The CFPB Can Enhance Its Diversity and Inclusion Efforts

Introduction

Objective

The Office of Inspector General (OIG) conducted an audit in response to a March 24, 2014, congressional request for information on the Consumer Financial Protection Bureau's (CFPB) activities related to diversity and inclusion.¹ We received a similar congressional request for information on activities related to diversity and inclusion for the Board of Governors of the Federal Reserve System, as did the OIGs of five other federal financial regulatory agencies.² We coordinated with the other OIGs to develop a comparable objective and scope to address the congressional requests.

Our resultant objective was to assess the CFPB's human resources-related operations and other efforts to provide for equal employment opportunities, including equal opportunity for minorities and women to obtain senior management positions, and increase racial, ethnic, and gender diversity in the workforce. To answer our objective, we

• reviewed relevant human resources-related operations, policies, and procedures (e.g., performance management, hiring, and promotions) to determine whether adequate controls are established to prevent and detect bias or discrimination
• analyzed information related to demographic statistics for minority and women employees (e.g., performance management, promotions, and representation at all levels of the agency); informal and formal equal employment opportunity (EEO) complaint statistics; and employee satisfaction survey results to determine whether this information suggests disparities in gender, race/ethnicity, or age
• assessed the CFPB's efforts to respond to complaints, employee satisfaction survey results, or other potential indications of bias or discrimination and to increase diversity throughout the agency
• evaluated the Office of Minority and Women Inclusion's (OMWI) role and involvement in monitoring the impact of the CFPB's personnel policies on minorities and women, as well as monitoring the CFPB's efforts to increase diversity in senior management positions
• identified factors that may impact the CFPB's ability to increase diversity in senior management positions
• reviewed the grievance process for bargaining-unit employees and analyzed related statistics for trends affecting equal employment, diversity, and inclusion

The scope of our audit included the CFPB's human resources-related operations affecting diversity and inclusion from when the agency began operations in July 2011 through the end of fiscal year (FY) 2013, as well as changes to policies and procedures since that time.³

We acknowledge that diversity and inclusion are much broader than the areas covered in our report and that initiatives and activities that are beyond the scope of our review also contribute to enhancing diversity and inclusion. The U.S. Office of Personnel Management (OPM) defines workforce diversity and inclusion, respectively, as follows:

[Workforce diversity is] a collection of individual attributes that together help agencies pursue organizational objectives efficiently and effectively. These include, but are not limited to, characteristics such as national origin, language, race, color, disability, ethnicity, gender, age, religion, sexual orientation, gender identity, socioeconomic status, veteran status, and family structures. The concept also encompasses differences among people concerning where they are from and where they have lived and their differences of thought and life experiences.⁴

[Inclusion is] a culture that connects each employee to the organization; encourages collaboration, flexibility, and fairness; and leverages diversity throughout the organization so that all individuals are able to participate and contribute to their full potential.⁵

OPM further stated that when an agency's workforce reflects the population it serves, it is better able to understand and meet the needs of its customers.⁶

For the purposes of our review, we focused on aspects of diversity and inclusion specifically related to gender, race/ethnicity, and age. These three aspects of diversity were emphasized as being of particular interest in our discussions with congressional staff. The race/ethnicity categories discussed in this report follow those prescribed by the U.S. Equal Employment Opportunity Commission (EEOC) as defined in its Equal Employment Opportunity Standard Form 100, Rev. January 2006, Employer Information Report EEO-1 Instruction Booklet. These categories include White (Not Hispanic or Latino), Black or African American (Not Hispanic or Latino), Hispanic or Latino, and Asian (Not Hispanic or Latino), among others.⁷ Details on our scope and methodology are in appendix B.

According to the U.S. Government Accountability Office (GAO), an agency with a diverse workforce that includes minorities and women in key positions benefits from multidisciplinary knowledge and skills that can help the organization better accomplish its mission and goals and increase innovation.⁸ Agencies with a diverse workforce achieve these benefits by fostering a work environment in which employees are enabled and motivated to contribute to continuous learning and improvement. When an organization's top leaders demonstrate the importance of diversity and inclusion initiatives--in terms of time spent, resources dedicated, and visibility of actions--they send a clear message about the organization's commitment to diversity management. The CFPB stated in its March 2014 Office of Minority and Women Inclusion of the Consumer Financial Protection Bureau Annual Report,

Just as we believe diversity makes good business sense in the industries we regulate, we are equally committed to holding ourselves to the highest standards of inclusion and fairness. We believe that a diverse workforce is essential to ensuring our work is relevant to and representative of the needs of the diverse American public.

