oversight

Women and Minorities in FHFA's Workforce

Published by the Federal Housing Finance Agency, Office of Inspector General on 2015-01-13.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

           Federal Housing Finance Agency
               Office of Inspector General




 Women and Minorities in FHFA’s
          Workforce




Evaluation Report  EVL-2015-003  January 13, 2015
              Women and Minorities in FHFA’s Workforce

              Why OIG Did This Report
              On March 24, 2014, nine members of the U.S. House of Representatives asked
              the Inspectors General at seven financial regulators, including the Federal
              Housing Finance Agency (FHFA or Agency), to conduct a review of diversity
              and related workplace issues at their agencies.
 At A         What OIG Found
Glance              Human Resource Data Limitations: Deficiencies in FHFA’s human
 ———                 resources data systems limited OIG’s ability to perform certain
                     analyses of diversity and workforce issues. Where FHFA’s human
January 13,          resources data systems provided sufficient data, OIG analyzed that data
   2015              and reached conclusions.

                    Representation of Minorities and Women in the Workforce:
                     According to FHFA data, the percentage of minorities and women
                     in senior positions at the Agency increased from 2011 to 2013.
                     Promotions of minorities at the senior level increased from 2011
                     to 2013. At mid-level positions during this timeframe, FHFA data
                     showed that the percentage of women increased and that the percentage
                     of minorities remained generally unchanged.

                    Employee Satisfaction Survey Results: FHFA participates in the
                     annual Federal Employee Viewpoint Survey (FEVS) administered by
                     the U.S. Office of Personnel Management (OPM). Among other
                     things, the survey asks for employees’ views on diversity and
                     associated workplace issues. The Agency’s survey results in these
                     categories generally improved between 2011 and 2013.

                    Performance Ratings: Our review found that, in most cases, there
                     were no statistically significant differences—those that are not likely
                     due to error or chance—in performance ratings based on race or
                     gender. However, FHFA data showed statistically significant
                     differences in mid-level employee performance ratings: performance
                     ratings favored White employees over Asian employees in 2011 and
                     2012, and favored female over male employees in 2012 and 2013.

                    Bonuses: There were no statistically significant differences in the
                     bonuses and other monetary awards given to mid-level employees
                     in 2011 through 2013. However, FHFA data showed statistically
                     significant differences in the bonuses and other monetary awards given
                     to certain senior level employees that favored White employees over
                     minority employees in 2013 but not in 2011 or 2012.

                    OMWI’s Role within FHFA: The Office of Minority and Women
                     Inclusion (OMWI) has submitted annual reports to Congress on its
                     diversity efforts, conducted diversity training, and initiated a number of
                     other efforts to increase diversity. However, FHFA has not acted on
                     some of OMWI’s proposals concerning diversity and workforce issues.
 At A
              What OIG Recommends
Glance        We recommend that FHFA:
 ———
                 1. Test the new human resource system to ensure that it will provide data
January 13,         sufficient to enable the Agency to perform comprehensive analyses of
   2015             workforce issues.

                 2. Regularly analyze Agency workforce data and assess trends in hiring,
                    awards, and promotions.

                 3. Adopt a diversity and inclusion strategic plan.

                 4. Research opportunities to partner with inner-city and other high
                    schools, where feasible, to ensure compliance with the Housing and
                    Economic Recovery Act.

              FHFA agreed with OIG’s recommendations and identified specific actions to
              address them. FHFA expects implementation of its new Human Resource
              Information System (HRIS) to be complete by September 2015. OMWI and
              the Office of Human Resources Management (OHRM) will work together
              to analyze FHFA’s workforce data once the implementation of the new HRIS
              is completed. FHFA will adopt a diversity and inclusion strategic plan by
              September 30, 2015. Also, OMWI and OHRM will meet to explore partnering
              with inner-city and other high schools during 2015.
TABLE OF CONTENTS ................................................................
AT A GLANCE ...............................................................................................................................2

ABBREVIATIONS .........................................................................................................................6

PREFACE ........................................................................................................................................7

CONTEXT AND ANALYSIS ........................................................................................................8
      ANALYSIS OF FHFA’S DIVERSITY AND WORKFORCE DATA ....................................9
      1.     Data Limitations................................................................................................................9
      2.     Representation of Minorities in Senior Level Positions and Women in Senior
             and Mid-Level Positions Has Increased, Although Representation of Minorities
             in Mid-Level Positions Remained Relatively Static .......................................................10
      3.     Promotions of Minorities at the Senior Level Increased from 2011-2013 .....................12
      4.     Analysis of FHFA Data Found No Statistically Significant Disparities in
             Performance Ratings Among Senior Level Employees, but Found Some
             Statistically Significant Disparities Among Mid-Level Employees and Within
             the FHFA Employee Workforce .....................................................................................12
      5.     Some Statistically Significant Differences Were Found in Bonus Awards for
             EL-15 Employees but No Statistically Significant Disparities Were Found in
             Bonus Awards for Mid-Level Employees ......................................................................13
      6.     FHFA Employees’ Responses to Survey Questions on Diversity and Associated
             Workplace Issues ............................................................................................................14
      7.     Review of FHFA’s Employee Complaint Process and Hiring Practices ........................15
              A. Complaint Process ...................................................................................................15
              B. Hiring Practices .......................................................................................................16
      OMWI’S ROLES AND RESPONSIBILITIES FOR DIVERSITY-RELATED
        MATTERS WITHIN FHFA ...........................................................................................17

CONCLUSIONS............................................................................................................................20

RECOMMENDATIONS ...............................................................................................................21

OBJECTIVES, SCOPE, AND METHODOLOGY .......................................................................22
      Objectives ...............................................................................................................................22



                                           OIG  EVL-2015-003  January 13, 2015                                                                4
      Scope.......................................................................................................................................22
      General Methodology .............................................................................................................22

APPENDIX A ................................................................................................................................24
      FHFA’s Comments on FHFA-OIG’s Findings and Recommendations .................................24

APPENDIX B ................................................................................................................................26
      Letter from Nine Members of the House of Representatives .................................................26

APPENDIX C ................................................................................................................................28
      Representation of Minorities and Women at FHFA at the EL-12 Pay Level and
          Below ..............................................................................................................................28
             Race/Ethnicity Composition of Employees at FHFA .....................................................28
             Gender Composition of Employees at FHFA .................................................................28

APPENDIX D ................................................................................................................................29
      Promotions ..............................................................................................................................29

APPENDIX E ................................................................................................................................30
      Performance Ratings ...............................................................................................................30

APPENDIX F.................................................................................................................................32
      FHFA Employee Complaint Processes ..................................................................................32
             OMWI .............................................................................................................................32
             OIG Hotline Referrals .....................................................................................................34
             Office of Human Resources Management ......................................................................34
             Internal Ombudsman.......................................................................................................34

APPENDIX G ................................................................................................................................35
      Hiring ......................................................................................................................................35
      Expression of Interest Notices ................................................................................................36

ADDITIONAL INFORMATION AND COPIES .........................................................................37




                                            OIG  EVL-2015-003  January 13, 2015                                                                  5
ABBREVIATIONS .......................................................................

