Personnel Management in Agencies, 89357-89367 [2016-29600]

Agencies

• Office of Personnel Management

[Federal Register Volume 81, Number 238 (Monday, December 12, 2016)]
[Rules and Regulations]
[Pages 89357-89367]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29600]



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Federal Register / Vol. 81, No. 238 / Monday, December 12, 2016 / 
Rules and Regulations

[[Page 89357]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR PART 250

RIN 3206-AL98


Personnel Management in Agencies

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: This rule is intended to align human capital management 
practices to broader agency strategic planning activities, and better 
align human capital activities with an agency's mission and strategic 
goals. This will enable agency leadership to better leverage the 
workforce to achieve results. In addition, the final regulation will 
allow agencies to gather additional information from employee surveys.

DATES: This rule is effective April 11, 2017.

FOR FURTHER INFORMATION CONTACT: For information, please contact Jan 
Chisolm-King by email at janet.chisolm-king@opm.gov or by telephone at 
(202) 606-1958.

SUPPLEMENTARY INFORMATION: The Office of Personnel Management (OPM) 
maintains statutory responsibility under 5 U.S.C. 1103(c) to guide, 
enable, and assess agency strategic human capital management processes. 
On February 8, 2016, OPM published the Personnel Management in Agencies 
proposed rule in the Federal Register (81 FR 6469) that would amend 5 
CFR part 250 subpart B, Strategic Human Capital Management, and 5 CFR 
part 250 subpart C, Employee Surveys. The purpose of this rule is to 
better assist agencies with developing strong human capital practices 
for achieving agency goals and objectives, and to further empower the 
human capital community to collectively identify and address cross-
cutting human capital challenges. OPM issues a final rule to revise 5 
CFR, part 250 subparts B and C.
    The rule establishes the Human Capital Framework (HCF), which 
replaces the Human Capital Assessment and Accountability Framework 
(HCAAF). This rule also reduces and clarifies the reporting procedures 
agencies are required to follow; creates a data-driven review process 
(HRStat); and describes workforce planning methods that agencies are 
required to follow.
    Lastly, the rule strengthens and modernizes the Employee Survey 
process by identifying questions that exhibit appropriate psychometric 
properties which better align to the topics cited in the National 
Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136, sec. 
1128, codified at 5 U.S.C. 7101).

Alignment of Strategic Human Capital Management (5 CFR, Part 250, 
Subpart B) to GPRA-MA

    The final rule sets forth a set of actions and practices that will 
better position human capital to demonstrate its contribution to agency 
mission through the alignment of Strategic Human Capital Management 
practices to the Government Performance and Results Act Modernization 
Act (GPRA-MA) of 2010 (Pub. L. 111-352). GPRA-MA requires performance 
assessments of Government programs for purposes of assessing agency 
performance and improvement.
    Following promulgation of this rule, OPM will provide additional 
guidance for agencies about the planning and implementation 
requirements presented within this regulation.

Strategic Human Capital Management (5 CFR Part 250 Subpart B)

    The federal workforce plays a vital role in executing the important 
missions of federal agencies in service to the American people. As 
such, the Strategic Human Capital Management processes used to 
cultivate and manage the workforce must be integrated into agency 
planning and management processes, remain current with research and 
best practices, allow for proactive responses to anticipated 
environmental changes, and seek to continuously maximize the efficiency 
and effectiveness of Human Resource (HR) service delivery.
    This rule supports the implementation of OPM's statutory 
responsibility under 5 U.S.C. 1103(c) to guide, enable, and assess 
agency strategic human capital management processes. Part 250 of Title 
5, subpart B, implements the requirements of 5 U.S.C. 1103(c), and 
section 1103(c)(1) requires OPM to design a set of systems, including 
appropriate metrics, for assessing the management of human capital by 
federal agencies and to define those systems in regulation. Section 
1103(c)(2) requires OPM to include standards addressing a series of 
specified topics. These requirements are further explained within this 
rule. Subpart B also provides an avenue for Chief Human Capital 
Officers (CHCOs) to carry out their required functions under 5 U.S.C. 
1402(a).
    Current regulations implement 5 U.S.C. 1103(c) by adopting the 
HCAAF system required by 5 U.S.C. 1103(c)(1) and providing the systems 
definitions and standards required by 5 U.S.C. 1103(c)(2). The HCAAF is 
a framework that integrates five human capital systems--Strategic 
Alignment, Leadership and Knowledge Management, Results-Oriented 
Performance Culture, Talent Management, and Accountability. These 
systems define practices for the effective and efficient management of 
human capital and support the steps involved in the planning and goal 
setting, implementation, and evaluation of human capital policies, 
programs, and initiatives in the Federal Government. This rule changes 
the current regulation, by replacing the HCAAF with the HCF.
    As described throughout this section, in addition to replacing the 
HCAAF with the HCF, subpart B of this rule will:
    1. Require agencies to develop a Human Capital Operating Plan 
(HCOP).
    2. Require agencies to participate in Human Capital Reviews (HCRs) 
with OPM.
    3. Institutionalize the requirement for agencies to conduct HRStat 
reviews.
    4. Remove the requirement for agencies to develop and submit a 
Strategic Human Capital Plan.
    5. Remove the requirement for agencies to develop and submit annual 
Human Capital Management Reports (HCMR).
    6. Require OPM to issue the quadrennial Federal Workforce 
Priorities Report.

[[Page 89358]]

    7. Communicate the workforce planning methods agencies are required 
to follow.
    8. Ensure the consistent application of human capital practices by 
clearly defining key human capital management terms.

Replace the Human Capital Assessment and Accountability Framework 
(HCAAF) With the Human Capital Framework (HCF)

    As discussed above, current regulations implement the requirements 
of 5 U.S.C 1103(c) by adopting the five systems of HCAAF. The HCF will 
replace the HCAAF and integrate four human capital systems--Strategic 
Planning and Alignment, Performance Culture, Talent Management, and 
Evaluation. OPM expects that the new systems and system definitions 
will result in improved outcomes for human capital programs that enable 
the accomplishment of agency mission objectives.
    The HCF uses ``Performance Culture'' and ``Talent Management'' as 
the descriptors for the two systems under which the government's major 
people and organization activities and programs occur. It also 
prescribes ``Strategic Planning and Alignment'' and ``Evaluation'' as 
the two supporting management systems required for the development, 
measurement, and management of agency human capital agendas.
    Standards are defined for each of the four systems and agencies 
will be expected to apply them as the bases for their work. Agencies 
will be required to implement each standard within their strategies, 
but will have autonomy to determine which focus areas (within each 
system) should be implemented to lead to the best outcomes.

Require Agencies To Develop a Human Capital Operating Plan (HCOP)

    The HCOP is a planning document (not a report) that provides 
details about how human capital strategies are being implemented in 
support of agency strategic. Additionally, the HCOP serves as a tool 
for agency leadership to set a clear path for achieving stated human 
capital strategies; identify and secure resources for supporting human 
capital policies, programs, and initiatives; and determine which 
timeframes and measures to use to assess progress, while demonstrating 
how the standards of each HCF system are being fulfilled within each 
strategy. The HCOP will correspond to the same timeframe covered by 
agency strategic plans and reviewed and updated annually.

Human Capital Reviews (HCRs) With OPM

    These reviews are annual, in-person meetings for agency human 
capital leaders to discuss the implementation and achievement of human 
capital goals, including risks, barriers and successful practices. The 
reviews will serve as an opportunity for OPM to provide feedback to 
agencies, as well as identify and share practices and identify cross-
cutting human capital challenges. This rule does not impose new 
requirements for agencies to submit written narratives. Previously, 
agencies were required to submit reports containing human capital 
information to OPM via a static written document. The revised rule 
affords agencies, in discussions with OPM, to collaboratively review 
agencies progress towards achieving their specific goals while 
providing a mechanism for OPM to identify cross-cutting and agency- 
specific human capital challenges that warrant further attention.

Institutionalize the Requirement for Agencies To Conduct HRStat Reviews

    The quarterly review process is managed by agencies to identify and 
monitor human capital measures and targets that inform the progress 
agencies are making towards meeting their agency specific goals. The 
outcomes from the reviews should report the approach agencies take for 
corrective actions in areas for which they are not making substantial 
progress.

