Diversity Management: Trends and Practices in the Financial Services Industry and Agencies after the Recent Financial Crisis
Published: 2013-04-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As the U.S. workforce has become increasingly diverse, many private- and public-sector entities recognize the importance of recruiting and retaining minorities and women for management-level positions to improve their business. The 2007-2009 financial crisis has renewed questions about commitment within the financial services industry (e.g., banking and securities) to workforce diversity. The Dodd-Frank Act required that eight federal financial agencies and the Federal Reserve Banks implement provisions to support workforce and contractor diversity. GAO was asked to review trends and practices since the beginning of the financial crisis. This report examines (1) workforce diversity in the financial services industry, the federal financial agencies, and Reserve Banks, from 2007 through 2011 and (2) efforts of the agencies and Reserve Banks to implement workforce diversity practices under the Dodd-Frank Act, including contracting. GAO analyzed federal datasets and documents and interviewed industry representatives and officials from the federal financial agencies and Reserve Banks.
section_title: What GAO Found
paragraphs: Management-level representation of minorities and women in the financial services industry and among federal financial agencies and Federal Reserve Banks (Reserve Banks) has not changed substantially from 2007 through 2011. Industry representation of minorities in 2011 was higher in lower-level management positions--about 20 percent--compared to about 11 percent of senior-level manager positions. Industry representation of women at the overall management level remained at about 45 percent. Agency representation of minorities at the senior management level in 2011 ranged from 6 percent to 17 percent and from 0 percent to 44 percent at the Reserve Banks. Women's representation ranged from 31 to 47 percent at the agencies and from 15 to 58 percent at the Reserve Banks. Officials said the main challenge to improving diversity was identifying candidates, noting that minorities and women are often underrepresented in both internal and external candidate pools.
In response to the requirements in the Dodd-Frank Wall Street and Consumer Protection Act (Dodd-Frank Act), in 2011 federal financial agencies and Reserve Banks began to report annually on the recruitment and retention of minorities and women and other diversity practices. They all have established Offices of Minority and Women Inclusion (OMWI) as required. Many agencies and Reserve Banks indicated they had recruited from minority-serving institutions and partnered with organizations focused on developing opportunities for minorities and women, and most described plans to expand these activities. Some used employee surveys or recruiting metrics to measure the progress of their initiatives, as suggested by leading diversity practices, but OMWIs are not required to include this type of information in the annual reports to Congress. Better reporting of measurement efforts will provide Congress, agency officials, and other stakeholders additional insights on the effectiveness of diversity practices and demonstrate how agencies and Reserve Banks are following a leading diversity practice. Most federal financial agencies and Reserve Banks are in the early stages of implementing the contracting requirements required under the act. For example, most now include a provision in contracts for services requiring contractors to make efforts to ensure the fair inclusion of women and minorities in their workforce and subcontracted workforce and have established ways to evaluate compliance. The proportion of an agency's dollars awarded or a Reserve Bank's dollars paid to minority- or woman-owned businesses reported in 2011 OMWI reports ranged between 3 percent and 38 percent.
section_title: What GAO Recommends
paragraphs: Each agency and Reserve Bank should include in its annual OMWI report to Congress efforts to measure the progress of its diversity practices. The agencies and Reserve Banks agreed to include this information in the annual OMWI reports. Additionally, some agencies and the Reserve Banks described steps they have taken or plan to take to address the recommendation.

section_title: Letter
paragraphs: As the U.S. workforce has become increasingly diverse, many private and  public-sector organizations have recognized the importance of recruiting  and retaining minorities and women for key positions to improve their  business or organizational performance. Studies have associated a  diversity of perspectives in organizations with innovation. However,  congressional hearings have raised questions about diversity in the  workforce of the financial services industry, which provides services that  are essential to the continued growth and economic recovery of the  country. During hearings on the financial services industry between 2004  and 2010, congressional members and witnesses expressed concern  about the level of inclusion of women and minorities in the industry,  particularly in key management-level positions. The 2007-2009 financial  crisis has renewed concerns about commitment within the financial  services industry to workforce diversity and the number of federal  contracting opportunities available to minority- and women-owned  businesses. The Dodd-Frank Wall Street Reform and Consumer  Protection Act (Dodd-Frank Act) included provisions requiring selected  federal financial agencies and Federal Reserve Banks (Reserve Banks)  each to establish an Office of Minority and Women Inclusion (OMWI).  The act required that these agencies and Reserve Banks establish the  new diversity and inclusion offices to replace existing diversity programs  by January 2011 and to begin addressing a number of other requirements  in the act.
This report updates our previous work by discussing changes in  management-level diversity or diversity practices used in this industry  since the beginning of the financial crisis in 2007. It also reviews the  implementation of requirements in section 342 of the Dodd-Frank Act on  workforce diversity. Specifically, our objectives were to discuss (1) what  available data show about how the diversity of the financial services  industry workforce and how diversity practices by the industry have  changed from 2007 through 2011; (2) what available data show about  how diversity in the workforces of the federal financial agencies and the  Reserve Banks has changed from 2007 through 2011; (3) how these  federal financial agencies and Reserve Banks are implementing  workforce diversity practices under section 342 of the Dodd-Frank Act,  including the extent to which their workforce diversity practices have  changed since the financial crisis; and (4) the status of federal financial  agencies’ and Reserve Banks’ implementation of the contracting  provisions of the Dodd-Frank Act related to the inclusion of women and  minorities.
To describe how diversity in the financial services industry and how the  diversity practices it uses have changed from 2007 through 2011, we  analyzed 2007-2011 workforce data from the Equal Employment  Opportunity Commission’s (EEOC) Employer Information Report (EEO-1)  and from the Current Population Survey (CPS) produced by the Bureau of  the Census and the Bureau of Labor Statistics. Through a review of  documentation, electronic testing, and interviews with knowledgeable  officials, we found these data sufficiently reliable for our use. We  conducted a literature review to identify academic and industry studies on  financial services workforce diversity, and we interviewed 10 industry  representatives on these issues.