Dodd-Frank         Dodd-Frank Wall Street Reform and Consumer Protection Act

EEO                Equal Employment Opportunity

Fannie Mae         Federal National Mortgage Association

FEVS               Federal Employee Viewpoint Survey

FHFA or Agency     Federal Housing Finance Agency

FHLBank            Federal Home Loan Bank

Freddie Mac        Federal Home Loan Mortgage Corporation

GAO                Government Accountability Office

HERA               Housing and Economic Recovery Act of 2008

OIG                Federal Housing Finance Agency Office of Inspector General

OHRM               Office of Human Resources Management

OMWI               Federal Housing Finance Agency, Office of Minority and Women
                   Inclusion

OPM                U.S. Office of Personnel Management

PEMS               Performance Evaluation Management System




                         OIG  EVL-2015-003  January 13, 2015                      6
PREFACE ...................................................................................

The purpose of this evaluation was to (1) determine if any personnel practices have
systematically prevented minorities and women from obtaining senior management positions at
the Agency, (2) determine if any personnel practices have created a discriminatory workplace for
minorities and women, and (3) assess OMWI’s operations.

This evaluation was led by Adrienne Freeman, Investigative Counsel, assisted by Nicole
Mathers, Program Analyst, Brian Stief, Investigative Counsel, and Omolola Anderson,
Statistician. We appreciate the cooperation of FHFA staff, as well as the assistance of all those
who contributed to the preparation of this report. We would also like to recognize the
contributions from OIG’s Office of Administration, who provided assistance during the course of
this evaluation.

This report has been distributed to Congress, the Office of Management and Budget, and others
and will be posted on FHFA-OIG’s website, www.fhfaoig.gov.




Angela Choy
Director of Program Oversight
Office of Evaluations




                             OIG  EVL-2015-003  January 13, 2015                              7
CONTEXT AND ANALYSIS ..........................................................

On March 24, 2014, nine members of the House of Representatives asked that we assess
certain aspects of FHFA’s internal operations.1 The Members referred to a GAO report
entitled Diversity Management: Trends and Practices in the Financial Services Industry
and Agencies after the Recent Financial Crisis.2 GAO’s report highlighted trends in the
representation of minorities and women in senior management positions in the financial
services industry and at federal financial regulators.3 Specifically, GAO found that
representation of minorities and women in 2011 ranged from 11% to 24% and 31% to 47%,
respectively, among the federal financial regulators. GAO also noted that during 2010 and
2011 FHFA generally had a higher percentage of minorities and women in senior
management positions than other financial regulators.4

The Housing and Economic Recovery Act of 2008 (HERA) established FHFA as the safety,
soundness, and housing mission regulator of the Federal National Mortgage Association
(Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal
Home Loan Bank (FHLBank) System.5 FHFA is a small agency compared to other federal
financial regulators.6

1
    The letter by which this request was made is contained in Appendix B.
2
  Government Accountability Office, Diversity Management: Trends and Practices in the Financial Services
Industry and Agencies after the Recent Financial Crisis (April 2013) (GAO-13-238) (online at:
www.gao.gov/assets/660/653814.pdf).
3
  OPM defines diversity “as 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.” OPM, Government-Wide Diversity and
Inclusion Strategic Plan 2011 (online at: www.opm.gov/policy-data-oversight/diversity-and-
inclusion/reports/governmentwidedistrategicplan.pdf).
4
  These financial regulators are the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of
the Federal Reserve System (Federal Reserve), the National Credit Union Administration (NCUA), the Office
of the Comptroller of the Currency (OCC), the U.S. Securities and Exchange Commission (SEC), and the
Consumer Financial Protection Bureau (CFPB).
5
    Housing and Economic Recovery Act of 2008, Pub. L. No. 110-289 § 1101, 122 Stat. 2654, 2661 (2008).
6
  Although the Agency is the conservator of Fannie Mae and Freddie Mac, our analysis was limited to FHFA’s
employees. FHFA has fewer than 600 employees. The number of employees in certain categories (for
example, senior level and mid-level) is relatively small, and the size of demographic subgroups within these
categories is even smaller. Thus, a small change to the number of employees in such a subcategory
substantially affects the results of any statistical analysis. For example, in the case of senior level employees,
the promotion of one Hispanic employee in the category of senior level employees represented 7.7% of the
promotions in that subcategory in 2013. Had another Hispanic senior level employee been promoted in 2013,
the Hispanic component of senior level promotions would increase to 15.4%.




                                    OIG  EVL-2015-003  January 13, 2015                                             8
In this report, we present our analysis of workforce and diversity data available from FHFA
for the period of 2011-2013 and an assessment of OMWI’s operations. The report is divided
into two parts. In part one, we provide an update on the representation of minorities and
women in senior and mid-level positions at FHFA since GAO’s report.7 Part one also
addresses promotions, performance ratings, bonuses, and employee responses to survey
questions on diversity and workplace issues at FHFA. The second part of the report discusses
OMWI’s roles and responsibilities.

ANALYSIS OF FHFA’S DIVERSITY AND WORKFORCE DATA

      1. Data Limitations

In the course of this evaluation we found that the Agency did not have an adequate human
resources data collection system with which to provide detailed information necessary to
conduct certain analyses.8 The Agency produced multiple spreadsheets of data that were
replete with missing, incorrect, or inconsistent information. For example, the Agency’s first
data production of performance appraisal data contained a significant amount of missing
information—such as race, ethnicity,9 gender, and pay level—as well as erroneous
information. In the data originally produced by the Agency, the then-Acting Director of the
Agency was characterized as both a Caucasian male, which he is, and an African American
female, which he is not. FHFA officials told us that some of the data elements had to be
entered into the spreadsheet manually because the relevant information is not maintained
within a single database.

To the extent possible, we compensated for these data limitations by compiling the various
batches of data FHFA provided, deleting duplicate entries, merging and formatting the
disparate spreadsheets, and reconciling missing data against other FHFA submissions to fill in
most of the data gaps in order to produce the aggregate summaries in this report. The Agency
also submitted revised data productions that addressed almost all of the obvious errors in the
performance ratings data. This revised data was used to conduct the performance ratings
analysis discussed later in this report.



7
 FHFA uses two pay scales, LL and EL. Members of FHFA senior staff are those employees at the LL-1 and
EL-15 pay levels. Mid-level employees are those at the EL-14 and EL-13 pay levels. FHFA employees at the
EL-12 pay level and below are referred to in this report as “other employees.”
8
  Section 1101 of HERA created FHFA as the successor agency to the Office of Federal Housing Enterprise
Oversight and the Federal Housing Finance Board. FHFA’s personnel files contain information gathered by its
two predecessor agencies.
9
    Providing race and ethnicity information is voluntary on the part of FHFA employees.




