OPM sits at the center of federal workforce strategy. It is the government's human capital backbone, shaping hiring, pay, benefits, retirement, performance management, and increasingly the digital infrastructure that supports it all. OPM Director Scott Kupor joins us today to discuss his strategic priorities: the modernization of federal HR systems, the streamlining of hiring, and what it all takes to build the workforce of the future.
Yeah. In your budget, your FY 2026 budget was really a bold vision out there, and I think you had four priorities in it, right? How are you trying to achieve this vision, follow those priorities, but also at the same time sequencing reform versus modernization?
Yeah. So let me start with number one, and these are not in any particular order, but I mentioned it: early career is a really critical issue. So you've probably heard me say this, but if you look at the demographics of the workforce, about 7% of the federal workforce is under the age of 30, and if you look outside the federal workforce, that number is about 22, 23%. So by about a factor of three to one, the federal government is underindexed on early career people. On the other end, by the way, we have a huge cohort. We've got about 44% of our workforce that's over the age of 50. So if you just first think about that demographic, right? If we do nothing over the next 5, 10, 15 years, you have close to half of your workforce that at least, you know, may retire or will be retirement eligible for sure, and we're doing nothing on the other end, on the early career end, to kind of replenish that. So we've got to solve that demographic problem. The other reason, though, why I think early career is so important is I'm a huge believer in differences in experiences making people better, whether they're managers or individual contributors. And for a long time, at least, what I believe is one of the reasons I believe we struggle with early career is we haven't had a pitch that I think is responsive to early career people. Right? I've got kids who are 19 to 25. You know, they think in maybe two or three year increments. And so part of what I think we have to do is we got to go tell the message, which is why is working for government so amazing? You can do public service. You can work on really hard, complex problems. And oh, by the way, like I don't need you to commit to a 40-year career. Like give me two years. Give me three years. And you know what? If you love it, that's great. Let's find you a job in government. But if you find that like you want to kind of have diversity of experience and go to the private sector, that's great, too. So, we've got to kind of change that messaging. So, anyways, that's thing number one. We got a bunch of initiatives there that we can talk about. Thing number two to me is, okay, if we can do a good job attracting early career folks, we have to have them come into an environment that actually is responsive to their ability to actually get stuff done and be able to progress through the organization. We have, you know, every job promotion is a tenure-based promotion, right? And so we need to kind of go change all those things. And this is what I mean by high performance culture. So I've been, you know, managing people for about 30 years now. What I found is, look, the vast majority of employees, they stay at a place or they leave a place because they want to, they feel like they can come, they can do their best work, they can learn, they can grow their career, they're surrounded by other people who are, you know, supportive, they've got a manager who cares about their career development. When they do great work, we recognize it. We can promote them in the organization. And so that's kind of the second piece is if we can attract these individuals, we need to reform all of the stuff in government that makes it hard for a high performance culture to persist. So some of the things we're doing there is performance management. So you probably know this, but today we do a really bad job of differentiating between people in employee reviews. So everybody gets reviewed one through five every year in government. One being the lowest score, five being the highest score. And virtually 99.7%, so virtually 100% of people get a three, four, or a five. Um, which in theory would make sense, but you're talking about a two million person workforce. Like it's hard to imagine that literally every single person is either like performing at expectations or well above expectations. And as a result, only 0.3% basically fall below that, you know, meeting expectations. Now, that may be great and maybe we'll learn that that's true. But like to me, that's not a performance management system that actually differentiates in actual performance. But we've got to have a situation where again, particularly if we're going to bring younger people in, my mind is they want to be able to be recognized for the work they're doing and progress in a fashion that is not tied to their tenure in the organization, but is tied to their actual merit and performance in the organization. So, I've given this example before, but look, you know, if we want to hire a 22-year-old who when we assess that person's technical talent, for example, for a technical role, if they are performing at the level of a GS-14, we should be able to hire that person at that level. Um, notwithstanding the fact that in the current regs, like GS-14 would say you have to have 10 years of work experience. So, to me, things like years tenure and stuff, these are proxies for merit, right? So if there's something about 10 years of work experience that actually is relevant to the job you're doing, then sure, we should test for that. But we've gotten into a system in my mind where we've got, quite frankly, lazy and we use proxies for talent as opposed to actual measures of performance.