To review changes to the representation of women and minorities in the  workforces of the agencies and Reserve Banks, we analyzed data the  agencies submitted to EEOC from 2007 through 2011 in annual Equal  Employment Opportunity Program Status Reports required by EEOC’s  MD-715 and analyzed EEO-1 reports provided by the 12 Reserve Banks.We assessed the reliability of these data by conducting electronic testing,  reviewing agency documentation, and interviewing agency officials. We  determined that the data were sufficiently reliable for our use. We  reviewed agency and Reserve Bank documentation of efforts to respond  to the Dodd-Frank Act requirements, including annual OMWI reports to  Congress. Additionally, we interviewed agency and Reserve Bank  officials on changes in the inclusion of women and minorities in their  workforces and any changes in the practices they used to further  workforce diversity goals.
To determine the extent to which agencies and Reserve Banks are  implementing the requirements of the Dodd-Frank Act regarding the  inclusion of women and minorities in contracting, we reviewed annual  OMWI reports submitted to Congress and interviewed officials on their  efforts in this area. We collected and reviewed agency documentation of  procedures developed to address the act’s requirements, such as policy  manuals, contract provisions related to promoting a diverse workforce,  process workflows, and technical assistance materials.
We conducted this performance audit from January 2012 through April  2013 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The financial services industry is a major source of employment in the  United States. EEOC data we obtained and analyzed showed that  financial services firms we reviewed for this work employed more than 2.9  million people in 2011. We defined the financial services industry to  include the following sectors: depository credit institutions, which include commercial banks, thrifts  (savings and loan associations and savings banks), and credit unions; holdings and trusts, which include investment trusts, investment  companies, and holding companies; nondepository credit institutions, which extend credit in the form of  loans and include federally sponsored credit agencies, personal credit  institutions, and mortgage bankers and brokers; the securities sector, which is composed of a variety of firms and  organizations that bring together buyers and sellers of securities and  commodities, manage investments, and offer financial advice; and the insurance sector, including carriers and insurance agents that  provide protection against financial risks to policyholders in exchange  for the payment of premiums.
subsections: section_title: Financial Services Industry and Diversity
paragraphs: We previously conducted work on the challenges faced in the financial  sector for promoting and retaining a diverse workforce, focusing on  private-sector firms.management level in the financial services industry did not change  substantially from 1993 through 2008 and that diversity in senior positions  was limited. We also found that without a sustained commitment among  financial services firms to overcoming challenges to recruiting and  retaining minority candidates and obtaining “buy-in” from key employees,  limited progress would be possible in fostering a more diverse workplace.
In 2010, we reported that overall diversity at the  In a 2005 report, we defined diversity management as a process intended  to create and maintain a positive work environment that values  individuals’ similarities and differences, so that all can reach their  potential and maximize their contributions to an organization’s strategic  goals and objectives. We also identified a set of nine leading diversity  management practices that should be considered when an organization is  developing and implementing diversity management. They are (1)  commitment to diversity as demonstrated and communicated by an  organization’s top leadership; (2) the inclusion of diversity management in  an organization’s strategic plan; (3) diversity linked to performance,  making the case that a more diverse and inclusive work environment  could help improve productivity and individual and organizational  performance; (4) measurement of the impact of various aspects of a  diversity program; (5) management accountability for the progress of  diversity initiatives; (6) succession planning; (7) recruitment; (8) employee  involvement in an organization’s diversity management; and (9) training  for management and staff about diversity management.
section_title: Diversity Requirements under Section 342 of the Dodd-Frank Act
paragraphs: Section 342 of the Dodd-Frank Act required specific federal financial  agencies and Reserve Banks each to establish, by January 21, 2011, an  OMWI, responsible for matters relating to diversity in management,  employment, and business activities.agencies.
section_title: Industry Diversity Levels Remained about the Same from 2007 through 2011
paragraphs: Diversity has remained about the same at the management level in terms  of the representation of both minorities and women, while industry  representatives noted the continued use of leading diversity practices and  some challenges. According to EEOC data, the representation of  minorities at the management level stood at 19 percent in 2011. The  representation of women in management remained at about 45 percent,  according to EEOC data. The nine leading diversity practices that we  previously identified in 2005 remain relevant today, according to industry  representatives with whom we spoke. Industry representatives also noted  some challenges, such as the difficulty in recruitment because of a limited  supply of diverse candidates.
subsections: section_title: Diversity in the Financial Services Industry Remained about the Same at the Management Level from 2007 through 2011
paragraphs: At the overall management level, the representation of minorities  increased from 17.3 percent to 19 percent from 2007 through 2011  according to EEOC data we obtained, which are reported by financial  services firms (see fig. 1). While this is not a substantial increase, it  shows a continued upward trend from our 2006 report, in which data  showed that management-level representation by minorities increased  from 11.1 percent to 15.5 percent from 1993 through 2004.
The representation of minorities varied among management positions,  which EEOC splits into two categories: (1) first- and mid-level officials and  managers and (2) senior-level officials and managers. In 2011, the  representation of minorities among first- and mid-level managers stood at  20.4 percent, about 1 percentage point higher to the representation of  minorities among all management positions, according to EEOC data  (see fig. 2). In contrast, at the senior management level, representation of  minorities was 10.8 percent in 2011, about 8 percentage points below  their representation among all management positions; yet representation  of minorities in first- and mid-level management positions consistently  increased from 18.7 percent to 20.4 percent over the 5-year period. First-  and mid-level management positions may serve as an internal pipeline in  an organization through which minority candidates could move into senior  management positions.
