Board Report: 2015-MO-B-006 March 31, 2015
The OD&I's mission is to ensure equal opportunity for all persons and to promote diversity relating to the Board's initiatives to employ, manage, and retain its human capital. This section discusses the OD&I's compliance with applicable provisions of the Dodd-Frank Act, the Board's application of the EEOC's MD-715 requirements, and the Board's compliance with provisions of the No FEAR Act as set forth in the Board's employment rules. It also presents the OD&I's organizational structure.
We found that the Board could benefit from finalizing its diversity strategic plan. We also found that the Board should formalize standards for equal employment opportunity and racial, ethnic, and gender diversity of the workforce and the senior management of the agency and ensure that No FEAR Act training is offered on a regular basis. In addition, we noted that the OD&I could enhance its communication to divisions on EEO matters and diversity initiatives. Finally, the OD&I should strengthen its internal controls for data collection and processing for MD-715 reporting.
The Dodd-Frank Act required the Board to establish an OMWI. To satisfy this requirement, the Board established the OD&I in January 2011. The OD&I houses the preexisting EEO function; the Diversity and Inclusion section, which is responsible for programs for minorities, women, and other employees at the Board; and OMWI, which is responsible for implementing the applicable provisions of the Dodd-Frank Act related to financial education, supplier diversity, and regulated entities. The Director of the OD&I reports to the Board's Administrative Governor and to the Chief Operating Officer.62
The Board follows the EEOC's MD-715, which includes general reporting requirements that help an agency identify and eliminate any barriers that impede free and open competition in the workplace and prevent individuals of any racial or national origin group or either sex from realizing their full potential. As part of its annual MD-715 reporting, the Board reports its identification of barriers to equal employment opportunity and its plans to eliminate such barriers.
In addition, the Board has adopted provisions of the No FEAR Act and its implementing regulations63 that require agencies to (1) post quarterly, on their public website, certain summary statistical data relating to EEO complaints filed under title 29, part 1614, of the Code of Federal Regulations and (2) notify current and former employees and applicants for federal employment of their rights and protections against discrimination. The No FEAR Act also requires each agency to develop a written plan for training all its employees, including supervisors and managers. In response to the No FEAR Act's requirements, the Board developed the No FEAR Act Written Training Plan, which outlines how the Board will satisfy the No FEAR Act requirements. The plan includes, but is not limited to, providing training to all new Board employees within 90 days of employment and refresher training to Board employees.
The EEOC produces an Annual Report on the Federal Workforce that includes, among other data, information on federal EEO complaints and alternative dispute resolution activities. Similar to other federal agencies, the Board reports this information on the EEOC's Annual Federal Equal Employment Opportunity Statistical Report of Discrimination Complaints. Federal agency administrators upload data into the EEOC's Federal Sector EEO Portal, which is only accessible to authorized federal agency administrators.
An OD&I official explained that the OD&I's structure is based on its three functions:
We assessed the OD&I's activities for compliance with 10 requirements of section 342 of the Dodd-Frank Act that pertain to our audit objective. We found that the OD&I complies with 9 of the 10 requirements and partially complies with 1 requirement, as shown in table 8.
| Relevanta OMWI requirements applicable to the Board | Fully satisfies | Partially satisfies |
|---|---|---|
| The Director of each Office shall be appointed by, and shall report to, the agency administrator. | ✓ | |
| Each Director shall develop standards for equal employment opportunity and the racial, ethnic, and gender diversity of the workforce and senior management of the agency: | ✓ | |
| Each Office shall submit to Congress an annual report regarding the actions taken by the agency and the Office pursuant to this section, which shall include | ||
|
the successes achieved and challenges faced by the agency in operating minority and women outreach programs |
✓ | |
|
the challenges the agency may face in hiring qualified minority and women employees and contracting with qualified minority-owned and women-owned businesses; and |
✓ | |
|
any other information, findings, conclusions, and recommendations for legislative or agency action, as the Director determines appropriate. |
✓ | |
| Each agency shall take affirmative steps to seek diversity in the workforce of the agency at all levels of the agency in a manner consistent with applicable law. Such steps shall include | ||
|
recruiting at historically black colleges and universities, Hispanic-serving institutions, women's colleges, and colleges that typically serve majority minority populations; |
✓ | |
|
sponsoring and recruiting at job fairs in urban communities; |
✓ | |
|
placing employment advertisements in newspapers and magazines oriented toward minorities and women; |
✓ | |
|
partnering with organizations that are focused on developing opportunities for minorities and women to place talented young minorities and women in industry internships, summer employment, and full-time positions; |
✓ | |
|
any other mass media communications that the Office determines necessary. |
✓ |
Source: OIG analysis of the Board's Annual Report to Congress on OMWI, OIG interviews with OMWI officials, Board policies and procedures, and section 342 of the Dodd-Frank Act (12 U.S.C. § 5452).
