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entitled 'Veterans Benefits Administration: Better Collection and 
Analysis of Attrition Data Needed to Enhance Workforce Planning' which 
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Report to the Ranking Democratic Member, Committee on Veterans' 
Affairs, House of Representatives:

United States General Accounting Office:

GAO:

April 2003:

Veterans Benefits Administration:

Better Collection and Analysis of Attrition Data Needed to Enhance 
Workforce Planning:

GAO-03-491:

GAO Highlights:

Highlights of GAO-03-491, a report to the Ranking Democratic Member, 
Committee on Veterans' Affairs, House of Representatives 


Why GAO Did This Study:

By the year 2006, the Veterans Benefits Administration (VBA) projects 
it will lose a significant portion of its mission-critical workforce to 
retirement.  VBA has hired over 2,000 new employees to begin to fill 
this expected gap.  GAO was asked to review: (1) the attrition rate at 
VBA, particularly for new employees who examine veterans’ claims, and 
the agency’s methods for calculating attrition; and (2) the adequacy of 
VBA’s analysis of attrition data, including the reasons for attrition.  
To answer these questions, GAO analyzed attrition data from VBA’s 
Office of Human Resources, calculated attrition rates for VBA and other 
federal agencies using a governmentwide database on federal employment, 
and interviewed VBA officials about their efforts to measure attrition 
and determine why new employees leave.  

What GAO Found:

About 16 percent of new examiners hired in fiscal year 2001 left VBA 
within 12 months of their hiring date, more than double the 6 percent 
rate for all VBA employees who left that year.  In general, new hire 
attrition tends to exceed the rate for all other employees, and VBA’s 
16 percent rate is similar to the attrition rate for all new federal 
employees hired in recent years, when as many as 17 percent left within 
12 months of being hired.  

VBA does not have adequate data on the reasons why employees, 
particularly new employees, choose to leave the agency.  VBA has 
descriptive data on whether employees leave the agency through 
resignation, termination, retirement, or transfer, but does not yet 
have comprehensive data on the reasons employees resign.  While VBA 
collects some data on the reasons for attrition in exit interviews, 
these data are limited because exit interviews have not been conducted 
consistently, and the data from these interviews are not compiled and 
analyzed. Without such data, VBA cannot determine ways to address why 
employees are leaving. Furthermore, VBA has not performed analysis to 
determine whether it can reduce its staff attrition. Despite recent 
steps to improve the collection and analysis of data on the reasons for 
attrition, an overall strategy for the collection and analysis of 
attrition data could help guide workforce planning and determine the 
extent to which attrition and its costs could be reduced. 

What GAO Recommends:

To ensure that VBA collects and analyzes information on the reasons for 
attrition, particularly for new hires, GAO recommends that the 
Secretary of Veterans Affairs (VA) direct the Under Secretary for 
Benefits to develop a strategy for the systematic collection and 
analysis of attrition data, including attrition rates, reasons for 
leaving, and cost data; and that VBA integrate the results of its 
attrition analysis into its workforce plan. VA concurred with GAO’s 
recommendation. 

www.gao.gov/cgi-bin/getrpt?GAO-03-491.

To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Cynthia A. Bascetta at (202) 512-7101 or 
bascettac@gao.gov.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Attrition at VBA Is Higher for Newly Hired Examiners Than for the 
Agency Overall:

VBA Lacks Adequate Data on Reasons Employees Leave and Analysis of 
Staff Attrition:

Conclusions:

Recommendation:

Agency Comments:

Appendix I: Objectives, Scope, and Methodology:

Objectives:

Scope and Methodology:

Appendix II: Comments from the Department of Veterans Affairs:

Appendix III: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Acknowledgments:

Related GAO Products:

General Human Capital Reports:

Department of Veterans Affairs:

Veterans Benefits Administration:

Table:

Table 1: Overall Attrition Rates for VBA Examiners, Other VBA, Other 
Department of Veterans Affairs, and Other Federal Employees, Fiscal 
Years 2000-2002:

Figures:

Figure 1. Examiners Hired by VBA, Fiscal Years 1998-2002:

Figure 2: Percentage of Examiners Who Left VBA within 2 Years of Their 
Hiring Date, Fiscal Years 1998-2001:

Abbreviations:

CPDF: Central Personnel Data File:

OMB: Office of Management and Budget:

OPM: Office of Personnel Management:

SSA: Social Security Administration:

VA: Department of Veterans Affairs:

VBA: Veterans Benefits Administration:

United States General Accounting Office:

Washington, DC 20548:

April 28, 2003:

The Honorable Lane Evans
Ranking Democratic Member
Committee on Veterans' Affairs
House of Representatives:

Dear Mr. Evans:

The Veterans Benefits Administration (VBA) projects that 21 percent of 
its employees who examine veterans' claims and are eligible to retire 
will do so by the year 2006. To prevent the potential disruptions in 
service to veterans applying for disability compensation that could 
result from these retirements, as well as to address a large claims 
backlog, VBA hired over 2,000 new examiners between fiscal years 1998 
and 2002. While VBA recognizes the importance of retaining its new 
employees, until 2001 it was not regularly calculating an attrition 
rate for its newly hired employees.