In addition, the Director of the CFPB communicates the value of a diverse and inclusive workplace annually to all CFPB employees via an equal opportunity policy statement. This statement describes the importance of fostering a work environment that is fair, equitable, respectful, collaborative, diverse, and inclusive.

Background

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) established the CFPB as an executive agency, as defined in title 5, section 105, of the United States Code, and as a bureau within, yet autonomous from, the Federal Reserve System. As such, the CFPB follows certain employment provisions of title 5 of the United States Code and the implementing regulations within title 5 of the Code of Federal Regulations, such as those related to hiring, promotions, and employee satisfaction surveys. The CFPB must also adhere to the EEO provisions of title 29 and title 42 of the United States Code and the implementing regulations within title 29 of the Code of Federal Regulations.

Federal Government Standards, Guidance, and Best Practices Related to Diversity and Inclusion

This section highlights standards, guidance, and best practices related to diversity and inclusion, including EEOC management directives, GAO's Standards for Internal Control in the Federal Government, the federal government's merit system principles, OPM's Government-Wide Diversity and Inclusion Strategic Plan 2011, and diversity management leading practices.

The EEOC is responsible for enforcing federal laws concerning discrimination against a job applicant or an employee because of the person's race, color, religion, sex, national origin, age (40 or older), disability, or genetic information. Federal law also prohibits discrimination against a person based on a prior complaint about discrimination, or because the person filed a charge of discrimination or participated in an employment discrimination investigation or lawsuit. The EEOC provides leadership and guidance to federal agencies on all aspects of the federal government's EEO program. The EEOC ensures federal agency and department compliance with EEOC regulations, provides technical assistance to federal agencies concerning EEO complaint adjudication, monitors and evaluates federal agencies' affirmative employment programs, develops and distributes federal-sector educational materials and conducts training for stakeholders, and adjudicates appeals from administrative decisions made by federal agencies on EEO complaints.

The EEOC's Management Directive 715 (MD-715) provides policy guidance and standards to all executive agencies for establishing and maintaining effective EEO programs. The MD-715 defines the following six essential elements of a model EEO program:⁹

• demonstrated commitment from agency leadership
• integration of EEO into the agency's strategic mission
• management and program accountability
• proactive prevention of unlawful discrimination
• efficiency (e.g., efficient, fair, and impartial complaint resolution process)
• responsiveness and legal compliance

The EEOC's Management Directive 110 provides federal agencies with policies, procedures, and guidance relating to the processing of employment discrimination complaints governed by the regulations in title 29, part 1614, of the Code of Federal Regulations.¹⁰

The Federal Managers' Financial Integrity Act of 1982 requires executive agencies to establish internal accounting and administrative controls that are consistent with standards prescribed by GAO. GAO's Standards for Internal Control in the Federal Government provides the overall framework for establishing and maintaining internal control and for identifying and addressing major performance and management challenges and areas at greatest risk of fraud, waste, abuse, and mismanagement. Internal control comprises the plans, methods, and procedures used to meet the organization's mission, goals, and objectives. Internal control also provides reasonable assurance that the organization is operating efficiently and effectively. In the context of diversity and inclusion at the CFPB, internal controls can assist the agency in preventing and detecting bias or discrimination in its human resources-related activities. For example, employee satisfaction surveys can help agency leadership to better understand employees' perceptions of diversity and inclusion, and the survey results can be used to customize employee training on topics such as unconscious bias in the workplace.