a We only analyzed the Dodd-Frank Act requirements that pertained to the scope of our audit. Return to table
The OD&I submitted annual reports to Congress for 2011, 2012, and 2013, which outlined its activities, successes, and challenges. The OD&I focused on agency diversity issues by partnering with the six Board employee advisory committees that deal with gender, race/ethnicity, and diversity.66
In addition, Board officials indicated that the OD&I participates in divisions' recruiting efforts and in national diversity recruiting events by sharing the costs associated with career fairs and attending affinity group67 engagements hosted by professional minority organizations. We also noted that the OD&I is involved with the hiring of Board officers, as detailed in the Recruiting and Hiring section of this report. However, the Director of the OD&I has not formalized standards for equal employment opportunity and the racial, ethnic, and gender diversity of the workforce and the senior management of the agency.
We found that the Board has not finalized its diversity and inclusion strategic plan. Board officials, including those within the OD&I, were in the process of developing this plan during our audit. The Board's Strategic Framework 2012–15 states,
OD&I is working with Human Resources and Procurement staff at the Board to (1) ensure a commitment to recruit and retain a staff that is diverse and inclusive and (2) develop standards and procedures to ensure, to the extent possible, the fair inclusion and utilization of minority and women-owned businesses in the Board's procurements.
The Board is developing its 2016–2019 strategic plan, which will include a component on diversity.
GAO's Diversity Management: Expert-Identified Leading Practices and Agencies Examples states that an agency's diversity strategy and plan should be developed and aligned with the organization's overall strategic plan. Further, GAO reports that one expert suggests that organizations link diversity to their overall strategic plan to ensure that diversity initiatives are not viewed as extras that could be vulnerable to cuts, for example, when funds are tight. An agency that incorporates diversity as part of its strategic plan can translate its diversity aspirations into a tangible practice and can foster a culture change that supports and values differences.
Implementation of a diversity and inclusion strategic plan tied to the Board's strategic plan would promote a culture of diversity and inclusion in achieving the Board's goals. The plan can also provide a base from which progress can be measured on the Board's diversity and inclusion objectives.
We recommend the Director of the OD&I
The Board concurs with our recommendation. In its response, the Board states that it will finalize the diversity and inclusion strategic plan. In addition, the Director of OMWI is a member of the Board's 2016–2019 strategic plan workgroup and is ensuring that the key elements of the diversity and inclusion plan are included.
The actions described by the Board appear to be responsive to our recommendation. We plan to follow up on the Board's actions to ensure that the recommendation is fully addressed.
We found that the Director of the OD&I has not formalized the OD&I's standards for equal employment opportunity and racial, ethnic, and gender diversity of the workforce and the senior management of the agency, as required by section 342(b)(2)(A) of the Dodd-Frank Act. Although the OD&I's diversity efforts are guided by federal government EEO requirements, it has not formalized a set of standards as required by the Dodd-Frank Act.
As a benchmarking exercise, we reviewed the standards of another financial regulatory agency's OMWI that were documented in the agency's overall diversity and inclusion strategic plan. In developing standards, the OMWI used the agency's strategic plan, annual performance budget information, the Federal Equal Employment Opportunity Recruitment Plan,68 and the MD-715. Following best practices, the financial regulatory agency's diversity and inclusion strategic plan contains standards that include the agency's attestation of, commitment to, and definition of diversity and inclusion, as well as the agency's goals, implementation measures, priorities, and actions to satisfy Dodd-Frank Act requirements and to enhance diversity and inclusion within the agency.