Remove the Requirement for Agencies To Develop and Submit a Strategic 
Human Capital Plan (SHCP)

    GPRA-MA requires agencies to indicate how human capital resources 
will support agency strategic goals within their strategic plans. 
Because human capital strategies supporting each mission-oriented goal 
and objective are identified in agency strategic plans, additional 
SHCPs are unnecessary. The increased alignment of human capital 
strategies to agency goals is intended to enhance human capital and 
organizational performance outcomes, by making data driven decisions.

Remove the Requirement for Agencies To Develop and Submit Annual Human 
Capital Management Reports (HCMR)

    OPM will monitor agency outcomes in human capital management 
through the Human Capital Evaluation Framework (HCEF), which consists 
of evaluating progress achieved through HRStat reviews, HCRs, and 
independent audits. As such, agencies are no longer required to develop 
and submit annual Human Capital Management Reports (HCMR). As mentioned 
above, the regulation does not impose new requirements for agencies to 
submit written narratives.

Require OPM To Issue the Quadrennial Federal Workforce Priorities 
Report

    The report is developed through research and the analysis of 
environmental trends, agency experiences and needs. The report 
communicates key governmentwide human capital priorities and suggested 
strategies to strengthen the communication amongst and between agency 
leadership and human capital practitioners. Additionally, the report 
serves as an informative tool for the Chief Human Capital Officers 
Council (CHCOC) because it signals what human capital priorities are 
required for the establishment of enterprise-wide plans and the 
coordination of resources amongst the human capital community. We 
anticipate that the first report would be released in mid-2017.
    The changes to the regulation focus on establishing requirements 
that maintain efficient and effective (integrated) human capital 
management practices now and into the future. This also provides 
Federal agencies with the flexibility to determine how to identify and 
implement human capital strategies that will achieve strong 
organizational outcomes for their specific mission and goals.
    The public comment period for the proposed regulation ended on 
April 8, 2016. OPM received 35 comments on the proposed rule: 15 from 
Federal agencies, 18 from private individuals, and two (2) from 
organizations. OPM carefully considered the comments and as a result, 
made minor revisions to the final regulation. The final regulation will 
become effective 120 days after the publication date of this notice, in 
order to give agencies time to amend policies and communicate changes 
to their human resources staff. Below is a discussion of the comments 
that OPM received.

Response to Comments, Subpart B--Strategic Human Capital

Section 250.201--Small Agencies

    Four agencies were concerned as to whom the regulation applied.

    To clarify, OPM revised Sec.  250.201, Coverage and Purpose, to 
explicitly state that Subpart B applies to agencies covered by sec. 
901(b) of the Chief Financial Officers (CFO) Act of 1990 (Pub. L. 
101-576), as well as 5 U.S.C. 1401.

[[Page 89359]]

Section 250.203--Human Capital Framework (HCF)

    An agency questioned the reason behind placing the HCF in 
regulation.

    Language within 5 U.S.C. 1103 requires OPM to design a set of 
systems, including appropriate metrics, for assessing the management 
of human capital by Federal agencies, which was known as the Human 
Capital Assessment Accountability Framework (HCAAF) and is now 
becoming the Human Capital Framework. The law further states that 
the systems shall be defined in regulation and include standards, 
which OPM has done with the inclusion of the systems and standards 
with their supporting definitions within regulation.

    An agency stated that they believed that two of the four systems of 
the HCF, Talent Management (TM) and Performance Culture (PC), appear to 
have significant areas of overlap.

    The two systems, Talent Management and Performance Culture, have 
two distinct definitions. For example, the definition for Talent 
Management incorporates workforce planning, or the process to 
identify and close skills gaps. It also states, the system 
``implements and maintains programs to attract, acquire, develop, 
promote and retain quality and diverse talent''. Within the proposed 
focus areas for the Talent Management system, the ways to ``promote 
and retain'' quality and diverse talent includes, for example, 
recruitment and outreach, as well as succession planning.
    On the contrary, the Performance Culture system is defined as a 
system that ``engages, develops, and inspires a diverse, high-
performing workforce by creating, implementing, and maintaining 
effective performance management strategies, practices, and 
activities that support mission objectives.'' The focus areas 
include performance management and diversity and inclusion.
    The two systems are distinct as Talent Management includes the 
identification and hiring of a workforce needed to accomplish an 
organizations mission while Performance Culture promotes practices 
that work to retain talent after being on board.

    An agency commented that using employee lifecycle terminology 
within the HCF would be easier for practitioners and managers to 
understand (e.g., staffing, performance management, awards, training, 
etc.). OPM's Human Capital Line of Business (HRLOB) recently developed 
a comprehensive set of terminology for its new Business Reference Model 
that is aligned with the employee lifecycle and maps to all existing 
OPM regulations. The agency preferred the HRLOB terminology and 
believed that using a consistent set of terms for planning and 
automation would be more beneficial to the HR community, as a whole.

    The employee lifecycle terminology is included within the 
nomenclature of the Human Capital Framework (HCF), specifically 
within the focus areas. We concur that practitioners and managers 
must have an understanding of the language used to explain the 
various tools and strategies to effectively manage the Federal 
workforce, which is why we have and will continue to work closely 
with the HRLOB team and other groups to ensure the use of consistent 
terms and definitions. Also, it is important to note that the system 
terms for the HCF serve as overarching explanations for the broader 
human capital systems while sub elements, such as staffing and 
awards are subsumed within each of the systems.

Section 250.204(a)(1)--Federal Workforce Priorities Report (FWPR)

    OPM determined there may be some confusion between the various 
requirements posed by GPRA-MA, particularly as it relates to developing 
and implementing strategic goals and initiatives. Therefore, OPM has 
removed references of the word ``strategic'' from the title of the 
``Federal Workforce Strategic Priorities Report'' and is now titling it 
the ``Federal Workforce Priorities Report.'' The intent and purpose of 
the report remains the same as only the title of the report has 
changed.
    An agency questioned why OPM was mandating agencies to align their 
human capital management strategies with the Federal Workforce 
Strategic Priorities Report (FWSPR). It was expressed that OPM should 
encourage agencies to develop human capital strategies that align to 
agency strategic goals and mission requirements.

    The FWPR was developed (in response to a need identified by a 
Government Accountability Office (GAO) forum comprised of CHCOs) to 
``strengthen coordination to address a fragmented human capital 
community,'' through the coordination of agencies collectively 
developing ``enterprise solutions to address common human capital 
challenges'' (GAO-14-168, May 7, 2014). Therefore, agencies are 
required to address governmentwide human capital priorities and 
suggested strategies contained in the FWPR as is determined by the 
CHCOC.
    Agencies will continue to develop human capital strategies that 
align to their agency-specific mission and strategic goals while 
concurrently addressing cross-cutting human capital challenges. 
Specific requirements for how agencies implement human capital 
strategies in support of the FWPR will be clarified through 
guidance. OPM expects to issue this guidance after the publication 
of the final rule.

    An individual representing an agency expressed concerns regarding 
the timing of the FWSPR and its effect on Presidential transitions and 
agency strategic planning.

    The FWPR will communicate key governmentwide human capital 
priorities in advance of the development of an Administration's 
agenda and agency strategic plans. The report will focus on cross-
cutting human capital challenges within the Federal Government, 
based upon a thorough evaluation of the state of Federal Human 
Capital Management. This will assist in the development of an 
Administration's human capital agenda, while ensuring agencies are 
aware of the key challenges and are prepared to take action as they 
develop their strategic plans. This will allow for the recruitment, 
development, and retention of an agile and capable workforce that 
has the requisite knowledge, skills, and abilities to support 
agencies' missions and Administration goals.
    The publication deadline for the FWPR, which used to be the year 
in which the term of the President commences, has been modified to 
include OPM's ability to extend the deadline. This modification is 
intended to build in flexibility regarding the publication date.

    An agency inquired whether agencies would be able to waive the 
requirement on supporting the priorities contained in the FWSPR by 
noting that the issue is not relevant to their agency.

    Specific requirements and expectations regarding which agencies 
should align their human capital strategies to support the FWPR, 
including any exceptions, will be clarified within guidance, which 
OPM expects to issue after publication of the final rule.

    An agency asked whether guidance on governmentwide standards and 
metrics will be included in the FWSPR.

