No management issue facing federal agencies could be more critical to their ability to serve the American people than their approach to strategic human capital management, including attracting, retaining, and motivating their employees. High-performing organizations in the private and public sectors have long understood the relationship between effective "people management" and organizational success. However, the federal government, which has often acted as if federal employees were costs to be cut rather than assets to be valued, has only recently received its wake-up call. As our January 2001 Performance and Accountability Series reports made clear, serious federal human capital shortfalls are now eroding the ability of many federal agencies—and threatening the ability of others—to economically, efficiently, and effectively perform their missions.  The problem lies not with federal employees themselves, but with the lack of effective leadership and management, along with the lack of a strategic approach to marshaling, managing, and maintaining the human capital needed for government to discharge its responsibilities and deliver on its promises. 
All five of the agencies we reviewed have experienced challenges in managing their human capital. Each has implemented management changes in response to the challenges they face, including implementing strategies to empower and involve employees.
FAA faces challenges, including the need to enhance communication and teamwork, and to provide employees with the training and skills they need to operate effectively. For example, we have reported on FAA's implementation of management reforms, including delegating authorities to teams, to improve its rulemaking processes.  In our July 2001 report on aviation rulemaking we recommended, among other things, that the FAA Administrator take steps to (1) empower team members by giving them the authority to coordinate with the associate administrators (which would eliminate a separate review and approval step), (2) empower team members by permitting them to set their own schedules and deadlines, and (3) hold staff and management accountable for ensuring that schedules are realistic.
At IRS we identified the challenges the organization faces in revamping its human capital policies to help achieve its congressionally mandated transformation to an agency that better balances service to the taxpayers with enforcement of the tax laws.  IRS has made major changes to modernize its organization and operations and comply with the IRS Restructuring and Reform Act of 1998.  These changes present major management challenges and will require considerable time to successfully implement them, and IRS managers and employees are still learning how to work effectively in the new environment. In revamping its performance management system, for example, we reported that IRS' new system is weakest at the front line, where interactions with taxpayers occur.  However, IRS officials told us that IRS is conducting customer satisfaction surveys to enhance its knowledge about what IRS employees can do to better meet taxpayers' needs.
VBA faces challenges in processing veterans' benefit claims accurately and in a timely manner. In its fiscal year 2000 performance report, the Veterans Administration reported that performance declined with respect to its rating-related claims-processing timeliness and national accuracy rate. Among the reasons it cited for this decline was underestimating how long it would take to realize the impact of initiatives such as increased staffing and improved training.  We reported that many experienced claims-processing staff are expected to retire and that VBA's training and recruitment programs may not be adequate to ensure a sufficient workforce of competent claims processors.  VBA officials told us that, in response to the concern we raised that many of the training modules might not be available in time to train new employees, VBA has stepped up implementation of its plans to use a new Training and Performance Support System (TPSS).  This system is intended to provide standardized training to new employees who will replace the wave of employees expected to retire during the next several years. According to VBA officials, they are currently using TPSS training modules to facilitate the training of some new employees, but the training modules needed for other newly hired employees will not be available until November 2001. In the interim, VBA is using a web-based "field guide" to train those employees. The field guide uses a variety of delivery mechanisms including satellite broadcasts, video teleconferencing and centralized and localized classroom instruction.
FEMA also faces special mission-related challenges, including providing timely responses to disaster aid requests, preventing or reducing harm and losses from future disasters through cost-effective mitigation efforts, and working effectively with other federal, state, and local programs. To address its strategic human capital management challenges, FEMA has started an initiative to reduce middle management layers and streamline its organization. 
The fifth agency we report on—OPM—downsized significantly during the 1990s. Among its many responsibilities, OPM receives tens of thousands of federal employee claims for retirement and insurance benefits each year. Although its processes have not changed significantly since the 1980s, OPM plans to modernize its retirement systems. This modernization is OPM's central strategy to meet the long-term customer service and financial management objectives for CSRS and FERS. In its fiscal year 2002 performance plan OPM reported that, beginning in fiscal year 2002, it will phase in a new business model for retirement claims processing. 
Performance and Accountability Series—Major Management Challenges and Program Risks: A Governmentwide Perspective (GAO-01-241, Jan. 2001). In addition, see the accompanying 21 reports, numbered GAO-01-242 through GAO-01-262 on specific agencies.
Human Capital: Meeting the Governmentwide High-Risk Challenge (GAO-01-357T, Feb. 1, 2001).
Aviation Rulemaking: Further Reform Is Needed to Address LongStanding Problems (GAO-01-821, July 9, 2001).
Human Capital: Taking Steps to Meet Current and Emerging Human Capital Challenges (GAO-01-965T, July 17, 2001).
P.L 105–206, July 22, 1998.
Follow-up to the May 8, 2001, Hearing Regarding the IRS Restructuring Act's Goals and IRS Funding (GAO-01-903R, June 29, 2001), and IRS Modernization: Continued Improvement in Management Capability Needed to Support Long-Term Transformation (GAO-01-700T, May 8, 2001).
Veterans Affairs: Status of Achieving Key Outcomes and Addressing Major Management Challenges (GAO-01-752, June 15, 2001).
Major Management Challenges and Program Risks: Department of Veterans Affairs (GAO-01-255, Jan. 2001).
Veterans' Benefits: Training for Claims Processors Needs Evaluation (GAO-01-601, May 31, 2001).
Federal Emergency Management Agency: Status of Achieving Key Outcomes and Addressing Major Management Challenges (GAO-01-832, July 9, 2001).
Office of Personnel Management: Status of Achieving Key Outcomes and Addressing Major Management Challenges (GAO-01-884, July 9, 2001).