CFPB Report: 2015-MO-C-002 March 4, 2015
OPM defines performance management as the systematic process by which an agency involves its employees, as individuals and as members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals. Performance management includes
According to GAO, effectively managing a diverse group of employees is important because equality of opportunity is essential to attracting, developing, and retaining the most qualified workforce throughout the organization.31 GAO also states that developing such a workforce is essential to ensuring the agency's achievement of its strategic mission.
This section presents information on the performance management process, including a summary of the applicable laws and regulations and demographic statistics. Overall, our findings indicate that the CFPB can strengthen its efforts to ensure that its performance management system is implemented consistently and that a framework is in place to analyze data to identify any trends. Specifically, we found that performance management training was not required for all employees, which may have contributed to a perception that the performance management system was inconsistently applied across the agency. In addition, we found that the CFPB did not use certain available information to identify trends in the performance management data, which if monitored, could provide the CFPB with potential indicators of employee concerns about the performance management system that may warrant further evaluation. We further found that there were inconsistencies in how supervisors addressed employee performance that fell below the solid performer level. Finally, we found that while diversity and inclusion is mentioned in supervisors' and senior managers' performance measures, measures do not sufficiently connect the supervisors' or senior managers' performance assessments to the progress of the CFPB's diversity and inclusion efforts.
The CFPB's performance management program follows title 5, chapter 43, of the United States Code, and the implementing regulations found in title 5, part 430, subparts A and B, of the Code of Federal Regulations.32 This law and the corresponding implementing regulations provide for the establishment of an agency's performance appraisal system and program that include agency-wide policies and parameters for the application and operation of employee performance appraisals. In addition, the law and regulations provide for procedures to plan, monitor, and rate employee performance, including actions that agencies are to take to address unacceptable performance.
The OHC's Performance Management Program Interim Policy describes the CFPB's performance management process, which was approved by OPM, for FY 2012 and FY 2013. While the policy does not comment directly on diversity issues, it does provide a process intended to prevent or detect bias in ratings. Specifically, the policy states that the reviewing official is responsible for reviewing the ratings to ensure the consistent application of performance standards and an assessment of progress toward performance objectives.33 The policy further states that the head of each division within the CFPB is responsible for conducting discussions with rating and reviewing officials to ensure the application of the same evaluation standards to all employees.34
Additionally, the policy includes diversity measures in its performance competencies for supervisors and senior managers.35 Specifically, in the Leading, Managing, and Developing Others competency, the policy states that a supervisor can "grow and retain a diverse staff" to demonstrate this competency. Further, senior managers have a Leading People competency that states that "inherent to this competency is the ability to provide an inclusive workplace that fosters the development of others, facilitates cooperation and teamwork, and supports constructive resolution of conflicts." This competency further identifies leveraging diversity by fostering and developing "an inclusive workplace where a diverse set of talents and perspectives are valued in accomplishing the vision and mission of the organization" as a behavior that can demonstrate this competency. Supervisor and senior manager ratings are based on an assessment of individual performance in all competencies and in the individualized results-based objectives.36
The CFPB's performance cycle is October 1 through September 30. The performance management process begins with the development of an individual employee's performance plan, which must be documented in writing. Performance plans can be modified up until 90 days before the end of the performance cycle to reflect changes to an employee's responsibilities and expectations. The rating official must approve any modifications to the plan; however, the reviewing official's approval is not required for modifications. If an employee's performance falls to the unacceptable level at any time during the performance period, the rating official must notify the OHC, and the employee is placed on a performance improvement plan.
At the mid-point of the performance cycle, the rating official must conduct a mid-cycle performance review for each employee. The employee and the rating official must have a conversation in which the rating official provides the employee feedback on how well he or she is meeting the performance standards contained in the performance plan. However, ratings are not assigned during the mid-cycle review.
On an annual basis, rating officials must rate each employee's performance. The rating official is responsible for determining an employee's rating for each competency and objective. The employee summary rating is determined by the equal weighting of the average score of all competencies and the average score of all objectives. These ratings are then reviewed and approved by the reviewing official. The rating official is responsible for communicating the final ratings to the employee.