Because of the concern that VBA maintain a sufficient workforce, you 
asked us to examine (1) the attrition rate at VBA, particularly for new 
employees who examine veterans' claims, and the agency's methods for 
calculating attrition; and (2) the adequacy of VBA's analysis of 
attrition data, including the reasons for attrition.

To do our work, we obtained and analyzed attrition data from VBA's 
Office of Human Resources and interviewed VBA officials. We focused our 
analysis on new employees because of the investment in training they 
need to reach full productivity. We calculated VBA's attrition rates 
and compared them to those for other federal new hires, using a 
governmentwide database on federal civilian employment. We also 
interviewed Office of Personnel Management (OPM) officials to identify 
generally accepted methods of calculating attrition and to determine 
how federal agencies develop and analyze data on attrition and the 
reasons for attrition. We conducted our work between October 2002 and 
February 2003 in accordance with generally accepted government auditing 
standards.

Results in Brief:

Using OPM data for fiscal year 2001, we calculated the attrition rate 
at VBA for newly hired examiners at about 16 percent, more than double 
the 6 percent rate for all VBA employees. The attrition rate for newly 
hired examiners is similar to the attrition rate for all new federal 
employees hired in recent years. Specifically, between fiscal years 
1998 and 2001, as many as 17 percent left within 12 months of being 
hired. While it is typical for new hire attrition to exceed overall 
attrition, the new hire attrition rate was much higher in certain VBA 
regional offices located in major urban areas than it was in other 
regional offices. For example, in the Newark regional office, 40 
percent of examiners hired in fiscal year 2001 left within the first 
year of employment, while no newly hired examiners in Wichita left. VBA 
calculates attrition by counting employees who leave the agency and 
comparing that number to either total employees or a subgroup of total 
employees. The methods VBA uses to calculate attrition are consistent 
with those used by OPM and other federal agencies, and VBA's 
calculations are similar to those we used for this report.

While VBA has descriptive data on whether employees leave the agency 
through resignation, termination, retirement, or transfer, it does not 
yet have adequate analytic data on the reasons why employees, 
particularly new examiners, leave the agency. VBA has also not 
conducted the types of analysis that would help the agency determine 
whether its attrition, particularly for newly hired examiners, is 
excessive. Efforts to collect better data on the reasons for attrition, 
for example by using exit interviews, are under way, but it will take 
some time before the results can be fully analyzed. Without such 
analysis, VBA cannot determine ways to address the reasons employees 
are leaving. Furthermore, VBA has not fully analyzed the cost 
implications of its attrition, nor has it performed the types of 
analysis, such as comparisons of its own attrition to that of other 
federal employees who perform similar work, that would help the agency 
determine the significance of its attrition rate, particularly for 
newly hired examiners. However, recent requirements approved by the 
Department of Veterans Affairs (VA) will begin to provide VBA the 
opportunity to enhance the collection and analysis of attrition data. 
For example, a VA-wide policy approved in January 2003 requires the use 
of attrition data to guide workforce planning.

Because information on staff attrition is essential for effective 
workforce planning, we are recommending that the Secretary of Veterans 
Affairs direct the Under Secretary for Benefits to develop a strategy 
for the systematic collection and analysis of attrition data at VBA. 
Furthermore, we recommend that the results be integrated into the 
agency's workforce plan. VA concurred with our recommendation.

Background:

VBA provides benefits to about 2.7 million veterans and about 
579,000 surviving spouses, children, and parents. These benefits and 
services include disability compensation and pension, education, loan 
guaranty, and insurance. VBA employs about 5,000 examiners,[Footnote 1] 
and they represent about 40 percent of the agency's entire workforce. 
Most examiners are located at 57 regional offices and are responsible 
for reviewing and processing veterans' disability claims. Typically, 
they begin service at GS-5 or GS-7 and can be promoted to GS-
10.[Footnote 2]

Between 1998 and 2002, VBA hired over 2,000 new examiners (see fig. 1). 
According to VBA officials, this was the first time VBA had the 
authority to hire significant numbers of examiners. These examiners 
were hired in anticipation of a large number of future retirements. For 
example, in 
2000, VBA was expecting the retirement of 1,100 experienced examiners 
in the subsequent 5 years. The hiring of these new examiners coincided 
with a growth in the backlog of claims awaiting decisions. Between 1998 
and 2001, the backlog increased by 74 percent from about 241,000 to 
about 420,000. VBA has since implemented an initiative to reduce this 
backlog.[Footnote 3]

Figure 1: Figure 1. Examiners Hired by VBA, Fiscal Years 1998-2002:

[See PDF for image]

[End of figure]


According to VBA, it takes 2 to 3 years for a newly hired examiner to 
become fully productive. After being hired, new examiners receive a 
combination of formal training in a central location and on-the-job 
training in one of VBA's regional offices. Once on the job, these 
workers perform a variety of critical tasks, such as compiling medical 
evidence, assessing the extent of the disability, determining the level 
of benefit, handling payment, and considering appeals.