                                    OIG  EVL-2015-003  January 13, 2015                                     9
In some instances, limitations in the data prevented a more detailed analysis into relevant
issues. For example, we could not verify that we had accurate information on designated
rating officials for performance ratings, so we could not analyze the effect of a rating
official’s race or gender on the average rating of the employees who reported to the official.
Likewise, on two separate occasions FHFA provided inconsistent information on, among
other things, gender with respect to promotions. The inconsistencies in the data precluded
any analysis of promotions by gender for each pay category. Data compilations provided by
FHFA regarding attrition also were missing numerous entries for race and gender. The
Agency’s responses to follow-up information requests showed that its data were not
maintained consistently and in an analysis-ready format.

In 2011, OMWI identified the need for FHFA to update its human resource data collection
systems.10 The office found that the databases made it difficult to conduct detailed analyses
for reporting purposes. Similar data problems still exist that inhibit the Agency’s ability to
provide reliable data to perform in-depth analyses of workforce diversity. FHFA is in the
process of transitioning to a new data system that Agency officials said will improve the
quality of the data and produce better reports.

     2. Representation of Minorities in Senior Level Positions and Women in Senior
        and Mid-Level Positions Has Increased, Although Representation of Minorities
        in Mid-Level Positions Remained Relatively Static

We examined available FHFA data from 2011 to 2013 and found increases in the
representation of minority—specifically, African American, Hispanic, and Asian—and female
employees serving at the senior level (EL-15 and LL-1). Minority employees at the senior
level increased from 19 to 25% and female senior employees increased from 36 to 38%. See
Figure 1 below.




10
   According to the former director of the Office of Human Resources Management, the Agency began an
effort to upgrade its human resource data system in 2013.




                                 OIG  EVL-2015-003  January 13, 2015                                 10
     FIGURE 1. FHFA RACE/ETHNICITY AND GENDER REPRESENTATION – SENIOR LEVEL EMPLOYEES

                         Race/Ethnicity                                                 Gender
      100%                                                       100%
       90%                                                        90%
       80%
                                                                  80%
       70%
       60%                                                        70%
       50%                                                        60%
       40%                                                        50%
       30%
       20%                                                        40%
       10%                                                        30%
        0%                                                        20%
                 2011          2012        2013
                                                                  10%
     Hispanic     3%            3%          4%
                                                                   0%
     Asian        6%            7%          9%                              2011          2012   2013
     Black        10%          10%         12%                  Female      36%           34%    38%
     White        78%          78%         74%                  Male        64%           66%    63%


Source: OIG aggregation of FHFA data. Numbers may not add up to 100% due to rounding.

The representation of women among mid-level employees (EL-13 and EL-14) increased from
40% in 2011 to 42% in 2013. Minority representation among mid-level employees remained
relatively static over the period 2011-2013. See Figure 2 below. An analysis of the representation
of minorities and women at the EL-12 pay level and below shows that the representation of
minorities remained relatively static over the period 2011-2013, but the representation of
women decreased from 62% to 58% during that time. See Figures 6 and 7 in Appendix C.

      FIGURE 2. FHFA RACE/ETHNICITY AND GENDER REPRESENTATION – MID-LEVEL EMPLOYEES

                    Race/Ethnicity                                                      Gender
      100%                                                      100%
       90%                                                       90%
       80%
                                                                 80%
       70%
       60%                                                       70%
       50%                                                       60%
       40%                                                       50%
       30%
       20%                                                       40%
       10%                                                       30%
        0%                                                       20%
                  2011         2012        2013
                                                                 10%
     Hispanic      3%           3%          3%
                                                                  0%
     Asian        14%          14%         13%                             2011          2012    2013
     Black        18%          20%         18%                  Female     40%            42%    42%
     White        63%          62%         64%                  Male       60%            58%    58%




                                OIG  EVL-2015-003  January 13, 2015                                   11
Source: OIG aggregation of FHFA data. Numbers may not add up to 100% due to rounding.

      3. Promotions of Minorities at the Senior Level Increased from 2011-2013

In the same time period, FHFA’s data for              FIGURE 3. 2011-2013 PROMOTIONS BY RACE AND
senior level employees show an increase in                  ETHNICITY FOR SENIOR LEVEL STAFF
the promotions of minorities. To be sure,
the number of senior level promotions in                                                2011   2012       2013
each of these years is small.11 However, in           White                              11      6          7
2013 more than 38% of the 13 promotions in            Black or African American           4      1          1
senior level positions were awarded to                Asian                               0      0          3
minorities. See Figure 3.                             Hispanic/Latino                     0      0          1
                                                      Unspecified                         3      2          1
Promotion data for all FHFA staff are                 Total                              18      9         13
attached as Appendix D, which also reflects
an increase in promotions of minorities.

      4. Analysis of FHFA Data Found No Statistically Significant Disparities in
         Performance Ratings Among Senior Level Employees, but Found Some
         Statistically Significant Disparities Among Mid-Level Employees and Within the
         FHFA Employee Workforce

FHFA uses the Performance Evaluation Management                  Statistical Significance refers
                                                                 to the probability that results
System (PEMS) for its annual performance review
                                                                 are not caused by error or
of employees and managers. PEMS measures                         manipulation. It also indicates
performance elements with five possible rating                   that the observed difference is
categories, ranging from “outstanding” to                        probably not due to chance.
“unacceptable”. A contractor retained by the FDIC
OIG analyzed FHFA’s PEMS ratings results for 2011
to 2013 and did not identify any statistically significant differences in performance ratings
among senior level officials based on race, ethnicity, or gender.12 The contractor’s analysis
found two statistically significant differences for mid-level employees: performance ratings
favored White employees over Asian employees in 2011 and 2012, and favored female over
male employees in 2012 and 2013. There were no statistically significant differences in
performance ratings between mid-level White and Hispanic or African American employees.
The analysis of performance ratings for all FHFA employees found a statistically significant

11
     See supra note 6.
12
  Performance rating analyses were performed by DCI Consulting Group. All other analyses were performed
by FHFA-OIG.




                                OIG  EVL-2015-003  January 13, 2015                                        12
difference that favored White employees over African American employees in 2011 and
2012, but not in 2013.13 Details of this analysis are set forth in Appendix E. We cannot
conclude, based solely on these statistically significant differences, that the differences found
in the performance ratings analysis were the result of discrimination or other unfair
employment practices.14

     5. Some Statistically Significant Differences Were Found in Bonus Awards for
        EL-15 Employees but No Statistically Significant Disparities Were Found in
        Bonus Awards for Mid-Level Employees

Under FHFA’s performance-based compensation system, annual performance bonuses are
calculated as a percentage of an employee’s salary. Non-cash awards, such as additional
hours of annual leave and on-the-spot cash awards, can be made at a supervisor’s discretion
throughout the year.