The rating scale for CFPB employees for the period under review was as follows:
1--unacceptable
2--marginal performer (only in effect for FY 2013)
3--solid performer
4--high performer
5--role model
If an employee did not agree with the final rating and requested reconsideration, the process for reconsideration depended on whether the employee was part of the bargaining unit. Non-bargaining-unit employees could request a reconsideration of their ratings as described in the Performance Management Program Interim Policy or through the process described in the Administrative Grievance section of this report, while bargaining-unit employees could request a reconsideration of their rating using the process described in the Negotiated Grievance section of this report.
The Performance Management Program Interim Policy states that a formal rating of record of unacceptable is not required before informing an employee about performance deficiencies, and rating officials should not delay informing employees about unacceptable performance until a formal rating of record is given. According to an OHC official, the OHC provides assistance to supervisors in dealing with employees with poor performance by providing nonmandatory training, holding information sessions for CFPB management, and advertising resources through e-mail. In addition, OHC's Talent Management section refers supervisors to the Employee and Labor Relations group for assistance in issuing performance improvement plans.
Finally, the Performance Management Program Interim Policy requires that new employees receive training on the performance management system within their first year at the CFPB; it also requires that, at a minimum, employees receive training every two years. In addition, in FY 2012 and FY 2013, the OHC provided calibration sessions for supervisors during which management teams reviewed performance narratives and the resulting rating for unconscious bias. The OHC offered 34 calibration sessions in FY 2012 and 9 in FY 2013, and the sessions generally occurred toward the end of the performance period.
In FY 2014, the CFPB conducted an internal analysis of its FY 2013 performance ratings. This analysis resulted in the CFPB finding statistically significant disparities among employees across certain different demographic groups. Specifically, the analysis revealed statistically significant disparities based on race/ethnicity; age; bargaining-unit membership; field and headquarters location; pay grade; tenure; and for some employees, status as a transferee.37 As a result of its analysis, the CFPB has taken specific steps to respond to these findings, including, but not limited to, the following:
We used the services of an external consulting firm to conduct an independent analysis of the CFPB's FY 2012 and FY 2013 performance ratings. To perform this analysis, the external consulting firm used tests of both statistical significance and practical significance to analyze performance ratings based on gender, race/ethnicity, and age.39 We requested the external consulting firm to perform its analysis agency-wide, by bargaining-unit membership, and by job level (i.e., senior managers, or employees in pay grades 80 and above; supervisors, or employees in pay grades below 80 who have supervisory status; and all other employees, or employees in pay grades below 80 who do not have supervisory status).
The results of the external consulting firm's analysis of the CFPB's FY 2012 and FY 2013 performance ratings indicated statistically significant disparities among CFPB employees across certain demographic groups. However, these statistically significant differences do not necessarily indicate discrimination and could be due to a wide variety of explanations, such as actual differences in employee performance. Specifically, the external consulting firm's analysis revealed the following statistically significant differences:
The statistically significant differences noted above are generally consistent with the CFPB's internal analysis. The external consulting firm's analysis is included in its entirety in appendix E.
In addition to the external consulting firm's analysis, we analyzed FY 2012 and FY 2013 performance ratings to determine average performance ratings by division. We did not evaluate the statistical significance of any differences noted during this analysis. As previously noted, these observations do not necessarily indicate discrimination and could be due to a wide variety of explanations. In FY 2012, the CFPB comprised six divisions and the Office of the Director. We noted the following for FY 2012:40
In FY 2013, there were six divisions, the Office of the Director, and Other Programs.41 We noted the following for FY 2013:42
Finally, we analyzed FY 2012 and FY 2013 performance ratings to determine average performance ratings at CFPB headquarters (i.e., those whose duty location is Washington, DC) as compared to employees at the regional offices (i.e., those whose duty location is not Washington, DC). The resulting averages were not evaluated for statistical significance; however, we found that at both CFPB headquarters and in the regional offices, White employees received higher performance ratings, on average, than Black/African American and Hispanic/Latino employees for FY 2012 and FY 2013. See appendix F for detailed information.
The external consulting firm we used found statistically significant differences based on gender, race/ethnicity, and age in CFPB employees' performance ratings for FY 2012 and FY 2013. This finding is generally consistent with the statistically significant differences identified in the CFPB's internal analysis of its FY 2013 performance ratings.