    The FWPR is designed to communicate key governmentwide human 
capital priorities and suggested strategies, and it will not include 
reporting requirements for agencies.
    Required metrics, as stated within Sec.  250.205 (system 
metrics) will be specified through guidance, which OPM expects to 
issue after publication of the final rule. Additionally, information 
regarding governmentwide standards and metrics as is related to each 
system within the Human Capital Framework will be made available 
through the Human Capital Framework Online Resource Guide.

    An agency expressed confusion about the ``Federal human capital 
assessment,'' referenced in Sec.  250.204(d) and the ``Governmentwide 
Strategic Human Capital Strategy,'' referenced in Sec.  250.204(g).

    Both references were in made in error and were actually intended 
to refer to the FWPR. Therefore, they have been corrected to refer 
to the FWPR defined under Sec.  250.202.

Section 250.204 (Redesignated as Sec.  250.207)--HRStat

    One agency recommended clarifying that HRStat is a quarterly review 
process.

    OPM agreed with the recommendation and noted such in both 
sections 202 and 207.


[[Page 89360]]


    Six agencies expressed concern that Sec.  250.204 was confusing. 
Specifically, they stated the regulation does not clearly demonstrate 
agencies' roles and expectations as related to HRStat. Also, an agency 
stated that HRStat Maturity guidelines are complex and descriptive.

    OPM has not published guidance regarding the specific 
requirements for HRStat, other than noting the frequency for which 
the data-driven reviews should occur (quarterly) and who should lead 
the reviews (CHCO). The regulation does not note detailed 
information about the Maturity Model as the information will be made 
available within guidance.
    HRStat is a monitoring process for agencies to identify, 
measure, and analyze agency human capital data to inform agency 
leadership about how human capital is contributing to and supporting 
the accomplishment of agency goals. Agencies, through the leadership 
of their CHCO, are solely responsible for conducting quarterly 
HRStat reviews.
    These data-driven reviews led by agency CHCOs, in collaboration 
with the agency Performance Improvement Officers (PIOs), are to 
discuss and monitor agencies progress with implementing key human 
capital goals that support the implementation of an agencies Annual 
Performance Plan (APP). The requirement to establish an APP was 
established through GPRA-MA.
    In addition, the review sessions allow agency leadership to 
identify and focus on human capital metrics that will inform the 
achievement of an agency's human capital goals and mission. The 
quarterly sessions allow for prompt course correction, if necessary, 
to ensure progress. Other supporting actions to be taken by agencies 
during their HRStat reviews will be specified through guidance, 
which OPM expects to issue after publication of this final rule.
    Additionally, OPM removed all references to HRStat from Sec.  
250.204 and placed it in its own section (Sec.  250.207) to provide 
greater clarity about the purpose of HRStat. Section 250.204 has 
been renumbered in light of the removed language.

    Three agencies stated that OPM should provide information on what 
measures or metrics are included in HRStat.

    HRStat is a monitoring process for agencies to identify, 
measure, and analyze agency Human Capital data to inform agency 
leadership about how human capital is contributing to and supporting 
the accomplishment of agency goals. Therefore, the measures 
associated with the reviews are agency-specific as they are based on 
agency set goals, and are not prescribed by OPM. So, agencies have 
the autonomy and flexibility to identify and evaluate measures that 
will help evaluate the efficacy of their human capital strategies.

    Three agencies stated that agencies should not be mandated to use 
OPM-identified metrics. Instead, agencies should be allowed to use 
metrics that address agency-specific human capital challenges.

    There are two different laws at issue here. First, GPRA-MA 
establishes the requirement of using data to inform human capital 
progress towards mission accomplishment. The other law, 5 U.S.C 
1103(c), enables OPM to determine the state of human capital through 
the evaluation of human capital metrics.
    GPRA-MA requires that goals are expressed ``in an objective, 
quantifiable, and measurable form,'' and ``establish common Federal 
Government performance indicators with quarterly targets to be used 
in measuring or assessing-- overall progress toward each Federal 
Government performance goal.'' Human capital management is a key 
contributor to ensuring that performance goals are met. Therefore, 
OPM established HRStat to provide agency CHCOs with the ability to 
quantify and report ``objective'' data about human capital progress 
towards meeting organizational goals. Therefore, agencies have the 
flexibility to identify, monitor, and measure data needed to assess 
their progress towards meeting their agency-specific goals through 
their HRStat reviews. Again, as noted above, the measures associated 
with the reviews are agency-specific as they are based on agency set 
goals, and are not prescribed by OPM.
    Unlike the measure associated with the reviews that are agency-
specific, OPM is required to ``design a set of systems, including 
appropriate metrics, for assessing the management of human capital 
by Federal agencies'' as noted within 5 U.S.C 1103(c). Therefore, in 
response, OPM will identify a set of measures to enable OPM to 
assess the state of human capital within the Federal Government. The 
determinants used to assess the state of human capital within the 
Federal Government warrants the identification of cross-cutting 
measures that apply to all agencies. Therefore, agency-specific 
measures used during agency HRStat reviews cannot serve as a 
resource to inform the state of human capital governmentwide. Agency 
requirements for governmentwide metrics set forth by OPM under HCF 
and 5 U.S.C. 1103(c) will be issued through guidance.

    Three agencies inquired as to whether OPM will provide guidance on 
governmentwide standards and metrics.

    OPM will issue guidance to fulfill its requirements within 5 
U.S.C. 1103(c) to ``design a set of systems, including appropriate 
metrics, for assessing the management of human capital by Federal 
agencies.''

    An agency suggested that agencies should not be required to use the 
HRStat Maturity guidelines because: (1) they are complex and 
descriptive, and 2) they were not widely communicated to agencies.

    The Maturity Model was developed by a Community of Practice 
(CoP) workgroup and vetted by the CoP, CHCOC, and OPM. All comments 
and feedback were addressed and considered prior to finalization of 
the Model. Consequently, the HRStat CoP and OPM are drafting 
instructions, which should improve the ability to implement and 
maintain the process.

    An agency noted that HRStat Reviews and HRStat Maturity Guidelines 
were not described within the regulation.

    OPM added language in the regulation stating that HRStat reviews 
are to be led by the CHCO, in collaboration with the Performance 
Improvement Officer (PIO), which has remained a requirement 
throughout the pilot process. OPM will issue guidance regarding 
further details and requirements of the HRStat review process and 
the Maturity Model after publication of the final rule.

    An agency suggested if OPM intends to rely upon the HRStat Maturity 
guidelines, OPM must adhere to the requirements of 1 CFR part 51 and 
specifically utilize the term ``incorporated by reference'' in 5 CFR 
250.207, as specified in 1 CFR 51.9.

    OPM will not include the recommendation to adhere to the 
requirements of 1 CFR part 51 and specifically utilize the term 
``incorporated by reference'' in 5 CFR 250.207, as specified in 1 
CFR 51.9. As a practical matter, in order to comply with Sec.  
51.9(b)(2), the final rule would have to ``state[s] the title, date, 
edition, author, publisher, and identification number of the 
publication''. The HRStat Maturity guidelines are currently under 
development, so much of the required information is not yet 
available.
    Although the final rule requires agencies to use the guidelines 
to affect measurable improvements in maturity levels, like the 
Maturity Model itself, the HRStat Maturity guidelines are meant to 
serve as an ``aspirational roadmap''. As such, the HRStat Maturity 
guidelines will provide helpful information, based on data from the 
Maturity Model Assessment Tool, to assist the agencies in attaining 
increasing levels of maturity in their HRStat processes, while 
maintaining flexibility in the management of their HRStat reviews.

    An agency noted that the focus of the HRStat Maturity Model was the 
recognition that federal agencies operate at different levels of human 
capital maturity concerning the use of analytics, technology, talent/
staff, collaboration, and leadership. OPM emphasized that not all 
agencies could achieve the scope of impact of aligning human capital 
outcomes aligned with mission imperatives. The final rule creates a 
gigantic leap in presuming agencies possess an optimized, mission 
delivery maturity level for aligning human capital outcomes with agency 
strategic and performance goals. This presumption may place inordinate 
burdens on agencies at a time when many HRStat programs are still in 
the emerging state of HRStat maturity.

    The vision of the HRStat Community of Practice workgroup that 
developed the Maturity Model was that it partially serve as an 
``aspirational roadmap.'' In that sense, it is intended to encourage 
continuous improvement but not to require a specific

[[Page 89361]]

amount of improvement within a specific timeframe. Therefore, OPM 
will not include the recommendation, since no dictated schedule for 
maturity increases will be established at this time. Although 
guidance for HRStat is under development, the section pertaining to 
the Maturity Model will discuss the model, how it's used for 
assessment, and information on ways to manage programs for maturity.