We analyzed FHFA data on monetary bonuses awarded to senior level employees at the EL-
15 level and found no statistically significant differences between awards given to White and
minority employees at the EL-15 level in 2011 and 2012.15 However, we did find statistically
significant differences between these groups in 2013. FHFA data showed that the average
bonus for White EL-15-level employees in 2013 was nearly $5,700 while the average bonus
for minority EL-15 employees was about $4,100, or approximately 27% less.16 See Figure 4
below. Our analyses of FHFA data did not find statistically significant differences in bonuses
given to mid-level employees (those at the EL-14 and EL-13 pay levels) over the same time
period.17 In addition, our analysis of FHFA data did not find statistically significant

13
   There were no statistically significant differences in performance ratings at the senior, mid-, or other level
between African American and White employees; however, there was a statistically significant difference in
ratings between non-supervisory African American and non-supervisory White employees.
14
  Further analysis at a more granular level would be required to determine whether the disparities identified
by the contractor are related to discrimination or due to differences based on experience level, actual
performance, job location, job function, grade level, or a combination of these and other factors.
15
   The dollar value of a performance bonus is calculated based on salary. Because there are differences in LL
versus EL salaries we analyzed EL bonuses separately. The overall pool of LL-1 employees is fairly small,
and there are relatively few minority LL-1 employees. Statistical significance tests of such small subgroups
often yield inconclusive results. Thus, we did not perform a statistical significance test on bonuses awarded to
LL employees.
16
  Cash bonus comparisons include both on-the-spot bonuses and annual bonuses. We were not able to
quantify other factors that could explain differences, such as differences in job duties and how often on-the-
spot bonuses were awarded to individual employees; accordingly, such factors were not considered in our
analysis.
17
  We were not able to analyze bonus data for employees at EL-12 pay levels and below because race/ethnicity
designations were missing from FHFA’s data.




                                    OIG  EVL-2015-003  January 13, 2015                                           13
differences in bonuses given to female and male mid-level and EL-15 level employees from
2011-2013.

FIGURE 4. AVERAGE AND MEDIAN ANNUAL BONUSES OF EL-15 LEVEL EMPLOYEES BY RACE/ETHNICITY

                                         2013                     2012                     2011
        Race/Ethnicity          Average     Median       Average     Median       Average     Median
           Minority             $4,132          $3,414   $7,592          $7,355   $6,410          $6,003
            White               $5,696          $4,500   $8,385          $8,196   $6,864          $6,535
     Minority $ Difference
                                –$1,564     –$1,086      –$793           –$841    –$454           –$532
     Compared to White
    Minority % Difference
                                 –27%           –24%      –9%            –10%      –7%             –8%
     Compared to White


We cannot conclude, based upon statistically significant differences alone, that these
differences resulted from discrimination or other unfair employment practices.

   6. FHFA Employees’ Responses to Survey Questions on Diversity and Associated
      Workplace Issues

The Federal Employee Viewpoint Survey (FEVS) is a survey administered by OPM. The
FEVS is designed to capture federal employees’ perceptions of their agency’s strengths and
weaknesses. Four FEVS questions pertain to employees’ views on diversity and associated
workplace issues. Employees are asked to respond whether they strongly agree, agree, neither
agree nor disagree, disagree, or strongly disagree with the survey statements.

A majority of FHFA employees responded positively (agree or strongly agree) to the
questions on diversity and workplace issues, and those numbers generally increased from
2011 to 2013. However, the number of employees responding negatively to the questions
also sometimes increased. See Figure 5 below. According to the former director of FHFA’s
Office of Human Resources Management (OHRM), the Agency can obtain reports about
responses to a particular survey question from OPM when 10 or more employees respond the
same way to a question. FHFA has requested such reports to follow up on specific issues
raised by employee responses to survey questions.




                             OIG  EVL-2015-003  January 13, 2015                                         14
                 FIGURE 5. FHFA FEVS DIVERSITY AND WORKFORCE-RELATED QUESTIONS

                               Percent Percent                                               Percent    Percent
  Policies and        Year     Positive Negative                                    Year     Positive   Negative
                                                                 Prohibited
    programs          2011     55.7%       –18.4%                                   2011      64.3%      –16.7%
                                                                 personnel
    promote
                                                                practices are       2012      61.0%      –18.0%
 diversity in the     2012     56.1%       –17.9%
                                                                not tolerated
   workplace
                      2013     56.1%       –20.2%                                   2013      63.5%      –17.7%


My supervisor/                 Percent Percent                   Managers/                   Percent    Percent
team leader is        Year     Positive Negative                supervisors/        Year     Positive   Negative
 committed to         2011     63.0%       –8.9%                team leaders        2011      53.8%      –22.0%
  a workforce                                                  work well with
representative        2012     68.8%       –8.8%               employees of         2012      51.0%      –24.5%
of all segments                                                   different
   of society         2013     70.1%       –10.0%               backgrounds         2013      58.9%      –19.3%

Note: The numbers do not add to 100% because the figure does not include neutral/neither agree nor disagree
responses.

     7. Review of FHFA’s Employee Complaint Process and Hiring Practices

In addition to the analysis of FHFA’s diversity and workforce data related to performance
ratings and bonuses, members of the House of Representatives requested information and data
on FHFA’s employee complaints and hiring practices, which we discuss briefly below.
Additional information is set forth in the Appendices.

        A. Complaint Process

At FHFA, internal employee complaints are primarily received through one of three divisions:
OMWI, OHRM, and the Office of the Chief Operating Officer (OCOO).18 A brief summary
of each office’s role in the complaint process is included in Appendix F along with data on
Equal Employment Opportunity (EEO) complaints.

During the course of this evaluation, we learned that, in 2012, a high-ranking official in the
Agency allegedly told two employees in the Agency’s EEO office that there would be serious
consequences if additional EEO complaints were filed against a particular Agency supervisor.
The OIG Office of Investigations investigated the allegation and was not able to determine
whether this alleged threat acted to reduce the overall number of complaints that were
subsequently filed against the supervisor in question or any other official. The results of the

18
  External complaints dealing with the regulated entities—Fannie Mae, Freddie Mac, and the Federal Home
Loan Banks—are referred to the Office of the Ombudsman.




                                  OIG  EVL-2015-003  January 13, 2015                                       15
investigation have been referred to the EEOC and the U.S. Office of Special Counsel, as well
as to FHFA. Workplace commitment to a discrimination-free environment begins with the
“tone at the top;” senior leadership must communicate and enforce compliance with anti-
discrimination laws. When a high-ranking Agency official is perceived as threatening
retaliation against employees if additional EEO complaints are filed, that threat of perceived
retaliation, even if it did not occur, can have a chilling effect on the Agency because it can
drive out capable employees and reduce employee willingness to report misconduct.

        B. Hiring Practices

The financial services industry has faced documented challenges in developing a diverse pool
of qualified candidates to fill the needs of the industry.19 According to FHFA:

        [The Agency] faces challenges when hiring certain mission-critical positions.
        For example, FHFA employs a number of Ph.D. economists and specialized
        examiners to fulfill its mission. Based upon census data, the availability
        of these financial skills is low among Hispanics, Blacks, and Native
        Americans.20

FHFA has stated that it takes diversity seriously. OHRM employed a team of contracted
recruiters tasked with recruiting mission-critical positions through social media and cold
calling. The recruiters stated that they searched for qualified candidates by cross-referencing
professional associations, including race-based or gender-based organizations, against
individuals with the desired education and experience. They also developed a recruitment
plan in August 2012, but FHFA has not approved it. Among other things, the plan suggested
that OHRM partner with OMWI and attend conferences for minority and women trade
associations. We also found that FHFA does not have plans for hiring minority candidates at
junior levels to increase diversity in senior management positions through internal
promotions.21




19
   Minorities and women are often underrepresented in both internal and external candidate pools; see GAO
report, supra note 2.
20
  OMWI, FHFA, Annual Report to Congress (Jan. 2012-Dec. 2012), at 7 (online at
www fhfa.gov/AboutUs/Reports/Pages/Office-of-Minority-and-Women-Inclusion-2012-Annual-Report-to-
Congress.aspx).
21
   See Appendix G for more information about FHFA’s hiring authority and the use of expressions of interest
in positions at the Agency.




