The Board Can Enhance Its Diversity and Inclusion Efforts

Recruiting and Hiring

The Board recognizes that a work environment that attracts top talent is essential. We considered the Board's diversity efforts in its recruiting and hiring as part of our work to address the congressional request to examine the Board's overall human resources–related practices.

This section presents information on the Board's recruiting and hiring processes, including the competitive promotion process. Further, we present demographic statistics on recruiting and hiring. Our findings relate to the Board's processes for gathering and analyzing demographic data on applicants for certain specialized positions and officers.

The Board's Processes

The Board has four distinct processes for recruiting and hiring, depending on position type:

1. professional employees (other than professionals with specialized skills) and wage employees
2. specialized professional employees—legal assistants, attorneys, senior attorneys, and counsels
3. specialized professional employees—economists and research assistants
4. officers

The Board's recruiting and hiring processes for each position type are described below. For each recruitment process, Talent Acquisition assists with the final processing and onboarding of candidates selected for employment.

Recruiting and Hiring for Professional Positions (Other Than Professionals With Specialized Skills) and Wage Positions

The Board has established recruitment practices and uses a variety of methods to attract a broad range of candidates, including job boards, social media, and career fairs. In addition, the Board recruits from colleges and universities. The Board's Vacant-Position Policy provides guidance on posting vacancies, selecting the most qualified candidates from a pool of internal and external applicants, and promoting employee awareness of available career opportunities.

Talent Acquisition leads the Board's recruitment efforts and participates in recruiting events with entities such as the National Society of Hispanic MBAs, the National Society of Asian MBAs, and the Thurgood Marshall College Fund. Further, the Board recruits interns through (1) colleges and universities, including historically Black colleges and universities; (2) diversity-focused organizations, such as the Hispanic Association of Colleges and Universities, Washington Internships for Native Students, the Workforce Recruitment Program,²¹ and INROADS;²² and (3) special-interest publications. OD&I staff members accompany Talent Acquisition representatives at certain recruiting events.

The Board generally provides current employees the first opportunity to apply for open positions;²³ however, the Board may simultaneously advertise open positions to external and internal candidates. Applicants are asked to voluntarily provide their sex and race/ethnicity at the time of application. Talent Acquisition reviews the applications of internal and external candidates to determine whether they meet the position's minimum requirements. Talent Acquisition forwards the applications of qualified internal and external candidates to the hiring manager. The hiring manager identifies candidates to be interviewed. Upon selection of a candidate, the hiring manager informs Talent Acquisition, which then conducts reference and education checks and offers a salary. Applicant information for these professional and wage positions is stored in a centralized applicant database.²⁴

Recruiting and Hiring for Specialized Professional Positions—Attorneys

The Legal Division recruits for attorney positions in two ways. For mid-career attorney positions, the division can partner with Talent Acquisition to advertise a vacancy on the Board's public website. In August 2013, Talent Acquisition became involved in recruiting and screening attorney applicants. These applicants are asked to voluntarily provide demographic data at the time of application, and their information is stored in the same centralized applicant database that contains information on other professional and wage position applicants.

For entry-level attorney positions, a Legal Division recruiter recruits second- and third-year students from select law schools, which include schools that have banking law programs. Legal Division applicant information obtained through this process is also stored in the Board's centralized applicant database.

Recruiting and Hiring for Specialized Professional Positions—Economists and Research Assistants

Board divisions that recruit for and hire economists and research assistants have a standard practice for each type of position.²⁵ According to an economics division official, the Board's practice derives from universities' practice of posting relevant materials of those pursuing a PhD in economics on their public website. The Board develops its economist candidate pool in four ways:²⁶

• A representative for the Board's economics divisions downloads the job market materials of those pursuing a PhD in economics (e.g., curriculum vitae and publications) from select university websites, irrespective of whether the individuals have expressed an interest in working for the Board.
• A committee of Board economists contacts faculty members in economics and finance departments at universities in the United States and abroad to request referrals of individuals expected to be in the job market.
• Candidates can send job market materials to an e-mail address specified on the section of the Board's public website that describes economist positions at the Board.
• Candidates can apply through the American Economic Association's Job Openings for Economists listings.

Board divisions that hire economists contact individuals from this resultant candidate pool to offer them an interview at the American Economic Association's annual meeting in January. A subset of those interviewed are invited for additional interviews at the Board. An individual may be extended multiple interviews and offers, and the economics divisions ultimately choose the candidates to whom they will extend an offer of employment. All economist candidate information is stored in the economics divisions' proprietary database,²⁷ which is separate from the Board's centralized applicant database.

