Originally Broadcast July 19, 2008

Washington, D.C.

Announcer: Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business. The Business of Government Hour is produced by The IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about The Center by visiting us on the web at businessofgovernment.org.

And now, The Business of Government Hour.

Mr. Morales: Good morning. This is Albert Morales, your host, and managing partner of The IBM Center for The Business of Government.

Throughout its history, the U.S. Department of Housing and Urban Development, commonly known as HUD, has sought to increase home ownership, support community development, and increase access to affordable housing. Over the past several years, HUD has taken many notable steps to improve its management and performance, through an effective resource management and work force strategy.

With us this morning to discuss HUD's strategic efforts in these areas is our very special guest, Keith Nelson, Assistant Secretary of Administration, and Chief Human Capital Officer at the U.S. Department of Housing and Urban Development.

Good morning, Keith.

Mr. Nelson: Pleasure to be here, Al.

Mr. Morales: Also joining us in our conversation from IBM is Solly Thomas, associate partner in IBM's human capital practice.

Good morning, Solly.

Mr. Thomas: Good morning, Al, and good morning, Keith. Good to see you again.

Mr. Morales: Keith, let's start by taking a moment to provide our listeners with an overview of HUD. Can you tell us a little bit about its history and its mission?

Mr. Nelson: Well, it's interesting. Congress created the Federal Housing Administration, precursor to HUD, in 1934, during the Great Depression. When FHA was created, there were 2 million construction workers just losing their jobs. So it was kind of a time of crisis, certainly, in the home ownership world. Terms were very difficult to meet for home buyers seeking mortgages, and FHA was set up to provide liquidity to the financial market while promoting home ownership.

At that time, only 40 percent of Americans owned their homes, and the FHA was a vital asset for Americans to start working on getting home ownership. The FHA was the leader in the industry in 1934. A sidenote: I would give you the typical mortgage the FHA provided then. It was 50 percent of the property's value, so you had to have a 50 percent downpayment; and your repayment term was between three to five years, ending with a balloon payment. So a very different mortgage structure than today.

From that date, in'65, the HUD cabinet agency was created under President Johnson. In '68, Congress enacted the Civil Rights Act, which included the Fair Housing Act, which outlawed discrimination in housing. And HUD was given that enforcement responsibility. You mentioned HUD's mission: to increase home ownership, support community development, and increase access to affordable housing free from discrimination. With about 70 percent of Americans now owning their homes, we do continue to encourage home ownership, but it must be done right.

Mr. Morales: Now, home ownership is a very broad issue across our country. Can you give us a sense of scale within the Department, some specifics perhaps around how you're organized, the size of your budget, number of full-time employees, and how you're organized across the country?

Mr. Nelson: Absolutely. HUD has 82 field offices across the country. As is probably pretty common with federal agencies, most of our work is done in the field, as it should. We have one office -- at least one office in each state and territory. Currently have about 9500 employees at HUD, which is down from a high of 12,000. Our budget is about $35 billion. Most of that is administered through grants.

Mr. Thomas: Keith, with that overview of the Department, could you tell us more about your specific area and role as the Assistant Secretary of Administration, and as the agency's Chief Human Capital Officer?

Mr. Nelson: Sure, Solly. My office is charged with providing support to HUD's employees across the country. Basically, if our employees are happy, then I guess I'm doing my job, and so is my staff. We're responsible for all of the operations of the agency, ranging from human resources, building services, security, training, grant oversight. I am the Secretary's chief policy advisor on human resources management issues, charged with selecting, developing, training and managing a high-quality productive work force.

So like I said, if the employee's happy, I guess I'm doing my job.

Mr. Thomas: And regarding these responsibilities and duties, Keith, what do you see as the top three challenges that you face in your position? And how have you addressed these challenges?

Mr. Nelson: I would say it's one major challenges, with three kind of subsets that all point to the same direction. And that is a high level of retirement-eligible employees, including many in senior leadership positions, and that's the real concern. It's a fact. And our challenge is threefold: one of them is to continually attract new people to federal government to address our succession planning needs. We've done several things along those lines, that I'll get into.

We also must kind of grow our own staff to take over leadership positions as the current leadership group retires. So training, and addressing those needs, has been a major initiative at HUD. Then finally, we must get maximum productivity out of our current staff. So we're changing the culture at HUD to really accountability and performance, and rating people according to what they're doing on the job.

Mr. Morales: Keith, I understand that prior to coming to federal service, you not only had a career at Dow Jones & Company, but you were also a sports journalist in Dallas. How did you begin your career, and what brought you to government?

Mr. Nelson: I did start out as a sports journalist. The way I'd relate it to my job today is that the game would start generally at 7:00, 8:00 at night; it would usually go two to three hours -- and this was anything from football to basketball to baseball to whatever season it was in -- and you had about 30 to 40 minutes to get some interviews, write your story, call the editor, make sure it transmitted well, type it up, go through any questions the editor might have, and then call it a night.