    An agency expressed concern about language that mandated that the 
Deputy Secretary and senior management team participate in the 
quarterly HRStat reviews.

    The language in Sec.  250.204(c) includes the option of a 
`designee.' OPM believes it is essential that agency leadership is 
aware of the progress and impact of human capital operations, 
policies, and strategies on an agency's ability to meet its mission, 
hence the modification of language in Sec.  250.204(c)(3) referring 
to the necessity of Deputy Secretaries remaining informed about the 
progress and outcomes of agency's HRStat reviews.
    This is particularly important as agency senior leadership, as 
stated in GPRA-MA, must identify and inform their progress towards 
meeting agency-specific goals, of which human capital management is 
a significant contributor. Therefore, it is imperative that the CHCO 
ensure that their senior leaders are provided with all relevant data 
about human capital contributions towards meeting agency goals. 
Additionally, it is expected that the information derived from the 
reviews will be used to inform agency leadership on how to best 
support the human capital community. OPM removed and will place into 
guidance any language regarding C-Suite and management officials' 
participation in the quarterly HRStat reviews, with the exception of 
the CHCO and PIO roles, which remain in the regulation.

    An agency suggested that the HRStat definition should include all 
four elements of the new HCF. HRStat should not be limited to strategic 
planning and alignment.

    OPM agrees that HRStat is an approach that should be employed to 
make improvements in all HCF systems. Upcoming HRStat guidance will 
provide guiding principles on how to ensure the approach is used to 
make improvements within all of the systems. However, this fact is 
inherent in the definition as stated.

Section 250.204(d)--Human Capital Operation Plan (HCOP)

    Six agencies expressed concern that Sec.  250.204 was confusing. 
Specifically, they stated that it did not clearly demonstrate agencies' 
roles and expectations as related to the HCOP.

    OPM removed all references to the HCOP from Sec.  250.204 and 
placed it in its own section (Sec.  250.205) to enable OPM to 
clarify the intent of and purpose for the HCOP. Section 250.204 has 
been renumbered in light of the removed language. Guidance, which 
will be published after the final publication of the regulation, 
will communicate the roles and expectations of agencies as it 
relates to developing, implementing, and monitoring the 
implementation of the HCOP.

    Two agencies expressed concern about the establishment of a work 
group, which would be led by the CHCO and comprised of the Chief 
Operating Officer (COO), Performance Improvement Officer (PIO), Chief 
Information Officer (CIO), Chief Financial Officer (CFO), Chief 
Acquisition Officer (CAO), and Equal Employment Opportunity (EEO) 
Director.

    OPM revised Sec.  250.204(d)(i) of the proposed rule to refer to 
the necessity to have the CHCO collaborate with the agency's senior 
management team as the integration of the various areas, such as 
Information Technology, Acquisition, and Finance serve an integral 
role with the implementation of human capital strategies. This is 
reinforced within the standards of the Strategic Planning and 
Alignment System within the HCF.

    An agency suggested there needs to be specific timeframes for the 
HCOP, Evaluation System, Human Capital Strategic Review (HCSR), and 
Evaluation Report.

    OPM expects to issue HCOP and HCR guidance after publication of 
the final rule, which will include timeframes.

    Four agencies expressed concern about the requirement that agencies 
develop annual HCOPs, including a need to distinguish the difference 
between the HCOP and the ``four-year annual HCOP.''

    It should be noted that the proposed rule erroneously cited 
Sec.  250.204(d)(ii). The correct citation should have been Sec.  
250.204(d)(2). OPM modified the language in the proposed rule to 
incorporate paragraph (d)(ii) into paragraph (d). In the final rule, 
this language is now contained within Sec.  250.205. Additionally, 
the word ``annual'' was removed wherever it preceded ``Human Capital 
Operation Plan'' or ``HCOP''.
    The HCOP supports an agency's Annual Performance Plan (APP) as 
required through GPRA-MA, which in turn supports an agency's 
Strategic Plan. The HCOP should be developed with a perspective of 
how respective human capital policies, programs and implementation 
strategies will support a 4-year strategic plan with annual targets 
and goals that will be developed and assessed through the APP. The 
HCOP should be reviewed and updated, if needed, on an annual basis 
to ensure the continued alignment of human capital strategies that 
support agency goals. This is particularly important if agencies 
note, as a result of conducting their HRStat reviews, that course 
corrections are warranted. Therefore, changes for how human capital 
policies and programs support the accomplishment of a respective 
strategic goal may need to be modified. Thus, aspects of the HCOP 
will also need to be modified.

    An agency questioned if the HCOP reporting requirements are 
redundant with agency Annual Performance Plan submissions.

    All CFO Act agencies will be required to develop an HCOP, but 
are not required to submit it to OPM unless requested. The HCOP is 
intended to serve as a strategy development and implementation tool 
that agency leadership, in particular the CHCO, should use to 
determine how respective human capital policies, programs and 
implementation strategies directly support the goals and objectives 
outlined within the APP. This will include the identification of 
measures that will inform agency leadership about human capital 
contributions to and progress towards accomplishing the identified 
goals. The level of detail included in the HCOP regarding the 
implementation of human capital strategies is not suitable for 
inclusion within an agency's Annual Performance Plan, which covers a 
far greater scope.

250.204(e)--Human Capital Review (HCR)

    To eliminate any confusion with the agency strategic review 
process, required by GPRA-MA (section 1116(f)), OPM is removing 
references of the word ``strategic'' from the title of the ``Human 
Capital Strategic Reviews'' and is now titling it the ``Human Capital 
Reviews.'' The intent and purpose of the reviews remains the same 
because only the title has changed.
    Six agencies expressed concern that Sec.  250.204(e) was confusing. 
Specifically, they stated that it did not clearly demonstrate agencies' 
roles and expectations as related to the HCSRs.

    OPM removed all references to the HCRs from Sec.  250.204 and 
placed it in a section dedicated to the HCR (Sec.  250.206), to 
enable quicker identification and understanding of the purpose of 
and intent for the HCRs. Section 250.204 has been renumbered in 
light of the removed language. OPM will publish guidance upon the 
publication of the final rule that specifies the roles and 
responsibilities of agencies as related to the HCRs.

    Five agencies wanted a clear understanding of OPM's expectations 
regarding the HCRs.

    As mentioned previously, OPM is required to ``design a set of 
systems, including appropriate metrics, for assessing the management 
of human capital by Federal agencies'' as noted within 5 U.S.C 
1103(c). To enable OPM to capture critical information that will be 
used to formulate an assessment of human capital by Federal 
agencies, OPM is establishing the requirement for agencies to 
participate in annual HCRs. The reviews also serve as an opportunity 
for agencies to underscore their

[[Page 89362]]

successful practices (that OPM would share with other agencies) 
while engaging in a discussion with OPM about suggested strategies 
that can address identified challenges.
    The HCRs are annual, evidence-based reviews that evaluate and 
measure: (1) How agencies identify and implement (human capital) 
strategies that will lead to the success of a respective agency 
goal; (2) the efficacy of implementation strategies in support of 
achieving organizational goals (using the principles of the systems 
and standards of the HCF; and (3) assesses agencies ability to 
monitor their progress towards achieving their agency strategic 
goals through their HRStat reviews.
    Agencies are required to meet with OPM on an annual basis to 
demonstrate how they are developing, implementing, and monitoring 
how their human capital strategies meet organizational goals. 
Agencies will discuss (and provide supporting information) to make 
evident how selected strategies supported organizational outcomes.
    Additionally, information derived from agency HRStat reviews, 
accountability audits, HCRs, and submission of required metrics per 
5 U.S.C. 1103(c), will inform the state of human capital within the 
Federal Government. The HCRs will provide OPM with information to 
enable OPM to determine human capital contributions towards and 
impact on agencies' ability to meet the goals identified within 
their strategic plans while identifying cross-cutting human capital 
challenges. The outcomes from the reviews will also inform the 
components of a policy agenda that should be established to support 
the development and implementation of governmentwide policies and 
strategies, and provide agencies with an opportunity to receive 
feedback from OPM to improve human capital implementation strategies 
and evaluation processes. Specific requirements and explanation of 
the process will be issued through guidance.
    Two agencies asked whether the HCR will replace OPM's annual 
Accountability System Assessment Tool (ASAT) review.