So that's an example of again the second big priority, which is how do we create a high performance culture that allows people to hopefully come to work and do their best job every day. And then the third piece is I would call efficiency writ large, basically. Okay. And there's, I got two subparts of this one. So, I will get to your four actually, but through a three grouping just to make the math easier. Um, to me there's efficiency within OPM. And efficiency to me, just to define that, what that means to me is can we continue to deliver a good or higher quality service hopefully to the American people, but can we do so with lower cost? And those two are together, right? Because like it's easy to cut costs if you just like eliminate the constraint on can we deliver a better service. To my mind, that doesn't actually make sense, right? So look, we have to do the things that the American people want us to do and we got to keep increasing the quality of that every year and then we should figure out, look, we are stewards of taxpayer dollars. Can we use technology, can we use process automation, can we use changes in organizational structure so that everything we do in government isn't just we have to add people in order to solve increasing problems? So we're doing that within OPM, there's efficiency stuff, and then for the first time ever, which I'm very excited about, OPM is partnering with OMB, Office of Management and Budget. Sorry for people who don't know what that is. Hopefully most people know OMB, but if you don't, we'll tell you. Um, to help all the other agencies think about efficiency, right? So, I'll give you a simple example if I can, just so you have a sense. So, we asked all the agencies to kind of give us their kind of guesses as to what do they think their headcount planning priorities are for this year going into the 26 fiscal year, which we're now in. We review those plans and what you see in almost all these plans is they have a bucket of full-time employees and then they have a big contractor bucket. And the honest answer is it's really hard to figure out that contractor number, but my estimate is we spend somewhere between two and three times on contractors. So probably 600 billion to 750 billion on contractors relative to about 250 to 300 billion on full-time employees. Contractors should be used for short-term type assignments and/or there's particular skill sets where it's like, look, you know, the government cannot attract this type of skill set and so we have to go out in the market to do that. Instead, we've kind of created this shadow FTE force in the form of contractors where people are there 5, 10, 15, 20 years. And so, you know what happens, as you probably know, you know, when you give people targets on headcount, for example, you often find they hit that target and then the contractor number goes way up on the other side, right? So people kind of play games. So this is a very simple thing we did, but for the first time we said, you know what, take your FTE expenses, take your contractor expenses, put them together into one number and then you guys should go figure out what's the optimal mix of things, right? And I'm fine if it turns out the answer is some of those contractors we should convert into FTEs, let's do that because I'm quite confident, number one, that will cost us less money, and I'm also quite confident that the delivery of services of somebody who is a fully integrated member of the team will be much better and more consistent over time. So anyways, that's kind of an example of how we think about kind of efficiency broadly across the agency.
Just to reiterate to folks that OPM plays a very interesting perspective as a policy setter and a service provider, right? And what are some of the most significant challenges, you may have already alluded to them, Scott, but that you face in that role where you have an inherent tension between being, I hate to use the word regulator, but it is sort of that, and a genuine service provider to the same agencies? How do you do it?
Yeah. So this is where again, as I said, you know, jokingly, we want to be go-PM, not no-PM. And I think what's happened, at least again, and this is not an indictment of any of the people there, they've been doing whatever their leaders have told them to do, but at least as I've talked to people who've been in government for a longer time, I think there's been more of the view of OPM as regulator, right? And to me that's just the wrong, I don't want us to do that. I think that's the wrong framing. Like in government, as you know, there are plenty of oversight and compliance and regulatory authorities, right? So we all have OIG, you know, sorry, Inspector General, there's the Government Accountability Office, GAO, as you well know. We should be an enabler for those agencies to help them. So for example, when we decide, okay, as we've done for senior people in the organization, you should, you know, not rank more than 30% of them in that four or five high category of performance. Okay, what I think we need to do then is report on that and collect the data and then go back to the agencies and say, 'Okay, you know what? Agency X, you're doing well on it. Agency Y, it looks like you're not. How can we help agency Y get there?' Right? And not in an audit function like we're going to basically kind of slap you on the hand, but hey, maybe there's some best practices that, you know, agency X is doing that we can say, hey, like they've tried this stuff, maybe, you know, you guys at agency Y should try this thing. So to me there's a distinction between are we there to be an audit compliance function, which I don't think we are, but more we are a goal setting, we certainly are setting goals. We're doing those obviously in conjunction with OMB and the president. So it's not like, you know, I just dream all these things up myself. Uh, you know, there is some adult in the room who's actually telling me, you know, either this is a good idea or not. Um, but that's what we want to do. And then you're absolutely right, which is the whole other side of our organization is we are a service provider to the government. So we've got two kind of core service provision areas. One is health and insurance. So, you know, we manage the, you know, health insurance business for both current employees and annuitants. And then we also manage the retirement operations, you know, for people obviously who, you know, are becoming annuitants in the federal government. Um, and those are, as you'd expect, they're complex, you know, organizations where you got lots of moving parts and you have customer service and you have, you know, underwriting and all the fun things that you do in an operational context. And then the third kind of core part of our business is called HRS, Human Resources Solutions. You can think of that as, I think of that as like a consulting arm that is there again to help agencies basically implement their policy. So do you need help in looking at the organization and figuring out your optimal organizational structure, or maybe you're thinking, you know, unfortunately this organization, you know, you need to get rid of, you need to understand how do the rules about, you know, eliminating an organization look like, you know, should you do a RIF, should you do a DRP-like program, like stuff like that. So that's kind of basically the three operational components that we have in the business.
Well, you focus on the people, and I want to talk about the ways we get people on board, so to speak, and that is hiring reform. Um, it's central to your agenda, and I believe there's an executive order, is it 14170? I think if I... it's a pretty ambitious target from, I think, 101 days to 80 days. Could you give us just a little preamble of what some of the structural bottlenecks were and what are the specific interventions you're pursuing to kind of make that reduction?