Similar to the total representation of minorities across all management  positions, specific races/ethnicities have not changed significantly, but  EEOC data show slight variations of representation for specific  races/ethnicities. For example, the representation of African Americans  decreased from 6.5 percent in 2007 to 6.3 percent in 2011, according to  EEOC data (see fig. 3). In contrast, representation of most other  races/ethnicities increased, and the highest increase was in the  representation of Asians, from 5.4 percent to 6.5 percent over the same  time period.
From 2007 to 2011, the representation of African Americans went down in  both management levels, while the representation of other specific  races/ethnicities either increased or remained stable (see fig. 4). At the  senior management level, the representation of Asians remained stable at  about 4.1 percent from 2007 through 2011. However, the representation  of African Americans in senior management positions decreased from 3.1  percent to 2.7 percent, and the representation of Hispanics increased  from 3 percent to 3.3 percent. Among first- and mid-level management  positions, the representation of Asians increased from 5.6 percent to 6.9  percent and the representation of Hispanics increased from 5.2 percent to  5.5 percent, while the representation of African Americans decreased  from 7.2 percent to 6.9 percent.
Over the same 5-year period, the representation of women at the  management level remained at about 45 percent in EEOC data, which  show a slight decrease from 45.1 percent to 44.7 percent (see fig. 5). In  2006, we reported an increase with representation of women at about  42.9 percent in 1993 to about 45.8 percent in 2004.
Among all women in management positions, EEOC data showed that the  representation of minority women increased, from 20.4 percent to 22  percent over the same 5-year period (see fig. 6). In addition, EEOC data  show that the representation of minority men increased from 14.8 percent  to 16.6 percent.
Among first- and mid-level management positions, the representation of  women has been at about 48 percent, slightly higher than the  representation of women among all management positions. In contrast,  women represented about 29 percent of all senior management positions  from 2007 through 2011—about 16 percentage points below the  representation of women for all management positions, according to  EEOC data (see fig. 7).
Based on EEOC data, minority women had greater representation at the  first and mid levels of management compared to the senior level over the  5-year period. As shown in figure 7, among female senior managers,  representation of minority women remained at about 13 percent over the  5-year period. In contrast, among female first- and mid-level managers,  the proportion of minority women increased during the same period from  21.2 percent to 22.9 percent.
The representation of minorities increases for both women and men as  the firm size increases (see fig. 8). For example, in 2011 the  representation of minorities at firms with 100-249 employees was about  18 percent among women and about 12 percent among men, while at  firms with more than 1,000 employees, the representation of minorities  was about 23 percent among women and about 17 percent among men.  For additional analysis of EEOC data by workforce position and industry  sector, see appendix II.
A survey of the general population shows some similar trends in the  representation of both women and minorities in the financial services  industry. The CPS is administered by the Bureau of the Census for the  Bureau of Labor Statistics and is a monthly survey of about 60,000  households across the nation. The CPS is used to produce official  government figures on total employment and unemployment issued each  month. According to the CPS data, from 2007 through 2011 the  representation of women at the management level decreased from an  estimated 49.1 percent to 47.3 percent. In addition, CPS data show a  smaller increase from an estimated 14.1 percent to 15.1 percent in the  representation of minorities in management over the same 5-year  period.
section_title: Leading Diversity Practices Remain Relevant but Challenges Exist Regarding Recruitment and Other Issues
paragraphs: The nine leading diversity practices that we previously identified in 2005  are still relevant today, according to industry representatives with whom  we spoke. Some industry representatives highlighted practices among  these nine that they considered the most important to foster diversity and  inclusion in their organizations. For example, top leadership commitment  drives the other eight leading diversity practices, according to 9 of 10  industry representatives. In addition, accountability helps to promote the  implementation of the other leading diversity practices because an issue  is more likely to be addressed if it is tracked, according to 2 industry  representatives. Moreover, creating awareness of the benefits of diversity  for an organization among management and employees is important  because it increases commitment to further the diversity goals of the  organization, according to 7 industry representatives whom we  interviewed.some firms that do not see the importance of diversity. In addition, 2  industry representatives said these 9 leading diversity practices should be  expanded beyond workforce management to include, for example, an  organization’s contracting efforts.
However, 1 industry representative told us there are still  Some industry representatives also noted that measuring the impact of  various diversity practices is an important practice but that it can also be  challenging; for example, it can be difficult to link specific practices to  diversity outcomes and it can be a long-term process. According to some  industry representatives, financial services organizations may measure  the effectiveness of their diversity practices by assessing attrition,  recruiting, and promotion rates, which are similar to measures we had  previously reported. For example, a financial services organization may  measure the proportion of certain minority groups or women in its  workforce or among its promotions to determine the effectiveness of its  practices. Further, financial services firms may use surveys to gather  employee perspectives on workforce diversity issues in the organization,  such as perceived fairness in the promotion process or factors that affect  an employee’s decision to remain with the firm, among other topics.
Additional diversity practices identified by some industry representatives  that can support the leading diversity practices include the following:
Sponsor individuals. Sponsorship of women within an organization  where an executive acts as a guide to help women navigate the  organization and expand their networks is an important diversity  practice, according to three industry representatives. This sponsorship  practice goes beyond the mentoring programs we previously reported  in 2006, as a sponsor acts as an advocate to help the individual  advance within the organization.
Address biased perceptions. One industry representative told us  about an effort to combat unconscious bias in promotions. They  described a promotion system designed to address biased  perceptions, such as a view of leaders as being typically male.  According to the industry representative, the firm that employed this  diversity practice gathered complete and objective evaluations of  employees and trained its managers to recognize and address these  perceptions. The result was that the firm promoted greater numbers of  women into management.