    The HCR will be in addition to the ASAT assessments. The HCRs 
are annual evidence-based reviews regarding the design and 
implementation of human capital strategies. The ASAT focuses on the 
effectiveness of the agency's overall Evaluation System.

Section 250.204(f)--Independent Audits

    Two agencies suggested that OPM clarify its role in the Evaluation 
System. It appears that the new Evaluation System is the old 
Accountability System, which is ``subject'' to full OPM participation 
and evaluation. The agencies questioned whether this meant OPM will no 
longer conduct and ``lead'' periodic, full-scale human capital 
evaluations of the agencies.

    OPM will continue its human capital evaluations. As part of 
OPM's statutory oversight responsibility, OPM may periodically 
conduct a full review of an agencies HR operations to ensure 
efficiency, effectiveness and regulatory compliance.

    An agency expressed concern that Federal agencies are again 
required to submit a report to ``its leadership and OPM'' of the 
findings of the human capital evaluations (the subsection only 
references ``audit findings''). OPM should clarify whether this report 
should include any HRStat or HCR findings, the two remaining mechanisms 
of the HCEF (as defined in Sec.  250.202). Additionally, OPM should 
provide the timeframe for issuing the document to agency leadership and 
OPM.

    It should be noted that the proposed rule erroneously cited 
Sec.  250.204(f)(viii)(B). The proper citation should have been 
Sec.  250.240(f)(8)(ii). The redesignated Sec.  250.204(f)(8)(ii) is 
referring to human capital evaluations conducted by an agency's 
independent audit program or by OPM. HRStat is a quarterly data-
driven review that informs agencies' human capital outcomes. The 
HCRs are annual, evidence-based reviews to assess the design and 
implementation of human capital strategies. Reports from independent 
audits should include information pertinent to both HRStat and HCRs. 
Depending on the scope of the independent or OPM audit, results of 
HRStat and HCRs may inform the focus of the evaluation and be 
referenced in the subsequent evaluation report. For example, if 
Time-to-Hire is one of the HRStat measures used by an agency, 
independent audits can assess whether timeliness is good or bad and 
why, which would then require agencies to make corrective actions. 
The timeframe for reporting back to OPM will always be included in 
the evaluation report provided to agency leadership.
    Small agencies are not required to have independent audit 
programs. However, if they chose to develop one, the timeframe for 
reporting findings and corrective action should be explained in the 
agency evaluation system policy.

Section 250.206 (Redesignated as Sec.  250.209)--Consequences--Improper 
Agency Actions

    An agency believed OPM should include consequences for non-
compliance with OPM position classification standards and inconsistency 
with OPM appeal determinations for like, identical, and similar 
positions within Sec.  250.206.

    According to 5 U.S.C. 5111, OPM has statutory authority to take 
corrective action and therefore, adding it to this section is 
unnecessary. In light of revisions to other sections, the proposed 
Sec.  250.206 is redesignated as Sec.  250.209.

Miscellaneous

    An agency recommended that a section of the regulation should 
address HCOP and HRStat processes for mutual agency human capital 
collaboration for Cross-Agency Priority Goals, particularly in the area 
of collaborative ways to close mission critical occupation (MCO) skill 
gaps, share technologies and tools, participate in category management, 
and re-allocate tasks to be performed solely by certain agencies to 
promote efficiency and effectiveness. OPM should be an active partner 
in these collaborative efforts contained in such a regulatory section

    OPM concurs that agency collaboration is an essential approach 
for implementing sound human capital strategies; however, with 
regards to Cross-Agency Priority (CAP) Goals, the regulation is not 
intended to address the implementation of CAP goals. We will 
encourage agencies to collaborate on implementing strong human 
capital strategies for other cross-cutting opportunities, such as 
those identified within the Federal Workforce Priorities Report.

    An agency noted that agency strategic plans are four year planning 
documents that outline an agency's broadest mission goals and 
objectives. The agency believes OPM's desire to align both the HCOP and 
HRStat process with the strategic goals and objectives contained in an 
agency's strategic plan will create an overwhelming burden on federal 
agencies that will inhibit any meaningful, deep human capital planning 
in the HCOP and focused analysis through the HRStat process. Further, 
the agency believes that the task of aligning strategic goals and 
associated performance goals in the HCOP with human capital 
implementation strategies, and monitoring progress in relation to human 
capital policies and programs that cuts across such a vast expanse of 
agencies' mission imperatives will lead agencies to focus their 
attention on only the most broad human capital outcomes.

    To maintain flexibility in the manner in which agencies may 
execute their responsibilities stated within the regulation, the 
details on how agencies are expected to fulfill them will be 
included in subsequent guidance rather than within the regulation 
itself. Specifying that alignment will pertain to APGs and CAP goals 
would be too restrictive for regulation. Therefore, the regulatory 
requirement to align human capital processes to the agency strategic 
plan will remain the same. The subsequent guidance, whose 
establishment will include input from the CHCO Community and 
relevant communities of practice (e.g. HRStat), will then specify 
the method that agencies will be expected to follow. This may or may 
not reflect the recommendation provided, depending on the outcome of 
the guidance development process.

    In light of revisions to other sections, the proposed Sec.  250.205 
is redesignated as Sec.  250.208. There was confusion within one agency 
regarding references to OMB Circular No. A-11 guidance on preparing the 
human capital portions of

[[Page 89363]]

an agency's Annual Performance Plan (APP).

    The current version of OMB Circular No. A-11 issued in 2015, 
does not contain specific guidance on preparing the human capital 
portions of an agency's APP. Therefore, specific references to OMB 
Circular No. A-11 was removed from the proposed rule.

    Twelve agencies inquired as to whether or not OPM was going to 
issue guidance following the publication of the final rule. Of the 
twelve, one agency encouraged OPM to engage agencies in the timely 
drafting of such guidance.

    OPM understands the need to assist agencies as they work to 
better integrate human capital within the agency strategic planning 
process. As such, OPM will host a series of meetings with agency 
human capital professionals, as it works to develop guidance per the 
regulation. Following publication of the final rule, OPM expects to 
issue guidance related to the HCOP, HCR, required metrics per Sec.  
250.208 (System Metrics) and HRStat Maturity Model.

    An agency noted that the final rule contained an incorrect cite (31 
U.S.C. 1116(d)(5)) as authority for 5 CFR 250, subpart B. The agency 
noted that the correct cite is 31 U.S.C. 1116(c)(5), which states that 
an agency's performance update shall ``include a review of the 
performance goals and evaluation of the performance plan relative to 
the agency's strategic human capital management.''

    OPM corrected the cite reference to read: 31 U.S.C. 1116(c)(5).

Employee Survey Process (5 CFR Part 250, Subpart C)

    This rule will strengthen and modernize the Employee Survey process 
by identifying questions that are well written, understandable, and in 
better alignment to the topics cited in the National Defense 
Authorization Act for Fiscal Year 2004, Public Law 108-136, sec.1128, 
codified at 5 U.S.C. 7101.

Response to Comments, Subpart C--Employee Surveys

    OPM received a total of 17 written comments directly addressing 
Subpart C--Employee Surveys. These comments were from 12 individuals, 
three agencies, and two organizations. These 17 comments are included 
in the total of 35 comments cited earlier. Below we summarize and 
respond to the comments received.
    Two individuals indicated that Federal Employee Viewpoint Survey 
references to senior leader, manager and supervisory levels in 
questions are not clear to employees taking the survey, notwithstanding 
the terms' definitions in 5 CFR part 250.
    OPM acknowledges that general terms and definitions for 
leadership levels (senior leader, manager, and supervisor) may vary 
greatly from agency to agency and it is imperative to give agencies 
and respondents a clearer understanding of each level for accurate 
answers/data. In light of the comments and ongoing discussions on 
the definitions of levels of leadership within organizations, OPM 
removed the definitions from the regulation to allow for additional 
discussion and revision for future versions of the survey towards 
the goal of achieving greater clarity for agencies and survey 
respondents.

    OPM received multiple comments and suggestions on additions to, and 
deletions from, the proposed list of survey questions from seven 
individuals, two agencies and two organizations.

