Workforce Planning Efforts Are Hindered by a Lack of Comprehensive Information on Employee Skills Levels
February 24, 2009
Reference Number: 2009-10-041
This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.
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202-622-6500
Email Address | inquiries@tigta.treas.gov
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http://www.tigta.gov
February 24, 2009
MEMORANDUM FOR DEPUTY COMMISSIONER FOR OPERATIONS SUPPORT
DEPUTY
COMMISSIONER FOR SERVICES AND ENFORCEMENT
FROM: Michael
R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – Workforce Planning Efforts Are Hindered by a Lack of Comprehensive Information on Employee Skills Levels (Audit # 200710042)
This report presents
the results of our review of the Internal Revenue Service’s (IRS) efforts to
evaluate employee skills levels. The
overall objective of this review was to evaluate the IRS’ progress in developing
a methodology to evaluate whether its workforce possesses the skills and
competencies (hereafter collectively referred to as skills) necessary to meet current
and future challenges. This review was
part of the Treasury Inspector General for Tax Administration Fiscal Year 2008
Annual Audit Plan coverage under the major management challenge of Human
Capital[1] and is one of a series of audits planned to assess
how the IRS is addressing the Human Capital management challenge.
Impact on the Taxpayer
The potential loss of a large number of its most
experienced technical employees within the next several years, coupled with the
continually increasing complexity of the work performed by these employees, necessitate
that the IRS conduct effective workforce planning. However, the IRS lacks the comprehensive, agency-wide
information on mission critical employee skills it needs to effectively perform
this planning. Because the IRS does not
have a methodology in place to fully measure its workforce against current and future
skills, it is missing the opportunity to reshape its workforce to meet future
challenges, which could adversely affect the quality of service provided to
taxpayers.
Synopsis
The work performed by IRS employees continually requires enhanced and more diverse skills, as manual systems used to support tax administration become computer based, the Tax Code becomes more complex, and American taxpayers and tax practitioners expect higher levels of service. However, the IRS lacks the comprehensive, agency-wide information on mission critical employee skills it needs to effectively assess its workforce needs.
The lack of employee skills information we identified is primarily attributable to the absence of a corporate process for the uniform collection, compilation, and analyses of skills data across the agency. In addition, the IRS Human Capital Office (HCO) has not provided sufficient guidance to support the uniform collection of these data at the business unit and operating division levels. However, the IRS HCO has begun to develop a methodology to identify and assess employee skills gaps agency-wide. Until the IRS implements a consistent methodology for assessing the skills needed and possessed by all employees in mission critical occupations,[2] it will be unable to fully plan for future training and recruitment needs.
The IRS HCO informed us that it is evaluating the feasibility of partnering with the Office of Appeals to develop a process for performing skills gaps assessments of mission critical occupations. This process would use the Enterprise Learning Management System[3] as a platform to collect information regarding critical skills needed and to document the results of skills assessments. This platform would also allow for the preparation of development plans tailored to address any skills gaps identified and would include an automated link between the skills gaps assessment process and available training courses. A key objective of this effort is the development of a skills assessment process that could ultimately be used agency-wide.
While we
believe that the current approach by the IRS HCO is reasonable, improvements
are needed to ensure accountability and maintain progress as the IRS moves
forward with its efforts to develop a skills gaps assessment process. Specifically, the IRS HCO has not developed a detailed
plan to guide the agency’s overall efforts and coordinate the multifunctional actions
necessary to ensure the success of this effort.
Recommendations
We recommended that the IRS Human Capital Officer continue with efforts to partner with one or more business units/operating divisions to develop a workable corporate process for skills gaps assessments. We also recommended that the Deputy Commissioner for Operations Support and the Deputy Commissioner for Services and Enforcement develop a detailed plan to guide the IRS’ overall skills gaps assessment effort and coordinate the multifunctional participation necessary to ensure the success of this effort. This plan should be developed in coordination with the IRS business units and operating divisions, identify periodic milestones, and assign accountability for specific actions.
Response
IRS
management agreed with all of our recommendations. The IRS
HCO in partnership with the Office of Appeals has initiated a pilot for
assessing the competencies of tax compliance specialists, a mission critical
occupation. A successful pilot will demonstrate
the feasibility of implementing these automated processes throughout the Office
of Appeals. The pilot will also be
evaluated for expansion to other business units/operating divisions. In addition, under the auspices of the IRS Workforce of Tomorrow’s[4] “Planning a Dynamic People Strategy,” the
task force will work with subject matter experts from the IRS HCO and the
business units to develop a competency management system. This group will identify the skills and
competencies to be tracked across the IRS as well as the process for tracking
skills and compiling the data. Once the
process is established, the system will be populated with skills and
competencies information for each employee.
