Originally Broadcast September 13, 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. I'm Albert Morales, your host, and managing partner of The IBM Center for The Business of Government.

The U.S. Department of the Treasury acts as steward of the U.S. economic and financial systems, including the role of the U.S. as an influential participant in the international economy. Treasury also performs a critical and far-reaching role in national security, coordinating financial intelligence, targeting and imposing sanctions on supporters of terrorism, and improving the safeguard of our financial system. Managing these complex tasks requires expanded capabilities in the pursuit of an effective resource management and workforce strategy.

With us this morning to discuss her efforts in this area is our very special guest, Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer at the U.S. Department of the Treasury.

Good morning, Rochelle.

Ms. Granat: Good morning.

Mr. Morales: Also joining us in our studio is Solly Thomas, associate partner in IBM's Human Capital Practice.

Good to see you again, Solly.

Mr. Thomas: Good morning, Al. And good to see you again, Rochelle.

Mr. Morales: Rochelle, many of our listeners will be familiar with the Treasury, but let's start by taking a moment to provide them just a quick overview. Could you tell us a bit about Treasury's history and its mission today?

Ms. Granat: Sure. I actually enjoy talking about Treasury's history, because Treasury was one of the first four original departments of the Executive Branch of government. And looking at Treasury's history is really an opportunity to look at how the growth of the domestic functions of government developed over the years, because many of the functions that today are in other agencies actually grew out of Treasury. Treasury's mission has always been around the public purse: managing the money resources in the United States as its primary function. And all of the functions it has today in some way tie to government finances and the economy.

The basic functions of Treasury -- you recited some of them, but it's managing federal financing; collecting the taxes and duties and monies paid to the United States; paying all the bills of the United States; producing currency and coinage; managing the government accounts and the public debt, supervising national banks and thrift institutions; and advising and establishing domestic and international financial policies and economic and trade and tax policy. So that's quite a hefty mission and a varied mission, and involves many different job skills and job sets, from manufacturing to accountants to tax attorneys and attorneys in many different functions.

An interesting point in the history, of course, is fairly recent, and that was that the creation of the Department of Homeland Security in 2003 resulted in Treasury losing four of its enforcement bureaus. Treasury did have four bureaus that originated in Treasury: Customs, Secret Service, ATF, and the Federal Law Enforcement Training Center. There actually is a money resource aspect to all of those that some people forget. The U.S. Secret Service was actually established to deal with counterfeiting and to protect our currency and coinage. And Customs, of course, was collection of duties, as was ATF, was revenue-raising.

But with that change, that was a significant change for Treasury, a new enforcement responsibility grew and developed, and that was around terrorist financing and financial intelligence.

Mr. Morales: So it sounds like the mission continues to broaden at Treasury. So Rochelle, just to put a finer point on the scale of this broad mission, could you provide us some specifics in terms of how Treasury is organized, the size of the budget, and number of full-time employees of the Department?

Ms. Granat: The Department has over 100,000 employees. The bulk of them are the Internal Revenue Service employees. We have among the permanent staff 114,000 employees. And they're working across the United States, and we also have folks posted in 16 countries and in 3 U.S. territories, so we really do have an involvement throughout the world.

The budget is, combined, roughly $16 billion. A major portion of that is the Internal Revenue Service, which is about $11 billion. The $16 billion figure includes our bureaus that are non-appropriated bureaus: the Mint, the Bureau of Engraving and Printing, Office of Thrift Supervision, and the Office of the Comptroller of the Currency fund their operations through revenue-raising. The bureaus of the Treasury operate independently, with Headquarters exercising oversight and policy over the bureaus. And they are organized around their functions. We do have -- a piece of the former ATF is now the Alcohol, Tobacco, Tax, and Trade Bureau. It's one of our smallest bureaus.

We, of course, have the manufacturing bureaus: the Bureau of Engraving and Printing and the Mint. We also have two fiscal service bureaus. The Financial Management Service, they pay our bills, issue our checks. When we get a paper check, it's from the Financial Management Service. When we get an electronic payment or Social Security payments or tax refunds, those are from the Financial Management Service. The Bureau of the Public Debt is the second fiscal service bureau, and they track the public debt, they issue and do transactions in government securities which represent the debt.

We have the two banking regulators: the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

Mr. Thomas: So with that overview of the Department, Rochelle, could you tell us more about your role as the Deputy Assistant Secretary for Human Resources, and as the Chief Human Capital Officer at Treasury? What are your specific responsibilities and duties? And how does your program support the overall mission of the Department?

Ms. Granat: Well, my responsibilities have different aspects. One major aspect is Department-wide policy and oversight around human capital programs, to include EEO and diversity. When I talk about human capital programs, I'm also talking about the EEO and diversity programs as well. Each of our bureaus have human capital offices and EEO offices that operate independently, but through our policy and oversight. There are certain functions that do have to come up to the departmental level, and they would come up to my office.

In addition, I have a responsibility that's a little bit anomalous or unusual, and that's oversight of the D.C. Pensions Program, which administers the Department's responsibilities for certain pension programs of the District of Columbia for teachers, police, firefighters, and judges.

I exercise that responsibility through a collaborative effort with the human capital officers at the bureaus. I chair a Human Capital Advisory Council that involves the leadership of those offices, the EEO office and the HR offices at the bureaus.

Mr. Thomas: Rochelle, regarding your responsibilities and duties, what are the top challenges that you face in your position, and how have you addressed these challenges?

Ms. Granat: Well, I'd say the top challenges are ones that I think most agencies share. Certainly recruiting and retaining the talent we need to accomplish our mission is huge, especially in the face of the changing demographics and the realities of an aging workforce. In that light, succession planning and knowledge transfer are also very significant challenges.

And I'd say the third challenge influences both of those, and that's really a challenge of resource limitations. We are all operating under very tight budget constraints and the challenges are significant, and we really need to be creative in leveraging across the Department our efforts to develop new initiatives to tackle some of these challenges.

Mr. Morales: Now, Rochelle, I understand that your history at Treasury goes back to about 1985. I believe you started at the Bureau of Public Debt. Could you tell us a little bit about your career path? How did you get started in public service?

Ms. Granat: Well, I actually started while I was in law school, and I do have a little less traditional path to a human capital occupation. In law school, I was a law clerk, working part-time. One of the reasons why coming to law school in Washington was attractive to me was that I was interested in public service. I was interested in public policy. And soon after finishing law school, I did move from the Department of Labor to the Bureau of the Public Debt, which is, as I mentioned earlier, a bureau of the Department of the Treasury.

And over time, I developed a concentration, and my work was largely around personnel and labor relations, EEO, all those areas of the law, as well as other sort of mission support, general law functions.

I really developed an interest in not just the legal issues, but really the policy issues. And the nature of the way in which one works as what I would call in-house counsel in an agency is really a collaborative relationship with your clients and working together to resolve problems, to avoid problems.

I actually spent a little bit of time -- 2-1/2 years -- at the creation of the Transportation Security Administration. I went over in the Chief Counsel's Office. And one of the attractions in taking that opportunity was what it stood to offer in terms of starting an organization from the ground up and working to develop a new organization, develop policies.

But I always wanted to look for and did look for an opportunity to step outside of the legal office and work on the management side, in June of '04, when the director of the D.C. Pensions Program was contemplating retirement and encouraged me to come back and become the director of that program. As I was back at Treasury, I was being increasingly brought into things within management but outside of the Office of D.C. Pensions. And when the Chief Human Capital Officer and Deputy Assistant Secretary position was vacant, I was asked to step in in an acting capacity, and did that and realized that I enjoyed it quite a bit.

Mr. Morales: Great, great. So as you sort of reflect on all of these experiences going back to your clerkship, what has shaped your leadership style and perhaps influenced your management approach today?

Ms. Granat: Well, I would say that the role I played in a significant aspect of what I did as counsel was really an advisory, collaborative member of a team with non-attorneys, with the client and with program managers. And I think that really fostered an appreciation and a management style and a leadership style that really was collaborative. And I see that as a strong aspect of my leadership style, that I really believe strongly that we solve problems best when we recognize and respect the expertise that a diversity of people bring, and that we work together to solve problems. I'm very much not a command-and-control leader, and I think that much of what I learned and what I think of being good counsel shaped that leadership style in a different role.

Mr. Morales: Great.

What is Treasury's human resource strategy? We will ask Rochelle Granat, Deputy Assistant Secretary for Human Resources, 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 The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer at the U.S. Department of the Treasury.

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

Rochelle, I want to spend some time talking about Treasury's human capital strategy. Can you tell us a bit about your four human capital strategic goals, and how does this strategy align with and support Treasury's broader mission, goals, and objectives?

Ms. Granat: Well, we're actually at a transition phase. Our human capital strategic plan covers the period 2005 to the end of this year. We actually are in the process of issuing our new human capital strategic plan that is a follow-on to the new department strategic plan, which was issued last year.

And there were four key goals: organizational effectiveness, recruitment and diversity, employee retention and employee satisfaction, and technical skills. And what we're talking about with respect to technical skills is enhancing workforce capabilities to support the use of current, new, and evolving technology. So we're really talking about making sure our organization is aligns its human capital plans with the strategies and systems to achieve organizational effectiveness in the mission of the agency.

And a key aspect of that is obviously being able to recruit the right people at the right time with the right skills, and at the same time, employee retention and employee satisfaction is critical. It's great if we can recruit the people and get them in the door, but if we are not growing and developing them and doing those things to ensure engagement and satisfaction, we're not going to keep them. And that would also make it more difficult for us to recruit new employees, because our best recruiters are our current workforce who say this is a great place to work.

Mr. Morales: Sure.

Ms. Granat: Last year, the Department issued its new departmental strategic plan, and a major goal in that plan is management and organizational excellence. Human capital is a major, major player in that goal. And without fulfilling that goal, we can't accomplish the key aspects of the strategic plan, which are all mission -- those remaining three aspects are mission-driven.

In developing our revised human capital strategic plan, which would run from this year to 2013, goals slightly revised, but not dramatically. One is broaden and diversify the talent pool. And we're talking there about creating effective recruitment strategies and utilizing all available flexibilities to attract a diverse pool of highly qualified candidates. Again, developing and retaining the workforce; it's going to be a constant. Making sure that we're effectively managing and utilizing human capital. Again, that's really focused on organizational effectiveness, through enhanced employee engagement and supporting and leveraging the Department's workforce.

And then the one goal that is new and actually grew out of efforts in the last year around our human capital operating plan, which we will -- as of this fiscal year, our intention is every year to have an annual operating plan that is based on the strategic plan. And in that operating plan for Fiscal Year '08, we had a goal and strategy around it to really transform the human capital occupation. We need to develop our human capital practitioners as strategic business partners. We need to move away from the focus on transactional processing, and you always have to do that. Hopefully, technology is increasingly making that easier, but we're moving to shared services for those types of functions.

And what's really critical if human capital is going to be at the table with the leadership of the agency in ensuring that our human capital strategies are aligned with our mission and our goals, we really need to be business partners and be able to converse and strategize and come up with solutions as real business partners.

Mr. Morales: Great. Now, I also understand that you've defined some human capital and business drivers that will shape the future. Could you tell us a bit about these drivers? And to what extent does cross-bureau coordination play into your plan going forward?

Ms. Granat: Well, the drivers are really probably the drivers that are facing most agencies. One key one is modernization. It's the recognition that we are dealing with increased use of constantly changing and evolving technology, and to really look at revising our business practices and obtain the necessary skill sets to deal with the benefits of this new technology.

Another business driver is the critical importance of customer service expectations and public scrutiny. Thirdly, it's the need for efficiency and accountability. And accountability for results has been a major driver in the last many years, most prominently under the President's Management Agenda. The PART exercises. So it's really driving a focus on results and performance, changing to a performance culture.

And then finally, it's dealing with continuous change. Every day, we face changes in our business requirements because, simply, as we know today, market changes and world events that affect what we need to do and the skill sets we need.

Mr. Morales: So given the complexities of the Treasury Department, which we talked about in the first segment, how does your organization evaluate the HR field performance and drive best practices across the entire HR community? And specifically, what steps are you taking to ensure that policies and procedures are implemented and monitored across such a vast and complex organization?

Ms. Granat: There are several ways in which we evaluate how our human capital programs are operating and how they operate within the bureaus. And as I think I've alluded, each of the bureaus is its own organization and its own culture and have their unique needs given the nature of the particular missions of those bureaus. So there's not a one-size-fits-all answer to a lot of things. But that said, we do evaluate bureau performance and effectiveness in human capital areas in several ways.

We do have a series of metrics that are developed based on the human capital strategic plan, an outgrowth of the President's Management Agenda, as well as our human capital system for accountability that was tied to our human capital strategic plan. And also, the Federal Human Capital Survey. The metrics that are involved there are -- measuring the closing of skills gaps in mission-critical occupations, gaps in leadership positions. We look at closing resource gaps. We look at assessing employee satisfaction through the Federal Human Capital Survey and other tools. We measure the time to hire, et cetera.