The Civil Service Reform Act of 1978 states that federal personnel management should be implemented consistently with merit system principles and free from prohibited personnel practices, such as those defined by the EEOC. As codified, the nine merit system principles address topics such as recruitment, hiring, and promotions; fair and equitable treatment in all aspects of personnel management; employee retention and performance management; employee training; and employee protection against arbitrary action or personal favoritism.¹¹

Executive Order 13583, Establishing a Coordinated Government-wide Initiative to Promote Diversity and Inclusion in the Federal Workforce, directed executive departments and agencies to develop and implement a more comprehensive, integrated, and strategic focus on diversity and inclusion as a key component of their human resources strategies.¹² This approach should include a continuing effort to identify and adopt best practices, implemented in an integrated manner, to promote diversity and remove barriers to equal employment opportunity, consistent with merit system principles and applicable law.

The executive order required OPM to develop the Government-Wide Diversity and Inclusion Strategic Plan 2011, which highlights comprehensive strategies for executive agencies to employ in identifying and removing barriers to equal employment opportunity that may exist in recruitment, hiring, promotion, retention, professional development, and training policies and practices.¹³ The executive order further required executive agencies to implement OPM's plan.

GAO issued Diversity Management: Expert-Identified Leading Practices and Agency Examples in response to a separate congressional request to report on the federal government's performance in managing its diverse workforce. In its report, GAO identifies the following nine leading diversity management practices:¹⁴

Top leadership commitment--A vision of diversity demonstrated and communicated throughout an organization by top-level management.

Diversity as part of an organization's strategic plan--A diversity strategy and plan that are developed and aligned with the organization's strategic plan.

Diversity linked to performance--The understanding that a more diverse and inclusive work environment can yield greater productivity and help improve individual and organizational performance.

Measurement--A set of quantitative and qualitative measures of the impact of various aspects of an overall diversity program.

Accountability--The means to ensure that leaders are responsible for diversity by linking their performance assessment and compensation to the progress of diversity initiatives.

Succession planning--An ongoing, strategic process for identifying and developing a diverse pool of talent for an organization's potential future leaders.

Recruitment--The process of attracting a supply of qualified, diverse applicants for employment.

Employee involvement--The contribution of employees in driving diversity throughout an organization.

Diversity training--Organizational efforts to inform and educate management and staff about diversity.

GAO states in its report that the diversity management experts it spoke with or whose publications it reviewed generally agreed that organizations should consider a combination of these nine identified leading practices when developing and implementing diversity management.

The CFPB's Workforce

In this section, we provide information about the CFPB's workforce composition by gender, race/ethnicity, and age. This information provides context for the remainder of the report.

Composition of the Workforce

The CFPB's workforce grew from 666 employees by the end of FY 2011 to 1,323 employees by the end of FY 2013. As the workforce expanded, the percentage of employees in the gender, race/ethnicity, and age categories remained essentially the same. As shown in appendix C, table C-1, by the end of FY 2013 approximately 34 percent of the CFPB's workforce were non-White employees, 47 percent were female, and 48 percent of employees were 40 years of age or older.

In FY 2011-FY 2013, the percentage of non-White employees in the CFPB's workforce was higher than the percentage of non-White employees reported in the most recent American Community Survey (ACS) data, with the exception of Hispanic/Latino individuals and those categorized as Other (figure 1).¹⁵

Figure 1: Permanent CFPB Employees, FY 2011-FY 2013, and ACS Data,^a 2006-2010, by Race/Ethnicity

Source: OIG analysis of CFPB-provided data and the Census Bureau's ACS data. 

^aThese data are compiled through the survey, which randomly samples around 3.5 million addresses and produces statistics for five-year time periods. Return to figure

Gender ratios in the CFPB's workforce in all three fiscal years were generally in line with those in the five-year ACS data (figure 2).

Figure 2: Permanent CFPB Employees, FY 2011-FY 2013, and ACS Data,^a 2006-2010, by Gender

 Source: OIG analysis of CFPB-provided data and the Census Bureau's ACS data.

^aThese data are compiled through the survey, which randomly samples around 3.5 million addresses and produces statistics for five-year time periods. Return to figure

The percentage of CFPB employees under 40 years of age grew slightly over the three-year period; however, there are no comparable ACS data (figure 3).  

Figure 3: Permanent CFPB Employees by Age, FY 2011-FY 2013

Source: OIG analysis of CFPB-provided data.

For detailed workforce data, see appendix C.