Research assistants are recruited twice a year through job fairs and outreach to economics and mathematics departments at a number of universities. Applicants for these positions are directed to the Board's website and must submit the required materials (college transcripts and a survey of interest form) to the Board. The materials are reviewed by staff members in several divisions, and qualified candidates are ranked based on credentials. Multiple divisions can interview and extend offers to research assistant candidates. Research assistants at the Board are typically employed for two years; however, their positions can be extended for a year.²⁸ Research assistant applicant materials are downloaded to a database that is separate from both the database used for economists' applications as well as the Board's centralized applicant database.

Divisions that recruit for economists request demographic data from applicants in the Board's economist database in a mass e-mail that is sent to all the e-mail addresses obtained from curriculum vitae accumulated during the development of the applicant pool, irrespective of whether the individuals have expressed an interest in working for the Board. Divisions that recruit for research assistants request demographic data from applicants after the applicants submit their job market materials. The e-mail contains a form that requests research assistant applicants to voluntarily provide their sex and race/ethnicity. Applicants choosing to disclose this information must return the form via e-mail. Data for all individuals being considered for these positions is manually compiled and submitted to HR. HR combines the economist and research assistant demographic data with all other applicant data contained in the Board's centralized applicant database to complete federal reporting requirements.

Hiring officials in the divisions that recruit economists and research assistants acknowledge that diversity within the economics profession is low and that the Board faces challenges in recruiting minorities for these positions. Divisions that hire for these specialized positions recruit at select schools with economist programs. Hiring officials state that they have taken measures to broaden their outreach for economists to underrepresented groups. For example, Board economists serve as program faculty at the American Economic Association Summer Program, which is designed for minority college-level students studying economics.

In addition, outreach is conducted at the high-school level to enhance students' interest in economics prior to college. For example, the FedEd program promotes outreach to underserved high schools in the Washington, DC, metro area and Math x Econ program brings students who are underrepresented in the field of economics, including minorities and women, from underserved high schools to the Board for a one-day program that highlights careers in economics in general and at the Board in particular.

Subsequent to our review, the Board, in partnership with the American Economic Association, hosted the National Summit on Diversity in the Economics Profession. The conference brought together Presidents and Research Directors of the Federal Reserve Banks and Chairs of economics departments from universities around the country to discuss, among other things, the state of diversity in the economics profession.

Recruiting and Hiring for Officers

Board divisions can recruit officers by using the assistance of an external search firm or using the assistance of Talent Acquisition. Divisions can also promote from within. However, officer hirings are managed by, and must be processed through, HR. Each division is charged with developing a detailed justification memorandum to support its officer selection. According to a Board official, Talent Acquisition and the OD&I review the candidate selection justification before it is submitted for approval by either the Oversight Governor for the division or the full Board of Governors.²⁹

As of June 2014, both Talent Acquisition and the Director of the OD&I are involved in the early activities of the officer hiring process. These activities include, but are not limited to, discussing the recruitment strategy, identifying the selection panel, and reviewing résumés. Information about the officer applicant pool varied from division to division and was not always captured in the Board's centralized database during the years under review.

Demographic Statistics

 Professional Positions (Other Than Economists and Research Assistants) and Wage Positions

During the application process, applicants for professional positions—including legal assistants, attorneys, senior attorneys, and counsels—and wage positions are prompted to voluntarily provide demographic data, to include sex and race/ethnicity. We analyzed demographic data from the Board's centralized applicant database pertaining to all applicants, to those applicants found to be qualified and referred to the hiring manager, and to those who were ultimately hired. The Board filled 232 professional and wage positions in 2011, 199 positions in 2012, and 154 positions in 2013.

Figure 5 illustrates the number of male and female applicants who applied and the number who were referred to the hiring manager during the period under our review. We found that similar percentages of male and female applicants were referred to the hiring manager. Applicants who did not voluntarily disclose their sex are included in the Unknown category.

Figure 5: Professional Position (Other Than Economist and Research Assistant) and Wage Position Applicants, by Sex, 2011–2013

Source: OIG analysis of Board-provided data.

The total distribution of hires by sex for professional positions (other than economists and research assistants) and wage positions during the three-year period was 339 males, or 57.95 percent of the total hired, and 246 females, or 42.05 percent of the total hired.

Figure 6 illustrates the race/ethnicity composition of applicants who applied and were referred to the hiring manager during the three years we reviewed. Applicants who did not voluntarily disclose their race/ethnicity are included in the Unknown category.³⁰

Figure 6: Professional Position (Other Than Economist and Research Assistant) and Wage Position Applicants, by Race/Ethnicity,^a 2011–2013

 Source: OIG analysis of Board-provided data.

