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Enterprise Risk Management
Enterprise Risk Management
Hardy Karen
Runnels Allen
Don't squander your most valuable resource! Collectively, your workers are your company's most important and most valuable asset. To make the most of this asset, nothing beats quantitative performance and investment measurement. Learning and Development is an 80 billion-dollar industry, and every valuable employee represents a sizable investment on the part of your company. To keep your business moving forward, effective management of human capital is crucial. It generates plenty of data, and deep analysis of this data helps you provide feedback and make adjustments to capitalize on the combined knowledge, skills, and creativity of your workers. Developing Human Capital: Using Analytics to Plan and Optimize Your Learning and Development Investments provides a guidebook for collecting, organizing, and analyzing the data surrounding human capital so you can make the most of your employees' potential. Use predictive analysis to optimize human capital investments Learn effective study design and alignment Get the tools you need for measurement, surveys, and analysis Decide what to measure and how to measure it Outline your company's current and future analytics technology needs Map data sources, and overcome barriers to data collection Authors Gene Pease, Bonnie Beresford, and Lew Walker provide case studies in which major companies applied human capital analytics to guide people decisions, and expand upon the role of analytics in Learning and Development. Developing Human Capital: Using Analytics to Plan and Optimize Your Learning and Development Investments is an essential guide to 21st century human resources and management practices, and can keep you from squandering your company's most valuable resource.
Karen Hardy
Enterprise Risk Management
Register at www.josseybass.com/email (http://www.josseybass.com/email) for more information on our publications, authors, and to receive special offers.
Enterprise Risk Management
A GUIDE FOR GOVERNMENT PROFESSIONALS
Dr. Karen Hardy
Foreword by Allen Runnels
Cover Design: Wiley
Cover Images: Isometric buildings В© iStock.com/Jamie (http://istock.com/Jamie) Farrant, Business People Walking В© iStock.com/Robert (http://istock.com/Robert) Churchill, Tightrope Walker В© iStock.com/AdrianHillman (http://istock.com/AdrianHillman), Business Executives В© iStock.com/4x6 (http://istock.com/4x6), Informal Presentation В© iStock.com/A-Digit (http://istock.com/A-Digit), Businesswoman Balancing В© iStock.com/juhat (http://istock.com/juhat), Businessman Sitting В© iStock.com/trigga (http://istock.com/trigga), Business Silhouette В© iStock.com/OST (http://istock.com/OST), Balance В© iStock.com/blackred (http://istock.com/blackred)
Copyright В© 2015 by John Wiley & Sons, Inc. All rights reserved.
Published by Jossey-Bass
A Wiley Brand
One Montgomery Street, Suite 1200, San Francisco, CA 94104-4594 —www.josseybass.com (http://www.josseybass.com/)
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the Web at www.copyright.com (http://www.copyright.com/). Requests to the publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at www.wiley.com/go/permissions (http://www.wiley.com/go/permissions).
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. Readers should be aware that Internet Web sites offered as citations and/or sources for further information may have changed or disappeared between the time this was written and when it is read.
The views herein are the author’s and do not necessarily represent those of the United States Government.
Jossey-Bass books and products are available through most bookstores. To contact Jossey-Bass directly call our Customer Care Department within the U.S. at 800-956-7739, outside the U.S. at 317-572-3986, or fax 317-572-4002.
Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com (http://booksupport.wiley.com/). For more information about Wiley products, visit www.wiley.com (http://www.wiley.com/).
Library of Congress Cataloging-in-Publication Data
Library of Congress Cataloging-in-Publication Data has been applied for and is on file with the Library of Congress.
ISBN 978-1-118-91102-0 (cloth); ISBN 978-1-118-91103-7 (ebk.); ISBN 978-1-118-91112-9 (ebk.)