Finally, when the system is fully populated with skills and competencies
data, it will be fed back into the IRS-wide attrition and workload models to
enable strategic analysis of skills gaps and needs. Management’s complete response to the draft
report is included as Appendix IV.
Copies of this report are also being sent to the IRS
managers affected by the report recommendations. Please contact me at (202) 622-6510 if you have any questions or Nancy A. Nakamura,
Assistant Inspector General for Audit (Management Services and Exempt
Organizations), at (202) 622-8500.
Appendices
Appendix I – Detailed Objective, Scope, and Methodology
Appendix II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix
IV – Management’s Response to the Draft Report
Abbreviations
|
HCO |
Human Capital Office |
|
IRS |
Internal Revenue Service |
|
MCO |
|
The mission of the Internal Revenue Service (IRS) is to provide
An IRS mission critical occupation (MCO) is a position critical to
front-line enforcement or in direct support to front-line operations needed to
meet stated program goals. Many MCOs within
the IRS, such as the revenue agent[5] and revenue officer[6] positions, continuously require greater
expertise and updated skills as the Tax Code becomes more intricate and attempts
by taxpayers and tax practitioners to evade compliance with the Tax Code become
increasingly more sophisticated. Other
challenges facing the IRS include an increasing number of taxpayers with
complex financial holdings, increased complexity of examinations, growing
impact of international tax law issues, expanded technology skills sets, and
the impact of significant tax law changes.
Finally, the Office of
Personnel Management projects that more than 550,000 Federal employees–almost
one-third of the entire full-time permanent workforce–will leave the Federal
Government by the end of 2012 (the majority through retirement). The Office of Personnel Management further
projects that nearly 40 percent of all current Federal Government employees
will retire by the end of 2016.[7]
To assist Federal Government agencies in addressing these issues, the
Office of Personnel Management was charged with designing systems and setting
standards, including appropriate measures for assessing the management of human
capital[8] by Federal agencies. In 2002, the Office of Personnel Management issued
the Human Capital Assessment and
Accountability Framework, which provides guidance to Federal Government agencies
and requires workforce planning strategies, identification of competencies
needed to fulfill the agency’s mission, and analyses of any gaps. Sharing this responsibility within the IRS
are the IRS Human Capital Office (HCO) and the individual business units and operating
divisions, with their embedded human capital staff. The IRS created its IRS HCO in 2004 to provide
human capital strategies and tools for recruiting, hiring, and retaining a
highly skilled and high-performing workforce.
This review was
performed in the IRS HCO, Office of Appeals, Large and Mid-Size Business Division,
and Tax Exempt and Government Entities Division in
Overall, the IRS lacks the comprehensive, agency-wide information on the skills of its employees in MCOs required to effectively assess its current and future workforce needs. The lack of employee skills information we identified is primarily attributable to the absence of a corporate process for the uniform collection, compilation, and analyses of skills data across the agency. Because the IRS does not yet have a comprehensive, agency-wide methodology in place to fully measure its workforce against current and future skills, it is missing the opportunity to reshape its workforce to meet future challenges as experienced workers retire, which could adversely affect the quality of service provided to taxpayers.
The
IRS HCO has begun to develop a methodology to identify and assess employee
skills gaps at the agency level, although significant work remains. For example, the IRS HCO informed us that it
plans to include questions regarding future skills needs and potential
competencies gaps as part of a workforce projection survey of senior managers in
selected business units and operating divisions scheduled to be initiated in
January 2009. The IRS HCO also informed
us that it is evaluating the feasibility of partnering with the Office of Appeals
to pilot a process to support the performance of skills gaps assessments of employees
in MCOs. Although these efforts
represent forward progress, the IRS still faces a significant challenge in
implementing a process to gather the uniform, agency-wide information on the
skills of its employees in the MCOs.
Efforts to Develop a Comprehensive
Methodology to Assess Employee Skills Need to Be Better Coordinated
The IRS designated 19
occupations (e.g., the revenue agent and revenue officer positions) as critical
to front-line enforcement or in direct support of front-line operations. As of September 30, 2007, 65,195 (64
percent) of the IRS’ 101,464 employees occupied 1 of these 19 MCOs. Federal Government agencies are required by
Office of Personnel Management standards to periodically identify gaps between
competencies needed and possessed by employees in MCOs and take actions as
needed to close these gaps.