Workforce planning, which can be guided by different types of data, is 
a key component to maintaining a workforce that can carry out the tasks 
critical to an agency's mission. Strategic workforce planning focuses 
on developing and implementing long-term strategies--clearly linked to 
an agency's mission and programmatic goals--for acquiring, developing, 
and retaining employees. In addition to data on attrition rates and the 
reasons for attrition, data that can guide workforce planning include 
size and composition of the workforce, skills inventory, projected 
retirement eligibility and retirement rates, and feedback from exit 
interviews.[Footnote 4] These data can be analyzed to identify gaps 
between an agency's workforce and its current and future needs. This 
insight can, in turn, become the basis for developing strategies to 
build a workforce that accommodates those needs.

Attrition at VBA Is Higher for Newly Hired Examiners Than for the 
Agency Overall:

We calculated the fiscal year 2001 attrition rate for new examiners at 
VBA at about 16 percent, more than twice as high as the 6 percent rate 
for all employees who left that year. About 16 percent of new examiners 
hired in fiscal year 2001 left the agency within 1 year of being hired. 
According to human resources experts, it is typical for new employees 
to leave at higher rates than all other employees. However, minimizing 
attrition is important because of the high costs of hiring and training 
new examiners. VBA calculates attrition by counting employees who leave 
the agency and comparing that number to either total employees or a 
subgroup of total employees. The methods VBA uses to calculate 
attrition are consistent with those used by OPM and other federal 
agencies.

Attrition for New Employees at VBA Is More Than Twice as High as the 
Agency's Overall Rate of About 6 Percent:

Attrition rates for new VBA examiners were generally higher than those 
for all VBA examiners and other employees. As shown in table 1, in 
fiscal years 2000, 2001, and 2002, overall attrition rates for VBA 
examiners and other VBA employees ranged from about 4 percent to 8 
percent. However, among all new examiners hired in fiscal year 2001, 
about 16 percent left the agency within 12 months, as shown in figure 
2.[Footnote 5] These attrition rates, for all employees as well as for 
newly hired examiners, reflect all types of attrition--including 
resignation, retirement, and termination.[Footnote 6] New hire 
attrition consists predominantly of resignations.

Table 1: Overall Attrition Rates for VBA Examiners, Other VBA, Other 
Department of Veterans Affairs, and Other Federal Employees, Fiscal 
Years 2000-2002:

Fiscal year: 2000; VBA: Examiners: 4.6; VBA: All other employees: 6.9; 
VBA: Agencywide: 6.0; All other VA: 8.2; All other federal government: 
7.4.

Fiscal year: 2001; VBA: Examiners: 6.0; VBA: All other employees: 6.6; 
VBA: Agencywide: 6.4; All other VA: 7.8; All other federal government: 
7.0.

Fiscal year: 2002; VBA: Examiners: 7.0; VBA: All other employees: 8.1; 
VBA: Agencywide: 7.6; All other VA: 7.6; All other federal government: 
6.5.

Source: OPM's Central Personnel Data File.

Note: GAO performed these calculations by dividing separations by an 
average of the total workforce on board at the beginning and end of 
each year. The averages could only be calculated for the years shown. 
For all categories of employees shown, attrition rates were calculated 
based on white-collar employees only.

[End of table]:

Figure 2: Percentage of Examiners Who Left VBA within 2 Years of Their 
Hiring Date, Fiscal Years 1998-2001:

[See PDF for image]

Note: Data for fiscal year 2001 do not reflect a full 24-month time 
period. A comparable analysis could not be done for fiscal year 2002 
because comparable data were not available to reflect a full 24-month 
time period.


[End of figure]:

According to human capital experts, in general, new employees tend to 
leave at higher rates than all other employees, and some of this 
attrition may even be desirable. Higher attrition among new hires has 
been the experience for federal agencies historically and, according to 
our analysis of OPM's data, is generally the case governmentwide. The 
attrition rate for all federal employees, both new hires and senior 
staff, was 7 percent in fiscal year 2001.[Footnote 7] However, for all 
new federal employees--those hired in fiscal years 1998, 1999, 2000, 
and 2001--as many as 17 percent left within 12 months of being hired. 
In some instances, according to a VBA official, such attrition may even 
be desirable. For example, a newly hired employee may turn out not to 
be a good fit for the agency.

The attrition rates we calculated for VBA's newly hired examiners are 
similar to those that the Social Security Administration (SSA) found 
among its own new hires doing comparable work. As part of its own 
workforce planning efforts, SSA has collected data on new hire 
attrition. Of its employees who examine and process benefit claims, SSA 
found attrition rates that ranged from about 15 percent for those hired 
in 1998 to about 14 percent for those hired in 2000.[Footnote 8]

VBA calculations show, and agency officials acknowledge, that attrition 
for newly hired examiners is particularly high or particularly low in 
certain locations.[Footnote 9] Specifically, VBA found attrition rates 
of 38 percent to 
49 percent for new examiners hired over a 3-year period at four 
regional offices--Baltimore (38 percent), Chicago (39 percent), Newark 
(41 percent), and New York (49 percent). By contrast, some offices--
such as Phoenix, Louisville, Huntington, and Wichita--experienced no 
attrition among new examiners hired during this period.