FOREWORD
Karen Hardy understands the value proposition associated with the practice of enterprise risk management (ERM). With this book, oriented toward informing the federal workforce about ERM, she has contributed significantly to expanding the body of knowledge about this extremely important subject. The insights she shares can help encourage and empower the federal workforce at all levels to identify, assess, and manage risk effectively. She writes from both thought-leader and practitioner points of view and focuses upon the need to advance the practice of enterprise risk management in the federal government. She gives readers specific examples of what the practice of risk management looks like in agency operations, and she also includes information about tools available to help manage risk. For the few current champions of risk management in government, this book lays the groundwork for enabling them to obtain buy-in from their agency leadership. For agencies without a champion, it provides an easy-to-read road map that answers the basic question of why organizations should adopt the practice of ERM.
As risk in government becomes more dynamic and complex, managers must become more enlightened and equipped to effectively plan for it, anticipate it, and manage it. The huge balance of the federal debt and the lack of political cooperation to resolve it have led to the sequestration of federal funds, driving drastic reductions in resources available to agencies to accomplish their missions. Federal executives and managers have been asked to do more with less for the last several years, a situation that generates even more risk in the execution of government programs and services. In her book, Karen Hardy asserts that for agencies to best navigate their way through these uncertain times and effectively accomplish their missions, they need to develop an enterprise-wide approach to risk management wherein everyone in the organization becomes a risk manager.
Karen Hardy has done a stellar job of introducing the subject of ERM to the federal workforce. She seamlessly guides the government risk manager through an extraordinary step-by-step review of all the pieces that make up ERM as a management tool. Her book should be mandatory reading for the federal workforce, because it can fill a huge knowledge gap regarding the value of ERM in contributing to the effectiveness of government. Those tasked with designing, implementing, and sustaining ERM at their agencies will find her book a much-needed reference in their ERM toolbox. Without her book, the practice of risk management in government would lack a key perspective from a real practitioner who not only writes about the subject matter but also is applying it. Karen gives readers an opportunity to understand the value of ERM for best accomplishing agency missions and programs, and, more important, how to apply it in their organizations.
Thanks to Karen Hardy for her efforts in making such a tremendous contribution to the practice of enterprise risk management in government.
Allen Runnels
President
Association for Federal Enterprise Risk Management
PREFACE: MANAGING RISK IN THE CURRENT FEDERAL ENVIRONMENT
It has been said that the only thing constant is change and the risks and opportunities that come with it. Over the past century, we have seen constant change in every aspect of life. Traditions that were once seen as mainstays and permanent fixtures in our society are now distant memories. Thanks to changes in technology and social norms, the ways in which we live and interact with our families, businesses, and communities continue on a path of rapid evolution. Key indicators of this change include simple, yet transformational events that we may have taken for granted. Consider the once-popular radio disc jockey; to a great extent, these announcers have been replaced by iTunes playlists. For many, the iPod has erased memories of the CD player, and books have been transformed into electronic delivery devices such as the Kindle. People by the millions are unplugging from telephone landlines and instead connecting with cell phones – allowing 24/7 access from almost anywhere in the developed and developing world. Telephone booths are now on display in museums rather than on street corners, and drones are fast becoming the next big delivery service. Even the system for manufacturing products has changed. With development of the new 3D printing technology, the use of factory assembly lines will no longer be limited to big car manufacturers in Detroit or Michigan. Rather, manufacturing will be personalized and accessible to ordinary individuals, such as doctors, dentists, and small business owners. On a larger scale, these individuals may soon be able to replicate and customize organs, tools, parts, and other products in minutes – and within the confines of their private garages and offices.
Government is not exempt from this constant change, which produces both risk and opportunity. However, as agents of change, the federal workforce must be aware of the environmental factors that will influence the context in which agency risk and opportunity will be managed. These factors include, but are not limited to, the political environment, budgetary constraints, workforce culture, policies, and laws and regulations, to name just a few.
ENVIRONMENTAL FACTORS
When Theodore Roosevelt set the foundation of the Civil Service Reform Act of 1883, one of his presidential goals was to modernize, expand, and reform the federal government. This included establishing a hiring system for America’s workers based on fairness and equal access and protection.[1 - Milakovich, M. E., and Gordon, G. J. Public Administration in America. Boston: Wadsworth, Cengage Learning, 2013.] Certainly, Roosevelt considered the political environment as well as the risk that came with pursuing such lofty goals, yet the risk of not reforming the system would have meant forfeiting historic transformational opportunities.
