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February 2, 2015
VIA ELECTRONIC MAIL
Office of Inspector General
Board of Governors of the Federal Reserve System
Consumer Financial Protection Bureau
Washington, DC 20551
RE: CFPB Response to the Office of the Inspector General (OIG) Draft Report entitled, "The CFPB Can Enhance Its Diversity and Inclusion Efforts" dated January 16, 2015 (Report)
Dear Mr. Bialek:
Thank you for the opportunity to respond to the above-referenced Report. The CFPB appreciates the OIG's affirmation of diversity and inclusion efforts as critical to the overall development and performance of an organization. Accordingly, the CFPB senior leadership team will continue to invest in these efforts in the coming years.
The Report contains specific suggestions regarding additional policies, procedures, and other enhancements to the CFPB's diversity and inclusion efforts. We concur with its recommendations. As detailed below, the CFPB has made significant progress in addressing the recommendations since the close of the evaluation review period in October 2014. We will be taking steps to adopt and implement all of the recommendations as we move forward in expanding our diversity and inclusion efforts.
Below are responses from CFPB management to each of the Report's specific recommendations.
CFPB Management Response to Recommendation #1
Enhance efforts to identify and evaluate potential barriers to equal employment opportunity in the CFPB's hiring process, and eliminate or modify any policy, practice, or procedure that creates such barriers, as necessary
We recognize that the observed decline in Black/African American applicant representation in the latter phases of the hiring process should be further analyzed to understand what factors may have contributed to the observed decline, and whether specific actions can help to reduce or eliminate any potential barriers. As part of our ongoing analysis, we intend to incorporate information, best practices, and recommendations from the U.S. Office of Personnel Management (OPM). OPM recently analyzed applicant flow data on a government wide basis; this data show markedly similar results to those found in the Report. As mentioned in the Report, we have been gathering additional data from hiring managers on the latter phases of the final selection process to explore contributing factors. Analysis of these data may help uncover reasons for selection or non-selection that will inform our continued effort to ensure equal employment opportunity. We plan to complete our initial assessment of this data by September 30, 2015. The assessment will include a summary of key findings and recommendations for future actions the Bureau can take going forward. It is notable, however, that the Report states in Appendix C that the Bureau's workforce is 33% non-White. It is also notable, as the Report states in Appendix D, that the Bureau's hiring of 990 persons from FY 2011 to FY 2013 was 44% non-White.
CFPB Management Response to Recommendation #2
Complete the Office of Human Capital's work to understand the root causes of the statistically significant differences in performance ratings and use the results to inform the design of the new performance management system
As discussed in the Report, the CFPB has taken the initiative to develop specific and comprehensive corrective action to address differences in performance ratings by transitioning to a new performance management system for FY 2014 and FY 2015; convening a joint labor-management working group with the National Treasury Employees Union (NTEU) to design a new performance management system for FY 2016 and beyond; and retroactively adjusting the performance rating of every CFPB employee (except senior leadership) who received a 3 or 4 summary level performance rating in fiscal years 2012 or 2013 under the prior performance management program. In addition, the CFPB has procured a third party vendor to review the CFPB's internal analysis of FY 2012 and FY 2013 performance ratings, confirm findings, further our understanding of root causes of ratings differences, and provide recommendations for future performance management features and processes. The third party has begun their work, and the CFPB will take action on their findings as appropriate. Based on the current timeline for work, we expect to complete these actions by June 30, 2015. In the meantime, we are continuing our work with NTEU to design the next generation performance management system for the CFPB.
CFPB Management Response to Recommendations #3:
Ensure that training on the performance management system, including calibration training for supervisors, is mandatory and provided to all employees at least annually, and is documented through records of attendance to ensure that all employees are trained on the performance management system
Training plays a critical role in enhancing employees' understanding of the performance management process and we appreciate the OIG's recognition of the significant performance management training and communication efforts that CFPB has undertaken to date. Building on these efforts, the CFPB's Office of Human Capital will require annual mandatory training for all employees on the performance management system and include mandatory calibration training for supervisors beginning in FY 2015. Moreover, we are developing a Standard Operating Procedure to formally document our practices and requirements for ensuring and recording training attendance. This procedure will be completed by March 31, 2015.
CFPB Management Response to Recommendation #4:
Enhance the process and metrics used to evaluate the effectiveness of performance management system training, and make changes to the training as needed
The CFPB recognizes the importance of an effective performance management system and has already begun to collect performance management training evaluation data and continue to use that data to refine and improve our performance management training offerings. In addition, as mentioned above, we are developing a Standard Operating Procedure to formally document our practices and requirements for gathering training evaluation data, measuring and reporting results, and implementing improvements based on the feedback received. This procedure will be completed by March 31, 2015.
