Testimony

Statement by
Dr. Ed Sontag
Assistant Secretary for Administration and Management
and
Chief Human Capital Officer
Department of Health and Human Services

on
Hearing: Federal Hiring Reform
before the
Subcommittee on Oversight of Government Management, the Federal
Workforce and the District of Columbia
Committee on Governmental Affairs
United States Senate

July 20, 2004

Good Morning Chairman Voinovich and members of the Subcommittee.  On behalf of Secretary Tommy Thompson, I appreciate the opportunity to appear before you today to discuss the initiatives that the Department of Health and Human Services' (HHS) has undertaken to address the challenges facing our workforce and how the Department has incorporated new workforce flexibilities into our human capital strategy.

I want to thank Chairman Voinovich for his leadership and foresight in authoring legislation that provides flexibility and efficiencies in the human capital arena.  As we know, creating a more effective government depends on attracting, developing, and retaining quality employees from diverse backgrounds and ensuring that they perform at high levels.  Sound investment in human capital is essential if agencies are to achieve their missions. HHS has taken up the challenge presented by the President's Management Agenda (PMA) and made significant progress.

The over-arching central direction of Secretary Thompson is that the Department of Health and Human Services must function as a single entity - as One HHS.  To ensure that HHS is One Department rather than a collection of disparate and unrelated agencies, we have taken a number of steps, and are planning more.  For example, we have consolidated support activities to increase efficiency of administrative services to the entire Department and have begun to implement more effective coordination of HHS research and demonstration activities.  We are increasingly collaborating and coordinating significant activities among HHS agencies, such as work on delivery of health care services to children and families, and privacy and confidentiality policies.  The HHS Strategic Plan contains Management Improvement Goals including reducing the number of personnel offices; modernizing and improving human, financial, and technological management, including the information technology governance process; and reforming regulations to reduce excessive paperwork and burden on doctors, nurses, and other health care professionals.  To provide accountability as well as feedback and tracking of how we are doing, we have instituted performance contracts (tied to the strategic goals and objectives) for the Department's senior leadership, which have cascaded to a significant portion of the Department.  These performance contracts instituted explicit standards against which HHS officials' work is measured.

In terms of our structure, HHS is one of the largest federal departments, the Nation's largest health payer, and the largest grant-making agency in the United States federal government.  The Department promotes and protects the health and well-being of all Americans and provides world leadership in biomedical and public health sciences.  As indicated above, in doing this, HHS is committed to becoming a unified Department.  We have developed "One HHS" outcome goals, accompanied by specific objectives and milestones designed to measure our progress in achieving these goals.

HHS' Strategic Plan for Human Capital

The foundation of HHS and the key to its future success is its workforce -- without whom the important mission-related work of the Department could not be accomplished.  The Department's ability to accomplish its mission is directly dependent on a workforce that capitalizes on its strengths and aligns itself with the agency's mission and strategic goals.  In a world of turbulent change, success depends on the workforce's ability to reach, learn and adapt at rapid speed.  The overall challenge for HHS is to develop and utilize its human capital in a strategic manner.  The Department continues to build a fully integrated human capital management approach that bridges the gap between where HHS is today and where HHS needs to be tomorrow.  Specifically, we have implemented Department-wide recruitment and retention strategies; a strategic workforce plan to respond to and eliminate potential skill imbalances; consolidated administrative functions to eliminate duplication and increase efficiency and effectiveness; delayered organizations to no more than four management layers to speed decision-making; and deployed staff to mission-related functions to improve HHS as a citizen-centered Department.

Accomplishing these objectives ensures that HHS is a well-managed organization that leverages its human capital, systematically measures its performance, remains focused on mission, and anticipates and responds to future requirements.