Based on a merit system, Roosevelt’s philosophy regarding government reform was based on three principles:
• Opportunities should be made equal for all citizens.
• Only those who have merit should be appointed to federal jobs.
• Public servants should not suffer for their political beliefs.
Under his leadership as both civil service commissioner and U.S. president, Roosevelt led efforts to investigate fraud and political abuse in government. During his administration, there was also great expansion of the federal government, including new laws protecting the health of Americans, regulating the pharmaceutical industry, and increasing the workforce. From 1901 to 1909, the federal workforce more than doubled, from 110,000 to 235,000 employees. That pales in comparison to the number of employees hired into the civil service system since the days of Roosevelt. However, the continuum of reform and modernization that began over one hundred years ago continues to resonate throughout government today. A snapshot of measurable changes can be seen in the employment trends impacting the federal service regarding age, salary, and education. As of September 2012, the federal government employed more than 2.6 million people in the executive branch versus 699,000 in 1940.[2 - “Distribution of Federal Civilian Employment by Branch.” Sept. 2012. http://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/employment-trends-data/2012/september/graphic-presentation-of-federal-civilian-employment (http://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/employment-trends-data/2012/september/graphic-presentation-of-federal-civilian-employment).] By 2011, the average salary for all federal employees was $75,296, and cabinet-level agencies employed the majority of that workforce. As a whole, the federal workforce is growing better educated. The majority of federal employees have obtained at least a high school degree and nearly half at least a college degree.[3 - U.S. Office of Personnel Management. Common Characteristics of the Government. Washington, DC: OPM, 2013.] More than 40 percent of the employees added from 2004 to 2012 had at least a bachelor’s degree; an additional 53 percent had at least a master’s.[4 - Reilly, S. “Retirement Wave Gaining Force.” Feb. 2014. http://www.federaltimes.com/apps/pbcs.dll/article?AID=2014301300003 (http://www.federaltimes.com/apps/pbcs.dll/article?AID=2014301300003).]
Policies, Laws, and Regulations
In addition to seeing demographic changes, over the years since the Civil Service Reform Act the federal government has instituted many new policies, laws, and regulations that have redefined how our government works – most notably the passage of the U.S. Patriot Act, Chief Financial Officers Act of 1990, Government Performance and Results Act (GPRA) of 1993, American Recovery and Reinvestment Act (ARRA), and the Federal Manager’s Financial Integrity Act of 1982 (FMFIA). All were instituted to address and manage some level of risk and opportunity inside and outside the government. These and other policies, laws, and regulations have shaped the ways in which government operates and executes its internal day-to-day activities as well as monitors and regulates industry. Issuance of such policies also demonstrates the government’s political willingness and need to respond to changes in society as a whole. For example, in response to the Enron acts of fraud and abuse, the government created the Sarbanes-Oxley Act of 2002 (SOX), which President Bush signed into law on July 30, 2002. He characterized it as “the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.” The Act mandated a number of reforms to enhance corporate responsibility and financial disclosures and to combat corporate and accounting fraud.[5 - Securities and Exchange Commission. Sarbanes-Oxley Act of 2002. Washington, DC: Government Printing Office, 2002. http://www.sec.gov/about/laws.shtml#sox2002 (http://www.sec.gov/about/laws.shtml#sox2002).]