CFPB Management Response to Recommendation #5:
Enhance the process for monitoring performance management data for trends, responding to potential problems, and assessing overall program effectiveness
As highlighted in the Report, the CFPB's Office of Human Capital currently generates weekly reports on the status of performance management activities and uses these reports to monitor progress in completing performance management activities. In response to identified trends, in both FY 2012 and FY 2013, the Office of Human Capital increased and refined its communications with managers about process steps, the importance of deadline compliance, strategies for managing incremental deadlines within offices and divisions, and strategies for providing employees with sufficient time to review and acknowledge performance documents. We are pleased that of the many steps involved in the performance management process, the OIG only noted one step - the mid-point performance review - that could benefit from enhanced monitoring. The mid-point performance review is an informal performance discussion involving no issuance of performance ratings, as distinct from the formal year-end performance appraisal process which directly results in an employee's performance rating. While the Bureau ultimately has no legal or regulatory mechanism through which to compel an employee to sign their mid-year review form, we recognize the importance of monitoring this data point as a potential indicator of employees' perceptions about the performance management system. We will implement enhanced monitoring procedures for this step, beginning with the FY 2015 performance management cycle. In addition, we are formally documenting all of our performance management program evaluation practices in a Standard Operating Procedure that will include specific procedures for monitoring performance management data for trends, responding to potential problems, and assessing overall program effectiveness. This procedure will be completed by March 31, 2015.
CFPB Management Response to Recommendation #6
Develop an internal process to ensure supervisors' compliance with the requirement to counsel employees at risk of falling below the acceptable level of performance; the process should include maintaining documentation of counseling sessions
We have adopted this recommendation and formally documented our process in a Standard Operating Procedure entitled "Documenting Declining Performance". The Standard Operating Procedure was finalized and approved on January 16, 2015. The new process includes a requirement for the Office of Human Capital to send a quarterly notice to all CFPB managers and supervisors reminding them of their obligations to counsel employees whose performance is at risk of falling below the acceptable level. The first of these quarterly reminders was sent on January 20, 2015.
CFPB Management Response to Recommendation #7
Enhance the existing performance measures that are already included in supervisors' individual performance plans to address managing employees who are below the solid-performer level
We recognize that supervisors have an obligation to coach and counsel employees who are struggling with their performance. As such, all CFPB supervisors' performance plans currently include a competency requirement for "Leading, Managing, and Developing Others". This competency 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". As noted in the Report, the CFPB and NTEU reached agreement on a new Performance Management article as part of the collective bargaining process in June 2014. This article contained new requirements for supervisors regarding performance counseling, Mandatory training was held for all supervisors that highlighted the new requirements. In addition, as outlined in our response to Recommendation #6 above, we have implemented a Standard Operating Procedure to ensure supervisors' compliance with the new counseling requirements, and initiated quarterly reminders to all supervisors of their obligations in this regard. The first of these quarterly reminders was sent on January 20, 2015. We will look for additional opportunities to highlight this responsibility as part of our work with NTEU to re-design the Bureau's performance management system.
CFPB Management Response to Recommendation #8
Enhance measures that relate supervisors' and senior managers' performance assessments to the progress of the CFPB's diversity initiatives, including the addition of specific supervisor and senior manager performance competencies related to promoting diversity and inclusion
The CFPB deeply believes in equal opportunity and fairness and recognizes that there remain opportunities to expand diversity and inclusion in the Bureau and its work. As noted in the Report, CFPB has developed a new competency model that specifically features a new leadership competency model for all CFPB supervisors, managers, and senior leaders. The new leadership competency model places an increased emphasis on diversity and inclusion behaviors throughout, and includes a specific competency called "Building and Managing Inclusive Relationships". The model is in the final stages of development Once finalized, we intend to use the new competencies to help tie supervisory and senior management performance to the progress of CFPB's diversity initiatives. In the interim, we have taken steps within our existing performance management system to reinforce the critical role that supervisors and senior managers play in achieving a diverse and inclusive workplace by providing specific examples of behaviors they can follow. This guidance was signed by the Director on December 9, 2014 and will be communicated broadly by April 30, 2015.