As previously noted, the Civil Service Reform Act of 1978 states that federal personnel management should be implemented consistently with merit system principles. Title 5, section 2301, of the United States Code outlines the federal government's merit system principles, including the second merit system principle, which states that
all employees and applicants for employment should receive fair and equitable treatment in all aspects of personnel management without regard to political affiliation, race, color, religion, national origin, sex, marital status, age, or handicapping condition, and with proper regard for their privacy and constitutional rights.
The CFPB pointed to its performance management system, which it believes was too sophisticated for a new agency, and its lack of policies and procedures as factors that contributed to the statistically significant differences in the performance ratings. Statistically significant differences in performance ratings may expose the CFPB to perceptions of unfairness, inequality, and bias in the manner in which it evaluates employee performance.
As noted above, the CFPB has taken actions to respond to statistically significant differences in its performance ratings, in part by transitioning to a two-level performance management system for FY 2014 and FY 2015. The CFPB has agreed to work with the NTEU to develop a new performance management system for FY 2016 and beyond.
The CFPB has agreed to compensate employees who received a performance rating of 3--solid performer or 4--high performer under the previous performance management program as though they had received a rating of 5--role model for FY 2012 and FY 2013. In addition, the CFPB has released a request for proposals for (1) a comprehensive third-party review and validation of its internally conducted performance management analysis and (2) a broad-based evaluation of major human capital processes, including hiring, promotions, and compensation.
We recommend that the Chief Human Capital Officer
The Director of the CFPB concurs with our recommendation. In his response, the Director of the CFPB emphasizes the actions, detailed in our report, that the CFPB has already taken to address differences in performance ratings. In addition, the CFPB has procured a third-party contractor to (1) review the CFPB's internal analysis of FY 2012 and FY 2013 performance ratings and confirm findings, (2) examine root causes of the rating differences, and (3) provide recommendations for future performance management features and processes. The expected completion date for the third-party review is June 30, 2015. In addition, the Director of the CFPB states that the CFPB is continuing to work with the NTEU on a new performance management system.
The actions described by the Director of the CFPB appear to be responsive to our recommendation. We plan to follow up on the CFPB's actions to ensure that the recommendation is fully addressed.
We found that the CFPB communicates with its employees about performance management using methods such as training on the performance management program and posting performance management information on an internal web portal. In practice, employees were not required to attend recurring performance management training as required by the CFPB's internal policy. Further, we found that the OHC did not maintain records of attendance at performance management training.
The OHC's Performance Management Program Interim Policy states that at a minimum, onehalf of all employees and supervisors are to receive training on the CFPB's performance management system every two years. Title 5, part 430, of the Code of Federal Regulations states that agencies are to "[c]ommunicate with supervisors and employees (e.g., through formal training) about relevant parts of its performance appraisal system(s) and program(s)."43 OPM's website clarifies that although the regulation does not specify a time frame, it recommends that agencies communicate the features and results of their performance management system annually to employees and supervisors. In addition, GAO's Human Capital: A Guide for Assessing Strategic Training and Developmental Efforts in the Federal Government includes a framework that helps federal agencies ensure that their training and development investments are not wasted on efforts that are irrelevant, duplicative, or ineffective.44 One step in this framework is that agencies evaluate the effectiveness of their training and development programs, in part, by developing performance metrics.
An OHC official stated that the agency's policy to provide performance management training at a minimum of every two years is treated as a guideline. The OHC relies on CFPB employees to voluntarily attend performance management training. The OHC official also stated that attendance at performance management training was initially tracked in FY 2012; however, the practice of maintaining attendance records was discontinued at the request of an OHC official. Further, the OHC determined that some supervisors would benefit more from the performance management consulting services offered by the OHC, such as the calibration sessions, than from attending formal performance management training.
We acknowledge that the OHC offered performance management consulting services to CFPB employees. However, the nonmandatory nature of performance management training may have contributed to the perception of an unfair and inconsistent approach to managing employee performance, which was one of the themes that the CFPB identified based on listening sessions held by OMWI, as discussed in the OMWI section of this report. In addition, the OHC is unable to determine how many CFPB employees received performance management training because it did not maintain records of attendance. By not maintaining attendance records, the CFPB may not have all of the necessary information to evaluate the effectiveness of its performance management training.
In FY 2014, the OHC increased the number of training sessions offered and added new performance management training courses on feedback, leadership development, and updates to the performance management system resulting from the "Performance Management" article in the collective bargaining agreement. While the sessions are still not mandatory, the OHC has begun to maintain attendance records.
