The CFPB Can Enhance Its Diversity and Inclusion Efforts

Promotions and Succession Planning

According to OPM, an estimated two-thirds of executives across the federal government are eligible to retire from federal service within the next five years.⁴⁷ While a large turnover in executives will be a challenge for federal agencies to manage, it presents an opportunity to diversify the executive workforce. Succession planning can help federal agencies realize this opportunity by forecasting senior leadership needs, identifying and developing candidates for future leadership positions, and selecting individuals from among a diverse pool of qualified candidates to meet executive resource needs. Promotions can also be a path to increasing agency diversity.

This section presents information on promotions and succession planning, including a summary of the applicable laws and regulations and demographic statistics. We found that the CFPB does not have a formal succession planning process, which presents an opportunity for the CFPB to proactively plan for increased diversity within its senior leadership.

Applicable Laws and Regulations

Title 5, sections 2301 and 2302, of the United States Code establish merit system principles that are applicable to the CFPB's promotion process. In addition, title 5, part 335, of the Code of Federal Regulations establishes regulations applicable to the CFPB related to the promotion and internal placement of employees. However, the Dodd-Frank Act granted the CFPB temporary authority that permits the agency to waive the requirements of title 5, chapter 33, of the United States Code and the requisite implementing regulations to the extent necessary to appoint employees on terms and conditions that are consistent with section 11(1) of the Federal Reserve Act, while providing for fair, credible, and transparent methods of assigning, reassigning, detailing, transferring, and promoting employees.⁴⁸

The CFPB's Processes

Promotions

The OHC's Hiring, Promotion, and Internal Personnel Movements Policy describes the CFPB's promotion process. Promotions at the CFPB may be made competitively or noncompetitively. The competitive promotion process allows individuals to apply and be considered for vacant positions using the same process described in the Recruiting and Hiring section above. Promotions can be temporary or permanent, depending on the agency's needs. Temporary promotions are not to exceed 120 days, as prescribed by title 5, part 335, of the Code of Federal Regulations and the CFPB's Hiring, Promotion and Internal Personnel Movements Policy.⁴⁹

For noncompetitive permanent promotions, the process begins with the supervisor's evaluation of the employee's performance. If the following criteria are met, the supervisor recommends an employee for promotion and requests the OHC's approval:

1. Employee meets the minimum requirements for the next grade level.
2. Employee demonstrates an ability to perform the work required at the next grade level.
3. Sufficient work is available at the next grade level.
4. Employee had an acceptable level of performance (i.e., at least a performance rating of 3--solid performer).

Succession Planning

According to GAO, agencies with effective succession planning and management efforts determine the critical skills and competencies that will be needed to achieve current and future programmatic results; develop strategies tailored to address gaps in human capital approaches for enabling and sustaining the contributions of all critical skills and competencies; and address specific human capital challenges, such as diversity.⁵⁰ In addition, succession planning is one of GAO's nine leading diversity management practices, which it describes as an ongoing, strategic process for identifying and developing a diverse pool of talent for an organization's potential future leaders.

CFPB senior officials stated that the agency does not have a formal agency-wide or division-level succession planning process in place for identifying and developing a diverse pool of talent with the potential to be future senior leaders. The CFPB's Workforce Planning Handbook, however, states that a succession plan should be in place to account for the unforeseen loss of an accountable executive, such as a deputy. The Workforce Planning Handbook does not contain guidance on developing nonsupervisory staff to take on supervisory roles. According to senior officials, there are people serving in principal deputy positions who can assume assistant director positions, if needed. In addition, a senior division official also stated that a number of staff members and team leads could potentially advance to management positions.

Demographic Statistics for Promotions

As noted above, competitive promotions are discussed in the Recruiting and Hiring section. In this section, we provide demographic statistics for noncompetitive promotions. The total number of noncompetitive promotions increased from 4 in FY 2011, when the CFPB first began operations, to 102 in FY 2012, the CFPB's first full year as an executive agency. In FY 2013, the total number of noncompetitive promotions decreased to 80; however, the number of such promotions increased within the 50 to 70 pay grade series from the previous year (figure 6). See appendix G for further details.

Figure 6: Noncompetitive Promotion Composition, by Race/Ethnicity and Pay Grade Series, FY 2011–FY 2013

Source: OIG analysis of CFPB-provided information.

Finding: The CFPB Does Not Have a Formal Succession Planning Process

We found that the CFPB does not have a formal succession planning process. GAO's Diversity Management: Expert-Identified Leading Practices and Agency Examples defines succession planning as

a comprehensive, ongoing strategic process that provides for forecasting an organization's senior leadership needs; identifying and developing candidates who have the potential to be future leaders; and selecting individuals from among a diverse pool of qualified candidates to meet executive resource needs. . . . Succession planning and management can help an organization become what it needs to be, rather than simply recreate the existing organization.

In addition, GAO reports that succession planning is also tied to the federal government's opportunity to change the diversity of its executives through new appointments.

Through interviews with agency officials, we found that the CFPB does not have an agency-wide or division-specific succession planning process. A senior OHC official stated that the CFPB has not developed a formal succession planning process because the agency is still developing its human capital infrastructure. As part of this effort, the CFPB has been establishing human capital policies and determining how to allocate and prioritize its resources. Other components of the agency's human capital infrastructure, such as a formal succession planning process, will take time to implement.

Without a formal succession planning process, the CFPB may not be able to ensure that it will have a sufficient number of qualified executives or will be able to retain high-performing staff in mission-critical positions. Further, a formal succession planning process could help ensure diversity in the CFPB's senior management.

Management Actions

In October 2014, the CFPB developed a Succession Management Guide that "will help structure succession planning implementation efforts across the Bureau, will ensure consistency, and will provide tools to gather data required to support succession discussions and decisions." According to an OHC official, the agency will use the guide to shape the design of the CFPB's succession planning process.

Recommendation

We recommend that the Chief Human Capital Officer, in coordination with division officials,

1. Develop and implement a formal succession planning process that promotes diversity in the CFPB's senior management and in mission-critical positions.

Management's Response

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 CFPB has developed a Succession Management Guide. This guide is intended to be used in the CFPB's senior leadership's FY 2015 discussions on succession management. In addition, the CFPB has begun cohort-based leadership and supervisory development programs, as well as mandatory leadership excellence seminars for managers and supervisors at the 60-and-above pay grades.

OIG Comment

The actions identified by the Director of the CFPB are generally responsive to our recommendation. While we concur that the Succession Management Guide, CFPB senior leadership discussions, and leadership development programs are all part of a succession planning process, we emphasize the need to formalize this process. As mentioned in our finding, succession planning is, among other things, a comprehensive, ongoing strategic process that provides for forecasting an organization's senior leadership needs. We plan to follow up with the OHC to ensure that our recommendation is fully addressed.

• 47. U.S. Office of Personnel Management, Training and Development Policy Wiki, Succession Management, accessed November 5, 2014, http://www.opm.gov/wiki/training/Succession-Planning.ashx. Return to text
• 48. The CFPB's temporary waiver authority expires July 21, 2015. Return to text
• 49. 5 C.F.R. § 335.103(c)(3)(iii). Return to text
• 50. U.S. Government Accountability Office, Human Capital: Selected Agencies Have Opportunities to Enhance Existing Succession Planning and Management Efforts, GAO-05-585, June 2005. Return to text