In addition, there are any number of ad hoc ways that we get a handle on how well our programs are running at the bureaus. And that's because of the relationship we have on a day-to-day basis with those offices, they look to us for policy guidance. They will call us for help in resolving unusual issues in problem cases. There's certain things that need to come to us for approval, some things that need to come to us before we go to OPM. And that gives us significant insight into how those programs are running.

There are some very formal ways in which we are able to measure the effectiveness of these programs, and one of those is our accountability program. We are now conducting independent audits of the programs at the bureaus, a few each year. We're measuring against the human capital accountability and assessment framework. And there are a series of areas in which we are measuring program effectiveness based on OPM standards in that area. We've completed several of those audits, and we will be expanding those audits in the future to also include the EEO programs.

Mr. Thomas: Now I want to switch gears for a minute to have you talk about workforce planning. Could you tell us about your efforts to enhance and institutionalize workforce planning within Treasury? And could you also elaborate on your workforce plans and how Treasury has addressed closing skills gaps in the mission-critical occupations?

Ms. Granat: Well, workforce planning is an extremely broad term. It can be done in many different ways, and certainly in a combination of ways. It certainly involves an understanding of what the workforce requirements are. It involves assessing your current workforce and where their competency gaps are, where basic resource gaps are. We have a workforce analytics tool that has been able to give us exact numbers on employees in mission-critical occupations, forecast attrition, and that allows us to strategize on how and where to find new employees and how to focus our efforts around which mission-critical occupations at which levels. And also, it focuses us on what internal training or re-training we need to do with our existing workforce.

It also informs what tools we might need in that workforce planning effort, such as strategic use of voluntary early retirement authority and incentive payments, where we see that the workforce restructuring really requires the elimination of certain positions. And we always are looking to avoid a reduction in force, and so we really need to use those authorities strategically and reduce involuntary separation actions.

We also need to, in workforce planning, strategically use some of the flexibilities that are available in recruitment. A lot of those flexibilities involve monetary resources, and they may not necessarily be able to be used across the board.

In closing skills gaps, we've focused significantly on mission-support occupations. Those exist in all of our bureaus. They're the common areas, especially around IT and procurement specialists. But then some of our bureaus have their bureau-unique, mission-critical occupations that have significant challenges. In IRS, we're talking about tax resolution representatives, for example.

Mr. Thomas: Rochelle, a recent global human capital study conducted by IBM showed that over 75 percent of the human resource executives interviewed believed that they are having difficulty developing future leaders. Can you talk about some of the efforts of Treasury to ensure continuity of leadership through succession planning and executive development?

Ms. Granat: Sure. One of the major focuses of our -- as I mentioned, we have an annual human capital operating plan. And one of those goals is developing talent. And a major aspect of that is around leadership skills and leadership development, and ensuring that we have brought up through the organization future leaders. And one of the things we've learned is we don't reach down early enough in employees' careers to develop those leadership skills. It shouldn't be the case that someone's going to their first significant leadership development program when they are in their 25th year of service, especially given the current demographics and the realities of our aging workforce.

So we do have an effort underway to develop a department-wide leadership development model that would have core aspects to it, and then obviously each bureau has its own unique needs that would go around that. A number of the bureaus have candidate development programs. The IRS has a robust leadership development program that has many different levels starting much earlier in folks' careers, and they have a very important candidate development program. And much of that is driven by its size and its critical needs. We really want to use the measuring of leadership skills gaps to drive the development of new efforts around leadership programs to ensure that we're able to close these gaps.

Mr. Morales: Great. What about Treasury's best place to work initiative? We will ask Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer, to share with us when we return to the conversation 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 Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer at the U.S. Department of the Treasury.

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

Rochelle, as you know, employee feedback can be a very valuable tool for understanding the work environment. Could you elaborate a bit on the Best Places to Work Initiative and the annual employee survey? How have you implemented any of the insights that you've gathered from this survey?

Ms. Granat: It was really driven in part by the recognition that if we are going to attract and retain the talent we need to accomplish our mission, we really need to focus on employee engagement and employee satisfaction. Treasury really needs to be one of the best places to work, and that is a huge selling point for agencies who rank high on the Partnership for Public Service's best places to work rankings.

Based on the 2006 survey, Federal Human Capital Survey upon which the rankings are based, in the 2007 rankings, we were 14 out of 30, and we want to get into the top 10. The Partnership for Public Service was very interested in helping agencies make improvements, and Treasury's quite eager to work with the Partnership. And the Partnership did an analysis of the results of our 2006 survey.

And they assessed where did we score well and continue to score well on, build on those strengths; and where was the area on the survey where if we could improve in our scores in those areas, we would make a significant difference in our overall score. And what they concluded was the area we had some weakness was the area that's referred to as "leadership effectiveness." And that doesn't mean that our leaders aren't effective. But what it means is in those questions around the survey that go to issues around how do employees perceive the way in which their senior leaders -- not their immediate supervisors, but their senior leaders -- communicate with them, share information, value their input, and things like that, we didn't score quite as well as we might. And so we developed a work group that involved folks from across the Department, especially those bureaus that scored perhaps not as well as other bureaus, and engaged this task force in developing a plan around the best places to work, and focusing largely, not exclusively, but largely around those leadership effectiveness issues.

There were some key aspects to the program. One was the workforce needs to know that we take these surveys seriously, and that we learn from the information they provide, and we work to improve in those areas where we need improvement and build on the positive aspects. And each bureau developed action plans around those areas that needed particular work. And we also convened focus groups of managers and focus groups of line employees. And there were facilitated discussions around key questions that sort of drove at the root causes for the perceptions around leadership effectiveness.

One of the areas around leadership effectiveness that's key is that things get communicated to the workforce, that lines of communication throughout the organization, at all levels of the organization, are sound.

So some of what the work groups are doing is developing tools around that, including work on a video, on new orientation materials that really focus on the organization mission. We've done that a lot in our performance management system in ensuring that they understand how what they do supports the mission. It's helpful for them to understand and appreciate what others in the organization are doing.

We also held a Best Places to Work Symposium, which was attended by the senior leadership across the Department. It was also simulcast and videotaped so that employees could see it and they could see it on their desktop computers. Secretary Paulson spoke around employee engagement, employee satisfaction, to share those best practices. And we also brought in senior leadership, largely the Chief Human Capital Officers, of several agencies that scored very well in the Federal Human Capital Survey or had marked improvement, and they shared their best practices.

That was a very well-received symposium that was at the end of March, and I think it reflected senior leadership commitment to these issues.

Mr. Morales: That's great. So I wish you success in getting into the top 10, as you mentioned.

So along similar lines, given the high rate of federal employees who may be eligible for retirement in the upcoming years, this certainly is going to create a loss of a lot of the institutional expertise and memory. And as you mentioned, I believe in our first segment, that becomes a challenge for the organization. Could you tell us how you're mitigating the pending retirement wave within Treasury?

Ms. Granat: Well, I should give you a sense of what we're facing. It's not dramatically different than a lot of other agencies of our size. The average Treasury employee is 48 years old and has over 16 years of experience. Based on recent running of our data, 21 percent of our employees will be eligible to retire this fiscal year. And in 2010, that number will increase to 29 percent, and then increase to 39 percent in Fiscal Year 2012. Now, of course, that's based on our current data, so obviously new folks are going to be coming in, so these are somewhat shifting stats, but it still is a daunting number.

It's especially daunting because there was a period of I'd say significant attrition and little hiring in the '90s, so that we really do have people in the beginning of their careers in somewhat large numbers. We do have a bit of a gap around those midlevel folks who would go into key leadership positions. And that certainly factors into our analysis of our leadership gaps and our succession planning.

One of the key things that we are doing to meet that challenge is, first of all, we're recognizing that we very much need to enhance our ability, the tools we use to recruit talent. That includes a Department-wide marketing strategy to build on the great marketing efforts that come of the bureaus have been able to develop, with the recognition that we really need to be recruiting at all levels. We're not just recruiting entry level.

We've recognized that we really should tap into second career folks, who would come in mid-level and even senior level. And one of the interesting things we're doing in that regard is the Experience Project with IBM and the Partnership for Public Service, where we're tapping into the folks who are retiring from the private sector. And as a pilot, we're focusing on IBM and we're focusing largely on those mission-support occupations, where folks who have had careers in the private sector in skills and areas that are relevant to our work, they want to make a contribution, they want to continue working, and they're looking for new challenges, and we really need to tap that resource.

So we have a series of things we're doing. And of course, one of the things that we need to do in the hiring arena is not just marketing, but it's really improving the way in which we recruit and hire. Simplifying the hiring process. Just simplifying vacancy announcements and having model vacancy announcements that are used across the board around those occupations that are mission-critical occupations for which we are doing recruitment across the Department. So those are just a few examples.

Mr. Thomas: Now, Rochelle, along the lines of potential retirements, what can you tell us about Treasury's knowledge management strategies to retain that knowledge?

Ms. Granat: All the Treasury bureaus have their own internal leadership development programs, which, if done well, are a critical way and an excellent way to ensure that we transfer institutional knowledge. If we use mentoring programs well, if we use developmental assignments well so that as we're developing people, they get experience within their organization and outside their organization, we are doing a good job about transferring institutional knowledge.

We've deployed automated tools around training. And our learning management system is one way in which we do that. That system allows us to do training across the Department in key areas. It allows us to both input our own type of training, but also make accessible to employees very easily other automated online training. And it also allows us to track development programs and track training efforts on an individual level to ensure that employees who we anticipate or want to groom to move to different positions are getting the training and knowledge that they need to move into those positions in the future.

We're ensuring that we're doing that knowledge transfer. Of course, we use what flexibilities we have to incentivize folks not to leave. That has limited success, and some of the constraints there revolve around the current retirement rules and systems. And there are some changes that we are seeking that OPM, the administration has been seeking, but those have not yet been enacted.

Mr. Thomas: Now, Rochelle, given the expanded complexity of your office workload, could you tell us more about Treasury's efforts to analyze workload requirements?

Ms. Granat: Within our office itself, we are constantly struggling with changing workload requirements and significant resource limitations. And one of the ways in which we've tackled that, sort of I would almost say in extremis, is really leveraging the expertise of folks across the Department, and some re-training efforts around our existing staff.

A good example, however, around changing workload requirements really comes from our business areas. And I think the best example is at the Internal Revenue Service, where we've had an evolving and significant shift in some workload demands as a result of the increased effort to encourage taxpayers to file electronically. And it's something that Congress has mandated. It's something that is beneficial to the government to encourage as many taxpayers to file electronically as possible. That, of course, results in a significant reduction in the need for employees to handle the paper processing of tax returns.

Mr. Morales: Rochelle, I want to go back to the topic of retention for a moment. Could you tell us about Treasury's efforts to develop and implement an agency-wide performance management system? Specifically, what have you done to link pay with performance as a means to enhance your ability to compete and retain a highly effective executive group?

Ms. Granat: Why don't I discuss that in two parts, because it's a different experience and implementation on the executive level from the non-executive level.

As you may know, in 2004, a new pay system, a pay-for-performance system, was implemented government-wide for the Senior Executive Service. And at Treasury, like all agencies, we took shifting to that system very seriously, and really changed the way in which our performance management was done department-wide.

Where previously each bureau had its own executive performance plan and system, we developed, through -- again, a collaborative effort across the Department -- a single SES performance plan that had three standard competency-based responsibilities, and provided for five to eight results-based performance commitments which are unique to each executive, which must be tied to organizational performance and the strategic plan. That was a shift in culture, a need to educate executives on what that meant to be measured that way and what that meant to measure their subordinate executives that way, and really developing and enhancing a performance culture that was measured in a way that hadn't quite been measured before.

But that said, it did change the way in which pay decisions were made. They had to be linked to performance. They needed to take into account not only individual performance, but organizational performance, and it was very focused on results. And we developed tools to assess organizational performance. We developed a tool that was used by each bureau that sort of rolled up data from across the fiscal year around performance measures, even including things around the Federal Human Capital Survey, PART scores and things like that, and a bureau head assessment of the bureau as a whole's accomplishments during the course of that fiscal year. And that information is shared with the performance review boards, et cetera.

One of the challenges here to making significant change with respect to incentivizing performance with the pay as a carrot is the reality of pay compression in the SES. You can have the most outstanding performer in your bureau who delivered the most significant results, and the pay increase that you can give is rather insignificant because of pay compression.

And so of course, that then shifts the focus to the bonus system. We have developed a system where we have standards for what ratings drive certain levels of flexibility around performance bonuses. And the performance review boards are very much a part of assessing that across their organizations. And senior leadership at the Department, at the Deputy Secretary level, has a role in ensuring that the ratings and pay adjustments and bonuses are consistent with organizational performance.

We have greater flexibility at the GS level. We do have some bureaus that have exception from the GS scale and do have pay-for-performance systems similar to the SES. But more importantly, even within the GS system, we have really driven a shift at the bureaus to ensure that their performance management systems, which are unique to each bureau but are focused on results and a results-based performance culture, and have systems that are able to tie to the strategic plan so employees understand where they are in helping the agency meet the strategic plan and strategic goals and organizational goals, but also that they understand that their performance rating and performance awards, whether they're cash awards or other types of incentives, time-off awards, that it is very much driven by performance and by delivering results.