So you had a lot of prep work by kind of watching the game and doing the analysis, and then no time at all to kind of execute. So kind of like that to what I've been doing now: when I was at Dow Jones & Company, I got my MBA degree, and went there. Some people might think Dow Jones & Company's kind of similar to the federal government. They publish the Wall Street Journal and Barron's. But my experience there was kind of a whirlwind. I joined their internet arm, which spun off into a joint venture start-up based in the heart of Silicon Valley, California.

So I was running at a super-fast pace every day, working in business development, having a great time. But then when the dot.com bubble burst, I was, like a lot of people, looking for the next opportunity. And I was interested in going where the action was, and being part of something larger. So I came to Washington in 2001. I tell you, although this pace is slower in the federal government than a digital start-up certainly, I was able to tap into some entrepreneurial spirit here, and have had a great time doing it.

Mr. Morales: That's fantastic. You sort of began to allude to this, but as you kind of reflect on your experiences as a sports journalist, or perhaps with Dow Jones, how have these experiences perhaps shaped your current leadership style, and how you approach problems now over at HUD?

Mr. Nelson: I've been very fortunate to work under two strong Secretaries, and then a new third Secretary that looks to be very very exciting and promising. But I started at the Labor Department under Secretary Chou, and she's a Harvard MBA, and she's very hard-driving and knows what she wants and is very determined, and has done some great things there in her long tenure.

Under Secretary Jackson, he was also very hands-on and very employee-centered, and I learned a lot from both of those people, as well as others that I've worked with. It really kind of boils down to my leadership style is to be fair and be clear. And this requires you to organize your priorities and strategies and know how to motivate your staff, depending on you're dealing with.

When you're fair, it requires transparency. And clarity requires constant communication. I like these two things because you can never attain perfection in either area. It requires you to continue to work at getting better all the time in those.

Mr. Morales: So it's a constant practice then.

Mr. Nelson: It is.

Mr. Morales: Great. What is HUD's human resource strategy? We will ask Keith Nelson, Assistant Secretary of Administration, and Chief Human Capital Officer at the U.S. Department of Housing and Urban Development, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Keith Nelson, Assistant Secretary of Administration, and Chief Human Capital Officer at the U.S. Department of Housing and Urban Development.

Also joining us in our conversation from IBM is Solly Thomas.

Keith, could you give us an overview of HUD's human capital strategy and priorities, and can you tell us a bit about execution and governance through the Human Capital Steering Committee?

Mr. Nelson: Absolutely, Al. We responded to the President's Management Agenda by developing the HUD Strategic Human Capital Management Plan, that intends to show our commitment to sustain a culture of high performance and investment in the employees.

The plan's available to the public on hud.gov. In a nutshell, it's boiled into three over-reaching goals, and that is for HUD to become a mission-focused agency; to maintain a high-quality work force; and three, to implement effective succession planning. You mentioned the HUD Human Capital Steering Committee, and I couldn't emphasize enough how effective that is in trying to steer many of our human capital goals.

We do have participation from senior leadership from each of HUD's program offices: usually the general Deputy Assistant Secretary level, which is the number two position, which generally tends to deal with the operational issues and less of the policy stuff. So we got the right people at the table. The Steering Committee actually helped create the human capital management plan, and recently updated it.

We meet monthly. It's an excellent forum for each program to raise concerns, make suggestions, and help us to continue to improve the Office of Human Resources and HUD's human resources and human capital in general. I'll mention a couple results and actions that came from the Steering Committee. All HUD employees are now on a consistent ratings cycle. They used to be kind of scattered, depending on the program office. Now, everybody's on one schedule.

We've created several working groups, one of which has been really kind of honed in on the Federal Human Capital Survey; looked at certain ways to try to improve our scores among the employees' comments and responses. The Committee also has had a strong hand in succession planning and work force planning, so that when these programs work together, they're really working as a unit, and not independent groups.

We also created a document signed by every member of the work force planning committee to make managers' work lives better. We heard in one of our forums that the incentive to become a manager wasn't there. So we looked at ways to encourage people to join management.

Finally, when we try to roll out certain kind of HUD-wide systems, this group is great to pilot. I would say the e-performance was a very exciting pilot, where we implemented electronic performance standards for all of our employees. Now, we're in the process of rolling out an electronic time and attendance system. Again, we're using pilot groups through that organization to test-case before going further.

Mr. Morales: Keith, you mentioned systems, but I understand that instead of spending roughly between $15 to $18 million to build your own HR management system, you've migrated to Treasury's HR connect platform. Can you tell us a little bit more about this move to an HR shared services model, and specifically, can you share with us any lessons learned, or perhaps give us an example of some of the tangible improvements or benefits you've seen from this move?

Mr. Nelson: Absolutely. I would say first out of the gate when we signed the interagency agreement with Treasury -- and this was my predecessor; it was not me -- six months later, we had a system up and running. Now, that's pretty remarkable stuff, considering just in general any kind of IT system of that scale: private sector, public sector, it doesn't matter -- that's a fantastic turnaround time to get something up and running.