On February 13, 2009, in direct response to the economic crisis and at the urging of President Obama, Congress passed the American Recovery and Reinvestment Act (ARRA) of 2009 – commonly referred to as the “stimulus” or the “stimulus package.” Not long after that, the president signed the Recovery Act into law. The three immediate goals of the Recovery Act were to:
• Create new jobs and save existing ones
• Spur economic activity and invest in long-term growth
• Foster unprecedented levels of accountability and transparency in government spending
The Recovery Act intended to achieve those goals by providing $787 billion in:
• Tax cuts and benefits for millions of working families and businesses
• Funding for entitlement programs, such as unemployment benefits
• Funding for federal contracts, grants, and loans
Eventually, ARRA’s original expenditure estimate of $787 billion was increased to $840 billion. To achieve the goal of transparency, the Act required recipients of Recovery funds to report on a quarterly basis how they were using the money. Today, all the data affiliated with Recovery Act spending is posted on Recovery.gov (http://recovery.gov/) so the public can track how the money is being spent.[6 - American Recovery and Reinvestment Act. http://www.recovery.gov/arra/About/Pages/The_Act.aspx (http://www.recovery.gov/arra/About/Pages/The_Act.aspx).]
A year after ARRA was passed, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law on July 21, 2010, by the Obama administration. The legislation set out to reshape the U.S. regulatory system in a number of areas, including but not limited to consumer protection, trading restrictions, credit ratings, regulation of financial products, corporate governance and disclosure, and transparency.[7 - Securities and Exchange Commission, Sarbanes-Oxley Act.]
Culture
While the demographics and policies of the federal workforce may have shifted drastically over the last century, the dedication, purpose, and level of service given by federal government workers have remained constant. In a 2013 Federal Employee Viewpoint Survey, administered by the U.S. Office of Personnel Management (OPM), civil servants showed an unwavering commitment to the missions of their organizations as well as a sense of pride and satisfaction in their work despite difficult and uncertain times. The survey also served to strengthen belief in the federal workforce at a time when their relevance and value is questioned by Congress and other opponents in the court of public opinion. OPM Director Katherine Archuleta emphasized that despite these obstacles, the results showed “employees are ready and willing to meet the challenges they face and are steadfastly accountable for achieving results and knowing what is expected of them on the job.”[8 - Office of Personnel Management. 2013 Federal Employee Viewpoint Survey. http://www.opm.gov/news/releases/2013/11/opm-releases-2013-federal-employee-viewpoint-survey-governmentwide-results/ (http://www.opm.gov/news/releases/2013/11/opm-releases-2013-federal-employee-viewpoint-survey-governmentwide-results/).]
Hardy Karen
Runnels Allen
Don't squander your most valuable resource! Collectively, your workers are your company's most important and most valuable asset. To make the most of this asset, nothing beats quantitative performance and investment measurement. Learning and Development is an 80 billion-dollar industry, and every valuable employee represents a sizable investment on the part of your company. To keep your business moving forward, effective management of human capital is crucial. It generates plenty of data, and deep analysis of this data helps you provide feedback and make adjustments to capitalize on the combined knowledge, skills, and creativity of your workers. Developing Human Capital: Using Analytics to Plan and Optimize Your Learning and Development Investments provides a guidebook for collecting, organizing, and analyzing the data surrounding human capital so you can make the most of your employees' potential. Use predictive analysis to optimize human capital investments Learn effective study design and alignment Get the tools you need for measurement, surveys, and analysis Decide what to measure and how to measure it Outline your company's current and future analytics technology needs Map data sources, and overcome barriers to data collection Authors Gene Pease, Bonnie Beresford, and Lew Walker provide case studies in which major companies applied human capital analytics to guide people decisions, and expand upon the role of analytics in Learning and Development. Developing Human Capital: Using Analytics to Plan and Optimize Your Learning and Development Investments is an essential guide to 21st century human resources and management practices, and can keep you from squandering your company's most valuable resource.
Karen Hardy
Enterprise Risk Management
Register at www.josseybass.com/email (http://www.josseybass.com/email) for more information on our publications, authors, and to receive special offers.
Enterprise Risk Management
A GUIDE FOR GOVERNMENT PROFESSIONALS
Dr. Karen Hardy
Foreword by Allen Runnels
Cover Design: Wiley
Cover Images: Isometric buildings В© iStock.com/Jamie (http://istock.com/Jamie) Farrant, Business People Walking В© iStock.com/Robert (http://istock.com/Robert) Churchill, Tightrope Walker В© iStock.com/AdrianHillman (http://istock.com/AdrianHillman), Business Executives В© iStock.com/4x6 (http://istock.com/4x6), Informal Presentation В© iStock.com/A-Digit (http://istock.com/A-Digit), Businesswoman Balancing В© iStock.com/juhat (http://istock.com/juhat), Businessman Sitting В© iStock.com/trigga (http://istock.com/trigga), Business Silhouette В© iStock.com/OST (http://istock.com/OST), Balance В© iStock.com/blackred (http://istock.com/blackred)
Copyright В© 2015 by John Wiley & Sons, Inc. All rights reserved.