VBA Uses Accepted Methods to Calculate Attrition:

The two basic methods VBA uses to calculate attrition are consistent 
with methods used by OPM and other federal agencies. Each method, the 
"annual calculation" and the "cohort calculation," compares employees 
who leave the agency to either total employees or a subgroup of total 
employees. They provide different ways of looking at attrition trends. 
The annual calculation indicates broad attrition patterns from year to 
year. In contrast, the cohort calculation follows a particular group of 
employees over time to see how many leave the agency, and the group or 
the timeframe can vary to suit the needs of the analysis. VBA's 
calculations using this method are similar to ours. For example, VBA 
found that, of all examiners hired in 2001, 18 percent had left within 
2 years of their hiring date, while our calculations using OPM data 
showed a corresponding rate of 17.6 percent. The following are the two 
methods VBA uses:

* Annual calculation. This method calculates attrition by dividing all 
employees who left in a given year by an average of employees working 
at the agency at the beginning of the year and at the end of the year.
:

* Cohort calculation. This method calculates attrition by following a 
specified group or "cohort" of employees to see how many leave the 
agency. The cohort can be defined as all those hired (new hires only) 
during a specific timeframe. These new hires are tracked for selected 
intervals (3 months, 6 months, etc.). This method can be adapted by 
defining the cohort differently (e.g., to track attrition among a 
subgroup of new hires) and by using different timeframes for the 
tracking (e.g., 
12 months, 18 months, etc.). This calculation differs from the annual 
calculation in that it does not use an average of the total workforce. 
VBA used this method to determine the attrition rate of certain newly 
hired examiners for a presentation in 2001 and for additional, more 
comprehensive calculations in 2002. VBA plans to use this method to 
calculate attrition rate for new examiners at least annually starting 
in 2003.

According to OPM officials, the annual method is a generally accepted 
method used to calculate attrition by federal agencies. OPM officials 
also recognized the value of the cohort method for calculations that 
require specific time frames or groups of employees and added that 
tracking the attrition of new employees is an important practice. OPM 
does not mandate the use of a particular method for the calculation of 
attrition, but officials said that any method used should be clearly 
explained.

VBA Lacks Adequate Data on Reasons Employees Leave and Analysis of 
Staff Attrition:

While VBA has descriptive data on whether employees leave the agency 
through resignation, termination, retirement, or transfer, it does not 
yet have adequate information to analyze the reasons why employees, 
particularly new employees who examine veterans' claims, leave the 
agency. While efforts to collect these data--for example, through an 
automated exit interview process--are under way, it will take some time 
before the results can be fully analyzed. Furthermore, VBA has not 
performed the types of analysis on its data, such as an analysis of the 
costs of attrition, that would help the agency determine whether its 
attrition, particularly for new examiners, is excessive. VBA is taking 
steps to ensure that attrition data will be available to guide its 
workforce planning.

VBA Collects Some Data on Types of Separations, but Data on Reasons Are 
Limited:

While VBA systematically collects descriptive data on whether employees 
leave the agency through resignation, termination, retirement, or 
transfer, the data on the reasons employees leave have not been 
systematically collected or analyzed. Without such analysis, VBA cannot 
determine the extent to which its attrition of newly hired examiners 
could be reduced. As at other federal agencies, when employees leave 
VBA, a standard federal "Form 52" is filled out.[Footnote 10] This form 
records whether the employee is leaving due to a resignation, 
termination, retirement, or transfer. Because this information appears 
on the form in discrete fields, VBA human resources staff can easily 
enter it into the agency's computer system to aggregate information on 
the types of separations.

The Form 52 also includes a blank space for narrative comments on the 
reasons for leaving. This space is primarily intended to be used in the 
case of resignation, and its use is optional on the part of the 
employee. According to VBA officials, this area is frequently left 
blank. When this area is filled out, it is up to a human resources 
employee to decide how to label an employee's reason for leaving in the 
computer system. Several "quit codes" exist to help in this labeling 
process. For example, reasons for leaving can be coded as relating to 
pay and benefits, supervisory relationship, opportunity for 
advancement, or personal reasons, including family responsibilities, 
illness, or household relocation. All forms are sent to one of four 
human resource centers to be entered into the agency's computer system. 
Human resources employees in these centers are instructed to code the 
reasons for leaving to the best of their ability. However, these staff 
members cannot clarify reasons when the information is blank or 
ambiguous because they do not have access to either the separated 
employee or the regional human resources staff who actually processed 
the employee's separation. Therefore, VBA officials do not consider the 
Form 52 to be a complete or reliable source of information on the 
reasons employees resign from VBA.

Another source of information on reasons why examiners leave VBA is 
exit interviews. However, according to VBA officials, exit interviews 
have not been consistently conducted for all separating employees. VBA 
officials said that the downsizing of human resources staff in regional 
offices is at least partly responsible for the inconsistency with which 
exit interviews have been conducted in the past. In addition, the data 
from the interviews that were conducted have not been forwarded to 
national headquarters to be aggregated and analyzed. Existing VA policy 
has recognized the importance of exit interviews for determining the 
reasons an employee leaves, but it has not explicitly required the 
department to conduct them. To ensure more systematic collection of 
information about the reasons employees leave, as of February 2003, VA 
planned to change existing policy to require the department to offer 
exit surveys to separating employees, according to a VA official. Both 
VA and VBA told us they have plans to require that exit surveys be 
offered by spring 2003.

