[Federal Register: April 28, 2008 (Volume 73, Number 82)] [Rules and Regulations] [Page 23011-23049] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr28ap08-14] [[Page 23011]] ----------------------------------------------------------------------- Part II Office of Personnel Management ----------------------------------------------------------------------- 5 CFR Part 250 Human Resources Management in Agencies; Final Rule [[Page 23012]] ----------------------------------------------------------------------- OFFICE OF PERSONNEL MANAGEMENT 5 CFR PART 250 RIN 3206-AJ92 Human Resources Management in Agencies AGENCY: Office of Personnel Management. ACTION: Final Rule. ----------------------------------------------------------------------- SUMMARY: The Office of Personnel Management (OPM) is issuing final regulations to implement certain provisions of the Chief Human Capital Officers Act of 2002, which set forth new OPM and agency responsibilities and requirements to enhance and improve the strategic management of the Federal Government's civilian workforce, as well as the planning and evaluation of agency efforts in that regard. Further, we are including a plain language rewrite of the subpart titled ``Authority for Personnel Actions in Agencies.'' DATES: Effective Date: The regulations are effective on May 28, 2008. FOR FURTHER INFORMATION CONTACT: Charles D. Grimes by phone at 202-418- 3163, by FAX at 202-606-2838, or by e-mail at pay-performance-policy. You may contact Mr. Grimes by TTY on 202-418-3134. SUPPLEMENTARY INFORMATION: On May, 23, 2006, the Office of Personnel Management (OPM) issued proposed regulations (71 FR 29593) to change 5 CFR part 250, to read ``Human Resources Management in Agencies'' to reflect current usage, to make a plain language revision in subpart A, and to add regulations on strategic human resources management as new subpart B. Case for Action Section 1304 of the Chief Human Capital Officers Act (CHCO Act), which was enacted within the framework of the Homeland Security Act (Pub. L. 107-296), and codified at 5 U.S.C. 1103(c), authorizes OPM to develop an assessment system, including metrics, for agency human capital management. Rather than establish a new reporting requirement, OPM elected to incorporate the CHCO Act requirements within the newly established Human Capital Accountability System and Human Capital Management Report (Accountability System). To accommodate the accountability assessment, OPM has modified the existing 5 CFR part 250. Subpart A, which establishes requirements for delegations of personnel authority to agencies, has been rewritten in plain English. Agencies will continue to operate in an environment of delegated personnel authority and will be required to ensure merit system accountability. The new subpart B details both agency and OPM responsibilities under the CHCO Act as well as the fundamental requirements of the Accountability System. OPM is cognizant of the burden placed on agencies by reporting requirements, and the regulations mitigate against increasing that burden through the incorporation of existing reporting requirements (e.g., PMA scoring) into the annual report to the maximum extent practicable. The CHCO Act metrics and the Accountability System will provide OPM with the data necessary to meet statutory requirements of 5 U.S.C. 1103(a) and (c) and 5 U.S.C. 2301. Major Issues As a general matter, multiple commenters suggested OPM collaborate directly with each affected agency or with a team of agency representatives to develop metrics tailored to each agency's requirements. We disagree. The CHCO Act gives OPM responsibility for assessing strategic management of human capital across Government. The Governmentwide focus requires standard metrics. OPM consults with agencies on a regular basis through a variety of mechanisms including the CHCO Council, the Human Resources Directors' Forum, and OPM's Human Capital Officers. HCAAF requirements are designed to enable OPM to fulfill this responsibility through a set of human capital management systems, standards and metrics. There also was general concern expressed by commenters that the CHCO Act regulations add significantly to agency OPM reporting requirements. However, the intent of the CHCO regulations is to coordinate human capital management reporting requirements in a single reporting system. A commenter noted that the Chief Human Capital Officer should approve workforce plans. A commenter also contended that it was the agency's responsibility to determine the timing and format of the human capital plan. We agree, but note that OPM has the responsibility to assess and approve agency human capital accountability systems. OPM's role is to assure that agencies engage in workforce planning that meets approved standards. Commenters also raised concerns about the interplay between the CHCO Act reporting requirements and the Annual Employee Survey regulations. While data from the Annual Employee Survey could be used for HCAAF metrics, there is no substantive overlap in these two regulations. HCAAF The Human Capital Assessment and Accountability Framework (HCAAF), annexed hereto as an Appendix to the regulation, details the concepts and systems for planning, implementing, and evaluating the results of human capital management policies and practices. Commenters contended that the framework is too transactional, broad and theoretical. Commenters further contended that agencies cannot be held accountable for ambiguous human capital management practices. We disagree. HCAAF