Overall, the IRS lacks comprehensive, agency-wide information on the skills of the employees in its MCOs. Our March 2008 survey of 18 IRS business units and operating divisions identified 4 instances in which at least some steps had been taken toward implementing a skills gaps assessment. However, these four efforts were in different stages of development, and each used or planned to use a significantly different method for assessing skills and compiling results. Until the IRS develops and implements a consistent methodology for assessing the skills needed and possessed by all employees in MCOs, it will be unable to fully plan for future training and recruitment needs.
The overall lack of comprehensive employee skills information is primarily attributable to the absence of a corporate process for the uniform collection, compilation, and analyses of skills data across the agency. In addition, the IRS HCO has not provided sufficient guidance to support the uniform collection of these data at the business unit and operating division levels. However, the IRS HCO has begun to develop a methodology to identify and assess employee skills gaps agency-wide. Specifically, the IRS HCO informed us that it is evaluating the feasibility of partnering with the Office of Appeals to develop a process for performing skills gaps assessments of MCOs. The Office of Appeals has significant recent experience in the performance of skills gaps analyses. In 2007, the Office of Appeals analyzed the skills necessary for all of its positions and surveyed 138 managers and executives regarding the current overall level of technical competency of its staff.
The proposed IRS skills assessments process would use the Enterprise Learning Management System[9] as a platform to collect information regarding critical skills needed and to document the results of skills assessments. This platform would also allow for the preparation of development plans tailored to address any skills gaps identified and would include an automated link between the skills gaps assessment process and available training courses. A key objective of this effort is the development of a skills assessment process that could ultimately be used agency-wide. Previously, the IRS HCO primarily concentrated on providing technical support on skills gaps assessment efforts focused on employees in a specific business unit or operating division.
While we
believe that the current approach by the IRS HCO is reasonable, improvements
are needed to ensure accountability and maintain progress as the IRS moves
forward with its efforts to develop a skills gaps assessment process. Specifically, the IRS HCO has not developed a detailed
plan to guide the agency’s overall efforts and coordinate the multifunctional actions
necessary to ensure the success of this effort.
Until it
has comprehensive information regarding the extent of its skills gaps, the IRS will
continue to miss an important opportunity to reshape its workforce to match its
future needs. In addition, the IRS’ lack
of skills gaps information severely limits its ability to maximize the return
on its current skills improvement efforts.
Finally, by not assessing and identifying skills gaps on an ongoing
basis, the IRS is increasing and perpetuating its risk that the skills currently
possessed by MCO employees will not keep pace with the skills needed to
adequately perform their jobs in the future.
Recommendations
Recommendation 1: The IRS Human Capital Officer should continue with efforts to partner with one or more business units/operating divisions to develop a workable process that can be used for the agency-wide skills gaps assessment of MCOs.
Management’s Response: The IRS
agreed with this recommendation. The
IRS HCO in partnership with the Office of Appeals has initiated a pilot for
assessing the competencies of tax compliance specialists, a mission critical
occupation. A successful pilot will
demonstrate the feasibility of implementing these automated processes
throughout the Office of Appeals. The
pilot will also be evaluated for expansion to other business units/operating
divisions.
Recommendation 2: The Deputy Commissioner for Operations Support and Deputy Commissioner for Services and Enforcement should develop a detailed plan to guide the IRS’ overall skills gaps assessment effort and coordinate the multifunctional participation necessary to ensure the success of the effort. This plan should be developed in coordination with the IRS business units and operating divisions, identify periodic milestones, and assign accountability for specific actions. The plan should address the following three elements:
Management’s Response: The IRS
agreed with this recommendation. Under the auspices of the IRS Workforce of
Tomorrow’s[10] “Planning a Dynamic People Strategy,” the
task force will work with subject matter experts from the IRS HCO and the
business units to develop a competency management system. This group will identify the skills and
competencies to be tracked across the IRS as well as the process for tracking
skills and compiling the data.
Management’s Response: The IRS
agreed with this recommendation. Once
the process is established, the system will be populated with skills and
competencies information for each employee.
Management’s Response: The IRS
agreed with this recommendation. When
the system is fully populated with skills and competencies data, it will be fed
back into the IRS-wide attrition and workload models to enable strategic
analysis of skills gaps and needs.