Published by Jossey-Bass
A Wiley Brand
One Montgomery Street, Suite 1200, San Francisco, CA 94104-4594 —www.josseybass.com (http://www.josseybass.com/)
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the Web at www.copyright.com (http://www.copyright.com/). Requests to the publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at www.wiley.com/go/permissions (http://www.wiley.com/go/permissions).
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. Readers should be aware that Internet Web sites offered as citations and/or sources for further information may have changed or disappeared between the time this was written and when it is read.
The views herein are the author’s and do not necessarily represent those of the United States Government.
Jossey-Bass books and products are available through most bookstores. To contact Jossey-Bass directly call our Customer Care Department within the U.S. at 800-956-7739, outside the U.S. at 317-572-3986, or fax 317-572-4002.
Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com (http://booksupport.wiley.com/). For more information about Wiley products, visit www.wiley.com (http://www.wiley.com/).
Library of Congress Cataloging-in-Publication Data
Library of Congress Cataloging-in-Publication Data has been applied for and is on file with the Library of Congress.
ISBN 978-1-118-91102-0 (cloth); ISBN 978-1-118-91103-7 (ebk.); ISBN 978-1-118-91112-9 (ebk.)
FOREWORD
Karen Hardy understands the value proposition associated with the practice of enterprise risk management (ERM). With this book, oriented toward informing the federal workforce about ERM, she has contributed significantly to expanding the body of knowledge about this extremely important subject. The insights she shares can help encourage and empower the federal workforce at all levels to identify, assess, and manage risk effectively. She writes from both thought-leader and practitioner points of view and focuses upon the need to advance the practice of enterprise risk management in the federal government. She gives readers specific examples of what the practice of risk management looks like in agency operations, and she also includes information about tools available to help manage risk. For the few current champions of risk management in government, this book lays the groundwork for enabling them to obtain buy-in from their agency leadership. For agencies without a champion, it provides an easy-to-read road map that answers the basic question of why organizations should adopt the practice of ERM.
As risk in government becomes more dynamic and complex, managers must become more enlightened and equipped to effectively plan for it, anticipate it, and manage it. The huge balance of the federal debt and the lack of political cooperation to resolve it have led to the sequestration of federal funds, driving drastic reductions in resources available to agencies to accomplish their missions. Federal executives and managers have been asked to do more with less for the last several years, a situation that generates even more risk in the execution of government programs and services. In her book, Karen Hardy asserts that for agencies to best navigate their way through these uncertain times and effectively accomplish their missions, they need to develop an enterprise-wide approach to risk management wherein everyone in the organization becomes a risk manager.
Karen Hardy has done a stellar job of introducing the subject of ERM to the federal workforce. She seamlessly guides the government risk manager through an extraordinary step-by-step review of all the pieces that make up ERM as a management tool. Her book should be mandatory reading for the federal workforce, because it can fill a huge knowledge gap regarding the value of ERM in contributing to the effectiveness of government. Those tasked with designing, implementing, and sustaining ERM at their agencies will find her book a much-needed reference in their ERM toolbox. Without her book, the practice of risk management in government would lack a key perspective from a real practitioner who not only writes about the subject matter but also is applying it. Karen gives readers an opportunity to understand the value of ERM for best accomplishing agency missions and programs, and, more important, how to apply it in their organizations.
Thanks to Karen Hardy for her efforts in making such a tremendous contribution to the practice of enterprise risk management in government.
