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Like any large business, the U.S. government suffers from personnel problems and employs human assets who are not fully utilized; unlike a business, however, the government’s human capital problem impacts citizens across the country, both in the delivery of services and in how efficiently taxpayer money is spent. In 2001, the Government Accountability Office (GAO) added “Strategic Human Capital Management” to its list of high-risk areas. Despite some progress, the human capital problem has remained on the high-risk list for the past seven years.

Among the problems: a lack of long term planning for top management positions vital to ensuring consistency — the Health Care Finance Administration that runs Medicare, for example, had 19 different administrators between 1977 and 2001 — and the absence of a “results-oriented” culture, leaving a bureaucracy in which the there is no incentive to do good work. The problem is not limited to one department, but affects the entire spectrum of government agencies, according to federal auditors. The original GAO report warned that the situation is creating a “government-wide risk” that endangers the “federal government’s ability to effectively serve the American people, ” and that officials have “often acted as if people were costs to be cut rather than assets to be valued.”

Since the 2001 GAO report, reforms have helped alter the way agencies manage their human capital. Agencies continue to struggle with meeting higher standards called for by the GAO and the Office of Personnel Management. The newest GAO High-Risk Areas report, due out in January 2009, will evaluate whether the government-wide human capital problem has improved during the last two years.

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