Since 1995 and prior to the creation of the OD&I, the Board sponsored EEO and affirmative action programs that included promoting diversity in its employment practices. The OD&I considers elements of these legacy programs, as well as the EEOC guidance used for MD-715 reporting, as its Dodd-Frank Act–required standards.
Formalizing standards can increase the transparency of the OD&I's diversity processes and practices and the way in which it plans to meet its internal objectives, monitor its progress, and meet its long-term goals. Without formalized standards, the Board is only partially compliant with the Dodd-Frank Act and may be limited in its ability to evaluate its effectiveness in promoting equal employment opportunity and diversity within its workforce and senior management.
We recommend that the Director of the OD&I
The Board concurs with our recommendation. In its response, the Board states that it plans to formalize the standards the OD&I relies on for equal employment opportunity and the racial, ethnic, and gender diversity of the workforce and the senior management of the agency, which will be included in the diversity and inclusion strategic plan.
The actions described by the Board appear to be responsive to our recommendation. We plan to follow up on the Board's actions to ensure that the recommendation is fully addressed.
We found that the OD&I does not provide training related to EEO and diversity to all employees on a regular basis. No FEAR Act training is required every two years. The Board provided No FEAR Act training in 2011; however, the OD&I did not retain any records pertaining to this training. No FEAR Act training, as described in the Board's No FEAR Act Written Training Plan, was not provided in 2013.
The OD&I is responsible for providing EEO, No FEAR Act, and diversity training. Internal and external guidance related to administering these trainings includes the following:
An OD&I official informed us that both EEO and diversity training were included in the No FEAR Act training that was required for all Board employees in 2014. In addition, the OD&I official indicated that the office provided customized EEO and diversity training based on trends or issues observed in particular divisions. Division officials we spoke with expressed an interest in having more guidance on the EEO complaint handling process.
In 2011, a Board contractor provided No FEAR Act training. According to an OD&I official, the vendor retained records of attendance using its own identification system and OD&I officials verified employees' completion of the training by matching Board employee identification numbers to those in the vendor's identification system. However, the OD&I did not retain records of this verification or of the training modules that were taught. The contract ended in 2011, and similar training was not offered Boardwide in 2013.
Providing No FEAR Act training—which includes both EEO and diversity and inclusion elements—on a regular basis can benefit the Board. For example, training on equal employment opportunity can inform employees who may wish to file EEO complaints and managers who handle such complaints, and it can assist the Board in establishing a model EEO program. Further, training on diversity and inclusion can help employees to understand how diverse perspectives can improve organizational performance. To ensure that the training accomplishes these goals, the Board will need to evaluate the effectiveness of the training offered and take steps to make improvements, as needed.
On October 27, 2014, the OD&I offered a web-based No FEAR Act training that was mandatory for all employees. Additional training modules were provided for supervisors, managers, and officers.
We recommend that the Director of the OD&I
The Board concurs with our recommendation. In its response, the Board states that it will continue to provide No FEAR Act training on a regular basis. In addition, it will explore methods to evaluate the training for effectiveness and to incorporate improvements as needed. Further, the Board will consider including provisions in its contract for the training that would require the vendor to provide the Board with evidence of employees' completion of the training.
The actions described by the Board are generally responsive to our recommendation. While the Board will explore methods to evaluate the No FEAR Act training for effectiveness, we encourage the Board to tailor the program to the Board's workplace needs, as necessary. We also encourage the Board to retain evidence of employees' completion of the No FEAR Act training. We plan to follow up on the Board's actions to ensure that the recommendation is fully addressed.
Board division officials reported that they experienced varying levels of interaction with and guidance from the OD&I. Specifically, four divisions reported positive experiences with the OD&I in regard to its EEO function and its diversity and inclusion activities. However, the remaining divisions communicated a variety of concerns that indicate perceived limits to the OD&I's value and impact, including not understanding the function of components within OD&I, the limited assistance available to managers and officers with respect to the EEO complaint process, and the OD&I's minimal involvement during the recruiting and hiring of specialized positions.
Further, one division expressed that it would like the OD&I to address developmental issues for women and minorities. Additionally, another division stated that it would like the OD&I to hold annual or biannual meetings with division management to, among other things,
The OD&I's objectives are to provide guidance to Division Directors, managers, and supervisors to help them resolve EEO matters as they arise and to participate in planning and implementing the divisions' EEO and diversity programs, including talent management, employee coaching, career development, recruitment, outreach, intern programs, and leadership development. However, these objectives do not fully address OD&I's roles and responsibilities, which will assist divisions in understanding the function of components within the OD&I.