Mr. Morales: Great. What does the future hold for the U.S. Department of Treasury?

We will ask Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer, to share with us when we return to the conversation 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 Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer at the U.S. Department of the Treasury

Joining us in our studio from IBM is Solly Thomas.

Rochelle, I understand Treasury is trying to create a results-oriented performance culture. Could you tell us a little bit about some of the bureau's success stories in forging this type of a performance culture?

Ms. Granat: I think the model that we created for the SES in developing the assessment tool that integrates a series of program measures into a snapshot of organizational performance and feeds that into the assessment of individual performance was a great vehicle to really communicate how critically important organizational performance is, and therefore, performance culture, is to an executive's performance. If our leadership is effective in communicating the importance of organizational performance, I think that will go a long way in driving that as we improve upon our performance management systems for our non-executive employees.

IRS at the moment is very focused and is working with a contractor to assist them in developing a new and more effective results-focused performance management program for their approximately 92,000 non-supervisory employees. And you can imagine that's a daunting task. So I think that's really the major successes in really ensuring that we filter down that focus on results throughout the workforce.

Mr. Thomas: Now, Rochelle, you also sit on the Chief Human Capital Officer Council, chaired by the Office of Personnel Management director. Can you tell us about your roles on the Council and the subcommittees?

Ms. Granat: Sure. The Council meetings as a whole are really an excellent opportunity to really exchange information and keep the Chief Human Capital Officers informed of where OPM and the administration is on any number of issues.

There's a sort of different level of communication and activity at the subcommittee level. Treasury sits on the Subcommittee on Hiring and Succession Planning and the Subcommittee on Performance Management. Those subcommittees have largely focused on sharing best practices in those two areas, in working with OPM staff as they develop or implement new initiatives, giving them feedback, perhaps challenging them on the design and implementation of moving some initiatives forward. It's really the most direct opportunity we have to influence initiatives that are going to be government-wide.

For example, in the Subcommittee on Performance Management, we had an influence on the SES survey that was sent to all executives in the last fiscal year, and the results came out recently. And we've been working with OPM on the evaluation of the SES performance management system through the assessment tool for the SES. In hiring and succession planning, we've been trying to drive some efforts to improve the hiring process and to advocate for some changes in some of the flexibilities that are available to agencies.

Mr. Thomas: Now, Rochelle, there's much talk about commercial best practices in the federal government, particularly in the service areas, such as human resources. What emerging technologies do you see holding the most promise for improving the federal management of human resources?

Ms. Granat: I alluded just in the last question to the fact that Treasury is actually in the HR line of business through our HR Connect automated personnel system. We are always actively engaged in assessing that system and improving and enhancing that system.

One of the things that's a particularly exciting initiative that we are developing right now is to really harness technology to improve the entrance on duty process, the on-boarding process. We recognize that this is a process which gives new employees, prospective employees entering the agency their first impression of what -- and in some cases, this is their first federal job, their first exposure to federal employment. And we realize that that's really both for our own efficiencies, but also for the experience that the employee has coming on duty, is really critical that we maximize the tools that technology can give us.

We've developed a strategy to develop an on-boarding system that really is a bit of a paradigm shift. It moves from paper-intensive forms to information-based processes -- as we do our electronic filing of our tax returns, we're providing data that gets populated into forms, we're not filling out the form. It looks at reducing our dependency on HR specialists to doing web-based self-service. Moving from disparate points of entry, looking at single points of entry and one-stop shopping.

And most importantly, it moves from what's now a day one paper-intensive processing experience to day one focused on learning about the agency and learning about their new job and having the tools in place when they come to their office. And we think that this will also be the foundation to using that system for agency branding.

Mr. Morales: So, Rochelle, continuing to look towards the future, how do you envision Treasury's human capital needs evolving in the next two to three years? And how do you envision your office will need to evolve over that same period of time?

Ms. Granat: The challenges that I articulated that we face are only going to increase in terms of what's at stake if we are not able to simplify the hiring process and improve our marketing of Treasury as an employer, and ensuring that we're tapping the right resources from which to recruit. We are going to need to do that at an increasingly intensive level. It really means transforming the human capital occupation to be more focused on this business partner strategizer and develop those skills that are needed to do that. So we need to identify those sources and really maximize wherever we can the benefits of technology, but also make sure that that technology is not off-putting to our potential candidates.

I really think it's important that as a new administration comes on board, that they really focus on the fact that in order to accomplish all those mission-related initiatives and address all the challenges, that they also focus on the infrastructure. And I'm not just talking about human capital, but of course, the human capital piece is especially important to me. But we really need to make sure that our institution has the infrastructure that it needs in order to help the new administration accomplish all its goals.

Mr. Morales: That's a great perspective. Now, at the beginning of the hour, you told us just a wonderful story of how you got started in public service. So I'm curious, what advice might you give someone who's out there thinking about coming to public service or perhaps to the federal government?

Ms. Granat: Well, I think the most important message to say to folks is a combination of this is an opportunity to do interesting and challenging work that's important to the public. It should be important to them personally, and it's important to the nation as a whole. I hope that most folks coming into the workforce or thinking about a change in their career are thinking about I want to do something that's making a contribution. I want to do something that's challenging to me, in which I will learn something, that I have an opportunity to have responsibility and do good work. And I think the government really does offer so many different opportunities that you come in the government and you are doing one thing, as in my career, and you wind up evolving over time and, you know, taking opportunities that lead you in another direction or in a complementary direction, I would say.

And I really think that one of the things that government service offers, and sometimes it takes finding the right position or finding the thing that works best for you, but we really do some fascinating things. Many of us pick up the paper in the morning and that tells us what might happen to our day because what we do is on the front page of the paper. And I think that that has got to be -- should be exciting and interesting to folks entering the workforce.

Mr. Morales: That's a great perspective. Thank you

Rochelle, we, unfortunately, have reached the end of our time together. I do want to thank you for fitting us into your schedule, but more importantly, Solly and I would like to thank you for your dedicated service to our country across your many roles at Treasury.

Ms. Granat: Well, thank you. I enjoyed this. And I think the important thing to say is no one, especially no leader, in government does anything by themselves, and what they do is really representative of what their organization does. And I have a great staff. And the human capital professionals across the Department are part of everything we do to make Treasury a best place to work and to move forward to tackle the challenges we have. And I think it's a great team and I want to thank them.

I want to encourage folks to look at the Treasury website and see all the interesting things Treasury does. It's http://treasury.gov, and through that, you can look at Treasury careers, opportunities at all the bureaus, and, of course, there's always the USH Ops website.

Mr. Morales: Great, fantastic. Thank you.

This has been The Business of Government Hour, featuring a conversation with Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer at the U.S. Department of the Treasury.

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 may 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. Until next week, it's businessofgovernment.org.

Originally Broadcast May 10, 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. I'm Albert Morales, your host and managing partner of The IBM Center for The Business of Government.

The U.S. Social Security Administration faces complex management challenges closely linked to profound changes in our country. With the baby-boom generation nearing retirement age and people living longer, the public is expecting greater program integrity as resources become constrained. The success of meeting such challenges rests on the pursuit of an effective human capital approach and workforce strategy.

With us this morning to discuss SSA's strategic efforts in this area, is Dr. Reginald Wells, deputy commissioner for Human Resources and chief human capital officer at the U.S. Social Security Administration.

Good morning, Dr. Wells.

Mr. Wells: Good morning, Al, how are you?

Mr. Morales: Great, thank you.

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

Good morning, Solly.

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

Mr. Wells: Solly, it's always good being with you.

Mr. Morales: Dr. Wells, as you know, we always like to ground our listeners with some context around the broader organizations. So could you start off by providing us a general overview of the Social Security Administration, perhaps including its history and its current mission?

Mr. Wells: I'd be happy to, Al.

Social Security Administration or the Social Security Act was signed into reality by President Roosevelt, 1935. It has grown exponentially over that time. And as you see today, it basically provides three basic programs, or has three fundamental constituencies.

People who are retirees and are receiving benefits, social security benefits as a result of what they've paid into the system, that funding resides in a trust fund, and then you have individuals who are survivors of workers who have paid into the system. And you have people with disabilities, who for whatever reason have a catastrophic illness or a disability that prevents them from working full-time in many instances.

We currently have about 50 million beneficiaries today of the social security program, about 7 million SSI beneficiaries. And 164 million individuals pay in to that system in order for the system to be as successful as it is today. We issue something in excess of 17 million cards, which is how most people know of us, one way or another. We have a 800 number telephone system that actually deals with about 57 million calls each year. So we have a pretty phenomenal case load.

We have had some fairly highly publicized challenges in terms of our disability backlogs and things of that nature. And as the baby-boomer generation enters into retirement years or enter into disability-prone years, you tend to have more people coming to us for those services, so it is a particular challenge for us right now, having sort of that confluence of events.

Mr. Morales: Well, it's certainly a very large organization with a very critical mission here in our country. So you began to give us a sense of some of the scale of the operations. Perhaps you could elaborate a bit more on that; how the organization is organized, perhaps the size of the budget, number of full-time employees and contractors, and perhaps a sense of the geographic footprint across the country.

Mr. Wells: Well, we are a pretty large organization. We have 60,000 employees. We basically pay out a $650 billion in benefits. And that is roughly 60 million people annually. So, in terms of the impact on the U.S. economy, and obviously the subsistence of our nation's population, it's pretty significant. We have about 1,400 hearing and hearing officers and field officers, which are very direct, service oriented. So a very significant difference between the Social Security Administration and a lot of other federal agencies is that we really do have a substantial amount of public contact. In terms of that foot print we are geographically all over the country.

Very often, I think community see us as, kind of, the face of the government, because probably 96 to 98 percent of the American public has to have some dealing with us at some point in time. Whether it's getting that card or coming to us for benefits. We have 36 teleservice centers, and they deal with those phone calls I referred to earlier, the 800 number. We have a program service centers processing those benefits.

And we have an administrative budget of about $9.7 billion, which is actually pretty efficient when you consider the amount of -- the size of our budgets and the amount of benefits we pay up.

Mr. Thomas: Reggie, now that you have provided our listeners with the sense of the larger organization, let's talk a little bit about your specific program. What are your responsibilities and duties as the deputy commissioner for Human Resources and the agency's chief human capital officer? Could you also tell us about the programs under your purview, how your office is structured, the size of the staff, perhaps the budget as well?

Mr. Wells: It's been quite a challenge. I have been with the agency about 6 years now, and it has been really a pleasure managing the office of Human Resources as deputy commissioner for Human Resources.

But in that role I have the responsibility for -- an oversight for the Office of Personnel, the Office of Training, our Labor Management and Employee Relations area and Civil Rights and Equal Opportunity. I also have a couple of smaller components for managing, and they are really attached directly to my office for managing our executive services function, and also our human capital planning, which is really critical to workforce planning and the work that we do in concert with the Office of Personnel Management.

And it's really in that chief human capital officer role that I get to relate most directly to the Office of Personnel Management and to the other federal agencies in government. So, I tend to think of my role as deputy commissioner of human resources as sort of the inside work that I do, as a strategic partner to all the other deputy commissioners and components of SSA, supporting the workforce, making sure that we are administering those human resources programs.

And then as chief human capital officer, pursuant to the Chief Human Capital Officer's Act of 2002, I get to relate to other federal agencies, collaborate with them, serve on sub-committees, doing work that benefits all federal agencies across the board.

Mr. Thomas: And Reggie, following up on the roles and responsibilities that you have as the agency's chief human capital officer, can you talk a little bit about the most significant challenges that you face in your position, and how you have addressed these challenges?

Mr. Wells: I am delighted to do that too, because this is an opportunity for me to share with you and the listeners some to the things that we are grappling with. And obviously, since we do this as public service, it's an opportunity to inform them of some of the things that we need support on.

One of the biggest challenges and it's not just particular to social security, of course, and really not even particular to the public sector, is the retirement wave. There was a recognition that we had to do more in the area of human resources to support the workforce, to make sure the agency was postured properly.

One of the advantages of being SSA is that we have actuaries; that's one of our mission critical positions. They started doing some workforce analysis 15 years ago. It gave us a very clear indication of what we were going to be experiencing in this period as we projected the fact that a significant number of our people were going to be eligible for retirement. It was obvious to us that we were going to see a tremendous brain drain.

So that's one of our major challenges and of course with that comes the challenge of recruitment and finding the right talent to replace the talent we lose. I think because the largest number of people who are going the quickest are leadership folks, you have to make sure that you are grooming the next generation and do it the right way. And the Office of Personnel Management has required all agencies, which is important, given this retirement wave we are dealing with, to pay more attention to succession management and to have a succession management plan.

And I would say the most significant challenge that we are facing is really the resource challenge. Having enough budget capability to replenish our workforce, meet the numbers that we need to, we have some significant programmatic challenges as a result of the retirement of the baby boomers, but it is compounded by our own folks retiring, and in some cases not being able to replenish them at the same rate that we lose them.

So I think our Commissioner has really done a phenomenal job of informing the White House and informing Congress of that challenge. So we are feeling a bit rejuvenated in the sense that we can replace at least the people we are losing on a one-to-one basis.

