WASHINGTON The Federal Reserve Board should improve how it tracks employee diversity and performance reviews, according to the agency's Office of Inspector General.
The watchdog for the Fed Board released a report Friday that made 11 recommendations for the central bank to boost its diversity efforts, including instituting better tracking of workforce data and finishing its formal equal employment standards in compliance with the Dodd-Frank Act. While the report acknowledged recent improvements made by the Fed, the agency has agreed to institute all of the recommendations.
"Although the board's results were positive, management is fully committed to making further improvements in its diversity and inclusion efforts given the utmost importance of providing a work a work environment that is free of employment discrimination and that supports the engagement of all employees," said Don Hammond, chief operating officer at the Federal Reserve Board, in a letter responding to the IG. "In this regard we note that the OIG has recommended several additional improvements to the board's diversity and inclusion efforts. Management generally agrees with the OIG's recommendations and, in a number of instances, has already implemented, or has begun to implement, changes to address them."
Among the recommendations, the inspector general said that the Fed could collect and collaborate more on certain demographic data on employees that is shared on a centralized system and across divisions on a regular basis. The report also suggested the Fed ramp up training efforts about diversity and inclusion as well as the equal employment opportunity process on a regular basis.
"Our report contains recommendations designed to enhance and promote diversity and inclusion at the board," said the Inspector General's report. "The board has taken steps to improve the collection of applicant demographic data, provide non-EEO [Equal Employment Opportunity] statistics, and finalize the diversity and inclusion strategic plan. In addition, the board plans to enhance certain functions within the Office of Diversity and Inclusion."
The report pushed the Fed board to finalize its diversity and inclusion strategic plan something all the banking and finance regulators are doing because of the Dodd-Frank Act -- which was slated for the Fed's 2016-2019 strategic plan.
The IG report is in response to a request from Democrats on a House Financial Services subcommittee, who asked the inspectors general of all federal finance agencies to evaluate their workplace equality as well as diversity and inclusion practices. The request was sparked by an American Banker article that showed minorities averaged lower on performance ratings than white employees at the Consumer Financial Protection Bureau.
The Fed IG released a report on the CFPB's diversity practices last month that made 17 recommendations largely related to better demographic data tracking, management accountability and the handling of employee dispute systems. The CFPB is in the process of applying the recommendations while some have already been integrated.
As for the IG report on the Fed, it said an analysis by a consulting firm "indicated statistically significant differences in performance ratings among certain demographic groups on an agency-wide basis." However, there were no statistically significant differences in most cases when those same demographic ratings were evaluated by pay grade.
"The agency-wide differences do not necessarily indicate discrimination and could be due to actual differences in employee performance or other factors," the report said. "Further analysis of performance ratings may help the board identify any patterns that may indicate potential unfair or unequal treatment."
The IG noted that the Fed Board had piloted a new performance management system last year which was not reflected in their analysis.
Separately, the inspectors general reports for the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. released in December largely focused on a lack of women and minorities in senior level positions. Those two reports also identified some gender and racial differences in employee evaluations but said it was mostly in line with trends at other federal agencies. All of the agencies have concurred with the recommendations made by their respective IGs.