Some offices and staff members within VBA have made special efforts to 
compile or collect information on the reasons examiners leave the 
agency by producing special studies or reports. These include the 
following:

* High-Performing Young Promotable Employees (HYPE). In September 2002, 
a group of employees, representing six regional offices, prepared a 
report based on 72 exit interviews conducted at seven regional offices. 
The exit interviews had been conducted over 3 fiscal years: 
1999, 2000, and 2001. The report included recommendations that the 
agency develop a comprehensive strategic plan to address attrition and 
retention and improve and centralize its exit interview process. 
:

* Loss of New Hires in Veterans Service Centers. At the request of the 
head of VBA, the newly organized Office of Performance Analysis and 
Integrity (OPAI) issued a report in September 2002 that examined new 
hire attrition rates for regional offices individually. The report also 
looked at reasons for leaving, based on interviews with the directors 
of two regional offices.
:

* Review of attrition data at certain regional offices. At least two 
regional offices have investigated the reasons for attrition in their 
own offices. For example, in October 2002, senior management at the 
Newark regional office compiled information on the attrition of 
examiners over a 3-year period and the reasons these examiners left. 
This study was prompted by concern about high attrition rates at the 
Newark office. Portland did a similar review in September 2001.

These special efforts had several common findings. For example, three 
reported that inadequate opportunity for training was one of the 
reasons examiners left VBA. Two reported dissatisfaction with workload 
or employees' descriptions of the job as too difficult as reasons for 
leaving. Two also identified instances in which examiners resigned as a 
result of pending termination for poor performance or conduct. Reports 
associated with these efforts touched on other reasons for resignation, 
including inadequate opportunity for full utilization of skills and 
various personal reasons.

The other source of information on reasons examiners left VBA was 
anecdotal information provided by regional and other senior human 
resources officials. For example, senior human resources officials said 
that reasons for leaving included factors such as inadequate work space 
and computer equipment as well as insufficient pay. According to a VBA 
official, certain regional offices are aware of the types of employers 
with whom they are competing. For example, some regional offices report 
losing employees to a range of employers in both the public sector, 
including other federal agencies (such as SSA and the Department of 
Labor), and the private sector, including information technology firms. 
In addition, these officials reported that some newly hired examiners 
left when they discovered that the job tasks were not what they had 
expected. Certain regional offices have taken steps to respond to some 
of these findings. For example, some have offered job candidates 
opportunities to observe the work place before being hired.

While all of these sources of information provide examples of reasons 
why examiners left VBA, no comprehensive analysis of the reasons for 
attrition has yet been conducted, due in large part to the 
inconsistency with which exit interviews have been conducted and the 
fact that data on reasons for leaving have not been compiled 
nationwide. Without such analysis, VBA cannot yet determine the extent 
to which attrition among newly hired examiners involves reasons that 
could be addressed by the agency, such as work environment, or the 
reasons the agency cannot control, such as personal reasons and market 
conditions. As a result, VBA has lacked important information that 
could help the agency determine the extent to which attrition could be 
reduced.

VBA Has Not Fully Analyzed Data to Determine Whether Attrition Is 
Excessive:

VBA has not performed the types of analysis on its data that would help 
the agency determine the extent to which an attrition problem may 
exist. To better understand its own attrition, an agency can take 
advantage of
a range of analyses. These include the following:

* Comparisons. To understand the degree to which its attrition is a 
problem, an agency can compare its own attrition to the attrition of 
other federal agencies, especially to the attrition of agencies with 
employees who do similar work. While one of VBA's special reports did 
some broad comparisons of VBA's attrition to the attrition at other 
federal agencies, VBA has not compared the attrition of newly hired 
examiners to the attrition of employees in other parts of the federal 
government with comparable job series, nor has it coordinated with 
other agencies to share attrition data.
:

* Attrition modeling. To understand the degree to which attrition is a 
problem, an agency can estimate the attrition rates it expects in the 
future, providing a baseline against which to measure the actual 
attrition it experiences.[Footnote 11] This allows officials to 
determine if attrition rates are higher or lower than expected. While 
VBA has projected retirement rates for planning purposes, according to 
VBA officials, there was no formal or informal process to estimate the 
expected attrition rates of the examiners who joined the agency since 
1998. In 2002, VA projected future attrition trends for examiners in a 
restructuring plan submitted to the Office of Management and Budget 
(OMB), and officials expect to compare these projections to actual 
attrition rates for examiners in the future.
:

* Cost analysis. To understand the degree to which attrition is a 
problem, an agency can estimate the cost of recruiting and training new 
employees who leave and the cost of recruiting and training their 
replacements. While VBA's Office of Human Resources conducted a partial 
estimate of attrition costs in 2001, this estimate did not include all 
associated costs. For example, the investment lost when a trained 
employee leaves was not included, although it is one of the most 
important and potentially expensive costs. 
:

* Labor market analysis. To understand the degree to which its 
attrition is a problem, an agency can evaluate labor market conditions 
in locations where it operates. Such an evaluation can provide context 
for understanding if an attrition rate is higher than might be expected 
in those locations. Using general labor market data, VBA has identified 
several locations where it faces significant competition from other 
employers, both public and private. This information could be used to 
better understand its attrition rate in those locations in the future. 
However, this information is not based on the actual employment plans 
of separating employees, and VBA does not routinely collect or document 
this information. According to a VBA official, collecting data on where 
VBA's separating employees find employment after VBA would be useful 
for developing a more accurate understanding of the employers with whom 
VBA is competing.