Mr. Morales: That's great. It certainly is a challenge across the government and the private sector.

Now, Dr. Wells, I recall that prior to your joining SSA you were in the local D.C. government. Could you describe your career path for our listeners? How did you get started and what brought you to SSA?

Mr. Wells: I started out my public sector career in Essex County, New Jersey, as a matter of fact, and moved right into supervision and the social services and health area. And I managed nursing homes, well, the county nursing home and I was very much involved in the running of the county's psych hospital at that time.

I left there after 4 years and came to Washington, D.C. to work in the Department of Human Services as it was called back then. That was mental health, public health, and social services programs like -- at that time it was called aid to families with dependant children, or the welfare program, child welfare, juvenile justice, homelessness program, and the disability programs, and a number of the child care programs in the city.

And I started out doing primarily institutional management, but moved into community work because the district was de-institutionalizing, amidst system for people with developmental disabilities, mental retardation and developmental disabilities.

And after 10 years of working in those areas and then the commission on social services as the deputy commissioner, I had the opportunity to move to health and human services at the federal level as the deputy commissioner for developmental disabilities and I did that for about 7 and a half before going to social security.

And actually I went to social security originally to work in the disability reform effort that was going on there, and I was tapped by the commissioner to head up human resources and supporting the workforce of social security given its mission and function has been really phenomenal.

Mr. Morales: That's a fantastic story, and you've clearly seen the 360 degrees of this business. So as you reflect back on those experiences, how do you think that they have prepared you for your current leadership role and shaped your current management style?

Mr. Wells: One of the things that was a constant through that experience was the importance of people and the equation. You really can't accomplish, probably any meaningful work, but certainly not public service without having an extraordinary group of public servants that are sort of committed to making a difference in the lives of people. And I found that to be true in all of the jobs I've had that there were extraordinary people who were committed, making a difference in people's lives and making their lives better. And as a result of that, it just impressed upon me how important the human equation is.

I think the importance of showing those people appreciation, because I think it's important of those of us who are in leadership positions in government to make sure we take the time to remind folks of just how important the work is that they do, and, how much we appreciate them doing it well. I'd say that it's been very, very clear to me that resources, at the end of the day, drive a lot of what you are able to do.

We were fortunate enough to be evaluated by the partnership of public service as being seventh from among the best places to work in federal government, and it's kind of special to get that kind of recognition from time to time. It's been very clear to me that providing employees with the tools they need to do the job we have asked them to do is extremely important and something that we should always be working towards.

Mr. Morales: That's fantastic.

What is SSA's human resource strategy? We will ask Dr. Reginald Wells, deputy commissioner for human resources and chief human capital officer at the U.S. Social Security Administration 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 Dr. Reginald Wells, deputy commissioner for Human Resources and chief human capital officer at the U.S. Social Security Administration. Also joining us in our conversation from IBM is Solly Thomas.

Dr. Wells, could you tell us about SSA's comprehensive human capital strategy and your efforts to develop and implement an updated strategic human capital plan, and if I may, how does this human capital strategy align and support SSA's broader mission and goals?

Mr. Wells: Al, all federal agencies at this stage of the game are required to have a Strategic Human Capital Plan. It basically sets the strategic direction for your human capital efforts at a given agency. As I alluded to earlier, the chief human capital officer is expected to be a chief advisor to agency head and the executive team in any given federal agency, and you have to have certain information at your fingertips and certain alignment between the agency's strategic plan and the human capital plan, or the strategies from a human perspective that you have to have in place in order to carry-out that agency plan.

So it's very important that there be alignment. We put a lot of effort into making sure that the agency's strategic plan and our human capital plan are in fact in alignment or layout the human capital strategies that are necessary to fill that plan, and OPM and OMB do monitor whether or not we are achieving that and accomplishing that. And back at the Social Security we're going through or actually come through a fairly rigorous process of coming up with a new agency's strategic plan. And we have been working on our human capital plan, sort of on a parallel track, to make sure that it allows us to fulfill that agency's strategic plan.

The Office of Personnel Management has human capital assessment and accountability framework. And we make sure that our human capital plan fulfills all of those requirements. The human capital plan is a roadmap, I meant, it basically lays out where we have to get to with regard to certain competencies in the agency, which can shift over time. Those of us who were baby boomers we had to learn computer skills on the job, and some of us are still technologically challenged, but striving to be as good as we can be. Responding to e-mails and trying to conduct business, and those kinds of tools are very important to our ability to be efficient today, so we are expecting that of our workers.

We lay out in our human capital plan a recruitment strategies, the ability to identify, recruit, and then ultimately retain talent is really critical, so this human capital plan lays out, how we intend to go about that. Training is a really -- and especially entry-level training is extremely critical. So our claims reps and service reps who do that public contact work, we have to teach them the intricacies of the Social Security Act, and the various programs that are laid out in it.

So there is a tremendous importance for our human capital plan, laying out what our learning management strategies are going to be as an agency. And then there's the whole issue of that workload forecasting. We have to -- there are priorities that are set by the Commissioner, by Congress, by the White House, and we reflect those in our agency's strategic plan, and therefore, the human capital plan has to lay out the mechanisms by which we will make sure we are able to address that workload.

Mr. Morales: That's great. So since 2004, you've obviously been performing very well against the President's Management Agenda. So I'm curious, what lessons have you learned from this experience?

Mr. Wells: We actually were recognized for making the most dramatic improvement of any federal agency, and that we went from 21st to 7th, and that was a pretty dramatic --

Mr. Morales: It's a pretty big leap.

Mr. Wells: -- pretty dramatic leap and I think the things we learned from it were that technology was extremely important to that. We put a lot of emphasis on communication, because I think the record shows that communication between management, leadership and the workforce, when it is not fluid, when it is not complete, it can result in some disjoint effort, and working at cross purposes. And I think that's one of the things that we concluded that it was important to have a performance management system, for example, that laid out the importance of each individual responsibility in relation to the agency's strategic direction, or strategic plan, having a clear sense of what's expected, and having very clear feedback on whether you are meeting and fulfilling those obligations or not. We felt it paid some major dividends in terms of how employees felt about the workplace.

Training was extremely critical, we felt, and preparing people for the challenges in the workplace, and -- historically I think we've done an outstanding job with entry-level training, or training -- the technical training, so we've put a lot of emphasis into that. And those are some of the things that I think we've learned as a result.

Mr. Thomas: Reggie let's talk a little bit about the role of the HR workforce. As, you know, the federal human resources community is changing from a transaction-based environment to a more strategic and consultative role. Could you tell us more about your efforts to transform the human resources function within SSA and on a related matter, how is your agency looking to build the skills and capabilities of its HR professionals, so that they can become more strategic in areas such as workforce planning and recruiting.

Mr. Wells: Well, that's a very insightful question, Solly, and for much of my career, I functioned as a line manager with the usual dependency on the HR component to support me to make sure that they processed, you know, actions that are requested to get talented people in, and that transactional business is extremely important, and you can go about it in a variety of ways. Some organizations contract out a lot of that work, and that's sort of a trend today, to sort of move in the direction of outsourcing that work, or contracting it out to either another public agency or a private organization. And the emphasis is on sort of strategic direction, and how we plan and execute those human resources strategies is a really important thing. The President's Management Agenda really did allow us to recommit ourselves to that, and to emphasize that human resources is a strategic partner in the workplace, so that just as a practical example, if you are going to be initiating a major programmatic initiative, it is better to have human resources at the table, at the planning stage, so that you can anticipate any blips or bumps in the road toward that implementation.

In human resources we've really reoriented ourselves to be much more strategic in the way we go about thinking about things and doing things, and that has allowed, I think, organizations to be much more efficient in the way that they operate, because they aren't wasting resources by having false starts or starting down a path that is ill-advised from a labor perspective or a training perspective, or generally a human resources perspective.

So I think being a strategic partner is extremely important in an era where you don't have resources to waste, and I think that's been extremely important for Social Security, and I've gotten similar feedback from other federal agencies, since we have had this chief human capital officer counsel in place, and we share promising practices and best practices with one another. I think it has allowed all ships to rise, I think we are all able to move in a much more efficient and effective way.

Mr. Thomas: Thanks Reggie. Now, earlier in our conversation, you had talked about the SSA's performance management efforts and maybe we can talk a little bit more about that. Could you tell our listeners what you've done to put in place an agency-wide performance management system, obviously, ideally one that links employee-performance expectations with organizational goals and objectives, and I understand that you have also put in place, the performance assessment and communications system, perhaps we could have a better understanding of how that works and how that supports your performance management program?

Mr. Wells: When I took over as deputy commissioner of human resources, the first thing the commissioner asked me to do was to revamp performance management in the agency especially with our senior executives. Social security, when I arrived, was under a pass/fail system. We basically had our executives all the way down, essentially evaluated in a pass/fail model, you either passed or you failed. And in that kind of a model, obviously, there's really not much room or there really is no room to make distinctions, I mean, if everyone passes, there's no distinction about whether someone passed in a phenomenal way or someone just barely passed. And so I immediately moved to a multi-level system for senior executives, the year following we converted for our Grade 15 managers.

By that time the President's Management Agenda was full-blown and the guidance coming out of OPM was that pass/fail systems were frowned upon, they were not rigorous enough or robust enough to really distinguish performance. And so everyone was being encouraged to move away from it.

Well, we have a pretty healthy labor environment at Social Security; we have a number of unions that we work with as cooperatively as we can, and we felt that it was important to negotiate, enter into discussions around the sort of implementation of additional performance management changes and so we had a committee pulled together that really evaluated a number of performance management models, philosophies, and as a result of a -- really about a year, year-and-a-half process, came up with what you refer to, Solly, as PACS, the performance assessment and communication system.

The employee knows upfront how they will be evaluated against the expectations and then at the end of that year they sit down and sort of take stock of where they are. And we implemented it in October of 2006, and we've come through a full cycle now, and we're into the second year of it.

And feedback has been pretty good, there are always doubting Thomases, people who feel when you make a change, you know, it's going to be the end of the world. And I think it was done with extreme care, it was done very respectfully and working with labor around it, and I think in the final analysis, employees are giving us feedback that they do have a clearer sense of what is expected of them, And we've done some things with technology to make it a little simpler on how you actually record all of this. And so it really has been a very successful venture on our part.

Mr. Morales: Reginald earlier you've talked about the war on talent and the criticality of recruitment in support of your succession planning. Could you tell us what changes you are making to the recruitment process at SSA and are you able to use flexible compensation strategies to attract, or maintain employees and save the mission critical areas.

Mr. Wells: We use all of the flexibilities that are provided. We don't use them all at once, and we don't use them all the time, we use them when we feel we have a particular recruitment challenge, because of course, most of the flexibilities require resources and we try to use those as conservatively as we have to to make them go further. Our recruitment approach was actually revamped a number of years ago, I guess around 2001, and 2002, we actually overhauled in a major way, our recruitment strategy and we currently operate with a sort of a 10-point or 10-element approach. It involves an integrated marketing strategy and branding. For example, make a difference in people's lives, and your own to, sort of emphasize the mission-driven aspects of our agency.

And what I would suggest is that, at least for us, and this is a blessing, that our mission resonates very, very well with people, both young people and people who are looking to maybe have a second career, or to interrupt the career they are in to get into a line of work that they feel, you know, is more consistent with their value system or their goals in life, in terms of, you know, government does offer a pretty stable pension situation and other benefits that some people are gravitating to us for. So you know our mission is a very strong one, and we really, really play that up as much as we can, but we you know do on-campus recruitment, we have the benefit of a national blue -- and actually somewhat international blueprint.

So we are able to recruit in all kinds of communities, and which goes a long way toward allowing us to be a very diverse organization and to have a workforce that reflects the people we serve, so that's a very strong thing and something we continue to look forward in our recruitment activities.

We do a lot of online internet strategizing and we, as I said, use maximum flexibility. So I think we are doing all of that, I think in some strategically importance ways.

Mr. Morales: That's great, that's fantastic. What about SSA's knowledge management efforts. We will ask Dr. Reginald Wells, deputy commissioner for Human Resources and chief human capital officer at the U.S. Social Security Administration to share with us when the conversion about management continues on the Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to the Business of Government Hour. I am your host Albert Morales, and this morning's conversation is with Dr. Reginald Wells, deputy commissioner for Human Resources and chief human capital officer at the U.S. Social Security Administration. Also joining us in our conversation from IBM is Solly Thomas.

Dr. Wells, as you know agencies must have an effective strategy for organizing and retaining its intellectual resources and its institutional memory, so to that end, could you elaborate on your efforts to implement an effective knowledge management system and what can you tell us about SSA's knowledge management strategies?

Mr. Wells: Sure Al, and it is especially important for a federal agency that has a program as technically complex as social security. There are many, many rules, many, many nuances, and the experiences of people presenting themselves for services and so it is very important for our workforce to be very precise in the way that they evaluate a case and make benefit determinations.

As a result of that, and as you might imagine, there is voluminous rules and ways in which we present for our trainees, and for people who are journeymen, technical information about the work that they do. We have something referred to as the program operations manual system or POMS, which attempts to present a lot of these questions and answers for people, a lot of this information technically. So in a way there are a lot of knowledge management strategies that social security had to engage in this very naturally in order to do its business.