No industry representatives that we contacted reported changes to  diversity practices as a result of the challenges faced by many firms  during the financial crisis. Although representation of minorities and  women has remained about the same from 2007 through 2011, according  to some industry representatives, the industry continues to be focused on  diversity. However, three industry representatives did cite specific  instances where funding was scaled back as a result of the recent  financial crisis. One industry representative told us that investment in  training programs was reduced across the organization, but when a  measureable impact on employees was identified at this organization,  steps were taken to address the impact.
Some industry representatives cited challenges to achieving a diverse  workforce in general. We have previously reported some of these  challenges, which can affect some of the leading diversity practices. Six  industry representatives said that diversity recruitment is difficult because  the supply (or “pipeline”) of minority and women candidates is limited.  This has been a consistent challenge that we previously reported in 2006  and 2010. Available data indicate that for the internal pool of potential  candidates for some management positions, representation of women  varied, while representation of minorities was higher in every  nonmanagement category compared to management positions (see fig.  9). For example, in 2011 the representation of women was greater in  professional positions (about 51 percent) compared to sales positions  (about 38 percent). In addition, the representation of minorities was  higher in all nonmanagement positions than at the management level in  2011, but especially higher in technical and clerical positions at more than  29 percent in both types of positions. Further analysis of diversity in  various workforce positions can be found in appendix II.
In recent years, representation in business graduate programs, a  potential source of future managers in the financial industry, has  remained stable for women and has increased slightly for minorities, but  representation is still low for both women and minorities when compared  to the overall representation of students in the university system. To  assess one possible external pool of candidates for financial services  firms, we obtained data from the Association to Advance Collegiate  Schools of Business (AACSB) on the number of students enrolled in  Master of Business Administration (MBA) degree programs in AACSB  member schools in the United States from 2007 through 2011 as well as  the number of students in the university system.data, the representation of women remained constant over this period,  while the representation of minorities increased. For example, the  representation of women among MBA students remained at about 37  percent over the 5-year period, while representation of women was  slightly higher in the overall university system at about 41 percent. In  contrast, as table 2 shows, the representation of minorities increased  among MBA students from about 26 percent in 2007 to about 29 percent  in 2011. However, when compared to the university system,  representation of minorities in the overall university system was slightly  higher from about 29 percent in 2007 to 34 percent in 2011.
section_title: Agency and Reserve Bank Workforce Diversity Varied, and Officials Reported Difficulty Identifying Diverse Candidates
paragraphs: Since the financial crisis, senior management-level minority and gender  diversity at the federal financial agencies and Reserve Banks has varied  across individual entities. The representation of minorities at the senior  management-level increased slightly overall at both the agencies and  Reserve Banks. In addition, the representation of women at the senior  management-level increased slightly overall for both the agencies and  Reserve Banks. Agency and Reserve Bank officials identified key  challenges to increasing workforce diversity overall and at the senior  management-level, including limited representation of minorities and  women among internal and external candidate pools.
subsections: section_title: Senior Management-Level Representation of Minorities and Women Varied at Agencies and Reserve Banks, with Slight Changes Overall
paragraphs: Senior management-level representation of minorities and women varied  across individual federal financial agencies and the 12 Reserve Banks.  The agencies included FDIC, the Federal Reserve Board, NCUA, OCC,  and Treasury. Complete data for this period were not available for CFPB,  FHFA, and SEC, and we excluded these agencies from our analysis of  changes in senior management-level diversity from 2007 through 2011,  but provide recent data when available. Data for each agency are  provided in appendix IV. CFPB assumed responsibility for certain  consumer financial protection functions in July 2011 and has not yet  reported workforce information to EEOC. However, we received recent  employment profile data from CFPB as of May 2012. FHFA, which was  established in July 2008, started reporting workforce data for 2010; while  our analysis provides 2010 and 2011 data for FHFA, our analysis across  the agencies excludes FHFA from aggregated totals. SEC reported data  for 2007 through 2011, but revised how it reported officials and managers  during the 5-year period; while our analysis provides 2011 senior  management-level data for SEC, we excluded SEC from our senior  management-level trend analysis.
In our review of agency reports, we found that from 2007 through 2011,  the representation of minorities among senior management-level  employees, when aggregated across FDIC, the Federal Reserve Board,  NCUA, OCC, and Treasury, increased slightly, from 16 to 17 percent for  the agencies combined (see fig. 10). From 2007 through 2011, three  agencies—FDIC, the Federal Reserve Board, and Treasury—showed an  increase in the representation of minorities at the senior management- level, by between 1 and 3 percentage points. Two agencies—NCUA and  OCC—experienced no percentage point change in their representation of  minorities at the senior management-level from 2007 through 2011. In  2011, the representation of minorities among senior management-level  employees of these agencies, FHFA, and SEC ranged from 11 percent at  SEC to 24 percent at FHFA. Additionally, CFPB employment data  showed about 28 percent representation of minorities among senior  officials as of May 2012.
In our review of EEO-1 reports provided by the Reserve Banks, we found  that the representation of minorities among senior management-level  employees in aggregate across the 12 Reserve Banks increased from 11  percent to 14 percent from 2007 through 2011 (see fig.11). The  population of senior management-level employees at each bank in 2011  ranged from 9 employees at the Reserve Banks of Chicago, Dallas, and  Minneapolis, to 59 employees at the Reserve Bank of New York, and the  population of minority senior management-level employees at each bank  ranged from zero employees at the Reserve Bank of Cleveland to 7  employees at the Reserve Bank of New York. Specific information on  each Reserve Bank is provided in appendix IV.