Allen Runnels
President
Association for Federal Enterprise Risk Management
PREFACE: MANAGING RISK IN THE CURRENT FEDERAL ENVIRONMENT
It has been said that the only thing constant is change and the risks and opportunities that come with it. Over the past century, we have seen constant change in every aspect of life. Traditions that were once seen as mainstays and permanent fixtures in our society are now distant memories. Thanks to changes in technology and social norms, the ways in which we live and interact with our families, businesses, and communities continue on a path of rapid evolution. Key indicators of this change include simple, yet transformational events that we may have taken for granted. Consider the once-popular radio disc jockey; to a great extent, these announcers have been replaced by iTunes playlists. For many, the iPod has erased memories of the CD player, and books have been transformed into electronic delivery devices such as the Kindle. People by the millions are unplugging from telephone landlines and instead connecting with cell phones – allowing 24/7 access from almost anywhere in the developed and developing world. Telephone booths are now on display in museums rather than on street corners, and drones are fast becoming the next big delivery service. Even the system for manufacturing products has changed. With development of the new 3D printing technology, the use of factory assembly lines will no longer be limited to big car manufacturers in Detroit or Michigan. Rather, manufacturing will be personalized and accessible to ordinary individuals, such as doctors, dentists, and small business owners. On a larger scale, these individuals may soon be able to replicate and customize organs, tools, parts, and other products in minutes – and within the confines of their private garages and offices.
Government is not exempt from this constant change, which produces both risk and opportunity. However, as agents of change, the federal workforce must be aware of the environmental factors that will influence the context in which agency risk and opportunity will be managed. These factors include, but are not limited to, the political environment, budgetary constraints, workforce culture, policies, and laws and regulations, to name just a few.
ENVIRONMENTAL FACTORS
When Theodore Roosevelt set the foundation of the Civil Service Reform Act of 1883, one of his presidential goals was to modernize, expand, and reform the federal government. This included establishing a hiring system for America’s workers based on fairness and equal access and protection.[1 - Milakovich, M. E., and Gordon, G. J. Public Administration in America. Boston: Wadsworth, Cengage Learning, 2013.] Certainly, Roosevelt considered the political environment as well as the risk that came with pursuing such lofty goals, yet the risk of not reforming the system would have meant forfeiting historic transformational opportunities.
Based on a merit system, Roosevelt’s philosophy regarding government reform was based on three principles:
• Opportunities should be made equal for all citizens.
• Only those who have merit should be appointed to federal jobs.
• Public servants should not suffer for their political beliefs.
Under his leadership as both civil service commissioner and U.S. president, Roosevelt led efforts to investigate fraud and political abuse in government. During his administration, there was also great expansion of the federal government, including new laws protecting the health of Americans, regulating the pharmaceutical industry, and increasing the workforce. From 1901 to 1909, the federal workforce more than doubled, from 110,000 to 235,000 employees. That pales in comparison to the number of employees hired into the civil service system since the days of Roosevelt. However, the continuum of reform and modernization that began over one hundred years ago continues to resonate throughout government today. A snapshot of measurable changes can be seen in the employment trends impacting the federal service regarding age, salary, and education. As of September 2012, the federal government employed more than 2.6 million people in the executive branch versus 699,000 in 1940.[2 - “Distribution of Federal Civilian Employment by Branch.” Sept. 2012. http://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/employment-trends-data/2012/september/graphic-presentation-of-federal-civilian-employment (http://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/employment-trends-data/2012/september/graphic-presentation-of-federal-civilian-employment).] By 2011, the average salary for all federal employees was $75,296, and cabinet-level agencies employed the majority of that workforce. As a whole, the federal workforce is growing better educated. The majority of federal employees have obtained at least a high school degree and nearly half at least a college degree.[3 - U.S. Office of Personnel Management. Common Characteristics of the Government. Washington, DC: OPM, 2013.] More than 40 percent of the employees added from 2004 to 2012 had at least a bachelor’s degree; an additional 53 percent had at least a master’s.[4 - Reilly, S. “Retirement Wave Gaining Force.” Feb. 2014. http://www.federaltimes.com/apps/pbcs.dll/article?AID=2014301300003 (http://www.federaltimes.com/apps/pbcs.dll/article?AID=2014301300003).]