We do think that we could probably save more than $10 million in cost avoidance by joining this group. Probably higher than that, because we aren't going to have to pay the maintenance of our own systems. We do pay Treasury an annual maintenance fee, but we consider it much cheaper than going our own way. In terms of kind of the nuts and bolts, we had a bunch of legacy systems kind of not interoperable and kind of running independently, and we've been able to shut down eight of those so far. So that's money we don't have to spend on trying to keep those humming along.

And then some results. From this new kind of HUD-wide system, we've reduced our time to hire from 96-day average down to 38. We think we can do better. It's been able to develop a system where we now publish an HR Tracker every pay period. We communicate -- I communicate to my fellow Assistant Secretaries that this is where all their hiring actions are in the process. We can use it from a management tool, which HR specialists are dealing with actions, where are they stuck, and where are they flowing well?

The employees have embraced this system. 98 percent of them are registered on Hire Arts. (?) And we do have a requirement that each employee must enter their emergency contact information as a key component of our coupe operation.

Mr. Thomas: Keith, given the composition of the Department, how does HUD coordinate with its HR field offices, as well as impart best practices to the entire HUD HR community? And what steps are you taking to ensure that there's a continual open exchange between the field offices and yours to make sure that the HR policies are implemented, monitored, and updated?

Mr. Nelson: Thanks, Solly. We definitely went through a recent reorganization in the Office of Administration, where we did align our field HR with our headquarters HR. Obviously, our headquarters HR does a lot of operational transactional work, but they also do the policy. Our field is more operational transactional work, but they need to and should influence the policy quite a bit, so we've found that putting them under one umbrella with one leader was the right way to go, and the way to best address our customers' needs.

It has worked much better. The field and headquarters HR professionals have gone through exchange periods where we send one of our Washington, D.C.-based HR professionals out to the field, and we bring one of our field HR professionals to D.C., and just shift the workloads and let each other work in the other's shoes. It's very interesting. They do deal with managers a little differently in the field than they do here. Some managers are more hands-on -- it's reasonable to expect -- then others would like to just kind of have this HR work done by others.

And so it requires kind of a balancing act to address the managers' needs, but the one organization is now -- field and headquarters doesn't really matter. We do have a staffing and class division and a field labor and employee relations division -- that the expertise requires some distinction there. But other than that, the field and headquarters we put under one umbrella.

Mr. Thomas: Keith, you had mentioned before some of the efforts related to the new performance management system at HUD. Could you tell us more about your efforts to develop and implement that system? And specifically, how does the SMART Performance standards factor into your efforts to cultivate a culture of excellence within the Department?

Mr. Nelson: Absolutely, Solly. We call it SMART Standards. It's an acronym that stands for Specific Measurable Attainable Relevant and Time-bound. SMART Standards really are about being fair and being clear. We're very proud that 100 percent of HUD employees are now being rated on SMART Standards, which align with HUD's goals. Before we rolled out a SMART Standards, some people's performance standards were just kind of general and vague, and kind of in the eye of the beholder. And sometimes the eye of the beholder, whether it be a manager or employee, they don't necessarily see eye to eye, and you don't have the standards to kind of be objective here.

So now, they're very kind of specific. They lay out clearly what is expected in a performance period for the employees, and it's also really encouraged the employee-supervisor dialogue, which is always kind of expected but doesn't always happen. And now with the SMART Standards, we've been having some very healthy discussions with managers and employees, with what's reasonable, what's doable, what's our goal here. Managers are tied to their employees, so if the manager is being rated on something, it has to work down to the employees, and work up both. So each one is now kind of much more aware and familiar with the other's standards, and so it's been a very healthy exercise.

A couple results. We have 96 percent of performance plans that align with the organizational goal, which is fantastic. I don't think we had much of anything. We had some, but we just didn't measure where we were in terms of tying your work to the mission of the agency, which is so key. Training was a very important lesson learned from this. We had a very robust training program, where we went around the country; we created DVDs with "What is a SMART Standard?" And also, how do you enter it into an electronic system. This is another Treasury product that they rolled out of -- the e-performance is an add-on to our Hire Art system that Treasury provides.

In the front of every DVD that we shipped out to all of our employees, we had the Assistant Secretary for that organization give a couple of minutes of what their annual SMART Standards focus was. So they got to hear directly from their organization head what's important to them this year, so they could more clearly figure out what their standards should be.

I would say also that this was one where the union and management worked very well together. The union was very in agreement and supportive of the goals behind the SMART Standards. They thought the fair and clear philosophy, and these ongoing dialogues between managers and employees and the mid-year reviews, and the clear communication was a very good thing for the Department and the employees they represented.

Mr. Morales: So it sounds like the system really allows you to cascade in line the objectives and goals of folks at the very top of the organization right through through all the layers of the organization.

Mr. Nelson: It really does. And it really kind of helps cut through some of the arguments. I mean, if I'm getting it, then you're getting it, then he's getting it, then she's getting it. It's very clear that it has to bubble up, and the one single goal that HUD is trying to do in this area really goes all the way through the organization.

Mr. Morales: And it sounds like it really helps with the visibility and the accountability also. That's great.