tools are not designed to ensure strict compliance, but to assist agencies to meet HCAAF requirements. Measuring effective and efficient HCM is best accomplished through representative, flexible indicators, which OPM has established in the HCAAF metrics. Commenters also objected to sections of 5 CFR 250.203(a)(1)(ii) on workforce analysis. While we agree that other measurement methods could be effective, OPM has chosen the current Human Capital and Workforce Analysis Plan elements based on well-documented workforce plan models used in the public and private sectors. A commenter proposed that performance measures should support agency goals instead of agency measures. We agree. The wording in 5 CFR 250.203(a)(1) (iii) has been changed accordingly. Metrics By this regulation, OPM defines the metrics to be used pursuant to 5 U.S.C. 1103(c) as the HCAAF and the HCAAF Systems, Standards, and Metrics (HCAAF-SSM). See 5 CFR 250.202(b). See the Appendix to this regulation. These metrics may be adapted, in the future, pursuant to notice and comment, to meet the future needs of both agencies and OPM. Commenters are providing feedback on the metrics to OPM through the public comment process and in other forums like the CHCO Council. OPM may incorporate this feedback, as appropriate, and pursuant to notice and comment, to further refine the measures in the future. Commenters generally contended that the metrics were inflexible, overly detailed and potentially inaccurate. We disagree. The HCAAF-SSM is a systematic method to examine strategic human capital practices across all [[Page 23013]] Government agencies. Standardization is important because OPM cannot roll up metrics that are based on different calculations. Moreover, OPM, through the Accountability System, encourages all agencies to develop separate measures that address relevant agency issues. The HCAAF-SSM enables OPM to meet its statutory responsibility in the CHCO Act. That responsibility is to assess the strategic management of human capital across all of Government. OPM has determined that this can be accomplished only through using a common set of metrics. Accountability Commenters expressed confusion surrounding the reporting requirements under the Human Capital Accountability System and annual Report. Commenters were concerned by the interplay of new and existing reporting requirements and whether there would be redundancy. However, the intent of the annual Human Capital Management Report is to provide a mechanism to consolidate human capital reporting into one annual report, and to incorporate this into agency performance and budget reporting. Commenters also contended that the reporting requirements are of no value to the agencies. We disagree. The Human Capital Management Report serves a number of purposes, including providing agencies a mechanism to document human capital results and actions planned to address areas needing improvement. Agencies will benefit from having effective, comparable human capital data. A commenter also proposed that the report be issued biennially to give agencies more time. We disagree. The annual report is appropriate as it provides timely feedback on agency human capital management systems. Moreover, the first complete accountability reporting with all required metrics is not required until 2008 to give agencies sufficient time to comply. A commenter proposed that the agencies' Chief Human Capital Officers have the authority to approve the agency accountability systems. We disagree. OPM has the authority to require agencies to establish accountability systems consistent with OPM standards. We made a clarifying change to 5 CFR 250.203(a)(1)(iii)(2) to ensure that any independent audit process is conducted with OPM participation. A commenter also suggested implementing a third-party appeals system prior to OPM withdrawing an agency's delegated examining unit or otherwise penalizing the agency. We disagree. OPM has longstanding authority under 5 U.S.C. 1104 to exercise oversight and control over agencies' use of delegated authorities without the intervention of a third party. Commenters proposed that OPM's role be more as advisor than auditor. While we will continue to provide guidance, advice and leadership to agencies, OPM has a statutory role as auditor of agency human capital management that must be fulfilled. Some commenters expressed confusion over whether a third party auditor would be required, but the proposed regulations have no such requirement. A commenter also suggested OPM change the language in 5 CFR 250.103 regarding OPM discretion to require agency corrective action from may to must. We disagree. OPM retains discretion to determine the appropriate response to particular cases. A commenter contended that it was unnecessary to review each HC policy, program and operation every year. However, the regulations do not require such a review. Another commenter proposed that the annual Human Capital Management Report measure the number of employee complaints and resolution of such complaints. While we encourage agencies to include such measures in their accountability plans, and many agencies do track complaints, this is not a required metric. Commenters raised concerns about the sufficiency of pre-determined budgets when implementing the newly required Human Capital Management Report. Commenters contended that the timeline provided in the proposed regulation did not allow time to align the Accountability System and the budget development process. Concern was also raised about the availability