Human Capital Strategies are linked to agency mission and goals

HHS has emphasized the need to optimize the use of human capital and resources for mission accomplishment since FY 2002.  Budget instructions to departmental leadership make consolidating administrative functions, delayering organizations, and reducing overhead key elements of budget decision-making.  The budget formulation process includes functional reviews to assure that human capital and other President's Management Agenda (PMA) initiatives are an integral part of each OPDIV's budget.  Human capital and PMA initiatives link to the budget process and are reinforced by the Assistant Secretary for Administration and Management sitting on the Secretary's Budget Council.  The Human Capital plan documents the linkages between the Department's workforce analysis, restructuring plan, recruitment and retention plan, strategic plan, GPRA goals, and accountability plan.  The Human Capital Plan also provides a common timetable for plan assessment and updates and assures that accountability for results across the Department is maintained.  This coordination assures the alignment of human capital to HHS mission accomplishment.

Organization is restructured to provide optimal service at lowest cost and respond to changing business needs

HHS has completed administrative consolidations in all of its Operating Divisions, reducing the number of offices providing the same services.  At the same time, Operating Divisions have completed their de-layering efforts, so that no organization has more than four management levels Department-wide.  Competitive sourcing activities are coordinated with consolidation and restructuring, and transition tools (for example early retirement and buyouts) have been used to facilitate organizational transitions.  E-government initiatives such as e-grants and e-payroll have allowed HHS to achieve administrative economies and re-direct resources to mission accomplishment.  The Department's April 2003 initiative to redirect resources toward mission accomplishment has resulted in the percentage of mission critical positions increasing from 56 percent to 61 percent of the workforce.

Continuity of leadership and knowledge is assured through succession planning and professional development

Leadership recruitment and development programs are an institutionalized part of HHS's human capital strategy.  The Emerging Leaders Program is established as an ongoing success, graduating its first class and hiring its third in July 2004.  The Department's SES Candidate Development Program provides an ongoing pool of future SES members to succeed over 100 executives across HHS.  Workforce analyses feed succession planning programs for ongoing leadership and executive development.  Common needs training across HHS is consolidated in the HHS University, linking training, career development, workforce planning and succession planning to hiring and developing future leaders.  The HHS University achieves economies of scale by providing a central focus for common needs training while coordinating centers of excellence for programmatic and scientific training across the Department.

Performance appraisals for SES and managers link to agency mission and are cascaded appropriately throughout the agency

HHS is in its fourth iteration of performance contracts for political, operating and staff division heads, having begun the initiative in FY 2001.  Performance plans that flow from contracts with senior managers are linked to the Secretary's priorities and strategic goals for HHS and cascade to SES, GS managers and all appropriate employees - covering 95% of the HHS workforce.

Workforce Diversity

HHS has a diverse workforce at all levels, including critical occupations and its leadership.  Workforce diversity is an element in the planning of leadership recruitment and development programs such as Emerging Leaders and SES Candidate Development Program.  These efforts will help HHS to maintain diversity in its future leadership.  Ongoing workforce analysis and program assessment is carried out to measure the effectiveness of efforts to address workforce diversity.  Evaluation activities include analysis of reports required for the Department's affirmative action plans for women and minorities, persons with disabilities, and the Disabled Veterans Affirmative Action Plan.  In addition, evaluation efforts in the area of diversity are coordinated with strategic recruiting efforts to gauge the effectiveness of recruitment efforts and determine the best sources of qualified applicants from targeted groups.

Potential Skill gaps in mission critical occupations are identified and reduced

Workforce analysis is carried out as an ongoing part of strategic workforce planning.  Findings are linked to recruitment, retention, redeployment, career development and succession planning programs.  The Department's effort to shift resources from administrative to mission has resulted in a better alignment of support positions to mission critical occupations.  Changes in skills sets are assessed on the basis of driving forces, particularly changes in program and mission, business process re-engineering and the impact of technology.  Competitive sourcing and e-government initiatives feed into skills assessment and skills changes through all three of these driving forces.

Human Capital Program is guided by measurable outcomes

Human capital metrics are in place to gauge overall effectiveness of the Department's human capital management.  Measurable outcomes show that HHS has strong and effective human capital programs oriented to helping the Department carry out its mission.  Human resources service metrics enabled us to establish baselines for evaluating human resources services following consolidation to four service centers.  HHS's human capital accountability plan provides cross-cutting measures of human capital effectiveness, including baseline data for assessing human resources services; links to mission accomplishment through performance contracts; and baselines and direction for shifting resources from overhead functions to mission accomplishment.