Now, you mentioned in the last segment HUD's 9500 employees, and like most organizations of this size, I would imagine that work force planning is critical in helping your agency's leadership create a clear picture of the current and future decisions that you need to make with respect to human capital. Can you tell us a little bit about the efforts to enhance and institutionalize work force planning within HUD, and could you elaborate on the current work force plans and how HUD is addressing closing some of the skill gaps perhaps in some critical competencies?

Mr. Nelson: Sure, Al. I would say, in terms of work force planning, if we all had a crystal ball and knew when everybody was going to retire precisely, it'd be a lot easier to do succession planning and work force planning. Instead, we have these kind of overwhelming statistics that X number are retirement-eligible or going to retire at a certain date. And we tried to go beyond that rather than just say wow, that's big, let's do what we can, we actually employed a group of emerging leaders -- a group where we're kind of growing future managers -- and we put 'em on a task to say, based on history, what are our retirement risks for specific organizations, for specific people, for specific groups? Are they high risk of retirement? Low risk? Medium risk? And we found out that even though these numbers were really giant in terms of eligibles, the higher risk of people who actually retire were much more doable. It's more like the 6-8-10 percent range, which is what we've actually seen.

We've seen the actual retirements in that range, not at the 50 percent who are eligible. So it's been very helpful. We arm our managers with that through that Human Capital Steering Committee. We say when you're developing your work force plans, your succession plans, please take these numbers into account. And they do. They've been appreciative, and we update them every year.

The other key component of our work force plans -- and you asked about the skills gaps - is our training. I did mention this before, but I'd like to go into greater detail about what we're doing in training. In '06, we developed a requirement for managers to prepare what we call an ITAP. It stands for Individual Training and Action Plan. For every employee, so all of our 9500 employees have an annual training plan that they're responsible for closing some skill gaps that their managers have produced for them. It could be their current job, skills that they need to grow, or it could be for future growth, some skills they need to do before they're ready for the next step.

We compiled all those into a group of top ten training lists, so that we can develop a training schedule based on the greatest needs. This year, our number one training need was customer service, and so we developed a battery of courses to address that need. Now, when they come to any course, these employees must show a current ITAP to show that their manager does say that this individual needs this training. So that's been helpful for accountability, and to make sure we're really putting our precious training dollars where they're needed most.

Mr. Morales: Keith, along similar lines, a recent global human capital study which was conducted by IBM showed that over 75 percent of HR executives that were interviewed for the survey believe that they're having difficulty developing future leaders. Can you talk about some of the efforts to ensure continuity of leadership through succession planning and executive development? And as a follow-up, can you tell us a little bit about something I believe you have called HUD Fellows Program?

Mr. Nelson: Absolutely. We do have an overall recruitment campaign that we call Opening Doors to a Career at HUD. And that's kind of a marketing spin, and we've been targeting career fairs, universities, and we've been trying to look at some interesting other places, like we're working with the VA on their Coming Home to Work program; where disabled veterans are trying to ease back into the regular work force. We've had some real success. We've had about 11 people come through that program as volunteers, and now they've been converted into full-time HUD employees. We're also thinking -- we're actually working with Partnership for Public Service to, in an early stage, to attract recent retirees from the private sector who would like to work for the federal government before going full-time into a life of leisure.

The heart of the program, though, is what you referenced, the HUD Fellows program. We're in our second year, and there's currently about 150 on board. There's three components to the HUD Fellows program: we have the federal career interns, which many of those listening will know what that is. It's really kind of an entry-level opportunity for people to join government, perhaps soon out of college or early in their career.

We have the Presidential Management Fellows program. Again, familiar to those around government. These are targeted people who've finished grad school and can probably start in government at a higher level.

And then we have a third group called the MBA Fellows. These are similar to the PMFs. They all have MBA degrees after a graduate degree. These are grooming future managers. It's been real successful. We've had incredible numbers of applicants, and small numbers of those who make the grade. We force them to do four to six rotationals during their two-year provisional period. And one of those rotationals must be in the field.

They're kind of centralized -- they're centralized under my office because I'm happy to play the bad guy. If you have a real good-performing fellow in your office, a lot of managers don't want to let that fellow go. And my answer to that manager is well, if you want to convert him, why don't you post a job, and if they make the cert and they make the cut, go ahead and convert them to a full-time employee. But as long as they're a fellow, we're going to rotate 'em, we're gonna have a full, fleshed experience at HUD in a variety of organizations and a variety of locations.

And at the end of that two years, we think that's going to make a more-dynamic, talented person.

Mr. Morales: Going back to the 9500 employees, I just wanted to clarify. Those are federal employees within HUD; correct?

Mr. Nelson: They are indeed.

Mr. Morales. Okay. But we're also seeing within agencies that there is this mix of federal and contract employees performing various roles within organizations. Can you tell us a bit about how federal managers can effectively manage this what seems to be this ever-increasing blended work force, composed of both types of employees?