                                  OIG  EVL-2015-003  January 13, 2015                                       16
OMWI’S ROLES AND RESPONSIBILITIES FOR DIVERSITY-RELATED MATTERS WITHIN
FHFA

Section 342 of the Dodd-Frank Act mandated the creation of OMWI within FHFA and
directed that it “shall be responsible for all matters of the agency relating to diversity in
management, employment, and business activities.” 22 With the recent appointment of a new
OMWI Director, FHFA has an opportunity to review the office’s roles and responsibilities
and determine whether actions are necessary to enhance its effectiveness.

Since FHFA established its OMWI in January 2011, the office has conducted the following
activities, among others:23

          Issued annual reports to Congress on the diversity of the Agency’s workforce, as well
           as the diversity in its external business dealings, e.g., contract awards to minority- and
           women-owned businesses;24

          Issued annual reports to Congress, the Equal Employment Opportunity Commission
           (EEOC), OPM, and the Department of Justice on the Agency’s No FEAR Act
           obligations;25



22
  The Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 342, Pub. L. No. 111-203,
111th Congress, 12 U.S.C. § 5452.
23
   Under Section 1116 of HERA, Fannie Mae, Freddie Mac, and the FHLBank System are required to establish
an OMWI or designate an office responsible for carrying out OMWI requirements. FHFA has enforcement
authority over the diversity and inclusion practices of its regulated entities. Although carrying out the HERA
requirements at the regulated entities is a major portion of OMWI’s work, a review of OMWI’s efforts toward
workforce and management diversity at the regulated entities was beyond the scope of this evaluation.
24
     Section 342 of the Dodd-Frank Act requires OMWI to submit to Congress an annual report that includes:
        (1) a statement of the total amounts paid by the agency to contractors since the previous report;
        (2) the percentage of those total amounts that were paid to minority-owned and women-owned
        businesses;
        (3) the successes achieved and challenges faced by the agency in operating minority and women outreach
        programs;
        (4) the challenges the agency may face in hiring qualified minority and women employees and
        contracting with minority-owned and women-owned businesses; and
        (5) any other information, findings, conclusions, and recommendations for legislative or agency action, as
        the Director determines appropriate.

12 U.S.C. § 5452(e).
It was outside the scope of our evaluation to review OMWI’s efforts to increase participation of minority- and
women-owned businesses in the Agency’s contracting activities.
25
  Among the items that must be included in the annual report are: the number, status, and disposition of
pending or resolved federal court cases against the Agency, the number of individuals the Agency disciplined,



                                     OIG  EVL-2015-003  January 13, 2015                                           17
          Provided Equal Employment Opportunity (EEO)26 services to Agency employees,
           including counseling, mandatory training, complaint processing, and investigations;

          Coordinated with OHRM to issue annual reports according to EEOC Management
           Directive 715, known as MD-715 reports;27 and

          Conducted mandatory diversity training for FHFA management.

Dodd-Frank also directs OMWI directors to “develop standards for equal employment
opportunity and the racial, ethnic, and gender diversity of the workforce and senior
management” of the Agency.28 Section 1116 of HERA includes specific diversity provisions;
the Agency has interpreted the HERA diversity provisions as satisfying the Dodd-Frank
requirement.29

OMWI reported that it has initiated a number of efforts to increase diversity in the Agency,
including the following:

          Recruiting at conferences and job fairs targeted at women and minorities and
           forwarding resumes to OHRM;30

          Sponsoring a summer student internship program that includes women and minority
           students; and

          Distributing employment opportunity announcements to educational institutions,
           including historically Black colleges and universities, and professional organizations
           targeted at women and minorities.




and the types of discipline administered for violations of the employment discrimination and whistleblower
protection laws.
26
   EEO refers to the federal laws and regulations that make it illegal to discriminate against a job applicant or
an employee based on race, religion, national origin, color, sex, age, disability, and other protected categories.
27
   An MD-715 report includes a statistical snapshot of workforce demographics and an agency’s self-
assessment of its EEO program.
28
     12 U.S.C. § 5452(b)(2)(A).
29
     12 U.S.C. § 4520(f).
30
   Recruitment efforts by FHFA are managed by OHRM. As discussed in Section 7 B. above, the policy
proposed by OHRM contractors for OHRM to partner with OMWI to implement a more robust recruitment
plan has not been implemented.




                                    OIG  EVL-2015-003  January 13, 2015                                            18
However, OMWI has not yet initiated a partnership with high schools, as specified in HERA
and Dodd-Frank “where feasible.” The new OMWI director reports that the office will revisit
the feasibility of such a high school mentoring program.

OMWI’s former Acting Director had advised us that some of the policies OMWI proposed
concerning workforce and diversity issues were not acted on by Agency officials. For
example, during the period under review in this report, OMWI developed a draft diversity and
inclusion strategic plan, which was not finalized. The new OMWI director reported that the
office will continue to work toward implementing a plan.

Members of the House of Representatives staff also expressed interest in OMWI’s role and
involvement in assessing the impact of personnel policies on minorities and women. During
the period of this evaluation, few personnel policies had been adopted by FHFA. A number
of personnel policies had been drafted, but had not been finalized and implemented. The
former Acting Director of FHFA approved and signed only the EEO Policy Statement and the
Anti-Harassment Policy Statement during his five years in office. Thus, there were few
personnel policies in place to assess.31

According to OMWI’s former Acting Director, senior Agency officials were supportive of
OMWI’s external activities related to diversity and inclusion at FHFA’s regulated entities, but
they did not advocate for a more robust role for OMWI on diversity and inclusion within the
Agency. The former OHRM director stated that OMWI needed more resources to perform its
work. OMWI’s operating budget, excluding employee salaries, was reduced from its original
allocation of $532,696 in fiscal year 2011. Budget totals for fiscal years 2012, 2013, and
2014 were $445,662, $458,991, and $388,862, respectively.32

In October 2014, FHFA’s Director appointed a new OMWI director. The new director
reports that she believes that OMWI has a commitment from the top of the Agency. This
change in OMWI leadership provides FHFA with the opportunity to review OMWI’s
operations and performance and determine whether an expansion in its roles and
responsibilities would be appropriate.