We recommend that the Chief Human Capital Officer
The Director of the CFPB concurs with our recommendations. To address recommendation 3, beginning in FY 2015, the OHC will require (1) all employees to attend annual mandatory training on the performance management system and (2) supervisors to attend mandatory calibration training. The CFPB is also developing a standard operating procedure that documents the training requirements, including documentation of training attendance. The planned completion date for the standard operating procedure is March 31, 2015.
To address recommendation 4, the Director of the CFPB states that the CFPB has initiated efforts to evaluate its performance management training. The CFPB will also continue to make improvements to the training based on the data it collects. The standard operating procedure on performance management will also document the requirements for evaluating performance management training.
The actions described by the Director of the CFPB appear to be responsive to our recommendations. We plan to follow up on the CFPB's actions to ensure that the recommendations are fully addressed.
We found that the percentage of employees without a documented mid-point review increased from approximately 1 percent in FY 2012 to almost 8 percent in FY 2013. Additionally, we found that the percentage of employees who did not sign their mid-point performance review increased from nearly 2 percent in FY 2012 to over 16 percent in FY 2013.
The Performance Management Program Interim Policy requires that each employee receive a performance review from his or her rating official at the mid-point of the performance cycle. The policy further states that the date of the review must be documented and that employees must sign the mid-point review form to acknowledge that the review occurred.
An OHC official stated that in FY 2013, supervisors were not allowed to document the review in the performance management system after the deadline for completing mid-point reviews had passed. The OHC official further explained that while supervisors were directed to conduct mid-point reviews that were outstanding as of the deadline, the OHC did not track whether these reviews actually occurred. The OHC official also stated that supervisors considered the employee signature on the mid-point review to be optional, despite the requirement in the OHC's policy.
Further, the OHC generated weekly reports on the current status of performance management activities. According to an OHC official, these reports are used to monitor progress in completing performance management activities, including the review of the employees' ratings by reviewing officials, the occurrence of mid-point reviews, employees' acknowledgement of mid-point reviews, and discussions of the final ratings with employees. However, the OHC did not use the weekly report to identify the increase in the number of employees without a documented mid-point review or the number of employees who did not sign their mid-point performance reviews. By not monitoring performance management data, the CFPB may overlook potential indicators of employee concerns about the performance management system that may warrant further evaluation.
We recommend that the Chief Human Capital Officer
The Director of the CFPB concurs with our recommendation. In his response, the Director of the CFPB states that, as mentioned in our report, the OHC monitors progress in completing performance management activities through weekly status reports on performance management activities. The Director of the CFPB notes several actions that the OHC has taken in response to trends identified in the reports, such as refining its communications with managers. To address this recommendation, the Director of the CFPB states that beginning in FY 2015, the OHC will enhance its monitoring procedures for mid-point reviews. In addition, the CFPB is developing a standard operating procedure for its performance management evaluation practices. This standard operating procedure will include procedures for monitoring performance management data for trends, responding to potential problems, and assessing overall program effectiveness. The CFPB plans to finalize the standard operating procedure by March 31, 2015.
The actions described by the Director of the CFPB appear to be responsive to our recommendation. We plan to follow up on the CFPB's actions to ensure that the recommendation is fully addressed.
During our audit, we noted that seven employees received an FY 2013 marginal performer rating and were eligible for performance management counseling. OHC explained that two received such counseling.45 Of the remaining five employees, supervisors
In June 2014, the "Performance Management" article of the collective bargaining agreement became effective. This article requires that all bargaining-unit employees who received a marginal performer rating in FY 2013 be provided retroactive counseling sessions within 30 calendar days of implementation of the article. These sessions were to be documented by the supervisor with a copy provided to the employee within 5 calendar days of the counseling.
According to an OHC official, supervisors received mandatory training on the "Performance Management" article of the collective bargaining agreement in June 2014, which included a section on the process for performance counseling. However, we found instances in which supervisors were not following the requirement to provide retroactive counseling for employees who received a marginal performer rating in FY 2013. The CFPB can further demonstrate its commitment to improving its performance management system by holding supervisors accountable for following the collective bargaining agreement requirement to provide retroactive counseling.