of funding for accountability systems when agency human resources management does not control the budget. We disagree. The CHCO Act holds agencies responsible for maintaining accountability for results including merit system compliance. At the agency level, leadership is required to align budgets with strategic management of human capital. The first complete Human Capital Management Report with all required metrics is not required until 2008 to give agencies sufficient time to comply. Commenters also requested that OPM differentiate the requirements for agencies that have already implemented conforming accountability systems from the requirements for agencies that have not implemented such systems. We disagree. The regulations detailing the Accountability System have been drafted to provide individual agencies maximum flexibility while providing OPM comparable information across agencies. A commenter requested that OPM require agencies to post their Human Capital Management Reports on their Web sites. We disagree. While OPM believes that agencies should post their Human Capital Management Reports, an agency may have a number of valid reasons (e.g., national security) for not posting its report. Executive Order 12866, Regulatory Review This proposed rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866. Regulatory Flexibility Act I certify that these regulations would not have a significant economic impact on a substantial number of small entities (including small businesses, small organizational units, and small governmental jurisdictions) because they would only apply to Federal agencies and employees. List of Subjects in 5 CFR Part 250 Authority delegations (Government agencies), Government employees. Office of Personnel Management. Linda M. Springer, Director. 0 Accordingly, OPM is amending 5 CFR 250 to read as follows: 0 1. Revise part 250 to read as follows: PART 250--HUMAN RESOURCES MANAGEMENT IN AGENCIES Subpart A--Authority for Personnel Actions in Agencies Sec. 250.101 Standards and requirements for agency personnel actions. 250.102 Delegated authorities. 250.103 Consequences of improper agency actions. Subpart B--Strategic Human Capital Management 250.201 Coverage and purpose. 250.202 Office of Personnel Management responsibilities. 250.203 Agency responsibilities. Authority: 5 U.S.C. 1101 note, 1103(a)(5), 1103(c), 1104, 1302, 3301, 3302; E.O. 10577, 12 FR 1259, 3 CFR, 1954-1958 Comp., p. 218; E.O. 13197, 66 FR 7853, 3 CFR 748 (2002). Subpart B also issued under 5 U.S.C. 1401, 1401 note, 1402. [[Page 23014]] Subpart A--Authority for Personnel Actions in Agencies Sec. 250.101 Standards and requirements for agency personnel actions. When taking a personnel action authorized by this chapter, an agency must comply with qualification standards and regulations issued by the Office of Personnel Management (OPM), the instructions OPM has published in the Guide to Processing Personnel Actions, and the provisions of any delegation agreement OPM has made with the agency. When taking a personnel action that results from a decision or order of OPM, the Merit Systems Protection Board, Equal Employment Opportunity Commission, or Federal Labor Relations Authority, as authorized by the rules and regulations of those agencies, or as the result of a court order, a judicial or administrative settlement agreement, or an arbitral award under a negotiated agreement, the agency must follow the instructions in the Guide to Processing Personnel Actions and comply with all other relevant substantive and documentary requirements, including those applicable to retirement, life insurance, health benefits, and other benefits provided under this chapter. Sec. 250.102 Delegated authorities. OPM may delegate its authority, including authority for competitive examinations, to agencies, under 5 U.S.C. 1104(a)(2), through a delegation agreement. The delegation agreement developed with the agency must specify the conditions for applying the delegated authorities. The agreement must also set minimum standards of performance and describe the system of oversight by which the agency and OPM will monitor the use of each delegated authority. Sec. 250.103 Consequences of improper agency actions. If OPM finds that an agency has taken an action contrary to a law, rule, regulation, or standard that OPM administers, OPM may require the agency to take corrective action. OPM may suspend or revoke a delegation agreement established under Sec. 250.102 at any time if it determines that the agency is not adhering to the provisions of the agreement. OPM may suspend or withdraw any authority granted under this chapter to an agency, including any authority granted by delegation agreement, when OPM finds that the agency has not complied with qualification standards OPM has issued, instructions OPM has published, or the regulations in this chapter. OPM also may suspend or withdraw these authorities when it determines that doing so is in the interest of the civil service for any other reason. Subpart B--Strategic Human Capital Management Sec. 250.201 Coverage and purpose. The Chief Human Capital Officers (CHCO) Act of 2002 acknowledges the critical importance of Federal employees to the effective and efficient operation of Government. As a part of OPM's overall leadership responsibilities in the strategic management of the Federal civil service, and pursuant to 5 U.S.C. 1103, OPM is responsible for designing a set of systems, including standards and metrics, for assessing the management of human capital by Federal agencies. In