But what we have tried to do as an organization is use various strategies, various techniques, for both capturing that information and making it accessible and presentable to people who might benefit from it.

So we have done things like having -- establishing communities of practice and communities of interests. In HR, for example, we've tried to put together an HR curriculum that allows us to take our subject-matter experts, and put the information in a format that a young trainee or someone who's being tutored by them, and being, sort of, the baton is being passed from the more seasoned worker to this person who they are sort of grooming. And we've gotten some pretty good results, but that is, as you might imagine a pretty slow and laborious process.

I mean it's very specific between that individual and the person they are trying to groom. Mentoring is a major part of that and that is something that I think is kind of built into the DNA of the agency already, but we've tried to emphasize it in a number of ways, and we tried to formalize it, so that we're making sure that certain knowledge is transferred as it needs to be, to keep this thing going efficiently. Those are some of the things we are doing. You know we have those information portals; we have communities of practice and communities of interest, and communities of action where we are sharing best practices within the agency.

One of the things that my office is responsible for is monitoring the human resources practices across the agency. We have 10 regions and transactional business and that goes on in all of those regions, and so we actually go and monitor as a result of that we capture the best practices from one region and share it with others or with headquarters and vice versa. So there are a number of things we are doing to try to get a handle on knowledge management.

Mr. Morales: That's great. Now a recent global human capital study conducted by IBM, of which Solly Thomas helped execute, showed that over 75 percent of the HR executives interviewed believe that they have difficulty developing future leaders. Now, we talked a little bit about this, but can you provide us some more specifics on SSA's strategic leadership succession planning efforts?

Mr. Wells: I'd be delighted. If we do not have strong competent visionary leadership, there is the greater chance we will go astray even with outstanding oversight from the White House, Congress, the public. And so that's something that we're putting a lot of emphasis on.

Our commissioner, when he joined us a year ago, acknowledged the good work we had been doing in human capital, but challenged us to take it up a notch or two, and so he introduced, or had us introduce a new thinking on leadership. It envisions laying out for our employees agency strategic a very clear message that if you have an interest and the ability to be a leader, we are going to do whatever we can to groom you, to help you develop yourself, and in some instances, to offer competitive programs that you can compete for and get into, as a very deliberate attempt to make you the best that you can be as a leader.

And we've launched, for example, a symposium series which we refer to as leadership matters and we've run about 2000 managers through that. It's really targeted at our mid-level managers and we've run them through it and it's been very, very successful. People are saying that the things they have learned in that three-day symposium is translating very well in making them more effective in the work that they do when they get back to their field offices, or hearing offices, or what have you.

So we're putting a lot of emphasis on that, we believe that because that is a cohort in the agency that turns over, and will be turning over very quickly because of the retirement wave and the aging of the baby boomers, we have to groom people a lot quicker than we've had to in the past.

Mr. Thomas: And Reggie, staying on the development theme, could you talk a little bit more about your key learning and development strategies. In particular, I think our leaders would be interested in hearing more about your learning management system, Go Learn, and how it helps the SSA more closely-linked training to competencies and also to employee career paths?

Mr. Wells: Yeah, the Go Learn, or what was formerly Go Learn, it's actually we just pushed the button on April 1st making it SSA Learn, is basically an ability for our employees on a 24/7 hour basis access e-learning. And basically what they can do through this mechanism is take courses; we offer some 2,500 different courses. They can take them at home because it is internet based, they can take the courses on non-duty hour at their PC, or they can even do it during duty hours if they get the permission of their supervisor to do that, if there is some special training that the supervisor feels is going to be important to their ability to do their fundamental position well. And that has really put a lot of control in the hands of the employees to develop themselves, which is something we have been emphasizing.

I mean, there is no way for us to have all of the resources to train everyone to be the best that they can be, all at once. It is important that employees have mechanisms available to them that they can get, sort of learning as they need it, or learning as they want it, toward either the career path of their own or perhaps even to pursue another career path. And I really do subscribe to that view that you want people to do the work that they are committed to, that they believe in, that they have a passion for.

And sometimes, that means having them go from one track that they may be on to another. We encourage that and we are able to in a large agency like we have, because you could come into the agency as a claims rep, then become a public information officer, or go to work in the legislative office, or go into Human Resources. There is the potential in an organization like SSA to have multiple careers and stay in the same agency. And so this mechanism, this learning management strategy, I think, allows a level of flexibility that is extremely attractive to employees.

Mr. Thomas: Thanks Reggie. We want to shift our discussion a little bit to get your views on the blended workforce, the term commonly used for a workforce that consists of both contractors and federal employees. From your perspective, can you tell us how federal managers can effectively manage this blended workforce, and in particular, what you may see as some of the key differences that are intrinsic to these two core groups?

Mr. Wells: Well, social security and this is something that may vary from agency to agency -- we have a pretty longstanding and healthy use of contractors. There has been, over the last few years, an emphasis on making sure that that work with which is not inherently governmental can be pursued by contractors, and in some cases other federal agencies, a sort of shared service center kind of a concept, and what we have found is that our contractors, and career staff blend extremely well.

One of the areas that I would cite as a very positive example of that is in our information technology world, which Social Security, as you might imagine, has probably the largest repository of medical records and other kinds of personally identifiable information of any system in the world. And in order to manage that well, we have had to rely on both a large cadre of information technology specialists and mangers as well as contract workers.

And they blend very, very well. I think the reason they do is that the government workers recognize that they can't do it by themselves. So there is sort of a recognition that we need a partnership here or team work, in order to get this done. This is very important work, and we can't do it by ourselves. The other part of it is having really good project management skills, and the ability to lay out in fairly fine detail what it is we need for the contractor to do, and how that work is discreet from the work that the government employees do. So there isn't any sort of inherent competition with one another for that. So I think it's worked very well for Social Security. I think we have been very successful in that regard.

Mr. Morales: agency strategic Fantastic. What does the future hold for SSA human capital management, we will ask Dr. Reginald Wells, deputy commissioner for Human Resources 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 the Business of Government Hour. I'm your host Albert Morales, and this morning's conversation is with Dr. Reginald Wells, deputy commissioner for Human Resources and chief human capital officer at the U.S. Social Security Administration.

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

Dr. Wells, as you know, there has been much talk about commercial best practices in government, and particularly in the service area, such human resources, and we've talked a little bit about this, but what emerging technologies hold the most promise for improving the federal management of human resources?

Mr. Wells: Interesting question, Al. We've been very interested in trying to automate some of our programmatic tracking and our management information. So in areas like labor relations, tracking the official time usage of labor leaders, or looking at how our EEO cases are being processed efficiently, making sure that we are automating and we're able to look at how well the cases were working through the system.

Those are some of things that, I think, we feel are going to make a big difference in the area of training in particular. We've probably been the most proactive with our distance learning, our interactive video conferencing system really, and then learning system. It allows us to do distance learning to all those 1,400 offices across the country through a satellite system.

So that we don't have to bring people in large numbers to centralized locations to do training anymore, which is extremely expensive that, you know, that the transportation costs, and the per diem that - to have people come to those large gatherings. This is an extremely expensive proposition. So we've been able to save a lot of money by having that distance learning mechanism, and the one we were referring to earlier, SSA Learn allows us to offer training and the ability for self development. And it takes kind of the burden off of the agency. People can learn at their own rate in some instances, and take advantage of that which they choose to take advantage of.

Mr. Morales: Great, so you mention the future. So I have to ask, how do you envision SSA's human capital needs evolving over, let's say, the next two or three years, but more importantly, how do you envision your office evolving over the same period of time to meet some of these challenges?

Mr. Wells: Well, I think it gets back to an earlier question, I think, Solly posed, about you know, becoming more strategic. I think that we are growing up as strategic partners, and the tools and strategies that are needed for that, we are going to have -- we are going to get better at the whole issue of strategic planning we are going to be doing. But a lot of things are, I think, enduring. I mean, I think that we will always be concerned about our diversity and making the business case for it.

And however, the -- our public changes relative to those kinds of characteristics, we are going to be responsive to workforce planning is always going to be necessary to make sure we get the best bank for the buck, because even if we make out relatively well in a budget cycle, there is never going to be enough money to do all the great things we feel we need to do, to equip our workforce and to serve the public well.

So we are going to have to always prioritize, and have ways of sorting out what's most important, what's least important. Accountability and performance, there is an ever-growing expectation for that, a lot is going on at the national level, and tracking that and evaluating organizations. And SSA is one those organizations that always likes to be viewed as at the top of its game doing the best that it can with what it has been given to work with.

And so we are always going to be striving for recognition and acknowledgment of the excellent work we do. And so we are always going to be self-evaluating to make sure we stay at the top of our game, and that's going to be, I think, a constant persistent expectation that we in HR are going to have to be very sensitive to. And of course it plays out with that human capital survey, where you are asking your employees to give you feedback on how you are doing. And I think that's going to always be there.

Mr. Thomas: As you look to adequately prepare for the workforce of the future, one of the challenges you'll face, no differently than any other agency, is the fact that you have a high number of SSA employees retirement eligible. As I look at some of the statistics, nearly 60 percent over the next 6 or 7 years. What plans are in place to mitigate the effect of this retirement wave?

Mr. Wells: Well, the good news, Solly, is that people don't retire when they are eligible, necessarily, so we are fortunate in that. And again, I go back to it being probably mission-driven. I've talked with employees on the verge of retirement who expressed -- who are really looking to retire, but they express a sense of dread about not being in the mix and sort of in the public, that there may be people who come to their field office, that they have developed a personal relationship with, who may be disabled, or may have some other life circumstance that requires them to need benefits, and they feel personally responsible for that person connecting with those benefits.

So as long as we continue, I think, to attract the right people to social security, which I think, we've done a very, very good job of with our competency-based interview techniques and other strategies, as well as you know, being very clear about what our mission is. As long as we do that, I think, we are going to have people working a little longer than their retirement eligibility date.

Based on our projections, and we've been pretty accurate over the last few years. We are projecting that 23 percent of our workforce is going to retire over the next five years. So some of those people are going to work a little longer, but as we are -- as we have the resources to recruit and hire, we feel pretty good about our chances and our ability to do that. So whatever vacancies we have, we are pretty confident we are going to fill them.

Occasionally, we run into a challenge with a specialty, I mean, actuary is a specialized occupation, and you know, you sometimes have to do some extraordinary things to land the best ones, but -- or in the IT, it could be that way. But I think generally speaking, we have gotten that down to kind of a science. We've viewed some other techniques early -- using early retirement, for example, as a way of flaming the wave.

I think one of things that we have done or tried to do was to manage that wave, so that we didn't have a dramatic peak. At one point we are projecting that there would be at one point a dramatic spike in retirements which could have been devastating. By doing a few things creatively, to manage the wave, we've managed to flatten the wave so that there is no dramatic loss of people at any given point in time, and that has, I think, made some of the difference.

Mr. Thomas: And Reggie, I want to stick with the discussion on retention. The recent IBM global human capital study, one of the findings that it showed was that almost 50 percent of the human resources executives we interviewed, indicated that they are facing higher turnover. And perhaps more than half of those we interviewed are finding skills development within their existing workforce to be a particular challenge.

Now, at SSA, your retention rate is actually one of the best in the federal government, and probably on a related matter, one of the cause-effect, if you will, was that SSA was ranked by the partnership for public services, one of the top 10 places to work. What is the key to your success, and how do you see retention within your organization and your attempts to address that?

Mr. Wells: Solly, I think one of the major issues for us as I've alluded to with a number of the responses I've given is the mission of the agency. I think that single factor is very significant in drawing people to the agency and retaining them once they are there. We try to, as I said, find people who believe in this work, and want to do this work for a career, and we've been very fortunate in that regard. And we are -- and because of career patterns, concerns, and other things, we realize that there may be some shifts in that.

But so far, it's been holding that the mission has been an extremely strong draw, but once you have people in your organization, you have to do the types of things to convey to them that they are important to you that you need them in order to fulfill your mission. And we, particularly in HR, put as much effort into supporting the workforce, knowing that these jobs can be very, very difficult.

We have a few initiatives. One example, I would give you is the initiative we've referred to, sort of an umbrella initiative, caught all ages, all stages, and it was specifically designed with the multigenerational workforce in mind, so that whether you are someone with 35 years of service, and starting to experience elder care issues, or you are a new hire and you don't even have children yet, but you know, that's probably in the not too foreseeable future, so that we provide, you know, counseling and resources and information that might be a benefit to you. Or someone in between, who needs pre-retirement, you know, guidance, they are going to work another 15 to 20 years, but they want to make sure that when their time is over, they are all postured for reasonably good retirement.

We try to provide a lot of work-life balance. We try to make programs available like the flexiplace, where people can work from a remote site in some instances. It's a little tougher for SSA, because with the public contact work that we do, it isn't portable where you can't do it from home. There are also personally identifiable information concerns, about the security of the information that we have on beneficiaries.

So that makes it a little challenging there, but I think those are the kinds of things that you do to recruit and retain a strong workforce. You have to make a commitment to them that you are there for them that you are going to give them the supports they need.