Demographics by Pay Grade

The CFPB's pay structure contains 24 pay grades ranging from 10 (lowest) to 90 (highest). According to Office of Human Capital (OHC) officials, pay grades below 50 are equivalent to the federal government's General Schedule (GS)-10 and below, pay grades in the 50 to 70 series are equivalent to GS-11 to GS-15, and pay grades 80 and above are equivalent to the Senior Executive Service.¹⁶

In each year under review, White employees as a percentage of total employees within each pay grade series increased as the pay increased. For example, in FY 2013, White employees made up almost 52 percent of the below-50 pay grade series workforce, almost 70 percent of the 50-70 pay grade series workforce, and almost 76 percent of the 80-and-above pay grade series workforce (figure 4).

Figure 4: Workforce Distribution, by Race/Ethnicity and Pay Grade Series, FY 2011- FY 2013

Source: OIG analysis of CFPB-provided data.

Human Resources-Related Offices at the CFPB

The CFPB is composed of the Office of the Director and six supporting divisions, each with specific roles, responsibilities, and activities. Generally, the CFPB's human resources-related activities are undertaken by three offices: the OHC within the Operations division and the Office of Equal Employment Opportunity (OEEO) and OMWI within the Office of the Director.

Office of Human Capital

The OHC, led by the Chief Human Capital Officer, developed the FY 2013-FY 2015 CFPB Human Capital Strategic Plan to provide the CFPB with a roadmap of human capital initiatives and priorities. According to the plan, the CFPB plans to recruit and retain a diverse and highly qualified workforce through effective workforce planning and talent acquisition methods; strong engagement, diversity, and inclusion programs; and a competitive total rewards package. Sections within the OHC include Human Capital Services, Talent Acquisition, Talent Management, Organizational Development and Effectiveness, and Total Rewards.¹⁷

Human Capital Services

The OHC's Human Capital Services section is responsible for assisting the CFPB in meeting its staffing needs, addressing employee and labor relations issues, and ensuring that all human capital-related systems function properly. The section consists of (1) the Employee and Labor Relations group, which provides counseling, addresses grievances, and supports managers and employees with other human resources-related matters; (2) the Human Capital Systems and Operations group, which administers human capital information systems and provides budget, contract, and internal control support services for the OHC; and (3) the Staffing and Classification group, which works with hiring managers to develop position descriptions and fill vacancies.

Talent Acquisition

The OHC's Talent Acquisition section, which is primarily responsible for recruiting at the CFPB, collaborates with other sections within the OHC, OMWI, and the OEEO to carry out the CFPB's diversity recruitment strategy. The OHC's Diversity Recruitment Strategy outlines the agency's recruiting initiatives, which include conducting outreach to colleges and universities, developing relationships with professional and affinity organizations, and using social media and other recruiting tools.¹⁸

Talent Management

The OHC's Talent Management section is responsible for the CFPB's performance management program. The section provides training to supervisors and employees on performance management. Such training includes new employee orientation training, supervisors' training, and training for other employees. In addition, the section maintains an internal web portal that contains information related to performance management as well as online learning and development resources for employees.

Organizational Development and Effectiveness

The OHC's Organizational Development and Effectiveness section is responsible for assisting divisions in retaining the best people; creating a diverse, qualified workforce; and understanding employee feedback and data. The section provides candidate and organization assessments, workforce planning, organizational design, human capital reporting and analysis, and coaching services. For example, the section collects employee feedback through various tools (e.g., surveys, interviews, and focus groups) to increase understanding and improve employee involvement and empowerment.¹⁹ The section also measures progress through performance monitoring and evaluations, including information and reporting on critical human capital reporting metrics for quarterly performance reviews.

Total Rewards 

The OHC's Total Rewards section develops and implements the CFPB's compensation, benefits, and work-life programs. These programs are used to attract and retain CFPB employees.

Office of Equal Employment Opportunity

The U.S. Department of the Treasury (Treasury) managed the CFPB's EEO program from July 2011 through October 2012. During this time, the OHC's Employee and Labor Relations group coordinated with Treasury on EEO efforts. In February 2013, the CFPB established its OEEO to administer the CFPB's EEO program. The CFPB appointed the first Director of the OEEO in December 2013. 

