4: Resource Utilization
Maximize the Use of SEC Resources Other Information:
An efficient, well-managed, anticipatory SEC is critical to protecting investors and the markets. As such, the Commission
is concentrating on enhancing organizational effectiveness, as well as investing in staff, new technologies, and new internal
controls. Over the past two years, dramatic changes have occurred in theCommission’s operating environment. Starting in fiscal
year2002, legislation was adopted that allowed the agency to begin offering salary and benefit packages to its employees that
are competitive with those of other federal financial regulators. In2003, the President and Congress approved significant
funding and staffing increases that allowed the SEC to hire hundreds of new employees to help address the challenges facing
the securities industry. Additional legislative changes in theCommission’s hiring authority made it possible for the agency
to move more quickly to add highly qualified candidates to its staff. Taken together, these changes are helping the SEC to
retain talented and experienced staff while recruiting new highly qualified individuals that reflect the population from which
they are drawn as well as the citizens they will serve. These new resources also allowed the SEC to create and begin implementing
a multi-year strategy to enhance its information technology systems. This strategy will give SEC staff new and innovative
tools to analyze and scrutinize investigatory evidence, company disclosures, and other information used by the staff. In addition,
the investment strategy revitalizes the agency’s long-standing commitment to citizen-centered electronic government by providing
the public with greater access to more information, more quickly than ever before. Consistent with the President’s Management
Agenda, the agency is exploring ways to improve management activities in the areas of performance measurement, improved financial
controls, and budget and performance integration. This emphasis on agency management and operations will improve the SEC’s
ability to assess and enhance its performance and establish accountability for mission success. The Commission’s ability to
fulfill its mission depends upon astable long-term funding source. Under current law, the agency collects fees from the securities
industry that offset the budget. In 2007, the law reduces the fees collected by the Commission from their peak in 2006 of
about $2.1 billion to an estimated$1.1 billion. In anticipation of this drop in fee collections, it may be appropriate to
consider whether self-funding or other changes to the fee and funding structure are necessary. Strategic Management of Human
Capital The Commission’s most vital asset is its workforce. Yet throughout the 1990’s, the Commission had difficulty attracting
and retaining qualified staff. For reasons ranging from uncompetitive compensation to an increasing workload, the agency lost
employees to the private sector or to other federal regulatory agencies. Each time this happened, the agency incurred costs
to train replacement staff to work on the enforcement investigations, inspections,disclosure reviews, or other projects that
were underway. Now with pay parity, excepted service hiring authority, and increased financial resources, the agency has made
considerable progress in keeping turnover rates low, while recruiting hundreds of first-rate employees from a variety of sources.
The expertise and specialized skills intrinsic to the field of securities regulation is a significant factor shaping the agency’shuman
capital planning efforts. The SEC must identify the mission-critical roles and competencies the agency requires today and
in the future. To ensure a pool of trained and prepared staff, senior management, working with human resources staff, must
identify the requisite skills, determine whether gaps exist in the SEC’s workforce, and develop ways to bridge these gaps
through training or recruiting strategies. In addition, the agency must plan for filling leadership positions by establishing
strategies on succession planning,supervisory training, and management development. To attract and hire the correct people
to fill these gaps, the SEC will continue its nation-wide recruitment efforts. Recently,the agency bolstered its efforts to
identify and attract highly qualified accountants by retaining two executive recruiting firms – a first in the agency’s history.
The Commission also has reaffirmed its commitment to a diverse workforce, structuring its recruitment efforts to attract new
staff from a wide variety of demographic groups. Additionally, the SEC is broadening the range of skills for which it recruits
in order to ensure that the agency maintains a staff reflective of those it oversees and serves. The SEC recognizes that employee
satisfaction plays a major role in recruitment, retention, and employee performance. As such, the agency is working to help
staff maintain an appropriate balance between work and personal life by enhancing employee benefits, offering classes and
counseling,and working to build a “virtual workforce” with expanded options for telecommuting and working remotely. To enhance
the staff’s knowledge base, the SEC is implementing initiatives such as the “SEC University” (SECU),a comprehensive redesign
of the agency’s training and orientation programs. Through a variety of in-house and electronic courses, SEC-U will help the
agency develop and reinforce a strong operating culture, enhance employee performance, and broaden staff knowledge of industry
trends. Another important goal of SEC-U is to help the agency maintain quality leadership. Through training and mentoring,
SEC-U can help current and future managers more effectively motivate and manage staff. This effort is particularly important
given that 14 percent of SEC managers will be eligible to retire by the end of 2005.The SEC is working to build a culture
of accountability, where excellence is encouraged, noted, and rewarded. For example,the Commission has developed a Pay-for-Performance
system that recognizes and equitably compensates employees for contributions made that help the SEC achieve its mission. Supporting
the Pay-for-Performance system is the agency’s effort to establish a system that tracks key measures and holds managers and
staff accountable for achieving the Commission’s strategic and performance goals. The SEC will continue to explore ways to
improve the design of its programs and its organizational structure. In particular,the SEC will examine whether these structures
could be better aligned towards the customers the agency serves. Information Technology and Electronic Government Technology
plays a major role in determining how the SEC conducts its business and how it interacts with the public and its partners.