CFPB Management Response to Recommendation #9
Develop and implement a formal succession planning process that encourages diversity in the CFPB's senior management and in mission-critical positions
The CFPB is committed to ensuring diversity within the CFPB senior management and leadership positions. As such, and noted in the Report, the CFPB has developed a Succession Management Guide (Guide) as a roadmap for designing a succession managen1ent program at the CFPB. The Guide will be used as a starting point for conversations with CFPB senior leadership about succession management during FY15, Additionally, the CFPB has launched a series of cohort-based leadership and supervisory development programs. The CFPB's Leadership Excellence Seminars are mandatory for all managers and supervisors at the CN-60 level and above. This program provides Bureau leaders at the mid- and senior levels with a unified leadership curriculum and philosophy to help ensure the Bureau is supporting leaders at all levels. The CFPB's commitment to fostering diversity in senior management and mission-critical positions is reflected in the considerable diversity throughout CFPB's senior level employee population, which compares favorably to similar agencies.
CFPB Management Response to Recommendation #10
Ensure the accuracy and completeness of Equal Employment Opportunity (EEO) complaint data by evaluating publicly reported No FEAR Act data and updating these data, if necessary and reconciling, as necessary, the EEO complaint case files to the complaint data maintained in the tracking spreadsheet currently in use
We have adopted this recommendation and reported the FY 2012 No FEAR Act data provided by the Department of Treasury as administrator of the CFPB's EEO complaint program in FY 2012. The CFPB will also request that the Department of Treasury confirm the accuracy of the data it provided to us for the No FEAR Act reporting purposes and reconcile any discrepancies in the data initially provided. Additionally, the CFPB's Office of Equal Employment Opportunity has drafted an internal Operations Manual and Processing Guide that sets forth internal processes for case handling, including data tracking. Moreover, beginning in December 2014, the Office of Equal Employment Opportunity initiated a preliminary review to reconcile Excel data with case files as part of the transition from Excel to other tracking methods. The Office of Equal Employment Opportunity also drafted a new Standard Operating Procedure entitled "EEO Complaint Data - Monthly Reconciliation" on January 28, 2015 which will be implemented in March 2015. The CFPB will review and amend FY 2013 No FEAR Act data reporting on http://www.consumerfinance.gov/no-fear-act/, as necessary, as part of the transition to a commercially available complaint tracking system, which is scheduled to occur in FY 2015.
CFPB Management Response to Recommendation #11:
Ensure that any new database or complaint tracking system facilitates efficient No FEAR Act reporting and includes internal controls that are designed and implemented to ensure the accuracy and completeness of complaint data
The CFPB's Office of Equal Employment Opportunity has adopted this recommendation. The internal process for approval and acquisition of a commercial system is underway and reflects efforts to separate such functions from the previous Department of the Treasury process. This project received formal CFPB approval November 2014; roll-out is scheduled for the end of FY 2015. The CFPB will establish appropriate guidelines, develop additional training materials, and refine internal processes regarding accurate and complete data entry by staff.
CFPB Management Response to Recommendation #12
Reconcile, as necessary, the negotiated grievance case files to the grievance data currently maintained in the tracking spreadsheet currently in use
We have adopted this recommendation and formally documented our process in a Standard Operating Procedure entitled, "Labor and Employee Relations Monthly Grievance Reconciliation". The Standard Operating Procedure was finalized and approved on January 16, 2015. The new process provides enhanced procedures for maintaining grievance data going forward. It also provides for a review of the current master grievance tracker to audit and reconcile negotiated grievance case files to the grievance data currently maintained in Excel, which was completed on January 6, 2015. Notably, when we completed this review, it confirmed that our case files contained all required documentation, including responses to each stage of the grievance process and documentation of the disposition of each grievance (withdrawal, settlement, etc). In addition to these efforts, we have initiated the procurement process for a new automated tracking system and anticipate implementing the new system by the end of FY 2015 as mentioned in Recommendation #11.
CFPB Management Response to Recommendation #13
Design and implement the appropriate internal controls in the negotiated grievance tracking system to ensure the accuracy and completeness of grievance data
As discussed in the response to Recommendation 12 above, we undertook a review of the current master grievance tracker spreadsheet to ensure all grievance data was accurate and complete. That review was completed on January 6, 2015. The review confirmed that our case files contained all required documentation, including responses to each stage of the grievance process and document of the disposition of each grievance (withdrawal, settlement, etc.). Moreover, as stated in our response to Recommendation 12 above, we will follow the Labor and Employee Relations Monthly Grievance Reconciliation Standard Operating Procedure to ensure that we maintain sufficient controls to ensure accuracy and completeness of data in our grievance tracking tool.