this subpart, OPM establishes a framework of those systems, including system components, OPM's role, and agency responsibilities. Sec. 250.202 Office of Personnel Management responsibilities. (a) As the President's chief human capital officer, the Director of OPM provides Governmentwide leadership and direction in the strategic management of the Federal workforce. (b) To execute this critical leadership responsibility, OPM adopts the Human Capital Assessment and Accountability Framework (HCAAF) to describe the concepts and systems for planning, implementing, and evaluating the results of human capital management policies and practices. See Appendix. In addition, OPM adopts the related set of assessment systems required by the CHCO Act as the HCAAF Systems, Standards, and Metrics (HCAAF-SSM), also included in the Appendix. Each such assessment system associated with the HCAAF consists of: (1) A standard against which agencies can assess the results of their management of human capital; and (2) Prescribed metrics, as appropriate, for organizational outcomes, employee perspective, and compliance measures with respect to relevant laws, rules and regulations. (c) Together, the HCAAF and the HCAAF-SSM guide agencies in planning, evaluating and improving the efficiency and effectiveness of agency human capital management with respect to: (1) Alignment with executive branch policies and priorities, as well as with individual agency missions, goals, and program objectives, including the extent to which human capital management strategies are integrated into agency strategic plans and performance budgets prepared under OMB Circular A-11; (2) Identifying and closing competency/skill gaps in the agency's mission-critical occupations; ensuring leadership continuity through the implementation of recruiting, development, and succession plans; sustaining an agency culture that values, elicits, identifies, and rewards high performance; and developing and implementing a knowledge management strategy, supported by appropriate investment in training and technology; and (3) Holding the agency head, executives, managers and human resources officers accountable for efficient and effective human capital management, in accordance with merit system principles. Sec. 250.203 Agency responsibilities. (a) To assist in the assessment of the management of human capital in the Federal Government, and to help meet the statutory requirements to prepare that portion of the performance budget for which agency Chief Human Capital Officers are accountable as well as relevant portions of performance and accountability reports, heads of agencies or their designees must maintain a current human capital plan and provide OPM an annual Human Capital Management Report, as outlined below, based on an approved human capital accountability system. The HCAAF and the HCAAF-SSM provide more specific information on coverage and content for the plan and report. (1) Human Capital Plan. Using a format established by agreement between the agency and OPM, at a minimum the plan must include: (i) Human Capital Goals and Objectives. These are a comprehensive, integrated set of human capital goals and objectives, with detailed policy and program priorities and initiatives as appropriate, consistent with agency strategic plans and annual performance goals. These human capital goals and objectives must address each of the human capital management systems included in the HCAAF. (ii) Workforce Analysis. This analysis of the agency's workforce describes its current state, projects the human resources needed to achieve the agency's program performance goals and objectives during the term of the agency's strategic plan, and identifies potential shortfalls or gaps. An ongoing analysis must, for relevant agency mission requirements, describe the occupation(s) most critical to agency performance (including associated managerial and executive positions) and [[Page 23015]] describe mission-critical competencies and key demographics (e.g., talent analyses, turnover, and retirement eligibility); and for each such occupation, describe its current and projected staffing levels, attrition and hiring estimates, and proposed training and development investments. (iii) Performance Measures and Milestones. One or more human capital metrics, as well as appropriate program milestones, for each human capital goal or objective, provide a basis for assessing progress and results, including compliance measures with respect to relevant laws, rules and regulations. These metrics must include, but are not limited to, those described in the HCAAF-SSM issued under Sec. 250.202(b). These metrics and milestones must be specifically linked to broader agency program performance goals, to evaluate the impact of the agency's human capital management on its overall mission performance. (2) Human Capital Accountability System. This system provides for an annual assessment of agency human capital management progress and results including compliance with relevant laws, rules, and regulations. That assessment is conveyed in an annual Human Capital Management Report to OPM. The human capital accountability system must: (i) Be formal and documented; (ii) Be approved by OPM; (iii) Be supported and resourced by agency leadership; (iv) Measure and assess human capital management systems for mission alignment, effectiveness, efficiency, and compliance with merit system principles, laws, and regulations; (v) Provide for an independent audit process, with OPM participation, for periodic