Mr. Nelson: Yeah. I couldn't agree more. I mean, some of the contractors have longer tenures than the federal employees, which is kind of eye-opening at moments. But we can't just think of contractors as totally different, because these are individuals that in many cases are working hand-in-hand in really a key part of our work force. I think it's kind of a very interesting and healthy trend that Treasury, who supports our HR system, is in the midst of adding a contractor piece to that so that we can track the contractors' personnel -- we don't track their personnel actions, but we track who they are and make sure we know who has access to our computer systems, and who has access to our facilities.

We've been rolling out our Homeland Security Presidential Directive 12, the Federal ID badge project, and it's been really helpful for us to be able to put a finger on who all these people are, and to ensure that they've had the proper background checks. We're in the process of rolling that out. We've issued close to 60 percent of those badges to the employees and contractors. And again, in that project, it doesn't matter if you're a federal employee or a contractor. You need to meet the minimum background threshold before you can operate at HUD.

So it's a little bit of a change for us. In the past, we've really looked at contractors and not worried so much about who those people were, and often, they do turn over. But now we really say, it's important to know who these people are, and to keep track of them and make sure everybody's doing what they need to do. And by and large, they are.

Mr. Morales: That's great. What about HUD's knowledge management efforts? We will ask Keith Nelson, Assistant Secretary of Administration, and Chief Human Capital Officer at HUD, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Keith Nelson, Assistant Secretary of Administration, and Chief Human Capital Officer at the U.S. Department of Housing and Urban Development.

Also joining us in our conversation from IBM is Solly Thomas.

Keith, I understand that an initiative launched to review how the Department is organized revealed that approximately 30 percent of HUD employees are dedicated to various support functions. Can you elaborate a bit on this finding, and tell us, how has the service level agreement pilot improved performance in these areas?

Mr. Nelson: Glad to do it, Al. I mean, 30 percent of support function is high. Most organizations are closer to the 15 percent level. And so we realize that when we did that analysis that there was really room for improvement, and to focus on the mission of HUD is not a support organization, it's really mission-focused, public-facing groups, like the Federal Housing Authority, Fair Housing Group, and all those.

So what we did in terms of the support organizations were we looked at us and we said, how exactly are we structured? I mean, the Office of Admin is 100 percent support, obviously. The CFO is similar. The CIO. All those groups are 100 percent support. But what we found was, in some of those mission-oriented programs, was that they had similar support organizations. They had HR individuals. They had IT developers. They had budget analysts. And we found that there was some need for it, but perhaps not the need that had blossomed up. So what we did was we said, well, let's not do anything without piloting first. And so we set up a pilot. We called it the Service Level Agreement Pilot.

So that was, we approached a couple of these mission-oriented groups: the Office of Community Planning and Development, which is kind of a larger organization in HUD, and the Office of Healthy Homes and Lead Hazard Control -- probably more of a smaller organization. And I'll say CPD for Community and Development. They had kind of an administrative office shop that was fairly substantial. There were several dozen people devoted to kind of support organizations there. The Healthy Homes group just had a few, three or four. And so what we did was we developed a service level agreement where I, Office of Admin, promise you, customer, to do these certain items at a certain time, and with a certain quality. You will rate me on how well I did that by rating my performance and by giving me feedback with each item I did.

And so we set it up that way. And before we did that, we said, oh, and by the way, give us some of your support staff, redeploy other support staff from mission-critical things, and then we'll lower the overall support group dedicated to this, and it did a couple of things. It showed that we could deliver results in better fashion, actually, than we could before -- probably because we eliminated some redundancies, we've eliminated some layers. We've set up a single account manager for each of the customers who are there to really advocate on behalf of the managers and the employees in that customer's unit, and so if they want something like a new conference center built, or if they need to hire ten people in this city, this account manager is not there to do it, but that they're there to track it, and they're to make sure that nothing goes through the cracks, and that the quality is high.

It really is the goal for this to put a line manager into contact with an expert. If a line manager wants to hire, they ought to be talking to the HR specialist who's actually gonna do this. They talk to HR, they talk manager of what I need, have that communication and dialogue so that you can get an ad on the street that is really aimed at what that manager really wants. And before you put an ad on the street, let's have a discussion of, here's some timelines, here's some options, do you want to hire internal? Do you want to go external? All those types of discussions are very healthy so the manager understands what their choices are and they can make smarter decisions.

Mr. Morales: So if I net all this out, what it really comes down to is customer service. So with that, can you give us some specifics of how you're providing support to some of the HUD missionaries, and are there any specific initiatives that you're pursuing to be successful in this area of customer service?

Mr. Nelson: We do hold weekly staff meetings with our customers in terms of HR, to make sure that all their personnel actions are being done timely and quality. I would say that the key to customer service is communication. That really comes from the top. And we're very pleased that we have a new Secretary at HUD, Secretary Preston. He's launched a new initiative called HUD Heroes, which asks employees to nominate themselves or other employees they know for doing great jobs, either on the job or off the job. We're recognizing ourselves for good works we do.