In general, the representation of women at the senior management-level  increased slightly since the beginning of the financial crisis in 2007 at  agencies, but representation percentages varied for each entity. In our  review of agency reports, we found that from 2007 through 2011, the  representation of women at the senior management-level increased  slightly from 34 to 36 percent across FDIC, the Federal Reserve Board,  NCUA, OCC, and Treasury, in aggregate (see fig. 12). Changes varied by  agency, from a decrease of 5 percentage points at OCC to an increase of  5 percentage points at NCUA. Four of the five agencies—FDIC, the  Federal Reserve Board, NCUA, and Treasury—showed an increase of  between 3 and 5 percentage points in the representation of women at the  senior management-level from 2007 through 2011. In 2011, the  representation of women among senior management-level employees  ranged among the agencies from 31 percent at FDIC to 47 percent at  FHFA. Additionally, CFPB employment data showed the representation of  women among senior officials at about 35 percent as of May 2012.
In our review of EEO-1 reports provided by the Reserve Banks, we found  that from 2007 through 2011, the representation of women at the senior  management-level increased from 32 percent to 38 percent for the  Reserve Banks, in aggregate (see fig. 13). As mentioned previously, the  population of senior management-level employees at each bank in 2011  ranged from nine employees at the Reserve Banks of Chicago, Dallas,  and Minneapolis, to 59 employees at the Reserve Bank of New York. The  population of women among senior management-level employees at  each bank in 2011 ranged from two employees at the Reserve Bank of  Boston to 25 employees at the Reserve Bank of New York. Specific  information on each Reserve Bank is provided in appendix IV.
Several agencies reported on existing diversity practices related to  retaining and promoting employees to build management-level diversity.  For example, according to agency reports, some Treasury offices conduct  formal mentoring programs, and the Federal Reserve Board has  customized mentoring programs within its divisions, which in conjunction  with a leadership exchange program sponsored by the Federal Reserve  System, provide employees opportunities to develop new skills and  experiences. Further, OCC reported having development programs for  employees within its bank supervision division that provide leadership and  development opportunities to staff, and agency-sponsored employee  network groups implemented mentoring circles to assist in the career  development and retention of the agency’s workforce.
Several Reserve Banks identified practices targeted to improve  management-level diversity, including changes to hiring practices and  mentoring programs. For example, officials from several Reserve Banks  we contacted said their organizations revised their hiring policies to open  all management-level positions to external applicants in addition to  current employees as a way to build management-level diversity by hiring  diverse, experienced candidates from outside the organization.  Additionally, the Reserve Banks of Dallas and New York began piloting  new mentoring programs in 2011, and each planned to expand its  program based on initial feedback its OMWI had received. These banks  and several others with existing mentoring programs reported that  mentoring programs were important to retaining and developing minorities  and women within their organizations. Later in this report, we provide  additional information on the agencies’ and Reserve Banks’ recruitment  practices as part of their efforts to implement section 342 of the Dodd- Frank Act.
section_title: Total Workforce Minorities and Women Representation Varied but Decreased Slightly Overall
paragraphs: Based on our analysis of minority and gender diversity at all levels from  2007 through 2011, workforce diversity varied at the federal financial  agencies and Reserve Banks, with slight decreases in aggregate.  Specifically, the representation of minorities decreased slightly from 31  percent to 30 percent from 2007 through 2011 across FDIC, the Federal  Reserve Board, NCUA, OCC, SEC, and Treasury, in aggregate.  Additionally, CFPB employment data showed the representation of  minorities of all agency employees at about 33 percent as of May 2012.  Three agencies—NCUA, OCC, and SEC—showed a 1 percentage point  or greater increase in the overall representation of minorities during the 5- year period, according to agency reports. In 2011, the representation of  minorities at the agencies ranged from 25 percent at NCUA to 44 percent  at the Federal Reserve Board. Our analysis of EEO-1 reports provided by  the Reserve Banks for 2007 through 2011 showed that the representation  of minorities across the Reserve Banks declined slightly in aggregate,  from 38 percent to 36 percent. The Reserve Banks of Minneapolis and  New York showed a 2 percentage point increase in the overall  representation of minorities working at Reserve Banks, the Reserve Bank  of Boston showed no percentage point change, and the remaining nine  banks showed decreases of 1 to 8 percentage points. In 2011, the  representation of minorities at the Reserve Banks ranged from 16 percent  at the Reserve Bank of Kansas City to 53 percent at the Reserve Bank of  San Francisco.
Similarly, we found that overall gender diversity varied at individual  agencies and Reserve Banks, and generally declined slightly from 2007  through 2011. The overall representation of women in the workforce  aggregated across FDIC, the Federal Reserve Board, NCUA, OCC, SEC,  and Treasury declined slightly from 47 percent to 45 percent over the 5- year period. Additionally, CFPB employment data showed the  representation of women of all agency employees at about 49 percent as  of May 2012. Two agencies—NCUA and SEC—showed no percentage  point change in the representation of women during the 5-year period;  OCC showed a decrease of about 1 percentage point, and the other three  agencies—FDIC, the Federal Reserve Board, and Treasury— experienced decreases of 2 percentage points. In 2011, the  representation of women among all employees at the agencies ranged  from 42 percent at FDIC to 48 percent at SEC and Treasury. The overall  representation of women across the Reserve Banks, in aggregate,  declined from 49 percent to 45 percent from 2007 through 2011. All  Reserve Banks showed declines in the representation of women among  all employees during the 5-year period, ranging from a 1 percentage point  decrease at the Reserve Bank of New York to a 7 percentage point  decrease at the Reserve Bank of Cleveland. For example, in 2007, 827 of  the Reserve Bank of Cleveland’s 1,568 employees were women, and in  2011, 500 of the bank’s 1,094 employees were women; the bank’s  workforce changed from having around 53 percent women employees to  about 46 percent women employees. In 2011, the overall representation  of women at Reserve Banks ranged from 40 percent at the Reserve  Banks of Philadelphia and Richmond to 53 percent at the Reserve Bank  of Minneapolis. See appendix III for additional information on the overall  workforce representation for the agencies and Reserve Banks.