And that's where the tools come in. I mean, it is sometimes challenging having all the resources, to allow people to do their best work, but we try to do the best we can. And our commissioner has spent a large amount of his first year in the position trying to convey information about all the tools and resources we need to do the kind of job. But I think the American public expects, and certainly the White House and Congress expects.

Mr. Morales: Reginald, you earlier you told us just a wonderful story about how you got started. So I'm curious what advise would you give to someone who is out there, perhaps considering a career in public service, whether at a local level or at a federal level?

Mr. Wells: Well, the one thing I would say Al, and I mean this very sincerely, I can't imagine a more meaningful career than working in public service. You know, obviously I'm a little biased, and I'm actually a second-generation Fed, so maybe, you know, I come by naturally. My mother worked for IRS for 45 years, and I don't know if I'm going to do 45, but I really enjoy what I'm doing and I really believe in it. And I think that it really does make a profound difference in how our country operates how the people in it are supported and allowed to lead the lives that they lead. Sometimes we are invisible in that regard, and people don't think about us until you have some natural catastrophe, but when those things, whether it's on a day-to-day basis that you need us, or an episodic basis, I think that public services, there is no finer work that one can do.

And then in terms of rewards, even above and beyond some of the things that a lot of people gravitate to us for, you know, stable pension situation, certain, you know, work-life flexibilities and balances that you are going to have, that you may not have in other occupations or other environments, I think, are extremely important. I think, more than ever before, the opportunities in government are going to be huge.

I think the positive results that we had through the human capital survey also reflected the fact that we had people retiring in larger numbers. Therefore, people in government who were at lower levels of the organization can move up quicker than they have ever been able to before. And I think that makes for an optimism about their futures and their ability to be all that they can be, more quickly, maybe than they could have, had they been a baby boomer.

This is a wonderful time, I think, to come to public service. I think the need is there, I think the opportunities are going to be there, I think like an organization like Social Security, where you could come in and test out different careers, all in one place, is going to be a tremendous draw into the future. And I think the sky is the limit for eager, talented young people, who may want to make a difference in their lives and other peoples. And I would like to take this opportunity, if I might to give the ways in which people can contact us. We have the website which is www.socialsecurity.gov. And a couple of phone numbers I'd like to give you. The general number is 1-800-772-1213 -- that's 1-800-772-1213, and the TTY number for someone who might be hearing impaired is 1-800-325-0778 -- that's 1-800-325-0778.

Mr. Morales: That's a wonderful perspective, thank you. Unfortunately we have reached the end of our time here, but more importantly, Solly and I would like to thank you for your dedicated service to our country both at the local level and now at the federal level.

Mr. Wells: And I thank you for your interest.

Mr. Morales: Great, thanks. This has been the Business of Government Hour, featuring a conversation with Dr. Reginald Wells, deputy commissioner for Human Resources and chief human capital officer at the U.S. Social Security Administration. 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 may 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. Until next week, it's businessofgovernment.org.

Originally Broadcast April 12, 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.

Today, scientific discoveries are emerging at an accelerating pace in virtually every field, transforming the science and engineering landscape and opening entirely new territory for exploration. As one of the premier federal agencies supporting basic research at the frontiers of discovery across all fields, the National Science Foundation plays a critical role in keeping the U.S. competitive in the sciences. The success of such a vital national mission rests on the pursuit of an effective resource management approach and workforce strategy.

With us this morning to discuss NSF's strategic efforts in these areas is Anthony Arnolie, director of the Office of Information and Resource Management and NSF human capital officer.

Good morning, Anthony.

Mr. Arnolie: Good morning. Thanks for having me.

Mr. Morales: And joining us in our conversation is Solly Thomas, associate partner in IBM's Human Capital Practice.

Good morning, Solly.

Mr. Thomas: Good morning, Al. And good morning, Anthony. Good to see you again.

Mr. Morales: Anthony, let's start by setting some context for our listeners. Could you take a few minutes to provide us a general overview of the National Science Foundation, including its history and its mission today?

Mr. Arnolie: Certainly. The National Science Foundation is an independent federal government agency created by Congress in 1950 to, at that time, promote the progress of science, to advance the national health, prosperity, and welfare, and to secure the national defense. Today, we fund basic research in scientific disciplines such as biology, geosciences, computer sciences, engineering, and education. And we fund researchers in all 50 states through grants to about 1,700 universities. And each year, we receive about 42,000 competitive proposals, and award about 10,000 new funding grants each year.

Mr. Morales: That's a fairly competitive statistic. Could you perhaps share some additional details to give us a perspective on the organization, such as how the Foundation is organized, the size of the overall budget, number of full-time employees and contractors, if you have such a mix?

Mr. Arnolie: The Foundation is run by a director and a deputy director who oversee the staff and management responsible for program creation and administration, merit review, planning, budget, and day-to-day operations. We also have a 24-member National Science Board that establishes the overall policies for the Foundation.

This year, our current budget is about $6 billion. And at present, we have a total workforce of about 1,700. That includes about 1,200 career employees, about 200 scientists from research institutions on temporary duty, and about 300 contract workers. And we're located in Arlington, Virginia.

Each year, NSF supports an average of about 200,000 scientists, engineers, educators, and students at universities, laboratories, and field sites across the country and throughout the world, from Alaska to Alabama and from Africa to Antarctica. You could say that NSF support goes to the ends of the earth to learn more about the planet and its inhabitants and to produce fundamental discoveries.

Mr. Thomas: Anthony, now that you've provided us with a sense of the larger organization, perhaps you could tell us more about your specific program. What are your responsibilities and duties as the director of the Office of Information and Resource Management, and as the National Science Foundation's chief human capital officer? Could you take a moment and tell us about the programs under your purview, how your office is organized, and the size of your staff and your budget?

Mr. Arnolie: Sure. As director of the Office of Information and Resource Management, I'm responsible for ensuring that NSF runs smoothly and efficiently from an operational perspective. Organizationally, I'm responsible for three divisions: the Division of Information Systems, the Division of Administrative Services, and the Division of Human Resource Management. These divisions collectively are responsible for developing and maintaining the technology infrastructure and systems that facilitate business operations, as well as the underlying IT security for managing the day-to-day administrative functions, such as building security, facilities management, proposal processing, conference and events management and visitor services, and also leading the agency's effective recruitment retention, motivation development, and utilization of NSF staff.

I manage about 165 federal employees and well over 200 contractors who work within these three divisions. Approximately 75 percent of the contractors perform information technology services, including application development, data center operations, and help desk support.

From a funding perspective, I'm responsible for a budget of approximately $100 million. And as the chief human capital officer, I serve as the senior strategic advisor for the deputy and the director of the agency on all human capital management issues. I'm accountable for the strategic management of NSF's unique workforce, which includes a large planned turnover of our scientific staff annually.

Mr. Morales: Anthony, if I may, just as a quick follow-up, is your role as director of the Office of Information and Resource Management effectively what people might recognize as a CIO?

Mr. Arnolie: The information technology function falls under my purview, but the CIO function and the Office of the CIO function is a separate function. So my role is a bit broader than just information technology, much like even though I hold the title of chief human capital officer, my role is broader than just human capital management.

Mr. Morales: Okay, thank you.

Mr. Thomas: Anthony, regarding your responsibilities and duties, what are the most significant challenges that you've faced in your position, and how have you addressed these challenges?

Mr. Arnolie: I would say the most significant challenge I've faced since I've been at NSF has been funding constraints and competing priorities, which are not unusual to small agencies in particular. We've been evolving from a small sort of off-the-radar agency to a much more highly visible one, which brings with it greater oversight and increased demands. Until this year, our funding for administrative activities has not kept pace with our needs and those demands, although I am beginning to see that change this year, finally, and I'm really excited about what the future holds as a result.

As a result of that situation, we've had to make some difficult choices among competing priorities. So for example, I oversee information technology as well as human capital management. Both of those are funded traditionally out of the same budget. And so there are often times where a decision has to maybe be made between hiring more people or investing more in technology, and clearly both of those are imperative to our mission, and so it does create some difficult challenges.

What I've done in my position is to aggressively work to educate our senior leadership on the importance of the administrative functions to the execution of our mission. And as I said, I think this year, we are finally starting to make some inroads and those messages are starting to take hold and we're starting to see the benefits in terms of a bigger budget.

Mr. Morales: That's fantastic.

Now, Anthony, I understand that prior to joining NSF, you came from the private sector. Could you describe your career path for our listeners? How did you get started, and what brought you to NSF?

Mr. Arnolie: Well, up until 2003, when I joined NSF, I spent my entire career in the private sector working for a number of accounting and professional services firms. I spent most of my career managing IT organizations, providing internal support to the consultants and accountants.

My most recent position was a partner in charge of technology administration at Arthur Andersen in New York. And it's not unknown to most what happened to Arthur Andersen as a part of the situation that took place with Enron. At the time, my wife and I were both partners at Arthur Andersen. We had met and both worked here in the D.C. area. We decided to move back. She continued in the accounting profession. We thought it wise for us to both not make the same mistake twice, if you will. And so I sought to find a challenging yet somewhat more stable occupation in the interest of our family.

Mr. Thomas: Diversification strategy.

Mr. Arnolie: Absolutely. Absolutely. Too many eggs in the same basket the first time around.

I was fortunate that the opportunity at NSF came up because it was similar from a functional standpoint to roles that I had had in the private sector, albeit obviously in a very different sector, which has been quite an interesting experience for me.

Mr. Morales: So as you sort of reflect on these experiences, how have they prepared you for your current leadership role at NSF and perhaps shaped your management approach and your leadership style today?

Mr. Arnolie: Well, I've had the fortune over my career of having six outstanding bosses, all of whom when perhaps I was maybe too young to trust, trusted me with quite a bit of responsibility. I think that what they did and the themes that I took away from working for them are ones that I apply today. The first being communication is critical. They taught me to speak honestly and frankly and expect the same in return.

The second is you must empower your staff and make sure that they take ownership for the success of whatever they're assigned with. Thirdly, that you must support them when they make mistakes and when they're being treated unfairly. And last but not least, as a leader, you must maintain your poise at all times, especially in the most difficult of situations. And as I said, each of my previous bosses exhibited those qualities, and I've tried to employ those in my management and leadership style.

Mr. Morales: Those are wonderful principles.

What is NSF's human resource strategy? We will ask Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the National Science Foundation, 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 Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the National Science Foundation.

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

Anthony, let's talk a bit now about the President's Management Agenda and its focus on the improvement of management and accountability. What are some of the efforts within NSF to meet the requirements of the PMA today?

Mr. Arnolie: Well, when we embarked upon the PMA a few years ago, it really helped us as a small agency to institutionalize some of our important human capital functions and activities. And in particular, it helped us to bring some rigor to our evaluation processes.

NSF achieved green in human capital in 2005, and maintained that green for about two years up until this past June. The challenge that we faced, as I've alluded to earlier, had to do with limited funding. And as a result, we reached a point where there was a divergence between the agency priorities and some of the PMA requirements, and that left us in somewhat of a difficult position. Our funding was limited, and over time, we found it difficult to meet some of the ongoing requirements and still do what senior leadership at NSF was asking us to do.

Now, the good news is we had engaged senior leadership to the point where they had given us quite a list of human capital imperatives that they wanted us to carry out. We were working closely with senior management as well as all levels of the organization. And so while we would like to continue to work with OPM to see if we can get credit for some of the great work we're doing as an agency, and I think our director and deputy would support this, we're proud of the progress that we've been making, and we do credit the PMA for really getting us started down this road of a more rigorous approach to human capital management.

Mr. Morales: Anthony, let's probe on this area a bit more. If we focus on the theme of human capital, could you give us an overview of NSF's human capital strategy, and your efforts to develop a strategic human capital plan? How does the strategy align with and support the Foundation's core mission, goals, and organizational objectives?

Mr. Arnolie: Well, we've recently undertaken an effort to update our strategic human capital management plan, and the basis for that was the most recent update to the NSF strategic plan, so there is a very tight linkage between the human capital management plan and the agency's strategic plan. Our human capital vision is to attract, develop, and retain a diverse world-class workforce that is continually learning and expanding its capacity to shape the agency's future.

To that end, NSF senior leadership recognizes the value of strategic human capital planning as a key component of excellence in management. This is shown through the recent enhancement and ongoing implementation of our human capital management plan. And this plan is aligned to the agency's overall strategic plan as well as outlines goals, plans, and evaluation methods. A working group of senior career federal executives representing all of our key scientific disciplines was formed to update the plan and to ensure its relevancy to the agency's strategic goals and the needs of the strategic and scientific workforce.

Mr. Thomas: Anthony, staying on the human capital topic, as you know, the federal human resources community is changing from a transaction-based environment to a more strategic and consultative role. Could you tell the listeners about your efforts to transform the human resources function within the National Science Foundation? Specifically, how are you engaging the program directorates in order to anticipate human capital issues and improve processes while at the same time operating as consultants?

Mr. Arnolie: Well, under my tenure and under the leadership of the deputy CHCO, we've contracted out, over the last two years, many of our traditionally transaction-oriented duties. What that's allowed us to do is it's provided additional time for our permanent staff to serve in a more consultative role.