Effective integration of improved technology into the Commission’s work processes is key to the agency’songoing success. As
a result of recent funding increases, the Commission is moving much more aggressively to identify and develop strategic IT
initiatives that improve agency business functions and enhance operational effectiveness. Using a rigorous planning process
that is consistent with the requirements of the Clinger-Cohen Act and OMB guidance,the SEC’s technology planning committees
are strengthening the agency’s decisionmaking processes by requiring that all requests for new information systems be developed
in a consistent manner. The process also requires that requests be reviewed and approved by a diverse group of senior program
staff based upon the needs and priorities of the entire agency. To continue meeting its technology planning and management
challenges, the SEC is conducting an in-depth review of all information technology efforts and developing a comprehensive,multi-year
strategic IT plan. Coupled with the agency’senterprise architecture efforts, this strategic IT plan will help ensure the effective
implementation of innovative technologies that meet the needs of staff and the public for years to come. In particular, the
IT program is focused on the following strategic priorities: - Improving the Commission’s discovery and case management capabilities;
- Improving the accessibility and usability of registrant filings to the public and SEC staff; - Increasing the SEC staff’s
personal productivity and work flexibility; - Using enterprise architecture principles to streamline processes and better
leverage technology investments;- Increasing information security and disaster preparedness; and- Enhancing the agency’s capital
planning and project management processes. The Commission’s recent investment decisions reflect how technology is driving
significant changes within the agency,as resources are increasingly being directed toward the application of new technologies
to gather and analyze data. In particular, electronic discovery, computer forensics, and data analysis continue to be critical
components of agency efforts to proactively identify issues affecting the markets, assess risks,conduct enforcement investigations,
and target disclosure review and inspection activities to those firms and filings that pose the greatest risk to the safety
of the markets. Because the agency increasingly conducts its activities electronically, the public and other stakeholders
are in turn demanding far greater access to Commission data and services via the Internet. The agency’s strategic IT plan
will build upon past successes in the electronic government arena, which include the SEC’s website, www.sec.gov and the EDGAR
system. Budget and Performance Integration The use of performance measurement systems is helping SEC management identify programs
that are working effectively and efficiently. In early 2003, the Chairman created periodic management reports, known as “dashboards,”
that illustrate division and office progress towards budget, staffing, and performance objectives. These reports provide a
more detailed picture of the Commission’s operations and effectiveness than has ever before been available. The Chairman and
senior managers will use these reports regularly to identify emerging problems, discuss possible solutions, and hold managers
accountable for staff activities and performance. A performance budget for the agency’s fiscal year 2006 request will reflect
this strategic plan and efforts to introduce activity-based costing and performance-based budgeting into SEC programs. Improved
Financial Performance Under the recently enacted Accountability of Taxpayer Dollars Act of 2002, the Commission is required
to meet all proprietary accounting guidelines for federal agencies and to undergo annual audits. Prior to the Act, the Commission
was working to enhance its internal controls and meet applicable reporting requirements. In early 2002, the Inspector General
conducted an assessment of Commission financial management systems controls. This assessment did not find any systematic problems
that would indicate the Commission lacks the ability to account for any funds. However, the assessment did identify several
issues that are being addressed through the creation of internal task forces, support from contractors, and the hiring of
additional staff. The SEC is implementing an aggressive plan to upgrade some of its management systems and processes in order
to undergo its first complete financial audit in2004. Efforts to upgrade financial systems, strengthen and streamline business
processes, and improve information technology security will continue as a multi-year effort. The SEC’s Inspector General requested
and the Comptroller General agreed that the General Accounting Office (GAO) will act as the Commission’s auditor for an initial
period.
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