According to officials from five Reserve Banks and the Federal Reserve  Board, consolidation of check processing and other operations, some of  which occurred since the financial crisis, had eliminated many  administrative and service worker positions. Since these positions are  often held by minorities and women, these consolidations affected overall  employment diversity at affected Reserve Banks. In response to declines  in the use of paper checks and greater use of electronic payments, the  Reserve Banks took steps beginning in 2003 to reduce the number of  locations where paper checks were processed. In 2001, the Federal  Reserve System employed around 5,500 people in check processing  functions across 45 locations, and in 2008, around 2,800 employees  supported check processing functions across 18 locations. By 2010, one  paper check processing site remained in Cleveland, along with an  electronic check processing site in Atlanta. As of January 2013,  approximately 480 employees supported check processing functions  across the Federal Reserve System. The Federal Reserve System is  projected to complete its consolidation of check processing functions in  2013.
section_title: Officials Reported Difficulty Identifying Diverse Candidates as the Main Challenge to Building Workforce Diversity
paragraphs: OMWI officials described challenges to building workforce diversity both  at the management level and overall. Four agencies—FDIC, the Federal  Reserve Board, FHFA, and OCC—and three Reserve Banks—the  Reserve Banks of Chicago, Minneapolis, and St. Louis—cited  underrepresentation of minorities and women within internal candidate  pools as a challenge to building management-level diversity, as many  management-level positions are filled through promotions or internal  hiring processes. Additionally, the Reserve Banks of Dallas, Minneapolis,  Philadelphia, and San Francisco said low turnover was a challenge to  increasing their management-level diversity profiles because it limited  opportunities to increase organizational diversity through hiring and  promotion.
Federal financial agencies and Reserve Banks identified other challenges  to building workforce diversity generally. The Reserve Banks of Atlanta,  Boston, Chicago, Kansas City, and St. Louis cited competition from the  private sector for recruiting diverse candidates as a challenge. In addition,  FHFA and the Reserve Banks of Cleveland, Philadelphia, and San  Francisco cited limited representation of minorities within external  candidate pools as another challenge. The Federal Reserve Board and  the Reserve Banks of Chicago and Kansas City reported that the  availability of external candidates could be an issue in particular for hiring  certain specialized positions, such as economists, which would involve a  small candidate pool with limited representation of minorities. Additionally,  three Reserve Banks identified geographic impediments to their national  recruitment efforts, explaining that it is difficult to attract candidates from  outside their region. For example, the Reserve Banks of Kansas City and  St. Louis said it was difficult to recruit candidates lacking ties to the  central United States, and the Reserve Bank of San Francisco cited  difficulty recruiting from the eastern United States. Further, several  agencies and Reserve Banks identified other challenges to building  workforce diversity. For example, Treasury cited budget constraints on  hiring and the Reserve Bank of Cleveland cited time constraints on  recruitment practices as challenges. Additionally, NCUA cited as a  challenge establishing tracking systems to help identify barriers to  recruiting, hiring, and retaining minorities.
section_title: Dodd-Frank Requirements Are Being Implemented, but Enhanced Reporting of Efforts to Measure Progress Is Needed
paragraphs: Federal financial agencies and Reserve Banks have begun implementing  key requirements of section 342 of the Dodd-Frank Act. First, all agencies  and Reserve Banks have established OMWIs. Most agencies and all of  the Reserve Banks used existing policies to establish standards for equal  employment opportunity required by the act. Although many agencies and  Reserve Banks had been using recruitment practices required by the act  prior to its enactment, the majority of OMWIs have expanded these or  initiated other practices. In addition to meeting requirements regarding  their diversity policies, the federal financial agencies have taken  preliminary steps to develop procedures for assessing the diversity  policies and practices of entities they regulate, as required under the act.  Finally, nearly all the agencies and all of the Reserve Banks are reporting  annually on their diversity practices. While many OMWIs have  implemented or are planning efforts to measure and evaluate the  progress of their diversity and inclusion activities, information on such  efforts is not yet reported consistently across the OMWI annual reports.  Such information could enhance their efforts to report on measuring  outcomes and the progress of their diversity practices.
subsections: section_title: Agencies and Reserve Banks Have Established Offices of Minority and Women Inclusion and Diversity Standards
paragraphs: All federal financial agencies and all Reserve Banks have established an  OMWI. Six of the seven agencies that existed when the Dodd-Frank Act  was enacted established OMWIs by January 2011, pursuant to the time  frame established in the act. Additionally, SEC formally established its  OMWI in July 2011, following House and Senate Appropriations  Committees’ approvals of the agency’s request to create an OMWI.  SEC selected an OMWI director in December 2011, who officially joined  the office in January 2012. CFPB, which assumed responsibility for  certain consumer financial protection functions in July 2011, established  its OMWI in January 2012 and its OMWI director officially joined the  agency in April 2012.
Many agencies and most of the Reserve Banks established their OMWIs  as new, separate offices. Four of eight agencies and 9 of 12 Reserve  Banks established their OMWIs separate from other offices, including four  banks that refocused existing diversity offices as their OMWIs. Three  agencies—FDIC, the Federal Reserve Board, and OCC—and three  banks—the Reserve Banks of Atlanta, Kansas City, and Philadelphia— established their OMWIs within existing offices of equal employment  opportunity (EEO) or diversity. FHFA established its OMWI and then  merged its EEO function into that office. OMWI officials from several  agencies with separate OMWIs said their staff worked with their EEO  offices to address agency diversity issues. Similarly, many agency and  Reserve Bank OMWI officials said they coordinated with other offices  across their organizations, such as human resources, recruiting,  procurement, and management, to support ongoing diversity and  inclusion efforts organizationwide.