Additionally, we've recently implemented a service team concept. And what this entails is while we maintain our traditional functional branches, we deploy customer account representatives - CARs, we call them that are directly aligned to our internal customer organizations. These specialists strive to consult, coordinate, and communicate with their assigned organizations in order to improve our understanding of customer needs and to collaborate more closely for better, faster service. And so far, this concept seems to be working and our customers like it.

In addition, we are engaging senior leadership on a regular basis and discussing human capital issues that are of relevance to the strategic mission of the Foundation. On a quarterly basis, if not more often than that, we have a full agenda at our senior management meetings where we talk about a variety of human capital issues. The important point here is we don't spend a lot of time talking about staffing and classification, but really talking more about how we shape or reshape the workforce to respond to the needs of the scientific community.

And in addition, because we are a highly participatory organization, all of our strategic human capital initiatives are done in collaboration with the program directorates. I mentioned the updating of the human capital management plan as one example, but just about every one of our initiatives from a human capital standpoint is overseen by a steering committee or a working group that consists of representation from all parts of our organization.

Mr. Thomas: Anthony, let's talk a little bit about performance management. Could you tell us about the National Science Foundation's efforts to develop and implement an agency-wide performance management system, and in particular, the focus on aligning employee performance expectations with organizational goals and objectives?

Mr. Arnolie: Well, our performance plans for executives have been aligned to the agency mission for quite some time. In 2004, we expanded this to all general workforce performance plans. We held briefings for supervisors and staff. We set up frequently asked questions, and even created an internal web page to provide information and sample performance plans showing linkage to the mission. And within a short period of time, we had full compliance throughout the agency, and have been pleased with this result. As research shows that when employees see how their daily work supports the organization's goals, then their performance improves, and from there, organizational performance improves.

As far as the executive performance plans, we take a very rigorous and we'd like to think transparent approach to both the evaluation of the plans themselves and their linkage to mission, along with an evaluation of the appraisals and how effective the executives have been at carrying out what's documented in the performance plans. We think that this has been very important, both in terms of making sure that activities are aligned to the mission, and also that our executives are held accountable for delivering on those things documented in their plans.

Mr. Thomas: To accomplish its mission, the National Science Foundation invests in the best ideas generated by scientists, engineers, and educators across all fields of research and education. Could you give our listeners an overview of the Foundation's performance assessment framework? What exactly is the framework, and to what extent does it enable continuous improvement and ensure openness to the research and education communities serviced by the Foundation?

Mr. Arnolie: NSF conducts a wide range of internal and external assessment activities to evaluate and report on our strategic investments and how effectively the strategic plan is being implemented. Since we fund basic research in science and engineering and education, it's sometimes not possible to directly link outcomes to annual investments because the results from basic research oftentimes takes years to come to fruition. Consequently, we believe in assessing the true impact of NSF's activities by utilizing the qualitative judgment of outside experts. To that end, we have a few activities.

One is what we call committees of visitors. We rely on these external committees of experts to evaluate long-term outcomes resulting from NSF grants. The COVs, as we call them, meet every three years to review the program reviews and to provide into two areas: the assessment of the quality and integrity of program operations, and how the research results have contributed to the attainment of NSF's mission and strategic outcome goals.

We also utilize directorate and office advisory committees. The judgment of these external experts help NSF to maintain high standards of program management. They also provide advice for continuous improvement and ensure openness to the research and education community served by the Foundation. Each of our directorates has an external advisory committee that meets twice a year to provide a review of program operations, discuss important current issues, and approve recent reports from the relevant COVs.

Last but not least, we have an advisory committee for Government Performance and Results Act. This external advisory committee conducts an assessment of the entire portfolio of NSF investments in science, engineering, and education. Each year, the committee reviews the Foundation's investments to determine if NSF demonstrated significant achievement under these strategic goals. The committee submits a report to the NSF director, which is incorporated into the Foundation's annual report each year.

Mr. Morales: Now, Anthony, you talked a little bit about the connection between the program leadership and your organization. And I'm sure that the increase in multidisciplinary projects, international activities, and major research projects has increased the volume as well as the complexity of the workload over at NSF. But could you tell us a little bit more about the efforts to analyze these workload requirements? And what can you tell us about a pilot program currently underway to test a new organizational structure and operations model?

Mr. Arnolie: For many years, NSF has been a leading federal agency in leveraging technology to support business processes. With rapid increases in e-government solutions to conduct our core business, we discovered that there were resultant changes in employees' job functions and competencies.

In 2007, we developed a weighted workload model that compares NSF's workload indicators to the staffing levels in our directorates and offices. The trend data allows us to track changes in workload by workload type and by scientific discipline for each directorate and for each program. The model shows a significant increase in overall workload in the last seven years, with only a modest increase in our staffing levels. Further, the model projects continued increases in the coming years, and we continue to refine the model as new data becomes available.

In terms of the pilot, about two years ago we undertook what we called an administrative function study in order to understand and address the impact of changing business process and technology on the program support workforce. The goal was to better align the functions assigned to the administrative staff in support of the mission and to increase professional development opportunities for administrative staff by establishing career paths and learning maps.

The program support staff at NSF represents about 30 percent of our permanent workforce. And recommendations from this study have led to the development of new program support positions that have become part of a clearer career paths with extended professional opportunities that did not previously exist at NSF. In addition to the new positions and career paths, we've developed learning maps that help guide employees through their options for individual competency development, and allows them to target professional development opportunities at the Foundation.

The pilot was initiated in 2007 to test the management positions of this new model we created, and a structured learning and development plan is in place for each of the pilot positions for the duration in order to address the competency gaps assessed prior to the beginning of the pilot. Additional competency gap analysis will be conducted during the pilot. And at the end of the pilot, we will perform a formal evaluation in addition to the rolling evaluations to assess the validity of the pilot and to determine future plans for the new management positions.

Mr. Morales: That's great. It sounds like it's going very well.

Let me switch gears for a moment here, Anthony, and talk a little bit about the NSF Academy. Could you elaborate on how the Academy provides learning opportunities which support the agency's vision and mission? And since we do like to talk about technologies here, can you tell us a little bit about something called "Academy Learn?"

Mr. Arnolie: The NSF Academy serves as the catalyst for the creation of a continuous learning organization at the National Science Foundation. We have a highly educated workforce, and sometimes convincing them that further development and enrichment is necessary. But what we've tried to do with the Academy is, as I said, to simply serve as a catalyst for stimulating discussion and dialogue that might lead to that enrichment.

The Academy promotes organizational excellence through the advancement of human capital by proactively identifying and implementing programs necessary for the development of all of our employees. One unique offering that supports our mission-critical occupations is the Program Management Seminar. This seminar is NSF's orientation for new program officers, many of whom have never worked for the federal government before. In addition to introducing them to federal government requirements, the seminar examines our agency's culture and values centered around NSF's merit review of submitted proposals, and it also raises the new program officer's awareness of the diverse composition of NSF's workforce.

We also offer division director retreats twice a year and division director roundtables on a quarterly basis that are structured around topics of interest to our division directors and our deputy division directors. As an example of how NSF is a highly participatory organization, the planning committees who determine the agendas, the topics, the guests, are all the division directors and deputy division directors, with some assistance from my staff. In addition, the Academy is consistently evaluating and redesigning these programs to better meet the needs of our internal customers.

The NSF Academy is also embarking upon a blended approach to learning that enhances employee learning by allowing individuals to select the learning medium that best fits their individual needs. For example, the Academy provides standard classroom education, but it also provides e-business courses that can be accessed online 24/7 from home or work or while on travel.

We're currently implementing Academy Learn, a learning management system that contains a course catalogue of over 2,000 online courses, has an online technical library, and also has an individual learning plan built in that can communicate the employee's training needs and wants to their supervisor, so that supervisors can more fully support the learning process for our employees.

Mr. Morales: That's fantastic.

How does NSF manage a blended workforce? We will ask Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at NSF, 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 Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the National Science Foundation.

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

Anthony, like most organizations, workforce planning must be critical in helping your agency's leadership draw a clearer picture of the nature of the current and future human capital decisions. Could you tell us a bit about your efforts to enhance and institutionalize, perhaps, workforce planning within the Foundation?

Mr. Arnolie: Certainly. There's been quite a lot of activity around this in the last two years. As I mentioned before, our human capital strategic plan also includes a workforce plan as well as a succession plan, and those were recently updated to more closely align with the NSF's strategic plan. We assembled a group of senior executives from across the Foundation who led that effort and drafted a plan that was distributed to all NSF staff for comment, another example of the highly participatory nature even after the plan was developed. And we did this with the strategic plan as well. It was posted for comment for about three weeks for each and every one of the employees to provide feedback, and we did make changes as a result of that. That's somewhat of an aside.

But in any case, the workforce plan itself identifies the steps to align our workforce with our current and projected work requirements. Each year, the Division of Human Resource Management facilitates a workforce planning process with NSF senior management that results in an updated set of goals, priorities, and action strategies for workforce and staffing planning across the Foundation. This structured process has focused management efforts on strategic workforce planning, and I would say that's for the first time in many years at the Foundation.

At the same time, we've implemented a biannual staffing planning process with each directorate and office that focuses specifically on developing work unit staffing plans. The staffing planning process encourages directorates and offices to align their staffing strategies to the overall workforce plan.

Mr. Morales: Anthony, you mentioned succession planning. What are some of the efforts at NSF to ensure continuity of leadership through succession planning and executive development? Specifically, what changes are you perhaps making to the recruitment process that enable you to use flexible compensation strategies to attract and retain employees in some of the mission-critical areas?

Mr. Arnolie: The goal of our succession planning activities is to ensure a seamless transition in all of our executive leadership positions. We strive to enable continuity of business operations and to preserve critical organizational knowledge. Finally, we want to develop and nurture a cadre of executives that can lead the agency into the future. Some of our implementation strategies aim to broaden and deepen NSF's leadership pipeline through the implementation of a comprehensive leadership development program, to prepare leadership transition plans for all executive positions, and last but not least, to establish a comprehensive knowledge management and transfer strategy for all of our executive leadership positions.

Regarding our recruiting strategies, we use two principal avenues to hire staff. The first is the National Science Foundation Act of 1950, that authorized the creation of the agency and also authorizes us to appoint scientists and engineers without competition under the accepted service authority unique to our agency. This appointing authority provides us with the necessary flexibility to fill these mission-critical occupations. Compensation for these scientists and engineers is set within pay bands, and the use of additional incentives can also be authorized. Our administrative staff is hired using the same appointing and compensation rules as other agencies in the Executive Branch.

There are similarities in the recruiting processes for both of these groups and we've made substantial efforts to simplify the process, to leverage technology, and to look for ways to streamline the process. For example, we post our job information on both nsf.gov and USA Jobs. To the extent that there are individuals who are specifically looking for NSF opportunities, they would obviously find those on our website. And there are other individuals who may be seeking opportunities from NSF along with many other alternatives.

We've also adapted our recruiting processes to the needs and expectations of our key target applicant groups. For our professional scientific and engineering community, we use a streamlined application process. And these applicants may submit resumes that are much more in line with the types of CVs typically used in those professional communities. We also have extensive outreach efforts to the various scientific communities through what we call "Dear Colleague" letters, which solicit interest in our vacancies by contacting presidents of universities and chancellors who might know of worthy candidates who would be interested in an opportunity at NSF.

Last but not least, word of mouth is an extremely important tool in filling these positions. We turn over about 30 percent of our scientific workforce each year by design. And it's key for us for those individuals when they return to their home institutions to have had a positive experience, and therefore, be in a great position to recommend the next wave of individuals to serve the country by working at NSF.

Mr. Morales: That's great. It sounds like you're making it easier not only for the applicant, but as well as the managers within the organization who are seeking these candidates.

Mr. Thomas: Anthony, given NSF's mission, you seem to rely on a continual and transparent exchange between the broader science community and the Foundation itself. Could you tell us how federal managers can effectively manage an ever-increasing blended workforce composed of contractors and federal workers? And what are some of the key differences intrinsic to these core groups?

Mr. Arnolie: Our success in engaging the science community is in large part because we interact with them regularly and rely on them heavily to perform many key business functions of the Foundation. We not only recruit them for key leadership and program management positions, but we utilize them for merit review of competitive proposals as well as our performance assessment activities.

Now, while this enables fresh ideas regarding scientific research and the management of the agency, it does bring with it some challenges in terms of managing a blended workforce. When you factor in the increased reliance on contractors to perform many administrative functions, managing the NSF workforce can be challenging.

The good news is we have a very collegial culture, and the career federal employees at NSF provide mentoring support, and most importantly, stability to the agency's operations. One of the things that we try to do is we both try and engage the contractors and temporary staff as part of the NSF family. At the same time, we work closely to establish a strong core among the career executives and staff, because it's important for the contractors and temporary workers to hear and for the messages to be reinforced as to what's important to the Foundation.

And so we find that it's the permanent staff that allow us to do that. We have a very dedicated and committed staff, and they really make it possible for this rotation of temporary workers to come in and out and still allow the business of the Foundation to continue.