He's gone down to the cafeteria, had lunch with groups of employees and heard what they had to say. This is probably as bold a move, in my opinion -- he had an all-employee video broadcast. At the end, he gave his employees his e-mail address, and encouraged them to write in their thoughts. I know he reads them, because he's forwarded on a few to me already.

Mr. Thomas: Keith, I would imagine that one of the Department's major challenges has been to effectively manage its limited number of staff resources to accomplish its primary mission. You had mentioned before that you have fewer than 10,000 employees, which is relatively small for a Cabinet agency. In addition to having a small staff, I understand that approximately 60 percent of the HUD work force will be eligible to retire next year.

How are you handling the pending retirement wave, and what plans are in place to mitigate its effect?

Mr. Nelson: Thanks, Solly. We've set up a succession plan, because as I mentioned before, a lot of these eligible to retires don't actually retire, but we do have some analysis that says which directions we should be focused on. And our succession plan covers that. There's a seven-step to our succession planning strategy. Number one, we have to identify the mission-critical positions. Some of those who retire, we can probably get by without, or replacing later. Others, we can't.

Number two, we identify the staff who are eligible, qualified or interested in leadership positions in the agency within the next three years. So then we develop a nice little pool of those who we should focus on in terms of grooming.

Number three, we establish a talent leadership pool list of eligible staff by offices. So then we start organizing this pool. Number four, we ask for a self-assessment by the leadership pool members, using the management competencies assessment tool.

Number five, we have a supervisory assessment of leadership pool members, using the management competencies assessment too. And then number six, we create an individual development plan for each leadership pool member, created by their supervisor. Number seven, you do some succession planning based on the information compiled through steps 1 through 6.

Mr. Thomas: Keith, as you know, agencies really need to have effective strategies for organizing and retaining their intellectual resources and institutional memory. To that end, would you elaborate on your efforts to implement an effective knowledge management system, which includes strategies such as operation and brain trust?

Mr. Nelson: Sure, Solly. We have several programs focused on knowledge transfer. One that I mentioned a little earlier, we have an Emerging Leaders program. Currently, there's 33 participants. This is kind of the GS-12, GS-13 level, grooming some of these folks through exploring leadership issues, practices, classroom training; there's executive interviews, developmental shadowing assignments, and team projects. They're the ones who develop that higher risk retirement group.

We also have a new supervisory training. Since 2007, we have required all new supervisors to take kind of a boot camp -- week-long training program. We've had 200 go through this program, and it's been very very helpful. It's gotten good reviews because it was just in real need -- to have our new supervisors be armed with kind of the basics of how do you deal with staff issues; time and attendance; leave; position management classification; hiring -- all that stuff.

We have HUD subject matter experts who talk about each of these areas, and we do bring outside speakers in as well. We have a HUD SES candidate development program. This is a key area for knowledge transfer as well, similar to a lot of other SES training programs, and it's been very useful, and we do have a high percentage of those who do join the SES after graduating from that.

We have a strong mentor program, through which any employee can request a mentor. In some cases, we assign mentors without a request. All of our HUD fellows are assigned mentors, for example. These relationships provide opportunities for mentors to share experiences, insights, wisdom, guidance, and knowledge transfer is part of that. We're also kicking off a coaching program this year. This focuses on matching employees with specific with technical needs with seasoned employees with proven knowledge and skills in that area. So it's more focused on nothing but knowledge transfer and technical knowledge.

We have several other areas. We use the Microsoft Tools Sharepoint to put knowledge sharing in a digital standpoint. Some offices have put an office librarian to catalogue knowledge, and put the information through clearinghouses. And we archive all of our webcasts. We've also set up some lunch-and-learn groups, hosted by subject matter experts, and many others.

Mr. Thomas: Keith, in the wake of the subprime mortgage crisis, HUD continues to seek modernization of the Federal Housing Administration. Could you give our listeners an overview of this modernization? And more importantly, how will the proposed changes impact your work force and operations?

Mr. Nelson: Thanks, Solly. We've already seen a dramatic rise in the increase of number of lenders that are seeking to become FHA-approved lenders. It's natural that with the subprime lenders either going out of business or kind of turning in a new direction, a lot of mortgage holders are seeking relief, and we can do a lot with those who haven't yet started to fall behind in their mortgage payments. And we can do others -- we can do more with FHA reform, should that be passed shortly.

But the Secretary has already kind of indicated to me that his top priority in terms of hiring is to gear up the right work force to handle the increase in volume. We are gearing up to hire about 300 new employees in the Office of Housing that are dedicated to single family FHA modernization group. So as an ad for those listening who have experience in mortgages, lending, or housing, please look at usajobs in the coming weeks. There might be an opportunity for you.

Mr. Morales: That's great. Keith, to switch gears a little bit, can you tell us a bit about the grant manager program over at HUD? How has your office enhanced the management and the monitoring of the grants that are made by HUD?