VBA is taking steps to ensure that attrition data will be available to 
guide workforce planning. First, according to a VBA official, VBA 
developed a workforce plan, following a workforce policy approved by VA 
in January 2003.[Footnote 12] In a related document, VA stated its 
expectation that, in the current economy, attrition among examiners may 
stabilize. However, VBA cannot test that assumption without continued 
monitoring of attrition rates and improved data on reasons for 
attrition. Second, VBA has recently designated an official to head 
strategic planning efforts. While these efforts will address attrition 
and other human capital issues, a VBA official told us that its Office 
of Human Resources is expected to assume primary responsibility for 
human capital issues and to coordinate with the strategic planning 
office. Third, VA's new automated exit survey, which VA officials 
expect to be available in spring 2003, has the potential to aid VBA in 
its attrition data gathering and analysis. Separating employees will be 
able to answer a series of questions about the reasons they decided to 
leave the agency. The survey will provide confidentiality for the 
employee, potentially allowing for more accurate responses. The survey 
will also facilitate electronic analysis that could be broken down by 
type of job and region. As of March 2003, VBA had created and filled a 
new position intended to help VBA implement the automated exit survey, 
among other responsibilities.

Conclusions:

VBA's ability to effectively serve veterans hinges on maintaining a 
sufficient workforce through effective workforce planning. While 
attrition data are just one part of workforce planning, the data are 
important because they can be used to anticipate the number of 
employees and the types of skills that need to be replaced. While VBA 
officials told us about plans under way to better manage new hire 
attrition, the agency currently lacks useful analysis of the reasons 
new employees leave. Furthermore, while it is typical for new hires to 
leave their jobs at higher rates than other employees, and this 
phenomenon is not unique to VBA, VBA has not yet analyzed whether its 
new hire attrition is excessive, nor has it analyzed the cost 
implications of such attrition to the agency. Such analysis can help an 
agency determine the extent to which attrition could be reduced. 
Sustained attention to both attrition rates and reasons for attrition, 
particularly for new employees, can help VBA conduct more effective 
workforce planning. Understanding the reasons for attrition could also 
help the agency minimize the investment in training lost when a new 
employee leaves.

Recommendation:

To ensure that VBA collects and analyzes information on the reasons for 
attrition, particularly for new employees, we recommend that the 
Secretary of Veterans Affairs direct the Under Secretary for Benefits 
to develop a strategy for the systematic collection and analysis of 
attrition data. This could include the calculation of attrition rates, 
analysis of the reasons for leaving, and estimation of the costs 
associated with new hire attrition. Furthermore, we recommend that VBA 
integrate the results of its attrition analysis into its workforce 
plan.

Agency Comments:

In its written comments on a draft of this report (see app. II), VA 
agreed with our findings and conclusions and concurred with our 
recommendation. VBA is targeting July 1, 2003 for the implementation of 
an exit survey process to develop data on reasons for employee turnover 
and the costs of new hire attrition. VBA is also in the process of 
developing its workforce plan as part of overall departmental efforts. 
This should better position VBA to integrate the results of its 
analysis of attrition into its workforce plan.

As agreed with your office, unless you publicly release its contents 
earlier, we will make no further distribution of this report until 10 
days after its issue date. At that time, we will send copies of this 
report to the Secretary of the Department of Veterans Affairs, 
appropriate congressional committees, and other interested parties. We 
will also make copies of this report available to others on request. 
The report will also be available at no charge on GAO's Web site at 
http://www.gao.gov.

If you or your staff have any questions about this report, please call 
me at (202) 512-7101. Other contacts and contributors to this report 
are listed in appendix III.

Sincerely yours,

Cynthia A. Bascetta
Director, Education, Workforce, and Income Security Issues:

[End of section]

Appendix I: Objectives, Scope, and Methodology:

Objectives:

The objectives of our review were to determine: (1) the attrition rate 
at the Veterans Benefits Administration (VBA), particularly for new 
employees who examine veterans' claims, and VBA's methods for 
calculating attrition; and (2) the adequacy of VBA's analysis of 
attrition data, including the reasons for attrition. We conducted our 
work between October 2002 and February 2003 in accordance with 
generally accepted government auditing standards.

Scope and Methodology:

To determine the attrition rate for newly hired veterans claims 
examiners at VBA, we analyzed data from the Office of Personnel 
Management's (OPM) Central Personnel Data File (CPDF). Using the CPDF 
data, we identified the newly hired veterans claims examiners and 
followed them over time to see how many left VBA. We identified all new 
hires for fiscal years 1998 through 2002 by using personnel action 
codes for accessions and conversions to career or career conditional 
positions. Accessions include new hires and hires of individuals 
returning to the government. Conversions are primarily temporary 
federal government employees whose positions are made permanent. Next, 
we determined whether these individuals had personnel actions 
indicating they had separated from VBA. Separation (attrition) included 
resignations, retirements, terminations, and deaths. We did not include 
a small percentage of individuals with inconsistent data such as 
multiple or different hiring or separation dates. The small percentage 
of employees with inconsistent data is congruent with the generally 
reliable data in the CPDF we have reported previously. (See U.S. 
General Accounting Office, OPM's Central Personnel Data File: Data 
Appear Sufficiently Reliable to Meet Most Customer Needs, GAO/GGD-98-
199 (Washington, D.C.: Sept. 30, 1998)). By subtracting the hire date 
from the separation date, we determined how long individuals worked 
before separating. We also noted those individuals who had not 
separated within specific time periods such as 0 to 12 months and 13 to 
24 months. We calculated the attrition rate for a specific time period 
by dividing the number of individuals who left within that time period 
by the total number of new hires tracked for that time period. Since we 
issued our statement,[Footnote 13] OPM issued 2002 data, which we used 
to update this analysis. The additional year of data resulted in a 
small number of additional employees who had multiple, different 
separation dates. Because we excluded all instances of employees with 
multiple records and because some of these instances corresponded to 
records previously included in our original analysis, the additional 
year of data resulted in some revisions to our original analysis.

To determine overall attrition rates for veterans claims examiners at 
VBA (not just new hires), we analyzed data from the CPDF for fiscal 
years 2000 through 2002. For each fiscal year, we counted the number of 
permanent employees with personnel actions indicating they had 
separated from VBA. We divided the total number of separations for each 
fiscal year by the average of the number of permanent employees in the 
CPDF as of the last pay period of the fiscal year before the fiscal 
year of the separations and the number of permanent employees in the 
CPDF as of the last pay period of the fiscal year of separations. To 
place the overall attrition rates for VBA claims examiners in context, 
we compared VBA's rates to those for employees in other occupations and 
agencies (all other white-collar VBA employees, all other white-collar 
employees in the Department of Veterans Affairs, and all other white-
collar employees in the executive branch of the federal government).

To determine VBA's methods for calculating attrition, we interviewed 
VBA officials and reviewed VBA's calculations. We also interviewed OPM 
officials to identify generally accepted methods of calculating 
attrition. To determine the adequacy of VBA's data on the reasons for 
attrition and its analysis of attrition data, we reviewed VBA reports 
with information about the reasons for attrition, interviewed VBA 
officials to determine how VBA collects data on the reasons employees 
leave the agency, and interviewed a VA official about a new initiative 
to develop and implement an automated exit survey. To determine the 
adequacy of VBA's analysis of its attrition, we reviewed VBA efforts to 
analyze attrition, interviewed VBA officials, and interviewed OPM 
officials and relied on our prior reports on federal human capital 
issues to determine how federal agencies develop and analyze data on 
attrition and the reasons for attrition.

[End of section]

Appendix II: Comments from the Department of Veterans Affairs:

THE SECRETARY OF VETERANS AFFAIRS 
WASHINGTON:

April 16, 2003:

Ms. Cynthia A. Bascetta Director, Education Workforce and Income 
Security Issues 441 G Street, NW Washington, DC 20548:

Dear Ms. Bascetta:

The Department of Veterans Affairs (VA) has reviewed your draft report, 
VETERANS BENEFITS ADMINISTRATION: Better Collection and Analysis of 
Attrition Data Needed to Enhance Workforce Planning (GAO-03-491). VA 
agrees with your findings and conclusions and concurs with your 
recommendation. In fact, the recommendation is consistent with 
initiatives already underway in the areas of data collection, data 
analysis, and workforce planning.

The Veterans Benefits Administration's (VBA) Office of Human Resources 
(OHR) is implementing an exit interview survey process to develop data 
on the reasons for employee turnover. Implementation target is July 1, 
2003. VBA is partnering with the Departmental Office of Human Resources 
Management to conduct data analysis centrally. The analysis will review 
overall attrition and stratification by grade and/or tenure. While 
initial analysis will address reasons for losses on a national level, 
VBA expects that by accumulating additional data, the analysis will 
yield area and regional office rates and trends. Analysis of the costs 
of new hire attrition will also be included. Subsequently, training 
will be offered to VBA field managers on hiring and retaining 
employees.':

The Veterans Health Administration maintains a robust payroll data 
system through its VISN Support Service Center (VSSC). VBA is obtaining 
attrition data through the VSSC. Additionally, recurring reports and 
local access to data are being tracked so that management officials may 
monitor attrition rates in their workforce.

As part of the overall Departmental efforts, VBA has recently completed 
its initial workforce plan. The plan analyzed workforce needs and 
trends, including retirement and non-retirement losses in the aggregate 
and by key occupations. VBA understands that successful workforce 
planning includes managing the hiring, training, and retention of 
talented employees. Findings and recommendations in the plan are now 
under review. VBA will revise its plans according to the
Departmental schedule and VBA's needs. The workforce plan will be 
addressed at VBA's Directors' Conference in June 2003 and its Human 
Resources Conference in August 2003.

Thank you for the opportunity to comment on your draft report.

Anthony J. Principi:

Signed by Anthony J. Principi:

[End of section]

Appendix III: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Irene Chu, (202) 512-7102
Chris Morehouse, (202) 512-7214:

Acknowledgments:

In addition to those named above, others who made key contributions to 
this report are Ronald Ito, Grant Mallie, Corinna Nicolaou, and Gregory 
Wilmoth.
:

[End of section]

Related GAO Products:

General Human Capital Reports:

High-Risk Series: Strategic Human Capital Management. GAO-03-120. 
Washington, D.C.: January 2003.