^aOther includes (1) Native Hawaiian or Other Pacific Islander (Not Hispanic or Latino), (2) American Indian or Alaska Native (Not Hispanic or Latino), and (3) Two or More Races/Ethnicities (Not Hispanic or Latino). Unknown includes individuals who chose not to disclose their demographic data. Return to figure

Table 2 illustrates, for the period of our review, the race/ethnicity composition of applicants hired for professional positions (other than economists and research assistants) and wage positions. In the three-year period, approximately 43 percent of all such hires were non-White individuals.

Table 2: Professional Position (Other Than Economist and Research Assistant) and Wage Position Hires, by Race/Ethnicity, 2011–2013

Race/Ethnicity	Number hired	% of hired
Asian	82	14.02
Black/African American	128	21.88
White	333	56.92
Hispanic/Latino	31	5.30
Othera	11	1.88
Total hired	585	100.00

Source: OIG analysis of Board-provided data. 

Note: All hires fully disclosed their race/ethnicity. We were unable to compare the composition of hires to the composition of the applicant pool due to the number of Unknown responses in the applicant pool.

^a Other includes (1) Native Hawaiian or Other Pacific Islander (Not Hispanic or Latino), (2) American Indian or Alaska Native (Not Hispanic or Latino), and (3) Two or More Races/Ethnicities (Not Hispanic or Latino). Return to table

For more detailed information on the demographics of applicants for professional positions (other than economists and research assistants) and wage positions, see appendix D.

Specialized Positions for Economists and Research Assistants

We attempted to analyze the demographic trends of economist and research assistant applicants as they moved through the recruiting and hiring process; however, we were unable to perform a meaningful analysis due to the large number of applicants who had not voluntarily disclosed their sex or race/ethnicity.³¹ The economist database for storing applicant information differs from the database used to store information on research assistant applicants, and both are separate from the Board's centralized applicant database, which is used for other professional and wage position vacancies. As noted above, divisions that recruit for economists and research assistants request demographic data from applicants by sending a form in a separate mass e-mail, and in the case of economist candidates, demographic data is requested irrespective of whether the candidates have expressed an interest in working for the Board. Applicants choosing to disclose this information must return the form via e-mail.

The Board filled 116 economist and research assistant positions in 2011, 85 positions in 2012, and 112 positions in 2013. Upon gaining employment at the Board, all economists and research assistants disclosed their sex for the years under review. The total distribution of economist and research assistant hires by sex during the three-year period was 206 males, or 65.81 percent of the total hired, and 107 females, or 34.19 percent of the total hired.

Table 3 illustrates the total distribution of economist and research assistant hires by race/ethnicity during the period of our review. Approximately 25 percent of economist and research assistant hires during this period were non-White.

Table 3: Economist and Research Assistant Hires, by Race/Ethnicity, 2011–2013

Race/Ethnicity	Number hired	% of hired
Asian	61	19.49
Black/African American	2	0.64
White	234	74.76
Hispanic/Latino	10	3.19
Othera	6	1.92
Total hired	313	100.00

Source: OIG analysis of Board-provided data.

Note: All hires fully disclosed their race/ethnicity. We were unable to compare the composition of hires to the composition of the applicant pool due to the number of Unknown responses in the applicant pool.

^aOther includes (1) Native Hawaiian or Other Pacific Islander (Not Hispanic or Latino), (2) American Indian or Alaska Native (Not Hispanic or Latino), and (3) Two or More Races/Ethnicities (Not Hispanic or Latino). Return to table

For more detailed information on the demographics of applicants for economist and research assistant positions, see appendix D.

The OIG's Analysis of Nondisclosure of Demographic Information

We found that in 2011, approximately 67 percent of individuals considered for economist and research assistant positions did not voluntarily disclose their sex or race/ethnicity, which was considerably higher than the 10 to 15 percent nondisclosure rate of applicants for professional positions (other than economists and research assistants) and wage positions (table 4). In 2012, the nondisclosure rate of economist and research assistant applicants approximated 59 percent, and in 2013, this rate rose to approximately 92 percent. The low response rate may be attributable to the fact that a mass e-mail is sent to the applicant pool for economist positions, irrespective of whether the individuals have expressed an interest in working for the Board. Also, in 2013, according to a Board official, the e-mail was not sent. See appendix D for a distribution of the applicants who voluntarily disclosed their demographic data.