31
   Between March and October 2014, FHFA Director Melvin L. Watt approved additional personnel policies,
including policies on performance management, absence and leave, and reimbursement and stipends.
32
   As of February 2014, OMWI was staffed by eight employees, including two EEO staff. The remaining six
employees are responsible for diversity activities within the Agency as well as efforts to increase diversity in
the Agency’s external business dealings (e.g., contract awards to minority- and women-owned businesses) and
oversight of diversity at Fannie Mae, Freddie Mac, and the FHLBanks.




                                   OIG  EVL-2015-003  January 13, 2015                                           19
CONCLUSIONS ..........................................................................

We reached the following conclusions:

      Human resource data issues present challenges for assessing the Agency’s diversity
       efforts.

      According to FHFA data, the percentage of minorities and women in senior positions
       at the Agency increased from 2011 to 2013. Promotions of minorities at the senior
       level increased from 2011 to 2013. The percentage of women in mid-level positions
       increased; however, the percentage of minorities in mid-level positions remained
       generally unchanged.

      The Agency’s FEVS results with respect to the diversity and related workplace
       questions have generally improved since 2011, and the majority of employees
       responded affirmatively regarding diversity and workplace policies at the Agency.

      FHFA’s data did not reveal statistically significant disparities in performance ratings
       based on race, ethnicity, or gender for senior level employees. Analysis of that data
       found statistically significant disparities favoring mid-level White employees over
       Asian employees in 2011 and 2012, and female employees over male employees in
       2012 and 2013. It also found statistically significant differences in bonuses favoring
       some senior level White employees in 2013. We cannot conclude that these
       disparities resulted from discrimination or other unfair employment practices.

      OMWI has carried out statutorily mandated reporting requirements, conducted
       diversity training, and initiated a number of other efforts to increase diversity.
       However, FHFA has not acted on some of OMWI’s proposals concerning diversity
       and workforce issues or on a proposed policy for OMWI to partner with OHRM for
       recruitment efforts. With the recent appointment of a new OMWI Director, FHFA has
       an opportunity to review the office’s roles and responsibilities, and determine whether
       additional actions are necessary to enhance its effectiveness.




                             OIG  EVL-2015-003  January 13, 2015                               20
RECOMMENDATIONS ...............................................................

We recommend that FHFA:

   1. Test the new human resource system to ensure that it will provide data sufficient to
      enable the Agency to perform comprehensive analyses of workforce issues.

   2. Regularly analyze Agency workforce data and assess trends in hiring, awards, and
      promotions.

   3. Adopt a diversity and inclusion strategic plan.

   4. Research opportunities to partner with inner-city and other high schools, where
      feasible, to ensure compliance with the Housing and Economic Recovery Act.

On December 22, 2014, FHFA provided comments to a draft of this report. See Appendix A.
FHFA agreed with all of our recommendations. FHFA expects implementation of its new
Human Resource Information System (HRIS) and the adoption of a diversity and inclusion
strategic plan by September 30, 2015. OMWI and OHRM will work together to analyze
FHFA’s workforce data once the implementation of the new HRIS is completed. OMWI and
OHRM will also explore partnering with inner-city and other high schools during 2015.




                            OIG  EVL-2015-003  January 13, 2015                            21
OBJECTIVES, SCOPE, AND METHODOLOGY ...............................

Objectives

The objectives of this evaluation as stated in the March 24, 2014 letter from nine Members
of the House of Representatives were to (1) determine if any personnel practices have
systematically prevented minorities and women from obtaining senior management positions
at the Agency, (2) determine if any personnel practices have created a discriminatory
workplace for minorities and women, and (3) assess OMWI’s operations. Similar requests
were sent to CFPB, Treasury, FDIC, the Federal Reserve, NCUA, and SEC.

To address the objectives of the letter we analyzed agency-wide statistics, such as
performance rating results, promotions for minority and female employees, and employee
satisfaction results. We also reviewed agency personnel policies and procedures and OMWI’s
role and involvement in the Agency, among other things.

Scope

The scope of this evaluation was to assess workforce diversity at FHFA and OMWI as
described by the Dodd-Frank Act. The period of review was from 2011 through 2013.

General Methodology

To achieve the objectives of this evaluation we reviewed applicable federal laws, including
civil rights laws, HERA, the Dodd-Frank Act, as well as EEOC and FHFA regulations. We
also compiled publicly available data on EEO complaint activity. We interviewed FHFA
officials from OBFM, OCOO, OGC, OHRM, and OMWI. We reviewed documents provided
by FHFA including personnel policies and procedures; budget information; employee
satisfaction surveys; job posting information; formal and informal complaints; congressional
correspondence; and raw data regarding performance ratings, attrition, new hires, bonuses,
promotions, and disciplinary actions.

For each FHFA employee, we requested data elements such as race, ethnicity, gender, and
pay grade. Because our analysis was limited to FHFA employees, we did not request Fannie
Mae, Freddie Mac, or OIG employee data. The data provided by the Agency had missing
data elements and incorrect information. Follow-up data requests revealed that not all
necessary information was readily available for analysis.

As a result of the issues identified, we prepared the data for analysis by deleting duplicates
and merging and formatting datasets in order to produce the aggregate summaries provided in
this report. When possible, our analysis included individuals who self-identified as two or


                             OIG  EVL-2015-003  January 13, 2015                               22
more races. Although we did not independently test the reliability of FHFA’s data systems,
we discuss in this report the data quality issues that were identified in the course of our
evaluation. Data limitations prevented certain analyses of performance evaluation ratings,
expressions of interests, promotions, and hiring at the Agency.

The review of data from FHFA’s performance management system was conducted by a third
party contractor. According to the contractor, “[s]eparate analyses were conducted for overall
performance ratings administered in 2011, 2012, and 2013. These analyses were conducted to
detect trends in the data related to possible performance rating differences based on gender,
race/ethnicity and age. Analyses were conducted at overall (i.e., agency wide), job level
(senior executive, mid-level, and other) and supervisory status (supervisory and non-
supervisory) units of analysis.”33

This evaluation was conducted under the authority of the Inspector General Act and is in
accordance with the Quality Standards for Inspection and Evaluation (January 2012), which
were promulgated by the Council of the Inspectors General on Integrity and Efficiency.
These standards require us to plan and perform an evaluation that obtains evidence sufficient
to provide reasonable basis to support its findings and recommendations. We believe that the
findings and recommendations discussed in this report meet these standards.

The performance period for this evaluation was March 2014 to December 2014.




33
  DCI Consulting Group, An Analysis of Gender, Race, and Age Differences in Performance Ratings of FHFA
Employees: 2011-2013 (Sept. 5, 2014).




                                OIG  EVL-2015-003  January 13, 2015                                     23
APPENDIX A .............................................................................

FHFA’s Comments on FHFA-OIG’s Findings and Recommendations




                          OIG  EVL-2015-003  January 13, 2015                        24
OIG  EVL-2015-003  January 13, 2015   25
APPENDIX B..............................................................................

Letter from Nine Members of the House of Representatives




                          OIG  EVL-2015-003  January 13, 2015                        26
OIG  EVL-2015-003  January 13, 2015   27
APPENDIX C ..............................................................................