    Section 1128 of the National Defense Authorization Act for 
Fiscal Year 2004 (Pub. L. 108-136, 5 U.S.C. 7101 note) requires each 
agency to conduct an annual survey of its employees to assess two 
topic areas (1) Leadership and Management Practices that contribute 
to agency performance, and (2) Employee Satisfaction with: (a) 
Leadership policies and practices; (b) work environment; (c) rewards 
and recognition; (d) opportunity for professional development and 
growth; and (e) opportunity to contribute to achieving 
organizational mission. Any questions suggested by commenters that 
did not fit these two main areas of the statute (and/or the five 
sub-areas) were considered to be out of the scope of this regulation 
and therefore not considered. OPM did not adopt comments suggesting 
adding new areas with associated new questions, because these areas 
are not covered in the statute that drives this regulation (cited 
above). OPM notes, however, that agencies maintain the flexibility 
to expand their own surveys and add agency-specific questions as 
appropriate to the agency's needs. In addition, although the 
questions referenced in this paragraph are outside the scope of the 
statute and do not need to be retained in regulation, OPM will 
maintain the suggestions for consideration for future additions to 
the non-mandatory portion of the Employee Survey.

    An organization suggested seven (7) questions for addition to the 
regulation.

    These questions were evaluated to the extent that they (a) fit 
within the existing areas covered in the statute and (b) were 
understandable and well-written. All of these questions had been 
included in past versions of the annual survey and are of continued 
interest for year-to-year agency trending. Of the seven questions 
suggested, five questions both clearly fit within the existing areas 
covered in the statute and were understandable and well-written. 
These five questions were added to the original 11 questions 
proposed for the current legislation, for a total of 16 questions 
going forward. Specifically, the additional questions included in 
the current regulation are:
    1. I believe the results of this survey will be used to make my 
agency a better place to work.
    2. Considering everything, how satisfied are you with your 
organization?
    3. Considering everything, how satisfied are you with your job?
    4. I can disclose a suspected violation of any law, rule or 
regulation without fear of reprisal.
    5. I recommend my organization as a good place to work.
    Two of the questions suggested for inclusion were: (a) 
``arbitrary action, personal favoritism and coercion for partisan 
political purposes are not tolerated'' and (b) ``prohibited 
personnel practices (for example, illegally discriminating for or 
against any employee/applicant, obstructing a person's right to 
compete for employment, knowingly violating veterans' preference 
requirements) are not tolerated.'' They were not included in the 
current regulation because they lacked clarity and would not produce 
meaningful responses/data. These questions need to be more clearly 
written to be understandable to respondents and produce actionable 
results. These two questions also are outside the scope of the 
statute.

    One agency suggested adding questions dealing with veteran issues; 
an individual and an agency suggested adding questions regarding 
training; another individual requested the survey include questions to 
ascertain the education and career of the respondent's parents and 
spouse; and two other individuals requested additional areas/questions 
be included that focused on employee motivation as well as burnout, 
turnover and productivity.

    The questions and/or areas for additional questions suggested by 
these commenters were either outside the scope of the statute and/or 
already covered by questions included in the current revision of the 
regulation. No additional changes were made other than the five 
questions added above.

    An individual suggested that the Federal Employee Viewpoint Survey 
(FEVS) should provide results by race and ethnicity. For instance, 
currently, results are consolidated into ``minority'' or ``non-
minority'' categories.

    Confidentiality concerns require the combining of some response 
categories into more general and less personally-identifiable 
categories to protect the privacy of the individual responders. In 
any event, this comment is outside the scope of the proposed rule.

    Six individuals, two agencies and two organizations commented on 
what impact the reduction in survey questions in regulation will have 
on the existing metrics (indexes), trends and agency survey efforts.

    About half the survey questions currently in use are not 
reflected in the regulation, however these questions have been asked 
by OPM since 2002. Many questions that have

[[Page 89364]]

never been reflected in regulation have been used to produce the 
indexes provided to agencies each year, as well as the reports 
provided by OPM for year-to-year trending for agency use. Changes to 
the survey questions (regardless of whether the questions are 
represented in this regulation) are made only in consultation with 
OPM survey experts, agency representatives and stakeholders that use 
the survey results. OPM will continue to produce question trends and 
indexes as in prior years, but will be able to revise and improve 
questions as necessary for better measurement and remove questions 
which are no longer of interest to agencies. Index scores will 
continue to be produced but again, OPM will be able to revise, add 
or remove indexes to respond to agency needs. Information critical 
to agency success will not be lost, but instead the survey will move 
toward providing better and more accurate data to agencies as well 
as improved scientific rigor. Asking questions which are not well 
written or no longer relevant to agency success, as well as 
reporting indexes used in the past when newer indexes would better 
fit agency needs, confines the survey to be a formality rather than 
a dynamic and useful management tool.
    For the purpose of the regulation, a smaller set of 
understandable and well-written questions directly related to the 
statute areas, are critical for governmentwide and agency 
measurement and trends, and this smaller set of 16 questions will be 
retained in regulation. This set of questions satisfies the statute 
requirements. Since these questions cannot be revised or removed 
without a change in regulation, retaining a large number of 
questions within a regulation limits the effectiveness of the survey 
to respond to agency needs, to update the survey to address new 
initiatives, and/or to revise or remove questions that are no longer 
useful. Therefore, the previous list of 45 statute-based questions 
has been reduced to a smaller, core set of 16 areas. The results 
required by statute will continue to be produced.
    In addition, OPM will have the option to make revisions as 
needed to other parts of the survey and those relevant questions 
that used to appear in the regulation in order to improve 
measurement qualities and therefore, improve the overall scientific 
qualities of the annual survey and its value to the Federal 
Government, while satisfying the statue requirements.

    One agency, one organization and two individuals provided comments 
related to survey methodology: For example, shortening the fielding 
period and reducing reporting timeframes, frequency of survey 
administration, and sampling methodologies.

    These comments are outside the scope of the proposed rule; 
therefore, no response is needed.

    An organization suggested requiring OPM to report FEVS data 
publically within 90 days of the date by which an agency completes 
survey administration.

    Currently, while OPM provides services to all executive agencies 
for the annual survey, no such requirement is reflected in statute. 
Thus, no timeline can be established. Our goal is to provide 
agencies with the best information and reports possible, and 
imposing a timeline would hamper our ability to respond to dynamic 
situations and decision-needs.

Executive Order 13563 and Executive Order 12866, Regulatory Review

    The Office of Management and Budget has reviewed this proposed rule 
in accordance with E.O. 13563 and 12866.

Paperwork Reduction Act

    This document does not contain proposed information collection 
requirements subject to the Paperwork Reduction Act of 1995 (Pub. L. 
104-13).

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities because they 
apply only to Federal agencies and employees.

List of Subjects in 5 CFR Part 250

    Authority for Personnel actions in agencies, Employee surveys, 
Strategic Human Capital Management.

Office of Personnel Management.
Beth F. Cobert,
Acting Director.

    Accordingly, OPM amends title 5, Code of Federal Regulations, as 
follows:

PART 250--PERSONNEL MANAGEMENT IN AGENCIES

0
1. The authority citation for part 250 continues to read as follows:

    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--Strategic Human Capital Management

0
2. Subpart B is revised to read as follows:
Subpart B--Strategic Human Capital Management
Sec.
250.201 Coverage and purpose.
250.202 Definitions.
250.203 Strategic Human Capital management systems and standards.
250.204 Agency roles and responsibilities.
250.205 Human Capital Operating Plan (HCOP).
250.206 Human Capital Reviews (HCR).
250.207 HRStat.
250.208 System metrics.
250.209 Consequences of improper agency actions.

Subpart B--Strategic Human Capital Management

    Authority: 5 U.S.C. 105; 5 U.S.C. 1103(a)(7), (c)(1), and 
(c)(2); 5 U.S.C. 1401; 5 U.S.C. 1402(a); 31 U.S.C. 901(b)(1); 31 
U.S.C. 1115(a)(3); 31 U.S.C. 1115(f); 31 U.S.C. 1116(c)(5); Public 
Law 103-62; Public Law 107-296; Public Law 108-136, 1128; Public Law 
111-352; 5 CFR 10.2; FR Doc No: 2011--19844; E.O. 13583; E.O. 13583, 
Sec 2(b)(ii).


Sec.  250.201  Coverage and purpose.