Table 4: Percentage of Applicants Who Did Not Voluntarily Disclose Demographic Information, by Type of Position, 2011–2013

Applicant type	2011	2012	2013
Unknown sex
Economist and research assistant	67.01	58.96	92.13
Other professional position and wage position	10.14	11.38	11.43
Unknown race/ethnicity
Economist and research assistant	67.19	59.31	92.26
Other professional position and wage position	14.89	16.86	16.18

Source: OIG analysis based on Board-provided data.

Officers

We attempted to analyze the applicant demographic data for officer positions; however, these data were not consistently tracked by Talent Acquisition and Board divisions. As such, we conducted an analysis of the sex and race/ethnicity of the number of officers selected during the years under our review. The Board filled 30 officer positions in 2011, 26 in 2012, and 18 in 2013 (table 5). Of these 74 officer positions filled through internal promotions and external hires, 41.89 percent were female. The race/ethnicity composition of officers selected over the three-year period was as follows: 8.11 percent were Asian, 8.11 percent were Black/African American, 81.08 percent were White, 1.35 percent were Hispanic/Latino, and 1.35 percent were Other.

Table 5: Officer Selections, by Sex and by Race/Ethnicity, 2011–2013

Demographic group	2011		2012		2013
	Number selected	% of selected	Number selected	% of selected	Number selected	% of selected
Sex
Male	13	43.33	19	73.08	11	61.11
Female	17	56.67	7	26.92	7	38.89
Total	30	100.00	26	100.00	18	100.00
Race/Ethnicity
Asian	1	3.33	5	19.23	0	0.00
Black/African American	3	10.00	3	11.54	0	0.00
White	25	83.33	17	65.38	18	100.00
Hispanic/Latino	1	3.33	0	0.00	0	0.00
Othera	0	0.00	1	3.85	0	0.00
Total	30	100.00	26	100.00	18	100.00

Source: OIG analysis based on Board-provided data.
Note: Officer selections include both internal promotions and external hires.
^aOther includes (1) Native Hawaiian or Other Pacific Islander (Not Hispanic or Latino), (2) American Indian or Alaska Native (Not Hispanic or Latino), and (3) Two or More Races/Ethnicities (Not Hispanic or Latino). Return to table

Finding: The Board Cannot Fully Assess the Level of Diversity in the Economist and Research Assistant Applicant Pool

We found that in 2011 and 2012, over half the individuals in the economist and research assistant database did not voluntarily disclose their sex and race/ethnicity; this percentage rose to over 90 percent in 2013. We were informed that in 2013, no economist applicants disclosed demographic information. These rates of nondisclosure did not facilitate demographic trend analysis in the economist and research assistant applicant pools.

The EEOC's guidance to federal agencies for MD-715 reporting instructs agencies to report applicant demographic data for prescribed occupational categories. Pursuant to this guidance, the Board reports applicant pool data for occupational categories that include economists and research assistants. Further, the guidance states that if a particular group has a low participation rate in a particular occupation, the agency should determine whether recruitment efforts are resulting in a diverse pool of applicants. The Board cannot assess the degree to which the economist and research assistant applicant pool is diverse because the Board's process to collect demographic data for these applicants has resulted in high nondisclosure rates.

Divisions request demographic data from individuals considered for economist and research assistant positions in an additional step in the recruitment process by sending a mass e-mail that contains a form requesting the individual to voluntarily provide his or her sex and race/ethnicity. In the case of economist applicants, this e-mail is sent irrespective of whether the individuals have expressed an interest in working for the Board. Research assistant applicants are asked after their expression of interest in employment. If the individual chooses to disclose this information, he or she must return the form via e-mail. In contrast, professional and wage applicants are asked to voluntarily disclose their demographic data at the time they apply for a position on the Board's website, and the information is stored in the Board's centralized applicant database. In 2013, according to an official, the mass e-mail to request economists' demographic data was never released due to an administrative error.

We found that the method used to obtain demographic data from economist and research assistant applicants did not result in a response rate that enabled the agency to identify diversity trends in its economist and research assistant applicant pool. This method is less effective than the method used for professional positions (other than economists and research assistants) and wage positions, which yields a higher percentage of applicants disclosing demographic data.

Management Actions

According to an official, the Board implemented a new process for economist candidates in 2014 in which the Board automatically requests self-disclosure of demographic information within 24 hours of the Board obtaining an economist applicant's e-mail address. This process eliminates the administrator's role of releasing the mass e-mail.

Recommendation

We recommend that the Directors of the divisions that recruit economists and research assistants

1.  Develop and implement an alternative method for collecting the demographic data of economist and research assistant applicants to improve the response rate.