Mr. Nelson: Absolutely, Al. I would say the theme is e-gov. HUD is a big, significant in the federal government grants community. We are one of the four largest grantmaking agencies. We do approximately $30 billion in annual grants. We have set up a kind of - I think it's unique in government -- we have put all of our notice of funding availabilities in one kind of all-inclusive document that's published annually. We call it the Notice of Funding Availability. It's NOFA. We call it the Super-NOFA. And publish that. It helps all the grantee communities to see in one place what opportunities are out there. And all of those are published on grants.gov, as well as at hud.gov.

It allows just about every applicant to apply for a HUD grant using the e-grant system. I'll tell you, we do have quite a change over the years in terms of paper applications. In 2004, prior to the grants.gov website, we received 10,000 paper grant applications. You can imagine our file cabinets that year. 2005, grants.gov launched. We received only 597 paper applications. 2006, it dropped to 11. So we are paperless, and our grant community thanks us for that. I think they were ahead of us in that case.

We're moving forward into the Digital Age.

Mr. Morales: Obviously, in an organization such as HUD, and in any large organization, coordination and collaboration among the various chiefs -- the CFO, the CIO, Chico and so on -- is critical. Can you tell us a bit about how this works within HUD?

Mr. Nelson: We meet every week, those chiefs, to discuss coordination among ourselves, and coordination with our mission-oriented customers. Just try to understand what each of us are rolling out, and make sure that we don't hit 'em all at once, if you will. We talk about strategic efforts. We also talk about transactional things. And I would just highlight one concept that came out of those meetings, which are every Monday morning: we kind of realized that our organizations were always one step removed from the real mission of HUD, and the actual homeowner who receives a HUD loan or grant, et cetera. So we said, well, how do we get our staff kind of in tune with the actual mission and the good works that HUD does?

Well, there's a lot of these things going around in Washington, D.C., Virginia, Maryland, so let's put 'em on a bus, let's introduce 'em to actual HUD realities of what HUD is doing on the ground, and have a tour guide to show that this is a HUD home, if you would, and all these types of things. This is public housing. These are kind of some neat different kind of places that all translate back to various HUD missions, and you as a CFO employee or an Admin employee are an important part of this process.

Mr. Morales: That's great. That must give employees just a wonderful perspective on what they do and how it directly affects the people that they serve. That's fantastic.

What does the future hold for HUD? We will ask Keith Nelson, Assistant Secretary of Administration, and Chief Human Capital Officer, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to our final segment of The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Keith Nelson, Assistant Secretary of Administration, and Chief Human Capital Officer at the U.S. Department of Housing and Urban Development.

Also joining us in our conversation from IBM is Solly Thomas.

Keith, could you elaborate a bit on your efforts to support specific alternative work arrangements such as telecommuting, and what other benefit programs are you pursuing to make HUD a federal employer of choice?

Mr. Nelson: Glad you asked that, Al. We're drafting a new telework policy, which is going through the comments process now. But we do have a pretty strong telework program right now. Currently, a little over 1700 employees, which are about 20 percent, use telework. And we're looking at ways to increase that in a strategic fashion.

We also offer student loan repayment, as both a retention and recruitment incentive. We just doubled the money for that benefit. We are looking at entering a pilot exchange program with some state housing agencies. We find that we deal with states quite a bit through our grants and other matters. And we find that there's a pretty good training tool if you give us one of theirs, and they give us one of ours, we end up learning each other's business a little better, and we've found some states that are interested in participating on that. We'll roll it out as it makes sense.

We've recently completed some major renovations to our 40-year-old headquarters building. We have a brand-new child care center. We think it's as good as any in government, or better. We've installed a nanny cam on the advice of the parents who want to be able to log in and see how their kids are doing every day. We know that the results are there because our old child care center was in the basement, windowless, and we were probably the only one in D.C. that had no waiting list. In fact, we were only about 50 percent capacity. The current one is where it should be, with a long waiting list.

We've also upgraded our cafeteria. The old cafeteria was used by I think less than 15 percent of the work force. And then when we did some analysis of those figures, we realized a lot of them were just going for a Coke and they weren't really eating there. We've upgraded it. We have a Starbucks wireless cybercafe; we have a Subway sandwich and some other places in a real nice seating environment, and it's been a big hit since we opened a few months ago.

Speaking of employee benefits, it was kind of an odd thing, but we had our employee benefits center located in Chicago, where we have a strong federal presence, but most of our people in Washington, D.C., certainly. So we're in the process of transitioning and transferring that unit to Washington, D.C., and we expect it to be more-proactive and a better resource for our employees.

Mr. Thomas: Keith, you're a member of the Chief Human Capital Officer Council, and also chair of the Subcommittee on Learning Development. Could you talk to us a little bit about your membership on the Council, your role on the Subcommittee, and in particular, we're interested in hearing about the mission of the Committee; what some of the key training and development best practices are, and whether or not you've been able to pull them in to HUD to incorporate into your programs.

Mr. Nelson: Absolutely. As you probably know, the CHCO Act of 2002 established the Chief Human Capital Officers Council to advise and coordinate the activities of member agencies, such matters as the modernization of human resources systems, improved quality of HR information, and legislation affecting human resources operations and organizations. Recently, Director Springer of OPM helped celebrate the five-year anniversary of the CHCO Council, and we kind of recognized some of those original CHCOs, of which I'm not one of them, but there are a few out there.