review of human resources transactions to insure legal and regulatory compliance; (vi) Ensure that action is taken to improve human capital management programs and processes and to correct deficiencies; and (vii) Ensure results are analyzed and reported to agency management and OPM. (3) Human Capital Management Report. At a minimum, the agency's annual Human Capital Management Report must: (i) Provide an evaluation of and report on the agency's existing human capital management policies, programs, and operations, as they relate to the agency's overall mission/program performance. The report must address the performance measures and milestones contained in the agency human capital plan including compliance measures with respect to relevant laws, rules and regulations. The report must also document actions taken to correct any violations or deficiencies that are identified. (ii) Inform the development of human capital goals and objectives during the agency's strategic planning and annual performance budget formulation process, as well as the treatment of human capital results during the annual performance and accountability reporting process. (b) [Reserved] Note: The following appendix will not appear in the Code of Federal Regulations. ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- SECTION I--Introduction to the HCAAF Human Capital Assessment and Accountability Framework (HCAAF) ----------------------------------------------------------- Metrics ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Human Capital Assessment and Accountability The HCAAF establishes and defines five human capital Framework (HCAAF). systems that together provide a single, consistent definition of human capital management for the Federal Government. The HCAAF fuses human capital management to the merit system principles--a cornerstone of the American Civil Service--and other civil service laws, rules, and regulations. Establishment of the HCAAF fulfills OPM's mandate under the Chief Human Capital Officers Act of 2002 (CHCO Act) to design systems and set standards, including appropriate metrics, for assessing the management of human capital by Federal agencies. The regulation at 5 CFR 205.203 establishes requirements for an agency to submit to OPM annually a Strategic Human Capital Plan and an Agency Human Capital Accountability Report. The requirements in the regulation are by design congruent with the planning and reporting requirements contained in OMB Circular A-11 and title 31 U.S.C. Five Systems of HCAAF The HCAAF outlines an ongoing process of human capital management in every Federal agency--planning and goal setting, implementation, and evaluating results--in five systems: Strategic Alignment (Planning and Goal Setting). A system led by senior management--typically the Chief Human Capital Officer (CHCO)--that promotes the alignment of human capital management strategies with agency mission, goals, and objectives through analysis, planning, investment, measurement, and management of human capital programs. Leadership and Knowledge Management (Implementation). A system that ensures continuity of leadership by identifying and addressing potential gaps in effective leadership and implements and maintains programs that capture organizational knowledge and promote learning. Results-Oriented Performance Culture (Implementation). A system that promotes a diverse, high- performing workforce by implementing and maintaining effective performance management systems and awards programs. Talent Management (Implementation). A system that addresses competency gaps, particularly in mission- critical occupations, by implementing and maintaining programs to attract, acquire, promote, and retain quality talent. Accountability (Evaluating Results). A system that contributes to agency performance by monitoring and evaluating the results of its human capital management policies, programs, and activities; by analyzing compliance with merit system principles; and by identifying and monitoring necessary improvements. Each system consists of components that allow human capital practitioners to assess how well the system is strategically managing its human cpaital in compliance with merit system principles. Relationships Among the HCAAF Systems............... Figure 1 below shows the relationships among the human capital systems. [[Page 23016]] [GRAPHIC] [TIFF OMITTED] TR28AP08.000 ---------------------------------------------------------------------------------------------------------------- Implementation of the HCAAF will enable agencies to transform the Federal workplace into high-performing arenas where every employee is enabled to understand and maximize his or her contribution to agency mission. Through implementation of the HCAAF, Federal agencies will be able to focus on: Human capital management systems and practices that most impact attainment of their mission. Measurable, observable agency and individual performance results. This will help to assure the American people's continuing trust in their Government's ability to serve them and protect our national security. HCAAF Taxonomy...................................... The following components reflect the overall taxonomy of the HCAAF. Standard........................................ A standard describes the critical human capital management outcomes for agencies to strive toward in each of the five HCAAF systems. Metrics......................................... These are measurements that provide a basis for comparison. Strategic human capital management requires a reliable and valid set of metrics that provides an accurate baseline against which individual agency progress can be assessed. Required outcome metrics are provided for the three systems that implement strategic human capital plans and programs: Leadership and Knowledge Management, Results-Oriented Performance Culture, and Talent Management. These required metrics are summarized on the following pages. Additional suggested metrics are also included. Critical Success Factors........................ Each system is based on critical success factors that make up the overall system. Critical success factors are the areas on which agencies and human capital practitioners should focus to achieve a system's standard and operate efficiently, effectively, and in compliance with merit system principles. For example, Change Management and Diversity Management are two critical success factors associated with the Leadership and Knowledge Management system. Results......................................... The results describe the desired effects when key elements of a critical success factor are effectively implemented. Results are presented in two categories: Effectiveness results and compliance results. Compliance results refer to specific statutory or regulatory requirements. Key Elements.................................... Each critical success factor contains several key elements that are similar to the Elements of Yes that were initially developed as part of the HCAAF. Key elements describe what you would expect to see in an effective critical success factor. Suggested Performance Indicators................ The suggested indicators--both effectiveness indicators and compliance indicators--describe examples of visible evidence of the existence of key elements and compliance with merit system principles. Cumulatively, the indicators identify how well the agency is doing relative to key elements. The suggested performance indicators are linked to the key elements and are not meant to be an all- inclusive list. Human capital practitioners may need to search for other indicators if agency approaches differ from the list of suggested performance indicators provided. Agencies may decide which suggested performance indicators provide the best evidence that they have implemented practices that lead toward achieving the standard. ---------------------------------------------------------------------------------------------------------------- [[Page 23017]] ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- SECTION I--Introduction to the HCAAF Human Capital Assessment and Accountability Framework (HCAAF) ----------------------------------------------------------- Metrics ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Metrics............................................. Metrics have been established to help agencies accomplish the standard for the three systems that implement strategic human capital plans and programs--i.e., Leadership and Knowledge Management, Results-Oriented Performance Culture, and Talent Management. These three systems have both required and suggested metrics. Required metrics focus on human capital management outcomes and are required for Governmentwide reporting. They focus on human capital management outcomes from three perspectives: organization, employee, and merit system compliance. Suggested metrics focus on human capital management activities that support outcome metrics and show the health of a specific HCAAF critical success factor. The metrics were developed based on extensive research from a variety of expert sources. To be incorporated in the HCAAF, a metric needed to meet the following criteria: Align with the HCAAF. Drive organizational effectiveness directly or indirectly. Be applicable Governmentwide. Be actionable (under the control of the agency). Be practical (cost effective and acceptable). Be reliable (stable). Be valid (accurate and appropriate for its purpose). The metrics described in this Guide were carefully chosen to maintain their usefulness over time. However, many additional human capital metrics exist that agencies may find they want to implement. Agencies are encouraged to augment these Governmentwide metrics with other activity and outcome metrics that are relevant to the agencies' human capital objectives. The following pages provide the system standard and the required outcome metrics for the Leadership and Knowledge Management, Results-Oriented Performance Culture, and Talent Management systems. Refer to each specific system's section for the suggested metrics. Leadership and Knowledge Management System Standard. Agency leaders and managers effectively manage people, ensure continuity of leadership, and sustain a learning environment that drives continuous improvement in performance, and provide a means to share critical knowledge across the organization. Knowledge management must be supported by an appropriate investment in training and technology. ---------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------ Required Outcome Metric Description Purpose ------------------------------------------------------------------------ Organization Metric: Difference between To determine how the Competency Gaps Closed for competencies needed agency should Management and Leadership. and competencies target its possessed by recruitment and managers and retention, and leaders. development efforts to bring the competencies of its managers and leaders into alignment with the agency's current and future needs. Employee Perspective Metric: Items from Annual To determine the Questions from Annual Employee Survey. extent to which Employee Survey about employees hold Satisfaction with their leadership in Leadership. high regard, both overall and on specific facets of leadership. Merit System Compliance An assessment of To determine that Metric: Merit-Based compliance with decisions, Execution of the Leadership merit system policies, and Knowledge Management principles and processes, and System. related laws, practices executed rules, and under the regulations Leadership and governing the Knowledge Leadership and Management system Knowledge comply with the Management system. merit system principles and related laws, rules, and regulations. ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ Results-Oriented Performance The agency has a diverse, results- Culture System Standard. oriented, high-performing workforce and a performance management system that differentiates between high and low levels of performance and links individual/team/unit performance to organizational goals and desired results effectively. ------------------------------------------------------------------------ ------------------------------------------------------------------------ Required Outcome Metric Description Purpose ------------------------------------------------------------------------ Organization Metric: SES Relationship between To determine the Performance/Organizational SES performance extent to which SES Performance Relationship as ratings and appraisals and Linked to Mission. accomplishment of awards are the agency's appropriately based strategic goals. on achievement of organizational results. Organization Metric: Degree of linkage To determine whether Workforce Performance between employees' all employees have Appraisals Aligned to performance performance Mission, Goals, and appraisal plans and appraisal plans Outcomes. agency mission, that effectively goals, and outcomes. link to the agency's mission, goals, and outcomes. Employee Perspective Metric: Items from Annual To determine the Questions from Annual Employee Survey. extent to which Employee Survey about employees believe Performance Culture. their organizational culture promotes an improvement in processes, products and services, and organizational outcomes. [[Page 23018]] Merit System Compliance An assessment of To determine that Metric: Merit-Based compliance with decisions, Execution of the merit system policies, Performance Culture System. principles and processes, and related laws, practices executed rules, and under the regulations Performance Culture governing the system comply with Performance Culture the merit system system. principles and related laws, rules, and regulations. ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ Talent Management System The agency has closed skills, knowledge, Standard. and competency gaps/deficiencies in mission-critical occupations, and has made meaningful progress toward closing skills, knowledge, and competency gaps/ deficiencies in all occupations used in the agency. ------------------------------------------------------------------------ ------------------------------------------------------------------------ Required Outcome Metric Description Purpose ------------------------------------------------------------------------ Organization Metric: Difference between To determine how the Competency Gaps Closed for competencies needed agency should Mission-Critical and competencies target its Occupations. possessed by recruitment, employees in retention, and mission-critical development efforts occupations. to bring the competencies of its workforce into alignment with the agency's current and future needs. Employee Perspective Metric: Items from Annual To determine the Questions from Annual Employee Survey. extent to which Employee Survey about employees think the Organizational Capacity. organization has talent necessary to achieve organizational goals. Employee Perspective Metric: Items from Annual To determine the Questions from Annual Employee Survey. extent to which Employee Survey about employees are Employee Satisfaction. satisfied with their jobs and various aspects thereof. Merit System Compliance An assessment of To determine that Metric: Merit-Based compliance with decisions, Execution of the Talent merit system policies, Management System. principles and processes, and related laws, practices executed rules, and under the Talent regulations Management system governing the comply with the Talent Management merit system system. principles and related laws, rules, and regulations. ------------------------------------------------------------------------ ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- SECTION II--Strategic Alignment System The Strategic Alignment System ----------------------------------------------------------- Human Capital Planning ----------------------------------------------------------- Workforce Planning ----------------------------------------------------------- Human Capital Best Practices and Knowledge Sharing ----------------------------------------------------------- Human Resources as Strategic Partner ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- The Strategic Alignment System...................... This section contains information specific to the Strategic Alignment system, which focuses on having a human capital management strategy that is aligned with mission, goals, and organizational objectives. Definition.......................................... A system led by senior management--typically the Chief Human Capital Officer (CHCO)--that promotes alignment of human capital management strategies with agency mission, goals, and objectives through analysis, planning, investment, measurement, and management of human capital programs. Standard............................................ Agency human capital management strategies are aligned with mission, goals, and organizational objectives and integrated into its strategic plans, performance plans, and budgets. Critical Success Factors............................ The Strategic Alignment system is comprised of the following critical success factors: Human Capital Planning: The agency designs a coherent framework of human capital policies, programs, and practices to achieve human capital requirements to directly support the agency's strategic plan. Workforce Planning: The organization identifies the human capital required to meet organizational goals, conducts analyses to identify competency gaps, develops strategies to address human capital needs and close competency gaps, and ensures the organization is appropriately structured. Human Capital Best Practices and Knowledge Sharing: To leverage its efforts, the agency works with others to share best practices and learn about new developments. Human Resources as Strategic Partner: Human resources (HR) professionals act as consultants with managers to develop, implement, and assess human capital policies and practices to achieve the organization's shared vision. Senior leaders, managers, HR professionals, and key stakeholders contribute to the human capital vision and the agency's broader strategic planning process. Applicable Merit System Principles.................. The following merit system principle is especially relevant to the Strategic Alignment system: The Federal work force should be used efficiently and effectively. (5 U.S.C. 2301(b)(5)). Metrics............................................. Activities and outcomes of this system are assessed through documented evidence of a Strategic Human Capital Plan that includes human capital goals, objectives, and strategies; a workforce plan; and performance measures and milestones. ---------------------------------------------------------------------------------------------------------------- Agencies are required under OPM regulations implementing the CHCO Act to submit the Strategic Human Capital Plan described by this system to OPM on an annual basis. ---------------------------------------------------------------------------------------------------------------- [[Page 23019]] ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- SECTION II--Strategic Alignment System The Strategic Alignment System ----------------------------------------------------------- Human Capital Planning ----------------------------------------------------------- Workforce Planning ----------------------------------------------------------- Human Capital Best Practices and Knowledge Sharing ----------------------------------------------------------- Human Resources as Strategic Partner ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Results: Human Capital Planning..................... When the key elements of the critical success factor Human Capital Planning are effectively implemented, agencies will realize the following results: Effectiveness Results The agency's strategic plan establishes an agency- wide vision that guides human capital planning and investment activities. The agency has a system in place to continually assess and improve human capital planning and investment and their impact on mission accomplishments. Managers are held accountable for effective implementation of human capital plans and overall human capital management. Compliance Result In accordance with the Chief Human Capital Officers Act of 2002 (CHCO Act), the agency CHCO carries out the functions authorized in 5 U.S.C. 1402, including aligning the agency's human resources policies and programs with organizational mission, strategic goals, and performance outcomes. The following pages provide key elements and suggested performance indicators for this critical success factor. ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- HUMAN CAPITAL PLANNING ----------------------------------------------------------------------------------------------------------------- Key Elements Suggested Performance Indicators ---------------------------------------------------------------------------------------------------------------- The agency has a human capital planning system that: Promotes alignment of human capital Effectiveness Indicators strategies with agency mission, goals, and Key stakeholders, including HR, participate in objectives through analysis, planning, investment, the development and revision of the agency's strategic and management of human capital programs plan and facilitate workforce planning and analysis efforts. Documents substantiate involvement of key human capital leaders and key stakeholders in the planning process (e.g., team members of review boards, working groups, or executive off-sites). Human capital planning is managed by a human capital review team or similar collaborative body comprised of the CHCO and senior leaders and managers from human resources, information technology, finance, and mission-specific program areas. Compliance Indicator As provided by 5 U.S.C. 1303(c), the agency holds managers and human resources officers accountable for efficient and effective human resources management in support of the ag