Policies, Laws, and Regulations
In addition to seeing demographic changes, over the years since the Civil Service Reform Act the federal government has instituted many new policies, laws, and regulations that have redefined how our government works – most notably the passage of the U.S. Patriot Act, Chief Financial Officers Act of 1990, Government Performance and Results Act (GPRA) of 1993, American Recovery and Reinvestment Act (ARRA), and the Federal Manager’s Financial Integrity Act of 1982 (FMFIA). All were instituted to address and manage some level of risk and opportunity inside and outside the government. These and other policies, laws, and regulations have shaped the ways in which government operates and executes its internal day-to-day activities as well as monitors and regulates industry. Issuance of such policies also demonstrates the government’s political willingness and need to respond to changes in society as a whole. For example, in response to the Enron acts of fraud and abuse, the government created the Sarbanes-Oxley Act of 2002 (SOX), which President Bush signed into law on July 30, 2002. He characterized it as “the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.” The Act mandated a number of reforms to enhance corporate responsibility and financial disclosures and to combat corporate and accounting fraud.[5 - Securities and Exchange Commission. Sarbanes-Oxley Act of 2002. Washington, DC: Government Printing Office, 2002. http://www.sec.gov/about/laws.shtml#sox2002 (http://www.sec.gov/about/laws.shtml#sox2002).]
On February 13, 2009, in direct response to the economic crisis and at the urging of President Obama, Congress passed the American Recovery and Reinvestment Act (ARRA) of 2009 – commonly referred to as the “stimulus” or the “stimulus package.” Not long after that, the president signed the Recovery Act into law. The three immediate goals of the Recovery Act were to:
• Create new jobs and save existing ones
• Spur economic activity and invest in long-term growth
• Foster unprecedented levels of accountability and transparency in government spending
The Recovery Act intended to achieve those goals by providing $787 billion in:
• Tax cuts and benefits for millions of working families and businesses
• Funding for entitlement programs, such as unemployment benefits
• Funding for federal contracts, grants, and loans
Eventually, ARRA’s original expenditure estimate of $787 billion was increased to $840 billion. To achieve the goal of transparency, the Act required recipients of Recovery funds to report on a quarterly basis how they were using the money. Today, all the data affiliated with Recovery Act spending is posted on Recovery.gov (http://recovery.gov/) so the public can track how the money is being spent.[6 - American Recovery and Reinvestment Act. http://www.recovery.gov/arra/About/Pages/The_Act.aspx (http://www.recovery.gov/arra/About/Pages/The_Act.aspx).]
A year after ARRA was passed, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law on July 21, 2010, by the Obama administration. The legislation set out to reshape the U.S. regulatory system in a number of areas, including but not limited to consumer protection, trading restrictions, credit ratings, regulation of financial products, corporate governance and disclosure, and transparency.[7 - Securities and Exchange Commission, Sarbanes-Oxley Act.]
Culture
While the demographics and policies of the federal workforce may have shifted drastically over the last century, the dedication, purpose, and level of service given by federal government workers have remained constant. In a 2013 Federal Employee Viewpoint Survey, administered by the U.S. Office of Personnel Management (OPM), civil servants showed an unwavering commitment to the missions of their organizations as well as a sense of pride and satisfaction in their work despite difficult and uncertain times. The survey also served to strengthen belief in the federal workforce at a time when their relevance and value is questioned by Congress and other opponents in the court of public opinion. OPM Director Katherine Archuleta emphasized that despite these obstacles, the results showed “employees are ready and willing to meet the challenges they face and are steadfastly accountable for achieving results and knowing what is expected of them on the job.”[8 - Office of Personnel Management. 2013 Federal Employee Viewpoint Survey. http://www.opm.gov/news/releases/2013/11/opm-releases-2013-federal-employee-viewpoint-survey-governmentwide-results/ (http://www.opm.gov/news/releases/2013/11/opm-releases-2013-federal-employee-viewpoint-survey-governmentwide-results/).]