empowers employees to take responsibility

for finding ways to better manage change, and

to take some risks in looking for better ways to

get the work done. It will take great managers to

create that environment.”

John Palguta, Vice PresidentPolicy of the Partnership for Public Service

The 2014 State of Human Capital Management Report 17

The Human Capital Management for Government Training Series brings together key stakeholders from throughout the federal and defense HR communities to discuss best practices for managing human capital, improving efficiency, and advancing innovation. Launched in 2006, the series of events has evolved into the meeting place for strategic-level policy makers and operational-level HR managers and often serves as the catalyst for new initiatives.

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Cornerstone OnDemand is a leader in cloud-based applications for talent management. The company’s solutions help organizations recruit, train, manage and connect their employees, empowering their people and increasing workforce productivity. Based in Santa Monica, Calif., the company’s solutions are used by over 1,600 clients worldwide, spanning more than 14 million users across 191 countries and 41 languages. For more information about Cornerstone, visit csod.com. Read Cornerstone’s blog at csod.com/blog. Follow Cornerstone on Twitter at twitter.com/CornerstoneInc. Like Cornerstone on Facebook at facebook.com/CSODcommunity.

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The 2014 State of Human Capital Management Report 18

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The 2014 State of Human Capital Management Report 19

i. United States Government Accountability Office. Human Capital Management-Effectively Implementing Reforms and Closing Critical Skills Gaps Are Key to Addressing Federal Workforce Challenges.Comp. Gene L. Dodaro. Issue brief no. GAO-12-1023T. Washington, D.C.: n.p., 2012. Government Accountability Office. Web. 5 Feb. 2014.

ii. United States Office of Personnel Management-Planning and Policy Management. Federal Employee Viewpoint Survey Results-Employees Influencing Change. Washington, D.C.: n.p., 2013. Office of Personnel Management. Web. 5 Feb. 2014.

iii. United States Office of Personnel Management-Planning and Policy Management. Federal Employee Viewpoint Survey Results-Employees Influencing Change. Washington, D.C.: n.p., 2013. Office of Personnel Management. Web. 5 Feb. 2014.

iv. Dodaro, G. L., United States. Congress. Senate. Committee on Governmental Affairs. Subcommittee on Oversight of Government Management, t. F. W., & United States. Government Accountability Office. (2012). Human capital management: Effectively implementing reforms and closing critical skills gaps are key to addressing federal workforce challenges : testimony before the Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia, Committee on Homeland Security and Governmental Affairs, U.S. Senate. [Washington, D.C.]: United States Government Accountability Office.

v. Dodaro, G. L., United States. Congress. Senate. Committee on Governmental Affairs. Subcommittee on Oversight of Government Management, t. F. W., & United States. Government Accountability Office. (2012). Human capital management: Effectively implementing reforms and closing critical skills gaps are key to addressing federal workforce challenges : testimony before the Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia, Committee on Homeland Security and Governmental Affairs, U.S. Senate. [Washington, D.C.]: United States Government Accountability Office.

vi. Dodaro, G. L., United States. Congress. Senate. Committee on Governmental Affairs. Subcommittee on Oversight of Government Management, t. F. W., & United States. Government Accountability Office. (2012). Human capital management: Effectively implementing reforms and closing critical skills gaps are key to addressing federal workforce challenges : testimony before the Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia, Committee on Homeland Security and Governmental Affairs, U.S. Senate. [Washington, D.C.]: United States Government Accountability Office.

vii. United States Office of Personnel Management-Planning and Policy Management. Federal Employee Viewpoint Survey Results-Employees Influencing Change. Washington, D.C.: n.p., 2013. Office of Personnel Management. Web. 5 Feb. 2014.

viii. United States Office of Personnel Management-Planning and Policy Management. Federal Employee Viewpoint Survey Results-Employees Influencing Change. Washington, D.C.: n.p., 2013. Office of Personnel Management. Web. 5 Feb. 2014.

ix. United States Office of Personnel Management-Planning and Policy Management. Federal Employee Viewpoint Survey Results-Employees Influencing Change. Washington, D.C.: n.p., 2013. Office of Personnel Management. Web. 5 Feb. 2014.

x. United States Office of Personnel Management-Planning and Policy Management. Federal Employee Viewpoint Survey Results-Employees Influencing Change. Washington, D.C.: n.p., 2013. Office of Personnel Management. Web. 5 Feb. 2014.

xi. Tishman, F.M., Van Looy, S. & Bruyere, S.M. (2012) Employer strategies for responding to an aging workforce. New Brunswick, NJ: John J. Heldrich Center for Workforce Development at Rutgers University

xii. United States Office of Personnel Management-Planning and Policy Management. Federal Employee Viewpoint Survey Results-Employees Influencing Change.

xiii. United States Office of Personnel Management-Planning and Policy Management. Federal Employee Viewpoint Survey Results-Employees Influencing Change.

xiv. Tishman, F.M., Van Looy, S. & Bruyere, S.M. (2012) Employer strategies for responding to an aging workforce. New Brunswick, NJ: John J. Heldrich Center for Workforce Development at Rutgers University

xv. Tishman, F.M., Van Looy, S. & Bruyere, S.M. (2012) Employer strategies for responding to an aging workforce. New Brunswick, NJ: John J. Heldrich Center for Workforce Development at Rutgers University

xvi. 2013 Status of Telework in the Federal Government - Report to the Congress. United States Office of Personnel Management, December 2013

Sources