CFPB Management Response to Recommendation #14
Monitor the effectiveness of the OEEO's newly created procedures that are designed to prevent duplicate filing of EEO complaints and negotiated grievances
The CFPB has adopted this recommendation. As noted in the Report, we have taken steps lo address this concern by developing and implementing procedures to prevent duplicate filing of formal EEO complaints and negotiated grievances. These efforts began in June 2014 when representatives from the Office of Human Capital and Office of Equal Employment Opportunity met with NTEU to ensure that the NTEU was informing bargaining-unit employees of the negotiated grievance or EEO complaint options and the potential consequences of either choice. Additionally, the Office of Equal Employment Opportunity shared with the NTEU an enhanced notice form developed for employees filing an EEO informal complaint that explained in more detail the employees' options under either the EEO process or the negotiated grievance procedure. In November 2014, we formally documented this process in a joint Standard Operating Procedure entitled "Election of Negotiated Grievance or EEO Complaint Procedures". Notably, to date, we have not identified a case in which an EEO complaint and negotiated grievance that raised the same issue was inappropriately processed under either procedure.
CFPB Management Response to Recommendation #15:
Implement the CFPB's diversity and inclusion strategic plan, which would satisfy the requirement to implement the U.S. Office of Personnel Management's Government-Wide Diversity and Inclusion Strategic Plan
We have adopted this recommendation. As the report notes, the Office of Minority and Women Inclusion (OMWI) has drafted diversity and inclusion strategic plan in accordance to the OPM Government-Wide Diversity and Inclusion Strategic Plan which will be formalized by June 30, 2015. Implementation will occur on an ongoing basis with results reported in the OMWI Annual Report, starting with the 2016 OMWI Annual Report.
CFPB Management Response to Recommendation #16:
Formalize as a policy statement the standards on which OMWI relies for equal employment opportunity and the racial, ethnic, and gender diversity of the workforce and senior management of the agency.
The CFPB has adopted this recommendation and has taken steps to formalize a policy statement to make clear to all employees the standards on which OMWI relies for equal employment opportunity, which will be formalized by June 30, 2015. Section 342(b)(2)(A) of the Dodd-Frank Act requires each OMWI Director to develop standards for equal employment opportunity and the racial, ethnic, and gender diversity of the workforce and senior management of the agency. CFPB's OMWI carefully considered the requirements of these three subsections when the office was created in 2012. Baseline standards for the equal employment opportunity (EEO) portion of subsection (A) have been long established by the Equal Employment Opportunity Commission, the government agency with responsibility for enforcing the anti-discrimination protections of Title VII for federal government agencies. Baseline standards and guidance for workforce diversity government-wide have been developed by the Office of Diversity and Inclusion at the Office of Personnel Management. The Bureau currently follows both of these standards.
CFPB Management Response to Recommendation #17:
Ensure that diversity and inclusion training is mandatory and provided to all employees and supervisors on a regular basis and is evaluated for effectiveness using performance metrics and that the results are incorporated into the training, as needed
We have adopted this recommendation and recognize the need to expand diversity of representation and perspective in the Bureau and its work. In January 2015, Director Cordray signed a decision memo to make a course mandatory for all employees, thus fulfilling the first part of this recommendation. The Bureau has offered diversity and inclusion training for all employees since March 2013. While this training has not been mandatory prior to 2015, it has been strongly encouraged that employees attend. More than 700 employees have been trained, including employees in three of the Bureau's four regional offices. In addition, the July 2014 All-Hands Meeting with most employees in attendance included a training panel with experts, including professors from Columbia University and the University of Southern California, and from the Office of Personnel Management. In addition, OMWI has begun to offer training for managers and supervisors in diversity and inclusion. Senior leadership of the Bureau participated in the training. Managers and supervisors will continue to be strongly encouraged to attend this training. Moreover, OMWI plans to provide additional diversity and inclusion training for all employees, following the initial offering. The second part of the recommendation will be implemented on an ongoing basis, and results will be reported in the OMWI Annual Report, starting with the 2016 OMWI Annual Report. All trainings will be evaluated using questionnaires and surveys, and by using performance metrics developed and informed by the Bureau's annual employee survey, strategic plan, and through individual performance plans. Results will be incorporated into the training as appropriate.
Director, Consumer Financial Protection Bureau
Melissa Heist, Associate Inspector General for Audits and Evaluations
J. Anthony Ogden, Deputy Inspector General
Sartaj Alag, Chief Operating Officer
Stuart Ishimaru, Director, Office of Minority and Women Inclusion
Analisa Archer, Acting Chief Human Capital Officer
M. Stacey Bach, Director, Office of Civil Rights
Christopher D'Angelo, Chief of Staff