Representation of Minorities and Women at FHFA at the EL-12 Pay Level and Below

        Race/Ethnicity Composition of
                                                      FIGURE 6. REPRESENTATION BY RACE/ETHNICITY
        Employees at FHFA                                          (EL-12 AND BELOW)

The representation of minorities at pay                       100%
                                                               90%
levels EL-12 and below remained relatively                     80%
static during the period of review, 2011                       70%
to 2013.34 See Figure 6 at right. Note:                        60%
                                                               50%
Numbers may not add up to 100% due to
                                                               40%
rounding.                                                      30%
                                                               20%
                                                               10%
                                                                0%
                                                                           2011      2012          2013
                                                          Hispanic          2%        2%            2%
                                                          Asian             6%        7%            8%
                                                          Black             43%       46%          43%
                                                          White             48%       45%          47%

        Gender Composition of Employees at               FIGURE 7. FHFA WORKFORCE BREAKDOWN BY
                                                                 GENDER (EL-12 AND BELOW)
        FHFA                                          100%
                                                                     62%           61%            58%
The representation of women at FHFA at pay              80%

levels EL-12 and below has decreased over               60%
                                                                                                      Male
                                                                                                      Female
the past three years—four percentage points
                                                        40%
from 2011 to 2013. See Figure 7 at right.                                                         42%
                                                                     38%           39%
                                                        20%

                                                         0%
                                                                     2011         2012            2013

34
   For a comparison of the race and ethnicity representation levels of FHFA’s workforce and the federal
civilian agency workforce, see OPM’s Federal Equal Opportunity Recruitment Program (FEORP) for Fiscal
Year 2012: Report to the Congress. The report is available online at www.opm.gov/policy-data-
oversight/diversity-and-inclusion/reports/feorp-2012.pdf; for a comparison of the race and ethnicity
representation levels between FHFA’s workforce and those of the non-federal agency civilian workforce in
2013, see U.S. Bureau of Labor Statistics’ Labor Force Characteristics by Race and Ethnicity, 2013. The
report is available online at www.bls.gov/cps/cpsrace2013.pdf.




                                 OIG  EVL-2015-003  January 13, 2015                                         28
APPENDIX D .............................................................................

Promotions

Promotion data for all FHFA staff
                                           FIGURE 8. 2011-2013 PROMOTIONS BY RACE AND
show that in 2013, 30 promotions
                                                   ETHNICITY FOR ALL FHFA STAFF
were awarded to minorities, an
increase from 22 in 2011. See Figure 8                               2011   2012    2013
at right.                                White                        29     33      36
                                         Black or African American    17     22      19
                                         Asian                         4      3       9
                                         Hispanic/Latino               0      0       2
                                         Two or More Races             1      1       0
                                         Unspecified                   9      3       1
                                         Total                        60     62      67




                            OIG  EVL-2015-003  January 13, 2015                       29
APPENDIX E ..............................................................................

Performance Ratings

The following tables show percent differences in employee performance ratings by gender
and race or ethnicity for mid-level employees. We also present data relative to all employees
regardless of pay level.35

In Figure 9, the percentage difference column shows the performance rating difference when
compared to White employees. Statistically significant differences are indicated by a dot ().
For example, in 2012, the average performance rating for mid-level Asian employees was
7.8% lower than their White counterparts. Statistical analysis showed that the 7.8%
difference in ratings was statistically significant, and therefore, was not the result of chance or
an anomaly.36 In 2012 and 2013, Hispanic employees averaged higher performance ratings
than White employees by 3.8% and 1.1%, respectively. That difference, however, was not
found to be statistically significant.

                          FIGURE 9. PERFORMANCE RATINGS BY RACE OR ETHNICITY


                                     Mid-Level Employees Average Rating
                                               %                       %                                      %
                  White         Black     Difference    Asian     Difference               Hispanic      Difference
     2011         4.13           3.89         6.1        3.83         7.8                   3.83            7.6
     2012         4.17           3.98         4.8        3.87         7.8                   4.33            3.8
     2013         4.12           4.1          0.5        4.1          0.4                    4.17            1.1



                                      Overall Employees Average Rating
                                               %                       %                                      %
                  White         Black     Difference     Asian    Difference               Hispanic      Difference
     2011          4.23         3.93          7.7       3.96         6.7                    4.2            0.6
     2012          4.27         4.06          5.2       4.02         6.1                    4.47           4.5
     2013          4.3          4.16          3.3        4.21         2.1                     4.35           1.3
 = Statistically Significant


35
  Senior level are employees at the LL-1 and EL-15 pay levels. Mid-level are employees at the EL-14 and 13
pay levels. Other employees are employees at the EL-12 pay levels and below.
36
   There were no statistically significant differences in performance ratings by race/ethnicity for “other” and
“senior level” employees.




                                    OIG  EVL-2015-003  January 13, 2015                                             30
In Figure 10, the percentage difference column
                                                                  FIGURE 10. PERFORMANCE RATINGS BY
shows the performance rating difference
                                                                                GENDER
between male and female employees.
Statistically significant differences are indicated                 Mid-Level Employees Average Rating
by a dot ().37 For instance in 2012 and 2013,                                                        %
the average performance rating for mid-level                                Men       Women      Difference
female employees was higher than male                            2011       3.95        4.15         4.8
employees by 7.9% and 10.6%, respectively.                       2012       3.95        4.29         7.9 
                                                                 2013       3.92        4.38        10.6 

                                                                        Other Employees Average Rating
                                                                                                                 %
                                                                               Men            Women         Difference
                                                                 2011          3.68            3.93             6.3
                                                                 2012          3.91            4.18             6.4
                                                                 2013          3.89            4.19             7.1 


                                                                      Overall Employees Average Rating
                                                                                                                 %
                                                                               Men            Women         Difference
                                                                 2011          4.09            4.2              2.8
                                                                 2012          4.12            4.3              4.2 
                                                                 2013          4.17            4.38             4.6 
                                                               = Statistically Significant




37
  There were no statistically significant differences in performance ratings by gender for “senior level”
employees.




                                   OIG  EVL-2015-003  January 13, 2015                                            31
APPENDIX F ..............................................................................

FHFA Employee Complaint Processes

Below are brief summaries of the roles played by various offices of the Agency in the
handling of employee complaints.

         OMWI

OMWI processes EEO complaints as well as complaints that appear to involve discrimination
but do not fall within a protected category specified under federal law.38 OMWI also handles
non-EEO complaints, offering alternative dispute resolution services. The office developed a
Preventing Harassment Protocol as another method for addressing problematic conduct in the
workplace. Employees are provided with written materials that summarize the development
of harassment law, define what is considered harassment, and suggest actions employees can
take to prevent harassment. Highlighted in Figures 11 and 12, below, are breakdowns of EEO
allegations and complaint status for fiscal years 2011-2013. Figure 11 shows that in fiscal
years 2011 and 2012, most cases were settled, whereas in fiscal year 2013, many cases were
withdrawn. Figure 12 shows 13 categories of EEO allegations, with the most common
allegation related to hostile work environment.