    Pursuant to 5 U.S.C. 1103(c), this subpart defines a set of 
systems, including standards and metrics, for assessing the management 
of human capital by Federal agencies. These regulations apply to all 
Executive agencies as defined in 31 U.S.C. 901(b)(1) and support the 
performance planning and reporting that is required by sections 
1115(a)(3) and (f) and 1116(d)(5) of title 31, United States Code.


Sec.  250.202  Definitions.

    Chief Human Capital Officer (CHCO) is the agency's senior leader 
whose primary duty is to:
    (1) Advise and assist the head of the agency and other agency 
officials in carrying out the agency's responsibilities for selecting, 
developing, training, and managing a high-quality, productive workforce 
in accordance with merit system principles; and
    (2) Implement the rules and regulations of the President, the 
Office of Personnel Management (OPM), and the laws governing the civil 
service within the agency.
    CHCO agency is an Executive agency, as defined by 5 U.S.C. 105, 
which is required by 5 U.S.C. 1401 and 31 U.S.C. 901(b)(1) to appoint a 
CHCO.
    Director of OPM is, among other things, the President's advisor on 
actions that may be taken to promote an efficient civil service and a 
systematic application of the merit system principles, including 
recommending policies relating to the selection, promotion, transfer, 
performance, pay, conditions of service, tenure, and separation of 
employees. The Director of OPM provides governmentwide leadership and 
direction in the strategic management of the Federal workforce.
    Evaluation system is an agency's overarching system for evaluating 
the results of all human capital planning and implementation of human 
capital strategies to inform the agency's continuous process 
improvement efforts. This system is also used for ensuring compliance 
with all applicable statutes, rules, regulations, and agency policies.

[[Page 89365]]

    Federal Workforce Priorities Report (FWPR) is a strategic human 
capital report, published by OPM by the first Monday in February of any 
year in which the term of the President commences. OPM may extend the 
date of publication if needed. The report communicates key 
Governmentwide human capital priorities and suggested strategies. The 
report also informs agency strategic and human capital planning.
    Focus areas are areas that agencies and human capital practitioners 
must focus on to achieve a system's standard.
    HRStat is a strategic human capital performance evaluation process 
that identifies, measures, and analyzes human capital data to inform 
the impact of an agency's human capital management on organizational 
results with the intent to improve human capital outcomes. HRStat, 
which is a quarterly review process, is a component of an agency's 
strategic planning and alignment and evaluation systems that are part 
of the Human Capital Framework.
    Human Capital Evaluation Framework underlies the three human 
capital evaluation mechanisms (i.e., HRStat, Audits, and Human Capital 
Reviews) to create a central evaluation framework that integrates the 
outcomes from each to provide OPM and agencies with an understanding of 
how human capital policies and programs are supporting missions.
    Human Capital Framework (HCF) provides comprehensive guidance on 
the principles of strategic human capital management in the Federal 
Government. The framework, as described in Sec.  250.203 below, 
provides direction on human capital planning, implementation, and 
evaluation in the Federal environment.
    Human Capital Operating Plan (HCOP) is an agency's human capital 
implementation document, which describes how an agency will execute the 
human capital elements stated within Agency Strategic Plan and Annual 
Performance Plan (APP). Program specific workforce investments and 
strategies (e.g., hiring, closing skill gaps, etc.) should be 
incorporated into the APPs as appropriate. The HCOP should clearly 
execute each of the four systems of the HCF. The HCOP should align with 
the Government Performance and Results Act (GPRA) Modernization Act of 
2010, annual performance plans and timelines.
    Human Capital Review (HCR) is OPM's annual, evidence-based review 
of an agency's design and implementation of its HCOP, independent 
audit, and HRStat programs to support mission accomplishment and human 
capital outcomes.
    Independent audit program is a component of an agency's evaluation 
system designed to review all human capital management systems and 
select human resources transactions to ensure efficiency, 
effectiveness, and legal and regulatory compliance.
    Skill gap is a variance between the current and projected workforce 
size and skills needed to ensure an agency has a cadre of talent 
available to meet its mission and make progress towards achieving its 
goals and objectives now and into the future.
    Standard is a consistent practice within human capital management 
in which agencies strive towards in each of the four HCF systems. The 
standards ensure that an agency's human capital management strategies, 
plans, and practices:
    (1) Are integrated with strategic plans, annual performance plans 
and goals, and other relevant budget, finance, and acquisition plans;
    (2) Contain measurable and observable performance targets;
    (3) Are communicated in an open and transparent manner to 
facilitate cross-agency collaboration to achieve mission objectives; 
and
    (4) Inform the development of human capital management priority 
goals for the Federal Government.


Sec.  250.203   Strategic human capital management systems and 
standards.

    Strategic human capital management systems, standards, and focus 
areas are defined within the Human Capital Framework (HCF). The four 
systems described below provide definitions and standards for human 
capital planning, implementation, and evaluation. The HCF systems and 
standards are:
    (a) Strategic planning and alignment. A system that ensures agency 
human capital programs are aligned with agency mission, goals, and 
objectives through analysis, planning, investment, and measurement. The 
standards for the strategic planning and alignment system require an 
agency to ensure their human capital management strategies, plans, and 
practices--
    (1) Integrate strategic plans, annual performance plans and goals, 
and other relevant budget, finance, and acquisition plans;
    (2) Contain measurable and observable performance targets; and
    (3) Communicate in an open and transparent manner to facilitate 
cross-agency collaboration to achieve mission objectives.
    (b) Talent management. A system that promotes a high-performing 
workforce, identifies and closes skill gaps, and implements and 
maintains programs to attract, acquire, develop, promote, and retain 
quality and diverse talent. The standards for the talent management 
system require an agency to--
    (1) Plan for and manage current and future workforce needs;
    (2) Design, develop, and implement proven strategies and techniques 
and practices to attract, hire, develop, and retain talent; and
    (3) Make progress toward closing any knowledge, skill, and 
competency gaps throughout the agency.
    (c) Performance culture. A system that engages, develops, and 
inspires a diverse, high-performing workforce by creating, 
implementing, and maintaining effective performance management 
strategies, practices, and activities that support mission objectives. 
The standards for the performance culture system require an agency to 
have--
    (1) Strategies and processes to foster a culture of engagement and 
collaboration;
    (2) A diverse, results-oriented, high-performing workforce; and
    (3) A performance management system that differentiates levels of 
performance of staff, provides regular feedback, and links individual 
performance to organizational goals.
    (d) Evaluation. A system that contributes to agency performance by 
monitoring and evaluating outcomes of its human capital management 
strategies, policies, programs, and activities by meeting the following 
standards--
    (1) Ensuring compliance with merit system principles; and
    (2) Identifying, implementing, and monitoring process improvements.


Sec.  250.204  Agency roles and responsibilities.

    (a) An agency must use the systems and standards established in 
this part, and any metrics that OPM subsequently provides in guidance, 
to plan, implement, evaluate and improve human capital policies and 
programs. These policies and programs must--
    (1) Align with Executive branch policies and priorities, as well as 
with individual agency missions, goals, and strategic objectives. 
Agencies must align their human capital management strategies to 
support the Federal Workforce Priorities Report, agency strategic plan, 
agency performance plan, and agency budget;
    (2) Be based on comprehensive workforce planning and analysis;
    (3) Monitor and address skill gaps within governmentwide and 
agency-