The Director of the CFPB elevated the OEEO from the Operations division to a newly created office, the Office of Equal Opportunity and Fairness, within the Office of the Director, effective November 2014.²⁰ This new office includes both OMWI and the OEEO and is led by the Director of OMWI. This organizational change was part of an effort to underscore the importance of equal employment opportunity to the mission of the CFPB by facilitating closer communication and access to the Director of the CFPB for EEO issues and greater alignment and collaboration between the OEEO and OMWI in achieving diversity and inclusion goals across the agency. 

The OEEO is responsible for establishing and maintaining an EEO program at the CFPB in accordance with title 29, part 1614, of the Code of Federal Regulations (e.g., processing EEO complaints in accordance with Management Directive 110). The OEEO is also responsible for addressing requirements in the Notification and Federal Employee Antidiscrimination and Retaliation Act of 2002 (No FEAR Act),²¹ such as posting quarterly summary statistical data related to EEO complaints filed against the CFPB on its public website.

Additionally, the OEEO is responsible for ensuring that the agency follows the EEOC's MD-715, which prescribes requirements for developing a model EEO program through the identification of barriers to equal employment opportunity and the development of action items to eliminate such barriers. One such requirement is that agencies identify, monitor, and report significant trends reflected in complaint processing activity. 

Office of Minority and Women Inclusion

The Dodd-Frank Act required the CFPB to establish an OMWI that is responsible for all agency matters relating to diversity in management, employment, and business activities. The CFPB established its OMWI in January 2012 and appointed the first Director of OMWI in April of that year. The Director of the CFPB elevated OMWI from the Operations division to the Office of the Director effective April 2014. As noted above, in November 2014 the CFPB created a new office, the Office of Equal Opportunity and Fairness, within the Office of the Director that includes both OMWI and the OEEO. 

OMWI is responsible for, among other things, developing standards for equal employment opportunity and the racial, ethnic, and gender diversity of the workforce and senior management of the agency. The office must submit an annual report to Congress regarding actions taken by the CFPB, including, but not limited to, 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 any other information, findings, conclusions, and recommendations for legislative or agency action, as the Director of OMWI determines appropriate. 

In the Office of Minority and Women Inclusion section of this report, we discuss OMWI in more detail, including its role and involvement in monitoring the impact of the CFPB's human resources-related policies on minorities and women and the CFPB's efforts to increase diversity in senior management positions, as well as OMWI's overall effectiveness in enhancing diversity and inclusion at the CFPB. 

National Treasury Employees Union

In May 2013, CFPB employees voted in favor of representation by the National Treasury Employees Union (NTEU). Generally, nonsupervisory employees are classified as bargaining unit employees and are represented by the NTEU. Supervisory employees are typically classified as non-bargaining-unit employees. In FY 2013, bargaining-unit employees accounted for approximately 73 percent of the CFPB's workforce. 

In June 2013, the NTEU and the CFPB established an interim agreement that primarily addressed grievance procedures for bargaining-unit employees. In October 2014, the NTEU and the CFPB established specific collective bargaining agreement articles for telework, promotions, relocation, performance management, compensation, and grievance and arbitration. The CFPB has acknowledged the need to engage the NTEU as the CFPB addresses some of the recommendations noted in our report. 

Human Resources-Related Activities at the CFPB

The five human resources-related activities pertaining to diversity and inclusion that are covered in this report and the respective offices with primary responsibility for these activities are shown in table 1.

Table 1: CFPB Offices With Primary Responsibility for Relevant Human Resources-Related Activities

Officea	Human resources-related activities at the CFPB
	Recruiting and hiring	Performance management	Promotions and succession planningb	Employee complaints	Employee satisfaction surveys
Office of Human Capital
Human Capital Services	primary for hiring		primary for promotions	primary for non-EEO
Talent Acquisition	primary for recruiting
Talent Management		primary
Organizational Development and Effectiveness					primary
Office of Equal Employment Opportunity				primary for EEO

Source: OIG analysis of CFPB-provided documents and interviews.