Federal financial agencies and Reserve Banks all have taken steps to  staff their OMWIs. As of January 2013, the agencies had allocated  between 3 and 40 full-time equivalent positions to their OMWIs (see table  3), and all agencies had open positions they planned to fill among these  allocated positions. FDIC had allocated 40 full-time equivalent positions to  its combined OMWI/EEO office as of January 2013. Many of FDIC’s  OMWI staff, including eight EEO specialists, support the office’s EEO  functions, and OCC and FHFA also reported EEO specialists among their  staff. The agency OMWIs included directors and analysts among their  staff, as well as some positions specific to certain functions of the  OMWIs. For example, four of the agencies—CFPB, FDIC, NCUA, and  SEC—had allocated staff specifically to recruitment and outreach  functions, and four of the agencies—NCUA, OCC, SEC, and Treasury— had allocated staff specifically to business and supplier diversity. Four  agencies—the Federal Reserve Board, FHFA, NCUA, and OCC—had  each allocated a position to help implement the Dodd-Frank Act  requirement to review the diversity practices of regulated entities.  Additionally, two of the agencies—CFPB and SEC—had attorney  positions among their OMWI staff.
The Reserve Banks had allocated between three and seven full-time  equivalent positions to their OMWIs as of January 2013 (see table 4). Ten  of the 12 Reserve Banks had filled all of these positions, while the  Reserve Banks of Cleveland and St. Louis each had one open position.  The Reserve Bank OMWIs included directors and analysts among their  staff. Few Reserve Banks designated specific OMWI functions to certain  positions. Three banks, the Reserve Banks of Atlanta, Boston, and St.  Louis, had each allocated one position to supplier or business diversity,  and two other banks, the Reserve Banks of Chicago and Cleveland, had  each allocated one position to help carry out the reporting functions of the  OMWIs.
Perspectives on the role of OMWIs varied across some Reserve Bank  officials with whom we spoke. While several Reserve Bank officials said  their OMWIs were involved in policy development with a commitment to  improving the Reserve Bank’s diversity efforts over time, officials from  one Reserve Bank said their OMWI was compliance-focused and  primarily analyzed the banks’ human capital resources and recruiting  functions for compliance with Dodd-Frank Act requirements. Reserve  Bank of Dallas officials told us they considered the OMWI staff members  as objective critics of the Reserve Bank’s recruitment, procurement, and  financial education efforts, and that bank management is responsible for  fostering diversity and inclusion across the organization.
The act also required federal financial agency and Reserve Bank OMWIs  to develop standards for equal employment opportunity and the racial,  ethnic, and gender diversity of the workforce and senior management.  Six of eight agencies and most Reserve Banks indicated either their  previously established equal employment opportunity standards or MD- 715 requirements for agencies helped satisfy the Dodd-Frank Act  requirement to establish equal employment opportunity standards with  minimal changes, while two agencies and one Reserve Bank were still  determining how to respond to the requirement. Treasury and CFPB  planned to develop benchmarks of best practices as standards for  diversity and inclusion. For example, Treasury officials said they planned  to identify qualitative measures or indicators for assessing workforce  diversity practices. Additionally, the Reserve Banks of Kansas City and  San Francisco revised their diversity and inclusion policies pursuant to  Dodd-Frank Act requirements. One agency established new standards  separate from its existing equal employment opportunity policies as  standards for the diversity of the workforce and senior management.  Specifically, NCUA developed a diversity and inclusion strategic plan in  response to a government-wide executive order that provides diversity  standards and goals, which officials said the agency used to help  establish expectations for staff.
section_title: Agencies and Reserve Banks Are Implementing Recruitment Practices
paragraphs: OMWI Annual Reports to Congress and officials we contacted indicated  that federal financial agencies and Reserve Banks have implemented  various practices pursuant to the Dodd-Frank Act’s requirements  regarding diversity recruiting, outlined in table 5. Most agency and  Reserve Bank OMWIs indicated that they had been conducting various  diversity recruitment practices prior to the enactment of the Dodd-Frank  Act—such as partnering with organizations focused on developing  opportunities for minorities and women.
The majority of agencies and Reserve Banks focused their recruitment  efforts on attending job fairs and maintaining partnerships with minority- serving institutions and organizations. According to Federal Reserve  Board and Reserve Bank officials, they collectively participate in and fund  recruitment activities, including national career fairs, advertisements in  diverse publications, and social media initiatives. The Reserve Bank of  Chicago coordinates the Federal Reserve System’s participation in  national diversity recruitment events and oversees an internal training  initiative aimed at developing and retaining employees within the Federal  Reserve System. In addition to participating in these efforts, Reserve  Banks conduct some activities independently.
Some OMWIs indicated their diversity activities had changed due in part  to recent efforts to satisfy section 342 requirements as well as broadening  their approaches to diversity and inclusion. For example, some OMWIs  indicated the scope of their diversity and inclusion practices had  broadened to include persons with disabilities as well as the lesbian, gay,  bisexual, and transgender community. Further, the majority of OMWIs  reported on plans to improve or expand existing practices. For example,  many OMWIs described plans to pursue new or further develop existing  partnerships with organizations focused on developing opportunities for  minorities and women, and some OMWIs described recent efforts to  expand internship opportunities for minority students.
Some OMWI officials identified practices targeted to improve  organizationwide diversity, which could eventually help build  management-level diversity. These included targeted recruitment to  attract minorities and women, training for hiring managers and other  employees on diversity hiring practices, and expanded internship  programs as a way to hire a greater number of female and minority  interns.