[[Page 89366]]

specific mission-critical occupations by using comprehensive data 
analytic methods and gap closure strategies;
    (4) Recruit, hire, develop, and retain an effective workforce, 
especially in the agency's mission-critical occupations;
    (5) Ensure leadership continuity by implementing and evaluating 
recruitment, development, and succession plans for leadership 
positions;
    (6) Implement a knowledge management process to ensure continuity 
in knowledge sharing among employees at all levels within the 
organization;
    (7) Sustain an agency culture that engages employees by defining, 
valuing, eliciting, and rewarding high performance; and
    (8) Hold the agency head, executives, managers, human capital 
officers, and human capital staff accountable for efficient and 
effective strategic human capital management, in accordance with merit 
system principles.
    (b) Each agency must meet the statutory requirements of the 
Government Performance and Results Act (GPRA) Modernization Act of 
2010, by including within the Annual Performance Plan (APP) human 
capital practices that are aligned to the agency strategic plan. The 
human capital portion of the APP must include performance goals and 
indicators.
    (c) An agency's Deputy Secretary, equivalent, or designee is 
responsible for ensuring that the agency's strategic plan includes a 
description of the operational processes, skills and technology, and 
human capital information required to achieve the agency's goals and 
objectives. Specifically, the Deputy Secretary, equivalent, or designee 
will--
    (1) Allocate resources;
    (2) Ensure the agency incorporates applicable priorities identified 
within the Federal Workforce Strategic Priorities Report and is working 
to close governmentwide and agency-specific skill gaps; and
    (3) Remain informed about the progress of their agency's quarterly 
HRStat reviews, which are led by the CHCO, in collaboration with the 
PIO.
    (d) The Chief Human Capital Officer must design, implement and 
monitor agency human capital policies and programs that--
    (1) Ensure human capital activities support merit system 
principles;
    (2) Use the OPM designated method to identify governmentwide and 
agency-specific skill gaps;
    (3) Demonstrate how the agency is using the principles within the 
HCF to address strategic human capital priorities and goals;
    (4) Establish and maintain an Evaluation System to evaluate human 
capital outcomes that is--
    (i) Formal and documented; and
    (ii) Approved by OPM;
    (5) Maintain an independent audit program, subject to full OPM 
participation and evaluation, to review periodically all human capital 
management systems and the agency's human resources transactions to 
ensure legal and regulatory compliance. An agency must--
    (i) Take corrective action to eliminate deficiencies identified by 
OPM, or through the independent audit, and to improve its human capital 
management programs and its human resources processes and practices; 
and
    (ii) Based on OPM or independent audit findings, issue a report to 
its leadership and OPM containing the analysis, results, and corrective 
actions taken; and
    (6) Improve strategic human capital management by adjusting 
strategies and practices, as appropriate, after assessing the results 
of performance goals, indicators, and business analytics.
    (7) The agency's human capital policies and programs must support 
the implementation and monitoring of the Federal Workforce Priorities 
Report, which is published by OPM every four years, and--
    (i) Improve strategic human capital management by using performance 
goals, indicators, and business analytics to assess results of the 
human capital management strategies planned and implemented;
    (ii) Ensure human capital activities support merit system 
principles;
    (iii) Adjust human capital management strategies and practices in 
response to outcomes identified during HRStat quarterly data-driven 
reviews of human capital performance to improve organizational 
processes; and
    (iv) Use the governmentwide and agency-specific human capital 
strategies to inform resource requests (e.g., staff full-time 
equivalents, training, analytical software, etc.) into the agency's 
annual budget process.


Sec.  250.205  Human Capital Operating Plan (HCOP).

    Each agency must develop a Human Capital Operating Plan (HCOP) that 
aligns with an agency's Strategic Plan and Annual Performance Plan. The 
HCOP is to be reviewed and approved annually, and updated as needed. 
The HCOP must demonstrate how an agency's human capital implementation 
strategies follow the principles and standards of the HCF while 
including an explanation of how human capital policies, initiatives, 
objectives, and resources will be used to achieve agencies' human 
capital goals. The HCOP will be made available to OPM upon request. The 
HCOP must--
    (a) Be established by the CHCO, in collaboration with the agency's 
senior management team;
    (b) Be used to support the execution of an agency's strategic plan, 
as an agency's human capital can affect whether or not a strategy or 
strategic goal is achieved;
    (c) Explicitly describe the agency-specific skill and competency 
gaps that must be closed through the use of agency selected human 
capital strategies;
    (d) Include annual human capital performance goals and measures 
that will support the evaluation of the agency's human capital 
strategies, through HRStat quarterly reviews, and that are aligned to 
support mission accomplishment;
    (e) Reflect the systems and standards defined in Sec.  250.203 
above, consistent with their agency strategic plan and annual 
performance plan, to address strategic human capital priorities and 
goals; and
    (f) Address the governmentwide priorities identified in the Federal 
Workforce Strategic Priorities Report.


Sec.  250.206  Human Capital Reviews.

    Each agency must participate with OPM in a Human Capital Review 
(HCR). The HCR will be conducted during the evaluation phase and OPM 
will issue guidance about the HCR requirements.


Sec.  250.207  HRStat.

    The Chief Human Capital Officer must design, implement and monitor 
agency human capital policies and programs that--
    (a) Use the HRStat quarterly reviews, in coordination with the 
agency Performance Improvement Officer (PIO), to assess the agency's 
progress toward meeting its strategic and performance goals;
    (b) Implement the HRStat Maturity guidelines specified by OPM; and
    (c) Use HRStat quarterly reviews to evaluate their agency's 
progress.


Sec.  250.208  System metrics.

    OPM reserves the right to provide additional guidance regarding 
metrics.


Sec.  250.209  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

[[Page 89367]]

agency to take corrective action. OPM may suspend or revoke a 
delegation agreement established under 5 U.S.C. 1104(a)(2) 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 of the regulation. 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.

0
3. Subpart C is revised to read as follows:
Subpart C--Employee Surveys
Sec.
250.301 Definitions.
250.302 Survey requirements.
250.303 Availability of results.

Subpart C--Employee Surveys

    Authority: 5 U.S.C. 105; 5 U.S.C. 7101 note; Public Law 108-136


Sec.  250.301  Definitions.

    Agency means an Executive agency, as defined in 5 U.S.C. 105.


Sec.  250.302  Survey requirements.

    (a) Each executive agency must conduct an annual survey of its 
employees to assess topics outlined in the National Defense 
Authorization Act for Fiscal Year 2004, Public Law 108-136, sec. 1128, 
codified at 5 U.S.C. 7101.
    (1) Each executive agency may include additional survey questions 
unique to the agency in addition to the employee survey questions 
prescribed by OPM under paragraph (a)(2) of this section.
    (2) The 16 prescribed survey questions are listed in the following 
table:

 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
    (i) Leadership and Management practices that contribute to agency
                               performance
------------------------------------------------------------------------
                                        My work unit has the job-
                                         relevant skills necessary to
                                         accomplish organizational
                                         goals.
                                        Managers communicate the goals
                                         of the organization.
                                        I believe the results of this
                                         survey will be used to make my
                                         agency a better place to work.
------------------------------------------------------------------------
                    (ii) Employee Satisfaction with--
------------------------------------------------------------------------
(A)...................................  Leadership Policies and
                                         Practices:
                                        How satisfied are you with your
                                         involvement in decisions that
                                         affect your work?
                                        How satisfied are you with the
                                         information you receive from
                                         management on what is going on
                                         in your organization?
                                        Considering everything, how
                                         satisfied are you with your
                                         organization?
(B)...................................  Work Environment:
                                        The people I work with cooperate
                                         to get the job done.
                                        My workload is reasonable.
                                        Considering everything, how
                                         satisfied are you with your
                                         job?
                                        I can disclose a suspected
                                         violation of any law, rule or
                                         regulation without fear of
                                         reprisal.
(C)...................................  Rewards and Recognition:
                                        In my work unit, differences in
                                         performance are recognized in a
                                         meaningful way.
                                        How satisfied are you with the
                                         recognition you receive for
                                         doing a good job?
(D)...................................  Opportunities for professional
                                         development and growth:
                                        I am given a real opportunity to
                                         improve my skills in my
                                         organization.
                                        My talents are used well in the
                                         workplace.
(E)...................................  Opportunity to contribute to
                                         achieving organizational
                                         mission:
                                        I know how my work relates to
                                         the agency's goals.
                                        I recommend my organization as a
                                         good place to work.
------------------------------------------------------------------------

Sec.  250.303  Availability of results.

    (a) Each agency will make the results of its annual survey 
available to the public and post the results on its Web site unless the 
agency head determines that doing so would jeopardize or negatively 
impact national security. The posted survey results will include the 
following:
    (1) The agency's evaluation of its survey results;
    (2) How the survey was conducted;
    (3) Description of the employee sample, unless all employees are 
surveyed;
    (4) The survey questions and response choices with the prescribed 
questions identified;
    (5) The number of employees surveyed and number of employees who 
completed the survey; and
    (6) The number of respondents for each survey question and each 
response choice.
    (b) Data must be collected by December 31 of each calendar year. 
Each agency must post the beginning and ending dates of its employee 
survey and either the survey results described in paragraph (a) of this 
section, or a statement noting the decision not to post, no later than 
120 days after the agency completes survey administration. OPM may 
extend this date under unusual circumstances.

[FR Doc. 2016-29600 Filed 12-9-16; 8:45 am]
BILLING CODE 6325-39-P