WORKFORCE FLEXIBILITIES

HHS is using Direct Hire Authority, as provided by the Chief Human Capital Officers Act.  This authority permits agencies to evaluate the credentials of qualified candidates and hire them without putting them through the formal rating and ranking process used to fill most federal jobs.  The authority is limited to occupations for which there is a critical shortage of candidates or a critical hiring need for the agency.  OPM has approved the use of direct hire authority, government wide, for medical officers, nurses, pharmacists, diagnostic technicians, and Information Technology (IT) security specialists.

In June 2004 HHS published Department-wide vacancy announcements for medical officer, nurse and pharmacist positions and those announcements will remain open throughout the summer 2004.  Right now we are participating in career fairs, conferences and other recruiting events in an effort to fill jobs.  Agency managers are traveling to these activities to interview applicants and offer jobs on the spot; subject matter recruiters are attending medical association meetings and conferences to seek applicants; and the HR community is fully engaged in supporting these activities.  While it is too soon to know the outcome of this effort, we do expect to fill positions, especially nurses, which is one of our critical occupations.

HHS also requested approval of direct hire authority to fill positions at the Centers for Medicare and Medicaid Services (CMS) as they implement the Medicare Prescription Drug, Improvement and Modernization Act (MMA).  OPM approved the request in May 2004. We now have authority to fill health insurance specialist, economist and actuary positions, through grade 15.  This authority is in effect through 2005 and we are actively filling those vacancies.

Traditionally, applicants for Federal jobs are rated and ranked against pre-established criteria and then assigned a numerical score.  The 3 candidates with the highest scores are then considered for selection based on the "rule of three."  Category rating, which provides authority to refer more than three candidates for selection, has not been implemented within HHS at this point.  We have partnered with representatives from the Treasury Department, Department of Labor, Department of Homeland Security, General Services Administration, Environmental Protection Agency and OPM to develop an automated category- rating module that can be used with our automated system, HHS Careers/QUICKHIRE.  It will likely take six months or more to develop the module. We will use this flexibility within HHS following development of the automated process.

Another significant flexibility that HHS recently obtained from OPM permits us to quickly hire employees in the event of public health emergencies.  Should there be an event involving the outbreak of infectious diseases, bioterrorist attacks, etc., HHS is now prepared to hire experienced new and former employees to manage the crises.

Finally, HHS has made good use of voluntary separation incentives (buyouts) and voluntary early retirement authority as important tools in correcting current and anticipated skills imbalances in the workforce.  Within the context of the "One HHS" initiative, our objective has been to reshape the HHS workforce to fill skill gaps and phase out redundant non-mission-critical positions.  OPM has given us the authority to use "buyouts" to help achieve administrative consolidations and successful competitive sourcing outcomes.  Buyouts have been very effective in upholding the Secretary Thompson's pledge that no HHS employee will lose a job as a result of these initiatives.

The authority to offer voluntary early retirement and separation incentives has been essential to our ability to manage the workforce transition that accompanies this effort.  For example, Voluntary Separation Incentives were a critical element in our program of workforce restructuring as we completed the Department's consolidation from 40 human resources offices to four.  To date, HHS has eliminated several hundred administrative positions through consolidation and organizational de-layering.  This would not have been possible without our buyout program, which was directly responsible for decreasing our staff across all occupations by over 700 persons agency-wide in the last year.

HHS has been using the Student Loan Repayment Program since fiscal year 2002 primarily as a retention tool.  Managers will continue to use this authority, as appropriate, to recruit and/or retain high quality employees throughout the Department.

In Conclusion

The Department of Health and Human Services' workforce includes 65,000 employees who are spread around the United States and abroad.  We employ physicians, nurses, and other health professionals as researchers, clinicians and administrators; statisticians and actuaries; specialists in financial management, grants management, and information systems; legal and regulatory experts; and experts in public health, social sciences and many other fields.  We appreciate the flexibilities that Congress has provided as they have enabled the Department to improve our effectiveness in managing human capital initiatives across this broad spectrum of occupations and our far reaching mission.  Nothing is more important than ensuring we have the right talent in the right place at the right time to meet the needs of all Americans.

Last Revised: July 21, 2004