Mr. Thomas: As you know, Anthony, the younger employees have different attitudes, behaviors, and expectations for their careers and the workplace. In general, they tend to be more flexible and more mobile, and therefore, we expect them to change employers and jobs several times. They also typically look for more flexibility from their employers and greater support at the workplace.

Could you tell our listeners about the National Science Foundation's efforts to meet the challenge of this changing workforce?

Mr. Arnolie: In part, I think we're meeting the needs of this group by expanding our use of the Federal Career Intern Program as well as the Presidential Management Fellows Program. In addition, as you know, we're widely recognized as one of the great places to work in the federal government, and we offer many amenities, such as an on-site fitness center, an on-site child care center, on-site health services, on-site caf�, library services, and proximity to a shopping mall.

We also offer detailed assignments that offer interesting developmental opportunities for our employees. For the last six years, the number of telework agreements on file at the Foundation have increased, and telework is clearly one of those areas that's appealing to employees of all ages. That said, NSF is in a somewhat unique position because for many of the positions we try and fill, the requirements greatly limit our pool and our opportunities to go after some of the younger employees, in that a Ph.D. with six years of experience after attaining it is often a requirement for many of our program management positions. And so we look to leverage as best we can the opportunities to attract younger employees for those positions that they would qualify for.

Mr. Thomas: The NSF is also co-managing partner and a consortium leader for the grants management line of business. And you recently launched a web portal called research.gov. Could you tell us about this specific effort, and to what extent does your office support systems necessary to manage the Foundation's grant-making process?

Mr. Arnolie: Certainly. NSF is a single-mission agency that fulfills that mission by issuing grants, so it's critical that our IT investments support and enable those business processes. Research.gov is a new initiative that supports the grant-making process by providing a menu of services tailored to the needs of the research community, and enables NSF to comply with recent government-wide mandates and guidelines.

We were selected by OMB to lead the research focus grants management consortium because of our successful track record with our existing grants management system, FastLane, our leadership position in the research community, and our high standards and performance for our customers. Research.gov allows us to leverage FastLane's capabilities to deliver common grants management services, and allows us to serve as a lead partner for federal research-oriented, grant-making agencies with a shared vision of increasing customer service for the research community while streamlining and standardizing the business process among the partner agencies. Research.gov provides public-facing services for the broader research community, and business services for institutions that apply for and receive grants from participating federal research agencies.

The first of many business services that we offer is grants application status, and we recently released this in a beta mode. It will allow applicants to check the status of grant applications submitted to NSF and any of its research.gov partners in one single location. As this initiative matures, research.gov will continue to develop and implement additional services in support of the science, engineering, research, and education mission.

Mr. Morales: Anthony, in the past year, we've seen a surge of federal agencies and a variety of communities launching their own version of a Wikipedia or a blog. Could you talk about efforts within NSF to leverage these new social networking ideas and technologies such as blogs and wikis? And specifically from perhaps your vantage point, how can such tools enhance NSF's ability to collaborate and communicate?

Mr. Arnolie: NSF has several methods by which we interact with our communities, both internal and external. There's active interest among our scientists and engineers to explore and use various collaboration tools, and our connection with the academic community keeps us on the constant lookout for the latest technologies.

Regarding wiki technology, we launched the first NSF wiki in 2005, and it has been in agency-wide use for over the last two or three years. Currently, we have about 20 distinct groups that use the NSF wiki for a variety of purposes, such as project updates, meeting minutes, notices of interest, and posting and updating standard operating procedures. Right now, we're exploring the development of a wiki that can be used for both internal staff and their external communities for collaboration. All these tools can help NSF to better communicate and collaborate. We also have the luxury internally of being located in one location, which facilitates a lot more face-to-face collaboration, which is not always an option for some other organizations.

Mr. Morales: Let me switch subjects here for a moment. A major cyber security concern with the federal government these days is employees perhaps not thinking about the risks and being careless about personal information and data security. What steps have you taken to create or cultivate a culture of accountability and protection for sensitive personal information?

Mr. Arnolie: We strive to balance security and privacy considerations, such as the protection of personal information and data, with the open and collaborative environment that's central to the scientific research and discovery. User education we think is the critical success factor in maintaining this appropriate balance.

Our key message establishes accountability. Each employee is responsible for recognizing personal information and avoiding inappropriate access, use, or disclosure. We hold annual security awareness training, which is required or all employees and other on-site staff. We also hold ongoing outreach activities to remind employees of their responsibilities with respect to protection of personal information.

Keeping users informed is just one component of NSF's security and privacy strategy. NSF's information systems are designed to facilitate work processes while providing appropriate levels of protection for security information, which is not a trivial task given that we receive 42,000 proposals each year for research, education, and training projects, and we receive several thousand applications annually for graduate and postdoctoral fellowships.

One of the things that we've done recently, in 2007, we stopped collecting Social Security numbers from individuals that conduct business with the Foundation, and assigned unique NSF IDs to replace those SSNs for all individual accounts in our grants management system, and this constituted over 350,000 records. We also implemented other technical controls, such as data encryption and secure access mechanisms that are employed where appropriate to provide additional layers of protection for sensitive personal information.

Finally, our security and privacy program could not be successful without the involvement and dedication of senior management, particularly the director and the deputy director. When senior leadership makes it clear that security and privacy are priorities, then the Foundation listens.

Mr. Morales: That's great.

What does the future hold for the National Science Foundation? We will ask Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the Foundation, 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 Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the NSF.

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

Anthony, in addition to your role at NSF, I understand that you're also the chairman of the Small Agency Council. Could you tell us more about the Council and its charter? Specifically, what kinds of agencies are represented on the Council and what are the goals of the Council?

Mr. Arnolie: Sure. The Small Agency Council is a voluntary management association of sub-cabinet independent federal agencies. It was established in 1986 with the purpose of achieving three major goals: the first, to ensure that federal policy oversight agencies consider implications to small agencies when developing management policies; the second, to exchange approaches for improving management and productivity at small agencies; and the third, to share management resources so as to strengthen the internal management practices of small agencies.

Now, the loose definition of a small agency is an agency with less than 6,000 employees. Currently, the Small Agency Council has over 80 member agencies representing about 50,000 federal employees, and each of those agencies is represented by a principal management official who generally oversees agency management functions such as personnel, budget, procurement, finance, and information resources management. The full Council meets at least two times a year to discuss a variety of management issues of concern to small agencies.

The Council also has a number of committees that represent small agencies on specialized issues, including information technology, finance, procurement, training, and administrative services. Personnel from these agencies who work in these functional areas sit on these committees and help to widen the overall scope and effectiveness of the Council. In addition, we're also represented on many federal policy oversight organizations such as the Chief Human Capital Officers Council, the Federal CFO Council, and the Federal CIO Council.

Small agencies that have joined the Council are responsible for managing a wide array of federal programs and implementing various statutes. Members have diverse program responsibilities, including private and public sector employment, commerce and trade, energy and science, transportation, national defense, finance, and cultural issues. Almost half of the Council is divided among regulatory and enforcement agencies, and the remaining half is divided among grant-making, advisory, and uniquely chartered organizations. There are many sized agencies represented, including several so-called micro agencies with less than 100 employees.

During my tenure as chair, I believe the Council has further advanced the cause and unique issue of small agencies through the power of its collective voice and membership, which is really the main charter of the Council. For those who are interested in learning more about the Small Agency Council, please visit www.sac.gov.

Mr. Morales: Great.

Now, as a follow-up, could you tell us more about the efforts on the part of the Council to establish a human resources training academy? What is this training academy, and how might it operate?

Mr. Arnolie: Actually it's not the Small Agency Council, but the Small Agency Human Resource Council that has created the human resources training academy for small agencies. The "SAHR C," as they're called, operates independently from the Small Agency Council. However, because my deputy division director for human resource management is a co-chair of this training committee, I can actually tell you a little bit more about it.

Two courses have recently been held, and both were well-attended. And at this time, instructors are being sought among the different small agencies to train on a wide variety of topics within the HR arena, such as workforce planning, labor relations, and benefits. I should also mention that the Small Agency Council administers a training program each year through voluntary contributions from member agencies. This program allows us to pool and leverage funding from across the government agencies to make training opportunities available to small agency personnel. This is particularly beneficial to some of the micro agencies and other really small agencies that would otherwise not have the opportunity in some cases to provide their personnel with required training.

Mr. Thomas: Anthony, let's come back to your role at the National Science Foundation. In transitioning to the future, how do you envision NSF's human capital needs evolving in the next two to three years? And how do you envision your office evolving over that same period of time to support this transition?

Mr. Arnolie: I think what we'll do is we will continue our aggressive push to hire more staff. We're in desperate need, and we'll continue to focus on that. We plan to continue our efforts to redefine the NSF workforce and equip them with the skills and competencies that they need to be successful and to carry out the agency's mission. We'll continue to look for ways to leverage technology solutions to improve our work processes. And we'll also continue to implement work-life programs that improve both the quality of work and the quality of life for our staff.

My office will continue to strategically align itself with our customers, listen intently to their needs, and work closely with them to create and customize our service offerings and deliver the services and solutions that help the agency carry out its mission.

Mr. Thomas: Now, there has been much discussion about the pending retirement wave in government and what type of impact it will have on agencies. What are you seeing within NSF, and what plans are in place to mitigate its effect?

Mr. Arnolie: Well, as it turns out, our retirement projections aren't as grim as the federal government overall. The Bureau of Labor Statistics projects 50 percent of all federal employees and 70 percent of all federal senior managers will be eligible to retire by 2010. At NSF, by contrast, only about 20 percent are eligible today, and 39 percent will be eligible in 2011. In addition, and maybe more importantly, NSF staff tend to work longer into their retirement eligibility years.

With the recent adoption of the updated NSF strategic plan and the importance of aligning the agency's human capital management with the Foundation's strategic goals and priorities, a succession planning working group was tasked to update key elements of the human capital management strategy, including leadership succession planning, goals, and strategies.

Some specific succession planning concepts being implemented include identifying best practices in leadership transition and knowledge transfer, providing hands-on learning and mentoring for potential leaders, and appraising senior leadership on their succession planning efforts. And we believe that focusing on those particular areas will put us in the best position to handle any retirement wave that we might face in the years to come.

Mr. Morales: Anthony, you previously talked about how NSF has received the honors as one of the agencies titled as the best places to work. And in fact, you've obviously ranked consistently near the top on that list. So other than some of the things that you've mentioned, what do you think are some of the keys to your success as a best place to work?

Mr. Arnolie: Well, I'd like to take a lot of credit for that since it's the Federal Human Capital Survey that yields those results, but the truth is it's the NSF staff that make NSF a great place to work. It's very participatory, as I said before. Every individual believes that they have a voice and that what they have to say can influence the agency's priorities and the agency's strategic direction. I think that that is an important factor in people coming to the Foundation and wanting to stay at the Foundation.

In addition, I think that we have a very unique and very important mission in terms of funding basic research. We promote science and innovation through all types of science disciplines, and I think it's critically important. Two items that might not directly be connected to NSF in the public's eyes would be the initial investments we made to lead to the creation of the Internet, or the investments that we made in a small group of principal investigators who later went on to found Google. So those are two of the things that as an employee of NSF, you recognize that the work we do really in the near and the longer term future promote incredible innovations in science, engineering, research, and education that are critically important to the country.

As I said earlier, one of the other reasons I think we are considered one of the best places to work is we do all that we can to provide a variety of work-life programs that are meaningful and beneficial to our staff. I mentioned the on-site child care center, the on-site fitness center, the on-site health services, along with retirement counseling and tuition assistance. We continue to try and add to our portfolio work-life programs to the fullest extent possible.

Mr. Morales: That's great.

On that same note, Anthony, we have a number of listeners who may be thinking about a career in public service. Now, given your own federal experience and the transition from the private sector, what advice might you give someone out there who's perhaps considering a role in government?

Mr. Arnolie: Well, there are a number of agencies with different missions who serve this country in different ways. I would suggest that you explore a bit to find a fit between what you value and what you're interested in and what your strengths are and what those agencies do. I know that agencies are working hard to be more flexible in terms of work schedules and work assignments, so don't assume there isn't a good fit for you. Finally, understand that there's nothing more important than service to your country, so lend us your talents and you might find a rewarding, challenging, and personally enriching opportunity awaits you. That was certainly the case for me, and continues to be the case for me at NSF.

Mr. Morales: That's wonderful advice.

Unfortunately, we have reached the end of our time. I do want to thank you for fitting us into your busy schedule, but more importantly, Solly and I would like to thank you for your dedicated service to our country in your roles at NSF.

Mr. Arnolie: Thank you. And I guess I'd like to finish by saying a recent study said that there was a very positive impression of who NSF was, but by that same audience, not a clear understanding of exactly what we do. So what I would encourage you to do is to go to www.nsf.gov and learn more about what the Foundation is all about, the areas that we provide funding for, and the types of activities that might be of interest to those of you seeking employment in the federal government.

Mr. Morales: That's great.

This has been The Business of Government Hour, featuring a conversation with Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the National Science Foundation.

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 may 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.

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