Appendix I
Detailed Objective, Scope, and
Methodology
The overall
objective of this review was to evaluate the IRS’ progress in developing a methodology
to evaluate whether its workforce possesses the skills and competencies
(hereafter collectively referred to as skills) necessary to meet current and
future challenges. To accomplish our
overall objective, we:
I.
Determined
how the IRS HCO works with the operating divisions and business units to assess
and then potentially close any skills gaps among MCOs.
A.
Determined the level of interaction the IRS HCO
has with the operating divisions and business units to assess and address skills
gaps.
B.
Determined the level of oversight and support
the IRS HCO is providing to the operating divisions and business units to
assess and address skills gaps.
C.
Evaluated the status of any ongoing or
planned efforts by the IRS HCO and/or the operating divisions and business units
to develop a methodology for evaluating employee skills.
II.
Determined
whether the operating divisions and business units were assessing and
addressing skills gaps within their primary MCOs.
A.
Determined how the IRS identified its MCOs
and evaluated the criteria used in making these determinations.
B.
Provided a questionnaire to each of the 18 operating
divisions and business units responsible for the IRS’ 19 MCOs to determine whether
and when any skills analyses were conducted.
III.
Reviewed
the Office of Personnel Management guidance for Federal Government agencies on
assessing and addressing skills gaps in the Federal Government workforce.
In order to determine the overall number of
IRS employees and the number of employees in MCOs as of September 30, 2007, we
relied on Treasury Integrated Management Information System reports provided to
us by the IRS. We assessed the
reliability of these data by independently conducting online queries of the Treasury
Integrated Management Information System database and comparing the results to
the reports we received. We found the Treasury
Integrated Management Information System data to be reliable for the purposes
of the audit and performed no other data validity tests. The Treasury Integrated Management Information
System is the IRS’ official automated personnel and payroll system.
Appendix II
Major Contributors to This Report
Nancy A. Nakamura, Assistant Inspector General for Audit (Management
Services and Exempt Organizations)
Alicia P. Mrozowski, Director
Anthony J. Choma, Audit Manager
Kevin P. Riley, Audit Manager
Gene A. Luevano, Lead Auditor
Tom J. Cypert, Senior Auditor
Kenneth E. Henderson, Senior Auditor
Nikki M. Thomas, Auditor
Appendix III
Commissioner C
Office of the Commissioner – Attn: Chief of Staff C
Commissioner,
Large and Mid-Size Business Division
SE:LM
Commissioner, Small Business/Self-Employed
Division SE:S
Commissioner, Tax Exempt and Government
Entities Division SE:T
Commissioner, Wage and Investment
Division SE:W
Chief, Appeals AP
IRS Chief Human Capital Officer OS:HC
Chief Counsel CC
National Taxpayer Advocate TA
Director, Office of Legislative Affairs CL:LA
Director, Office of Program Evaluation and Risk Analysis RAS:O
Office of Internal Control OS:CFO:CPIC:IC
Audit Liaisons:
Commissioner, Large and Mid-Size
Business Division SE:LM
Commissioner, Small Business/Self-Employed Division SE:S
Chief, Appeals AP
IRS Chief Human Capital Officer OS:HC
Director, Communications and Liaison, Tax Exempt and Government Entities Division SE:T:CL
Senior Operations Advisor, Wage
and Investment Division SE:W:S
Appendix IV
Management’s Response to the Draft Report
The response was removed due to its size. To see the response, please go to the Adobe
PDF version of the report on the TIGTA Public Web Page.
[1] The term “human capital” is used to describe the skills, abilities, and contributions of the people in an agency.
[2]
[3] The Enterprise Learning Management System is used for managing and documenting employee training.
[4] The Workforce of Tomorrow task force was established by the Commissioner to ensure that 5 years from now the IRS has the leadership and workforce ready for the next 15 years.
[5] Revenue agents examine and audit the financial records of corporate and individual taxpayers, helping to ensure that these taxpayers pay the appropriate taxes and comply with Federal tax laws.
[6] Revenue officers are responsible for collecting delinquent taxes and tax returns.
[7] The Office of Personnel Management projections were based on full-time permanent Federal Government employees on rolls as of October 1, 2006.
[8] The term “human capital” is used to describe the skills, abilities, and contributions of the people in an agency.
[9] The Enterprise Learning Management System is used for managing and documenting employee training.
[10] The Workforce of Tomorrow task force was established by the Commissioner to ensure that 5 years from now the IRS has the leadership and workforce ready for the next 15 years.