Yeah, so I would kind of describe it as like there's front-end interventions and then there is back-end, and the delineation is, you know, when you actually get an offer to start employment, that's kind of, you know, if we're before that we're on the front end, if we're after that we're on the back end. If we take the front end, for example, um, I think one of the things that we do, so we own a whole suite called USAJOBS that you may know about that OPM does, which is kind of a candidate interface tool on the front end and then it's kind of the workflow tool for the lifecycle management of that employee through the actual interview and hiring process, but often, you know, beyond. So there's a module, for example, USA Performance, which does performance management. So, thing number one that we got to figure out is like what are all the bottlenecks that cause an applicant to say today I want to get this job and it takes me X amount of time to apply for the job. It takes me X amount of time to hear from an interviewer about whether I'm in or out, right? And you know, whatever all the steps are that take to getting to an offer. So, we're tackling that in OPM. So, a couple things just, you know, some of it is just, okay, can we improve the user experience so that it's not hard to do. So we've done some stuff at the margin, like there used to be these 10-page rsums, we now do two-page rsums. You know, my personal view is like rsums should be one page, not two, so like we have a little bit to go, but, you know, 10 to two was a good enough starting point.
Well, that's exactly right, yeah. Um, so that's thing number one. Thing number two is the evaluation process for candidates. So historically, we have not used what I would consider what I call like assessments, basically. So if you're applying for a software engineering job in the private sector, one of the first things they do is they send you a software development test. Basically, we just kind of stayed away from tests. Um, and in their place came basically an applicant's self-attestation of their skills, right? So, again, I would say, here's a software engineering job. Do you know Python? Yes, I know Python. Do you know C++? Yes, I know C++. Right? But I would say like that's not a great screening tool because what people learned was we were using that. And so then they would tailor their responses to make sure that they got past that stage of the interview process even if that didn't actually reflect their skills. All these things add time to the process. So part of the assessment process to me is being much more efficient and much quicker on, you know, are you in or out, basically. Do you at least meet the minimum qualifications from an assessment perspective? And if you don't, look, we should just be fair and transparent with the applicant and say, look, this is not the right role for you.
So we've fixed all those things, then I'd say the next process is, and this is kind of in process right now and we have a big goal on it for this year, is every agency basically does all their own stuff with respect to recruiting. Okay. So in my perfect world, if I'm a, you know, I have a background in, you know, finance and operations, right? So in the perfect world for me, like what I would do is I'd be able to go to our USAJOBS portal and say, and it would say, you know, flashing light for me, hey, you've got operations skills, the government wants operations skills, apply here, basically. And on the front end of that process, I don't need to know does HHS have a job or IRS have a job. I just need to know that my skills are generally in demand across various agencies. Sure. And then what OPM will do is do this kind of assessment and screening process. We'll do some interviews and then we're now doing something that we call shared certificates where I want to take all the qualified operations finance people and then share them with every single agency who's doing this, right? Um, and like again, none of this is like rocket science, but the idea is instead of every single agency going to every single college campus by themselves or putting up their own job announcements, and then by the way, I may be a great person but maybe HHS isn't a good fit for me. Quite frankly, the honest answer is we lose that applicant because we just close them down. We say, 'Hey, that's done.' What I'd rather do is say, 'If you're qualified, let's go give the agencies a whole set of qualified applicants and then quite frankly, let's let the agencies compete for you as an employee, right? So, which agency has the best interview process? Which agency has the best pitch that gets you excited, right?' Like, I think that actually all those things can kind of create efficiency in the hiring process, make it easier for applicants, and will shorten that front-end time. So, there's a ton of stuff on the front end. Does that make sense at least about how we're thinking front end? And then the back end, which I'm saying starts from, okay, great, we love you, you're great, we want to make you an offer, and how long does it take from offer to actually starting in government? And historically the long pole in the tent has been we do a bunch of, you know, security reviews, and, you know, OPM does some of those, but then also now there is a broader system that DCSA does. That's the big area also where we lose a lot of time. So sometimes that can take 30, 60, 90 days just in that process. So we're working with, you know, that agency as well to figure out, okay, like what can we do kind of maybe, which of the things can we start up front and get going? How can we basically even get people maybe started before we've completely finished everything and maybe you just kind of cordon off some of their responsibilities, but at least you're kind of multitasking on some of these things. So that's what we want to do. But to me, the very simple objective at the end of the day is like it should be very easy for an applicant to say I'm interested in the federal government, these are the skills that I bring to the table, and then we should do the work of saying, great, you know what, like we think you've got a great match with this financial operations job at IRS and we'll route you there, as opposed to the burden being on me as the applicant to go search 150 different agencies and figure out what's happening. So I think we can do a lot better on that process and you're going to see a lot more of this, what we call these shared certificates, these consolidated hiring opportunities going forward.
Interesting. I mean, for several years I believe OPM has been building towards a skills-based hiring model, is that right? And I think it's, I'm thinking the IT management positions pilot, the competency modeling work, I think AI and ML tools for skills identification. Could you tell us what's going on in this area and how does this impact and get us to sort of a modern classification world?