38
   EEOC enforces laws that make it unlawful for an employer to (1) fail or refuse to hire, discharge, or
otherwise discriminate against anyone with respect to compensation, terms, conditions, or privileges of
employment, or (2) limit, segregate, or classify employees in a way that deprives them of employment
opportunities or otherwise adversely affects their status based on race, color, religion, sex, national origin,
age, disability, or genetic information.




                                     OIG  EVL-2015-003  January 13, 2015                                        32
                                                                                                   39
                         FIGURE 11. EEO COMPLAINT STATUS SUMMARY FISCAL YEARS 2011-2013

                     8
                     7                                                              Settled

                     6                                                              Dismissed
 No. of Complaints




                                                                                    Final Agency Decision Issued
                     5
                                                                                    Hearing Requested
                     4
                                                                                    FAD Appealed to OFO
                     3
                                                                                    EEO Hearing Pending
                     2
                                                                                    Withdrawn
                     1                                                              Investigation
                     0
                            2011              2012                  2013




                           FIGURE 12. EEO ALLEGATIONS SUMMARY FISCAL YEARS 2011-2013*


                                                                                                        Overall
                                                               2011        2012   2013        Total     Percent
 Hostile Work Environment                                        0           5      4           9        14%
 Terms and Conditions of Employment/Assignment
                                                                2           3      3           8         13%
 of Duties
 Non-selection                                                  1           5      2           8         13%
 Performance Evaluation                                         2           3      3           8         13%
 Pay                                                            1           5      2           7         13%
 Harassment                                                     2           2      3           6         11%
 Promotion/Demotion                                             1           3      1           5          8%
 Suspension/Termination/Constructive Discharge                  1           3      0           4          6%
 Denial of Telework/Training                                    0           1      1           2          3%
 Harassment (Non-Sexual)                                        1           0      1           2          3%
 Leave                                                          0           0      1           1          2%
 Discipline                                                     0           1      0           1          2%
 Accommodation                                                  0           0      1           1          2%

*A single complaint often contains more than one allegation.


39
       Includes formal and informal complaints.




                                       OIG  EVL-2015-003  January 13, 2015                                      33
          OIG Hotline Referrals

FHFA encourages its employees to use the Office of Inspector General’s (OIG) Hotline to
report instances of fraud, waste, and abuse at the Agency or the regulated entities. OIG, in
turn, may refer non-criminal matters to OCOO and request that OCOO provide OIG with a
brief explanation of their resolution.40 During the period of review (2011-2013) OIG referred
to OCOO several Hotline complaints in which discrimination was alleged. According to a
senior Agency official, one of those complaints was investigated by a third party consultant.
We were unable to verify the involvement of a third party in that particular complaint.

          Office of Human Resources Management

OHRM also handles employee complaints and grievances related to appeals of performance
ratings. According to FHFA officials, OHRM refers to OMWI complaints that appear to
pertain to EEO matters. In such cases, OHRM may serve in an advisory role because it is
often charged with implementing settlement agreements between aggrieved employees and
FHFA.

OHRM also tracks appeals of performance ratings. According to a senior official, OHRM
does not track informal employee complaints, but it does track formal complaints. We were
unable to confirm whether OHRM had referred any EEO matters to OMWI.

          Internal Ombudsman

FHFA’s Office of the Ombudsman is charged with handling complaints against the Agency
and the GSEs from sources outside the Agency. The Ombudsman does not handle internal
employee disputes.

In 2013 OMWI was tasked by the then-Acting Director to draft a proposal for an Internal
Ombudsman program to handle employee complaints that do not involve allegations of
discrimination. According to FHFA officials, the then-Acting Director verbally approved the
proposal drafted by OMWI. To date, however, the Agency has not implemented it.




40
     Employee complaints are also referred to OCOO by OHRM or received directly from FHFA employees.




                                  OIG  EVL-2015-003  January 13, 2015                                34
APPENDIX G .............................................................................

Hiring

In addition to the topics listed in the March 24, 2014 letter to OIG, members of the House of
Representatives staff asked that we include a discussion of FHFA’s hiring practices.

In general, all federal agencies can use commercial recruiting firms to recruit candidates. 41
All agencies can conduct competitive examining for competitive service positions under
delegation agreements between the Agency and OPM.42 For competitive examining, agencies
can use category rating selection procedures43 or they can hire by methods authorized under
Title 5 of the Code of Federal Regulations, section 330.102.

In addition to competitive service hiring, HERA provides FHFA with direct hire authority
to hire employees for positions that directly support FHFA’s mission, namely economists,
information technology professionals, financial specialists, and accountants. Direct hire
authority gives federal agencies the ability to fill vacancies when there is a critical hiring
need or a severe shortage of candidates. Direct hire authorities permit hiring without the
procedural safeguards of Title 5 of the United States Code.44 From 2011-2013, FHFA hired
more than 50% of its employees under this authority.

FHFA determines the type of authority that it will use to hire a candidate on a case-by-case
basis. According to an FHFA official, the Agency is required to record the legal authority
used to fill a position. The legal authority specifies the law, executive order, rule, regulation,
or other basis that authorizes an agency to take a desired action. The use of one hiring
authority over another may affect whether a position is advertised (internally, externally, or
at all), the factors considered by hiring officials, the amount of time a position remains open,
and the requirements for each position.

Figure 13, below, contains the number of employees FHFA hired from 2011-2013 by
race/ethnicity.




41
     5 CFR Part 300, subpart D.
42
     Pub. L. No. 104-52; 5 U.S.C. § 1104(a)(2); 5 CFR § 2.1.
43
     5 U.S.C. § 3319.
44
     5 U.S.C. §§ 3309-3318.




                                    OIG  EVL-2015-003  January 13, 2015                            35
                 FIGURE 13. COUNT OF NEW HIRES BY RACE/ETHNICITY, 2011-2013

                                              EL-12 and                    Senior
                                                Below       Mid-Level       Level
             White                                43           59            44
             Black or African American            24           13             4
             Asian                                 7           12             3
             Hispanic/Latino                       3            0             0
             Two or More Races                     0            2             2
             Unspecified                           2            1             0
             Total                                79           87            53


Expression of Interest Notices

FHFA can choose to notify existing employees about job openings. These notifications are
called an expression of interest (EOI). EOIs are posted internally for permanent, temporary,
and detail assignments.

We requested information regarding FHFA’s use of internal EOIs, but the Agency does not
track this information.




                              OIG  EVL-2015-003  January 13, 2015                            36
ADDITIONAL INFORMATION AND COPIES .................................


For additional copies of this report:

      Call: 202-730-0880

      Fax: 202-318-0239

      Visit: www.fhfaoig.gov



To report potential fraud, waste, abuse, mismanagement, or any other kind of criminal or
noncriminal misconduct relative to FHFA’s programs or operations:

      Call: 1-800-793-7724

      Fax: 202-318-0358

      Visit: www.fhfaoig.gov/ReportFraud

      Write:

                FHFA Office of Inspector General
                Attn: Office of Investigation – Hotline
                400 Seventh Street, S.W.
                Washington, DC 20024




                              OIG  EVL-2015-003  January 13, 2015                        37