Management's Response

The Board concurs with our recommendation. In its response, the Board notes that management began implementing a new process to automatically request self-disclosure of demographic information within 24 hours of obtaining an economist applicant's e-mail address. The Board will assess whether this change provides a significant improvement in response rates for economist and research assistant applicants and, if not, will consider other changes in order to obtain demographic data for economist and research assistant applicants.

OIG Comment

The actions described by the Board are generally responsive to our recommendation. We plan to follow up on the Board's actions to ensure that the recommendation is fully addressed.

Finding: The Board Did Not Consistently Track Officer Applicant Demographic Data

We found that the Board's method for recruiting and hiring officers did not produce information that shows the diversity of the applicant pool. Demographic information for the officer applicant pool was not consistently tracked by Talent Acquisition, the hiring division, or the executive search firms used by divisions. We also noted that during 2011–2013, two officer positions were tracked in the Board's centralized applicant database.

The MD-715 guidance requires agencies to report applicant demographic data for occupational categories, including senior-level positions. Further, the guidance states that if a particular group has a low participation rate in the applicant pool, the agency should determine whether recruitment efforts are resulting in a diverse pool of applicants.

Historically, the Board's divisions have operated autonomously in establishing their management processes, including those for recruiting and hiring officers. A division may fill an officer vacancy by promoting from within the division, using an executive search firm, or posting a vacancy announcement through the Board's centralized applicant database. Because the Board has several methods to recruit and hire officers and does not consistently collect voluntary demographic data for officer applicants, the Board cannot assess the diversity of the applicant pool for officer-level positions. By establishing a standardized formal process to ensure that officer applicant demographic data are captured, the Board can better assess whether its officer recruitment efforts are resulting in a diverse pool of applicants.

Management Actions

In June 2013, the Board began a more standardized process to recruit for officer positions. Further, all officer positions will be tracked through the centralized applicant database. This standardized process may allow Talent Acquisition to accumulate demographic data and measure trends in diversity at the officer-applicant level. While these efforts will provide the Board with better information to assess the diversity of its officer applicant pool, we note that there may be gaps in the demographic data when divisions use an executive search firm to recruit officer candidates.

Recommendation

We recommend that the Chief Human Capital Officer 

2. Ensure that the demographic data for all internal and external officer applicants are maintained in the Board's centralized applicant database.

Management's Response

The Board concurs with our recommendation. In its response, the Board notes that management began to implement processes to track officer positions, which it believes will allow it to accumulate demographic data and measure trends in diversity at the officer-applicant level.

OIG Comment

The actions described by the Board are generally responsive to our recommendation. We plan to follow up on the Board's actions to ensure that the recommendation is fully addressed.

• 21. The Workforce Recruitment Program is a nationwide recruitment and referral program that connects federal and private-sector employers with highly motivated college students and recent graduates with disabilities. Return to text
• 22. INROADS is the nation's largest nonprofit source of paid internships for undergraduate students of diverse backgrounds. Return to text
• 23. Employees may apply after the internal-only posting period ends, but they are then considered as external applicants and are not guaranteed an interview. Return to text
• 24. Talent Acquisition uses a human resources software application that manages the recruiting and hiring process. Information stored in the software database assists with evaluating candidate qualifications, tracking new hires, and maintaining metrics. Return to text
• 25. Six Board divisions hire economists and research assistants: Research and Statistics, International Finance, Monetary Affairs, Office of Financial Stability Policy and Research, Banking Supervision and Regulation, and Reserve Bank Operations and Payment Systems. Return to text
• 26. For the purposes of our review, an economist or research assistant applicant is a candidate whose information is stored in the economics divisions' proprietary database. These individuals may or may not have expressed an interest in working for the Board. An applicant's job market materials are considered by multiple Board divisions. Return to text
• 27. Multiple divisions may consider any candidate in the database for an economist or research assistant position. As a result, individuals were counted multiple times. Return to text
• 28. Research assistants are considered as part of the Board's permanent workforce. Return to text
• 29. Internal officer promotions are approved by the division's Oversight Governor and the Administrative Governor. For a newly created officer position, officer vacancies filled with external candidates, or a Board employee who is being considered for an officer position, the members of the Board of Governors must approve the position and the new officer appointment. Return to text
• 30. Because applicants are not asked to provide a birthdate during the application process, we did not conduct an analysis of the age of applicants and referred applicants. Return to text
• 31. For the purposes of our review, an economist or research assistant applicant is a candidate whose information is stored in the economics divisions' proprietary database. These individuals may or may not have expressed an interest in working for the Board. An applicant's job market materials are considered by multiple Board divisions. Return to text