Human Capital: Effective Use of Flexibilities Can Assist Agencies in 
Managing Their Workforces. GAO-03-2. Washington, D.C.: December 6, 
2002.

Air Traffic Control: FAA Needs to Better Prepare for Impending Wave of 
Controller Attrition. GAO-02-591. Washington, D.C.: June 14, 2002.

A Model of Strategic Human Capital Management, Exposure Draft. 
GAO-02-373SP. Washington, D.C.: March 15, 2002.

Federal Employee Retirements: Expected Increase Over the Next 5 Years 
Illustrates Need for Workforce Planning. GAO-01-509. Washington, D.C.: 
April 27, 2001.

Human Capital: A Self-Assessment Checklist for Agency Leaders. GAO/OCG-
00-14G. Washington, D.C.: September 2000.

Department of Veterans Affairs:

Major Management Challenges and Program Risks: Department of Veterans 
Affairs. GAO-03-110. Washington, D.C.: January 2003.

High-Risk Series: An Update. GAO-03-119. Washington, D.C.: January 
2003.

Veterans Benefits Administration:

Veterans' Benefits: Claims Processing Timeliness Performance Measures 
Could Be Improved. GAO-03-282. Washington, D.C.: December 19, 2002.

Veterans' Benefits: Despite Recent Improvements, Meeting Claims 
Processing Goals Will Be Challenging. GAO-02-645T. Washington, D.C.: 
April 26, 2002.

Veterans' Benefits: Training for Claims Processors Needs Evaluation. 
GAO-01-601. Washington, D.C.: May 31, 2001.

Veterans Benefits Administration: Problems and Challenges Facing 
Disability Claims Processing. GAO/T-HEHS/AIMD-00-146. Washington, 
D.C.: May 18, 2000.

FOOTNOTES

[1] According to VBA, these positions carry the title of Veterans 
Service Representative. These positions and similar ones, such as 
rating specialists, are classified as job series 996, veterans claims 
examiner. For our analysis, we focused on the 996 job series. For this 
report, we are referring to jobs in this series as examiners. 

[2] According to a VBA official, in some cases, they can also start at 
GS-9. In 2003, basic starting salaries for GS-5 and GS-7 are about 
$23,400 and $29,000, respectively, not counting locality pay, and for 
those hired at the GS-9 level, the corresponding starting salary is 
about $35,500. VBA is planning to extend competitive promotion 
potential for this job series to GS-11.

[3] VBA began to implement this initiative, called Claims Process 
Improvement, at all of its regional offices in July 2002. For more 
information, see U.S. General Accounting Office, Veterans' Benefits: 
Claims Processing Timeliness Performance Measures Could Be Improved, 
GAO-03-282 (Washington, D.C.: Dec. 19, 2002).

[4] For more information, see U.S. General Accounting Office, A Model 
of Strategic Human Capital Management, Exposure Draft, GAO-02-373SP 
(Washington, D.C.: Mar. 15, 2002).

[5] Since we issued our statement, Veterans Benefits Administration: 
Better Staff Attrition Data and Analysis Needed GAO-03-452T 
(Washington, D.C.: Feb. 11, 2003), OPM issued 2002 data, which we used 
to update this analysis. For further information about our methodology, 
see appendix I.

[6] We did not include in our analysis of new hire attrition staff who 
left the examiner position but remained in VBA, nor did we include 
transfers within VA.

[7] These attrition rates represent employees at all federal agencies 
except VA.

[8] SSA's analysis focused on claims representatives, service 
representatives, and teleservice representatives. We could not 
duplicate this analysis because OPM's Central Personnel Data File does 
not break out job series into the kinds of subcategories that SSA was 
able to use by accessing its own records. According to SSA officials, 
SSA plans to issue a report including its attrition and other workforce 
analyses in spring 2003.

[9] According to VBA officials, attrition rates could also be 
calculated for certain subgroups of newly hired examiners such as 
veterans or minorities. VBA has not calculated attrition rates for 
these subgroups. 

[10] The Form 52, Request for Personnel Action, is used by all federal 
agencies, including VBA.

[11] For more information on attrition modeling, see U.S. General 
Accounting Office, Air Traffic Control: FAA Needs to Better Prepare for 
Impending Wave of Controller Attrition, GAO-02-591 (Washington, D.C.: 
June 14, 2002). For additional information on how attrition data can be 
used by federal agencies, see Human Capital: A Self-Assessment for 
Agency Leaders, GAO/OCG-00-14G (Washington, D.C.: Sept. 2000) and, for 
the importance of valid and reliable data in assessing an agency's 
workforce requirements, see A Model of Strategic Human Capital 
Management, Exposure Draft, GAO-02-373SP (Washington, D.C.: Mar. 15, 
2002). 

[12] The new VA policy requires workforce plans from all three of VA's 
administrations--VBA, the Veterans Health Administration, and the 
National Cemetery Administration. VA first identified the need for a 
workforce policy following a workforce analysis required of all 
executive branch agencies by OMB in May 2001.

[13] GAO-03-452T.

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