^aOMWI coordinates with both the OHC and the OEEO for several human resources-related activities (e.g., recruiting, hiring, and employee satisfaction surveys). Return to table
^bIn October 2014, the CFPB developed a Succession Management Guide to help structure succession planning implementation efforts across the agency. See the Promotions and Succession Planning section of this report for further details. Return to table

The congressional request that initiated our work identified specific activities to examine with respect to diversity and inclusion in the CFPB's senior management and across the six divisions. These activities include recruiting and hiring; performance management; promotions and succession planning; employee complaints; employee satisfaction surveys; and more generally, OMWI's overall effectiveness in enhancing diversity and inclusion at the CFPB. Our findings and recommendations related to each of these activities are discussed in the remaining sections of this report.

• 1. The congressional request letter is in appendix A. Return to text
• 2. The OIGs that received similar requests are those for the U.S. Department of the Treasury's Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, and the U.S. Securities and Exchange Commission. Return to text
• 3. The CFPB operates on a fiscal year that runs from October 1 through September 30. Return to text
• 4. U.S. Office of Personnel Management, Government-Wide Diversity and Inclusion Strategic Plan 2011. Return to text
• 5. U.S. Office of Personnel Management, Government-Wide Diversity and Inclusion Strategic Plan 2011. Return to text
• 6. U.S. Office of Personnel Management, Diversity & Inclusion, accessed October 29, 2014, http://www.opm.gov/policydata-oversight/diversity-and-inclusion/. Return to text
• 7. For the purposes of this report, we grouped the following race/ethnicity categories as Other due to the small number of individuals typically represented in each of these categories: (1) Native Hawaiian or Other Pacific Islander (Not Hispanic or Latino), (2) American Indian or Alaska Native (Not Hispanic or Latino), (3) Two or More Races (Not Hispanic or Latino), and (4) Undefined (i.e., an individual chooses not to disclose demographic data). Return to text
• 8. U.S. Government Accountability Office, Diversity Management: Trends and Practices in the Financial Services Industry and Agencies after the Recent Financial Crisis, GAO-13-238, April 2013. Return to text
• 9. U.S. Equal Employment Opportunity Commission, Management Directive 715, October 1, 2003. Return to text
• 10. U.S. Equal Employment Opportunity Commission, Management Directive 110, November 9, 1999. Return to text
• 11. 5 U.S.C. § 2301(b). Return to text
• 12. Executive Order No. 13583, Establishing a Coordinated Government-wide Initiative to Promote Diversity and Inclusion in the Federal Workforce, August 18, 2011. Return to text
• 13. U.S. Office of Personnel Management, Government-Wide Diversity and Inclusion Strategic Plan 2011. Return to text
• 14. U.S. Government Accountability Office, Diversity Management: Expert-Identified Leading Practices and Agency Examples, GAO-05-90, January 14, 2005. Return to text
• 15. The Census Bureau entered into a reimbursable agreement with a consortium of four federal agencies--the EEOC, the U.S. Department of Justice, the Office of Federal Contract Compliance Programs at the U.S. Department of Labor, and OPM--to create a custom tabulation identified as the EEO Tabulation 2006-2010, referred to as the five-year ACS data. The five-year ACS data serves as the primary benchmark for comparing the race, ethnicity, and sex composition of an organization's internal workforce with that of the analogous external labor market, within a specified geography and job category. Return to text
• 16. The General Schedule, or GS, classification and pay system covers the majority of civilian white-collar federal employees. The GS has 15 grades--GS-1 (lowest) to GS-15 (highest). Senior Executive Service employees serve in the key agency positions just below the top presidential appointees. Return to text
• 17. According to an OHC official, the Talent Acquisition section was merged with the Human Capital Services section in December 2013. Return to text
• 18. An affinity organization is a group of people having a common interest or goal or acting together for a specific purpose. Return to text
• 19. The CFPB contracts with OPM to conduct and administer employee surveys on behalf of the agency. Return to text
• 20. The OEEO was renamed the Office of Civil Rights as a result of the reorganization. For the purposes of this report, we use OEEO because that was the name of the office during the period of our review. Return to text
• 21. Notification and Federal Employee Antidiscrimination and Retaliation Act of 2002, 5 U.S.C. § 2301 note. Return to text