NEWS | May 5, 2020

Finito: USAFMCOM finalizes ‘hire-to-retire’ civilian pay standardization

By Mark R. W. Orders-Woempner U.S. Army Financial Management Command

The U.S. Army Financial Management Command recently closed out a world-wide and years-long business process mapping initiative, which standardized how the Army pays its civilian employees from their hire date to the day they retire or separate.

“We looked at the Army’s entire ‘hire-to-retire’ process so that we can provide our auditors with a complete sight picture of how we pay our employees throughout their career and to ensure we are conducting business in a uniform way,” said Brig. Gen. Mark S. Bennett, USAFMCOM commanding general.

“We will now be able to use that baseline to work with all stakeholders, in and out of the Army, to improve those related business processes,” Bennett added.  

Understanding those processes, especially for an auditor who may not have extensive government or military experience, can be a challenge.  

“We find that the way the Department of Defense and the Department of the Army do business is unlike any Fortune 500 company out there, and unfortunately, that puts our independent public accountants, our auditors, at a disadvantage,” said Matthew Macko, USAFMCOM Business Process Improvement division chief.

“If I’m the new associate auditor coming in, I want to be able to read the process standard that states, ‘this is how we’ve defined everything that impacts that financial statement as it relates to a process,’” Macko continued. “I want something that orients me from start to finish on how all the processes and sub-processes fit together, how systems are being used, how systems are being used to perform processes and if there are key controls in place.”

In 1990, Congress passed the Chief Financial Officers Act, requiring all requiring the DoD to develop auditable accounting systems and submit to annual audits. The DoD has been working toward that effort ever since and went through two financial statement audits in as many years. Looking to help those auditors and the Army as a whole, Macko and his team set out to tackle civilian pay.

“We looked at all the processes that have an impact on financial statement auditability, and one of the major end-to-ends is ‘hire-to-retire,’” said Macko. “That is, how do we account for an employee from the date of hire all the way until they retire or leave federal service?”

The team was able to quickly document how the Army’s business processes for U.S. civil service pay, but they found some unique outliers in the way the Army pays local nationals, citizens from other nations who work for the Army outside the United States.

“(Army civilian pay) is done in a pretty standardized way, and any deviations from a single standard are based on mission requirements and documented within the process,” said Macko, who leads a team of 15 people from various disciplines. “There were five local national pay processes, in addition to U.S. civilian pay processes, that the Army manages for itself and doesn’t defer to the State Department when hiring employees from other countries where we have troops stationed.”

Those processes dealt with employee actions in Germany, Belgium, Korea, the Netherlands and Italy. The USAFMCOM team was able to wrap up all but one of those countries within a couple months of when they had documented U.S. civilian pay, but the Italian processes were being moved to a newer pay system, delaying their start.

In January 2019, the team said they felt the newly minted Italian Local National Pay System had been put through its paces and stabilized enough for documentation.  

“We began to work with the 266th Financial Management Support Center, and the director insisted we come over so they could show us how they did business,” recalled Macko, who added being able to interact face-to-face with their U.S. Army Civilian Human Resources Agency and U.S. Army Europe counterparts was invaluable.

“We needed to round out a holistic approach on how we conduct business, including how everything works out on the back end and reports to the financial statements,” he added. “We had to ensure we had everything right.”

Over the last year, the team focused its efforts on that and coordinated their efforts with every stakeholder in the process. From the organizations already mentioned, to the individual units, the Deputy Assistant Secretary of the Army (Financial Operations) and the Defense Finance and Accounting Service, USAFMCOM made sure they considered everyone’s input relative to each civilian pay process.

“This isn’t a headquarters saying ‘thou shalt,’ and then trying to get everyone to buy-in to a plan after it’s been worked out,” explained Macko. “They’ve had the opportunity to have input from the ground up, and we received 100 percent concurrence.”

Going forward, USAFMCOM’s Business Process Management Team said they intend to leverage the standardization and documentation to make even greater gains.

“Now, we have this baseline, and we’ve seen how business is being done today,” concluded Macko. “We can start looking for efficiencies, for better ways to do business, whether that’s reducing system interfaces, making a manual process more efficient by removing some unnecessary, non-value added steps to drive down costs and allow the Army to better optimize how it better spends its appropriated dollar.”

USAFMCOM conducts enterprise-level financial operations and provides technical coordination for financial management units and commands across the Army in order to ensure the effective implementation of policies and programs to support optimally resourcing the Army.

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