It's been really interesting to see how the CHCO group have evolved. My Subcommittee, the Learning and Development Subcommittee, we set annual goals that really kind of help us share best practices throughout the federal organizations. This may have been looked at up-front as maybe a scorecard issue. Oh, if something comes out of here, then OPM's gonna slap it on the scorecard and keep people away from Green, and that isn't the case at all. It's been a very very well-received opportunity for people to share best practices and for us to learn from each other and move forward.

One thing that was pretty interesting we've had is a session on return on investment for those with limited training budgets, which is I think everybody but maybe DoD. We have to make sure there are dollars really going the right directions, and so we saw how some federal agencies were doing that. And another thing that's pretty neat but not a lot of federal agencies are doing is kind of using the virtual worlds and second life and the multi-player role-playing games for training. We've recently had a session using some of those virtual worlds and showing what federal agencies were doing there.

Mr. Thomas: Keith, there's much talk about commercial best practices in the government, particularly in the services areas such as human resources. Given your CIO background and experience at Labor, and also your private sector experience, what emerging technologies do you see that hold the most promise for improving the federal management of human resources?

Mr. Nelson: If I had to boil it into one thing, Solly, I would say we need the people in human resources to not focus on processing. They need to be consultants and thought leaders and strategic advisers to the managers who need to use them. Let the computers be processors, and that's the direction we're moving toward. E-recruit is an example of that, where it really kind of sorts, chops, slices and dices all of the apps for certain jobs, and we've rolled out at HUD 40 jobs using this e-recruit, so it helps rate and rank all the applications in a certain way. And it requires the little human checking on that, but rather than go through the wading through the papers that we normally do, we let the computers kind of take a cut at that first.

Web-TA is another kind of private sector aspect, and HUD is probably very late to the game at adopting an online TNA system, but we do have 1100 timekeepers. That's a lot to deal with, and we're gonna shrink that to 200 or fewer over time once we roll out an electronic time and attendance system.

Another initiative that we're doing electronically is EOPF. Official Personnel Folders. And turning all of those paper again into a searchable database that employees can click on anytime they want to review their file.

Mr. Morales: Keith, if we continue to sort of look into the future, how do you envision HUD's human capital needs evolving over, say, the next two to three years, and how do you envision your office will need to evolve over that same period?

Mr. Nelson: Al, I think, like I said, the HR specialist of the future is going to be much more customer service-oriented, much more adviser, much more out there dealing with the customer and adapting to their needs, and providing counsel even before they know it. They're going to be trained in all of the human capital and HR law and legislation and regulations, but they need to translate that into terms that a business manager can understand. And be a real advocate for that individual as they try to move forward and be adaptable to, and let the computers kind of work on processing the papers. We're going to have our staff really deployed as kind of an army of consultants.

Mr. Morales: Sort of moving to the high-end services, then.

Mr. Nelson: Absolutely. That's the future of HR.

Mr. Morales: Keith, you've obviously made a very successful transition from the private sector over to the government. You seem still very energized about the work that you do. What advice might you give to someone who's out there perhaps thinking about a career in public service in the federal government?

Mr. Nelson: I would say it helps with energy to have a new-brand Cabinet Secretary with seven months to go. Certainly we're doing a lot of hard work between here and the end. h And I would say that one day, I think we need to have usajobs on the lips and minds of just about every graduate graduating senior, just like they may look at monster or careerbuilder now, or hotjobs or any of these other sites aimed at all of the commercial sector jobs, they should be thinking about government in the same way, because I really tend to agree with what OPM puts out there in their ads: what have you done in your job today? There are so many fabulous jobs in the federal government. It's really a great opportunity if you look deep.

Mr. Morales: That's a wonderful perspective. Thank you. Unfortunately, Keith, we have reached the end of our time now. I want to thank you for your dedicated service to our country, both in your roles at DOL and now at HUD.

Mr. Nelson: Absolutely. I would just say that for anybody interested in hearing more about HUD's human capital strategic plans, or our succession plan, it's all available at hud.gov. We try to make that available for anybody. We send it to the Hill. We forward it to all of our employees and managers.

I just want to say one kind of moment that's a key moment in HUD's human capital history, and that is my Deputy Chief Human Capital Officer, Barbara Edwards, who's committed 40 years-plus to federal service, has announced her retirement. So I guess the retirement wave has certainly hit HUD now.

Mr. Morales: That's great. And congratulations to her.

This has been The Business of Government Hour, featuring a conversation with Keith Nelson, Assistant Secretary of Administration, and Chief Human Capital Officer at the U.S. Department of Housing and Urban Development.

My co host has been Solly Thomas, associate partner in IBM's Human Capital Practice.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who might not be able to hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

For The Business of Government Hour, I'm Albert Morales. Thank you for listening.

Announcer: This has been The Business of Government Hour. Be sure to join us every Saturday at 9:00 a.m., and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and get a transcript of today's conversation.

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