According to an OD&I official, prior to the Dodd-Frank Act enactment, the EEO section and the Diversity and Inclusion section conducted outreach to the divisions. Although the Board established the OD&I to include an OMWI function in response to the Dodd-Frank Act requirements, according to the OD&I official, the OD&I has not significantly modified its approach because these activities were already being covered prior to the enactment of the Dodd-Frank Act.
We believe that the OD&I can further its objectives by enhancing communications with all Board divisions on EEO and diversity and inclusion efforts. This approach can also assist the OD&I in aligning its efforts to its objectives and better enable the office to ensure equal opportunity for all persons and to promote diversity relating to the Board's initiatives to employ, manage, and retain its human capital.
We were informed that the OD&I is developing a quarterly reporting tool for each division. The tool's purpose is to support the Board's strategic objectives and commitment to attract, hire, develop, promote, and retain a highly diverse workforce and to show each division's progress. The OD&I plans to implement this tool during the second quarter of 2015. The sharing and discussion of the quarterly reporting tool results with the divisions will provide the OD&I with an opportunity to clarify its roles and responsibilities and provide guidance and assistance to divisions.
We recommend that the Director of the OD&I
The Board concurs with our recommendations. In its response, the Board states that it will take steps to increase the divisions' awareness of the OD&I's roles and responsibilities. In addition, the Board plans to implement a new quarterly reporting tool for divisions that will establish specific diversity and inclusion strategies and initiatives.
The actions described by the Board are generally responsive to our recommendations. While we acknowledge that the OD&I's objectives are updated annually as part of the Board's budget process, the stated objectives do not fully address the OD&I's roles and responsibilities. A more comprehensive document may assist divisions in understanding the functions of the components within the OD&I. We plan to follow up on the Board's actions to ensure that the recommendations are fully addressed.
We analyzed the workforce data in the Board's human resources database and had difficulty reconciling the annual aggregated data to the information reported on the MD-715. We determined that the OD&I's process to filter the data used for the MD-715 report resulted in a limited overstatement of the number of promotions, separations, and new hires. Specifically, we found 20 duplicate entries, representing less than 1 percent of the 2,600 total entries in the promotions, separations, and new hires data in the Board's MD-715 report for 2011, 2012, and 2013. Although we identified a small number of errors in the MD-715 reporting, additional controls would help reduce the risk of significant errors occurring in the future.
Establishing appropriate internal controls helps agencies improve organizational effectiveness and accountability. GAO's Standards for Internal Controls in the Federal Government states that effective communications within the organization are needed to carry out internal controls and other responsibilities. In addition to internal communications, agencies should ensure that there are adequate means of communicating with, and obtaining information from, stakeholders. Moreover, effective information management is critical to achieving useful and reliable communication of information.
Further, National Institute of Standards and Technology Special Publication 800-53, Revision 4, Security and Privacy Controls for Federal Information Systems and Organizations, outlines mandatory information security controls for federal information systems, including in the areas of data output reconciliation and error correction.
The OD&I's process for reporting certain data in the MD-715 report consists of querying, downloading, and filtering data provided by HR. During the 2011–2013 period, we found that the data collected were not validated against the employee electronic records stored in HR. We believe that the duplicate entries resulted from the lack of mutual understanding between the OD&I and HR of the underlying data needed to complete a line item in the MD-715 report and the lack of internal controls in the OD&I to validate the data. We noted fewer duplicate entries in 2013 due to better collaboration between the OD&I and HR.
While we understand that the error rate was less than 1 percent, a documented data gathering methodology can facilitate consistent reporting and reduce the risk of reporting errors, such as the duplicate entries noted in our analysis. During our audit, we were informed that the OD&I will hire a data specialist to assist with the MD-715 reporting process.
We recommend that the Director of the OD&I and the Director of the Management Division
The Board concurs with our recommendation. In its response, the Board states that it agrees that it is always useful to take steps to ensure that data are reported as completely and accurately as possible, and the Board states that it will take the recommended steps to enhance the data reporting process.
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.