We recommend that the Chief Human Capital Officer
The Director of the CFPB concurs with our recommendations. The Director of the CFPB states that the OHC has adopted recommendation 6 through a standard operating procedure, approved on January 16, 2015, on documenting declining performance. As part of this standard operating procedure, the OHC is to notify supervisors and managers on a quarterly basis of the requirement to counsel employees whose performance is at risk of falling below the acceptable level. The Director of the CFPB states that the first notification was issued on January 20, 2015.
To address recommendation 7, the Director of the CFPB states that the Leading, Managing, and Developing Others performance competency for supervisors requires supervisors to provide "ongoing, timely feedback and monitoring" of employees and to assess employees' performance "in order to make improvements or take corrective action." In addition to this competency, the January 16, 2015, standard operating procedure on documenting declining performance ensures supervisors' compliance with the counseling requirements in the June 2014 "Performance Management" article of the collective bargaining agreement. The Director of the CFPB states that the agency will work to include the counseling requirements in the new performance management system being developed with the NTEU.
The actions described by the Director of the CFPB appear to be responsive to our recommendations. We plan to follow up on the CFPB's actions to ensure that the recommendations are fully addressed.
We found that while diversity and inclusion are mentioned in supervisors' and senior managers' performance measures, these measures do not sufficiently connect the supervisors' and senior managers' performance assessments to the progress of the CFPB's diversity and inclusion efforts.46 The OHC's Performance Management Program Interim Policy includes only a brief discussion of diversity and inclusion in the performance competencies on which supervisors and senior managers are rated.
The ratings measures in both the supervisory and senior manager competencies pertaining to diversity and inclusion are minor components within broad descriptions. Specifically, supervisors are rated on three competencies. The only competency for supervisors that addresses diversity and inclusion is the Leading, Managing, and Developing Others competency. The policy lists several ways in which supervisors can demonstrate this competency, only one of which mentions diversity and inclusion. Similarly, senior managers are rated on five competencies. The only competency related to diversity and inclusion is the Leading People competency, which can be demonstrated by multiple actions, including conflict management, leveraging diversity, developing others, and team building. Senior managers are not required to demonstrate all of these actions to satisfy the competency; as a result, leveraging diversity is not a required measure.
One of GAO's leading diversity practices is accountability, which GAO defines as the means to ensure that leaders are responsible for diversity by linking their performance assessment and compensation to the progress of diversity initiatives. GAO provides as an example one agency that incorporated this practice into its performance management system by requiring senior executives to submit a written description of an accomplishment that promoted EEO and workforce diversity programs. Further, that agency's Director of EEO also serves as an advisor to the agency's performance review board. In the advisory role, the Director of EEO identifies executives with a history of EEO noncompliance and can advise that the executive not receive a bonus.
The supervisor and senior manager competencies do not fully ensure that supervisors and senior managers are held accountable for helping the CFPB achieve its diversity and inclusion initiatives. The identified diversity and inclusion measures in the competencies are only one of several actions listed that can support how a supervisor or senior manager demonstrates the broadly defined competency; there are no specific competencies that directly address diversity and inclusion. If supervisors' and senior managers' performance measures do not sufficiently connect their performance assessments to the progress of the CFPB's diversity and inclusion efforts, the CFPB may limit its ability to foster a diverse and inclusive workforce.
According to an OHC official, the CFPB has developed a new competency model framework that will include both a team member model and a leader model. The new leader model includes a specific competency called "Building and Managing Inclusive Relationships."
We recommend that the Chief Human Capital Officer
The Director of the CFPB concurs with our recommendation. In his response, the Director of the CFPB states that the CFPB's competency model, which is currently under development, emphasizes diversity and inclusion behaviors and is intended to connect supervisor and senior manager performance to the progress of the CFPB's diversity initiatives. The Director of the CFPB states that in the interim, the agency is providing examples of behaviors for supervisors and senior managers to follow within the existing performance management system to reinforce the role of supervisors and senior managers in achieving a diverse and inclusive workplace. The Director of the CFPB signed the interim guidance on December 9, 2014, and it will be communicated to supervisors and senior managers by April 30, 2015.
The actions described by the Director of the CFPB appear to be responsive to our recommendation. We plan to follow up on the CFPB's actions to ensure that the recommendation is fully addressed.