Targeted recruitment. All agencies and Reserve Banks with whom we  spoke had participated in career fairs or partnerships with minority- serving organizations, as outlined in section 342 of the Dodd-Frank  Act, to target diversity recruitment, and in several cases bolster  recruitment of particular populations, such as Hispanics. The OMWIs  at FDIC, FHFA, and SEC work with the agencies’ hiring and  recruitment staff to identify strategies for recruiting diverse candidates.  Additionally, the Federal Reserve Board OMWI reported that including  hiring managers at diversity career fairs had made their targeted  recruitment activities more effective.
Training for hiring managers. Some OMWIs reported they  implemented practices to educate supervisors and hiring managers  on diversity hiring practices. For example, the Reserve Bank of New  York designed a training course to enhance cross-cultural interviewing  skills of recruitment staff. OCC also provides diversity recruitment  training to the agency’s recruitment staff, and CFPB planned to   provide its hiring managers a toolkit with tips on diversity hiring  practices.
Internship programs. Many agencies and Reserve Banks  implemented internship programs to build employment diversity by  developing a more diverse pipeline of potential entry-level candidates.  For example, the Reserve Bank of San Francisco reported that it  expanded its internship program to support more interns and  leveraged partnerships with organizations representing minorities and  women to increase the diversity of the bank’s internship program  applicant pool.
section_title: Agencies Have Taken Preliminary Steps to Develop Procedures to Assess Diversity Policies and Practices of Regulated Entities
paragraphs: In response to section 342 of the Dodd-Frank Act, seven federal financial  agencies have taken preliminary steps to respond to the requirement to  develop standards for assessing the diversity policies and practices of  entities they oversee. While these agencies have made initial progress, it  is too soon to evaluate how effectively the agencies are responding to this  requirement. The affected agencies include CFPB, FDIC, FHFA, the  Federal Reserve Board, NCUA, OCC, and SEC. In addition to this  requirement under the Dodd-Frank Act, FHFA is also subject to the  Housing and Economic Recovery Act of 2008 (HERA), under which it  must assess its regulated entities’ diversity activities and meet other  provisions similar to those in section 342.
In 2010, FHFA developed an agency regulation implementing HERA  requirements, in part, to ensure that diversity is a component of all  aspects of its regulated entities’ business activities. The agency’s  regulated entities include Fannie Mae, Freddie Mac, Federal Home Loan  Banks, and the Federal Home Loan Bank System’s Office of Finance.  HERA requires the agency’s regulated entities to develop diversity  policies and procedures, staff an OMWI, and report annually to FHFA on  their OMWI activities, among other requirements. In addition, FHFA has  enforcement authority under HERA and FHFA’s promulgated regulation  to ensure its regulated entities have diversity standards in place.  According to FHFA OMWI officials, the agency’s response to HERA also  satisfies the section 342 requirement.
According to OMWI officials, other agencies reviewed FHFA’s regulation  as a possible option for responding to the section 342 requirement;  however, the enforcement authority included in FHFA’s regulation is  unique to the agency. They said that under the Dodd-Frank Act their  agencies do not have enforcement authority to require regulated entities  to implement diversity standards and practices. affected agencies also told us their OMWIs collaborated on initial steps to  determine how to respond to these requirements by meeting periodically  as a group, meeting with members of Congress, and performing outreach  to industry participants and advocacy groups.
Pub. L. No. 111-203. § 342(b)(4) (2010). Even though section 342 provides for the  development of standards for the assessment of diversity policies and practices of  regulated entities, it further provides that nothing in the requirement may be construed to  require any specific action based on the findings of the assessment. understand industry views on developing standards for assessing  diversity policies and practices. One OMWI reported that industry  representatives discussed options for evaluating diversity with respect to  a regulated entity’s size, complexity, and market area.
OMWI officials told us responding to the requirement was a challenge for  several reasons. Specifically, differences across regulated entities in  terms of size, complexity, and market area made it challenging to develop  a uniform standard. Determining the process and format for developing  standards was also a challenge. OMWI officials also said they want to  minimize adding a new regulatory burden to meet this provision.  Therefore, the agencies would like to leverage existing information  sources—data that regulated entities already provide—in evaluating the  diversity activities of regulated entities. For example, to find ways to avoid  duplicating existing data-collection efforts, CFPB and NCUA were working  with EEOC for access to EEO-1 data for regulated entities. OCC officials  said OCC had also considered using EEO-1 data, but some regulated  entities had concerns about maintaining proprietary information, given the  potential for Freedom of Information Act requests.
section_title: Efforts to Report on Measuring Outcomes and Progress Could Be Enhanced
paragraphs: In addition to establishing an OMWI, the act required federal financial  agencies and Reserve Banks to report annually on their diversity  practices, and nearly all of the agencies and all the Reserve Banks have  begun reporting annually on their diversity practices. As discussed earlier,  the act required each OMWI to submit to Congress an annual report on  the actions taken pursuant to section 342, including information on the  percentage of amounts paid to minority-and women-owned contractors  and successes and challenges in recruiting and hiring qualified minority  and women employees, and other information as the OMWI director  determines appropriate. Including more information on the outcomes and  progress of their diversity practices could enhance the usefulness of  these annual reports. Seven of eight agencies and all Reserve Banks  issued annual reports in 2011. CFPB, which was created in July 2010 and  assumed responsibility for certain consumer financial protection functions  in July 2011, issued an agencywide semiannual report for 2011. Its OMWI  planned to issue an annual report for 2012 at the same time as the other  agencies, in March 2013.
In their 2011 Annual OMWI Reports to Congress, several agencies and  Reserve Banks reported on efforts to measure outcomes and progress of  various diversity practices, which provide examples of the types of  outcomes and measures of progress that could be helpful for OMWIs to  include in their annual reports. Although the act requires information on  successes and challenges, it does not specifically require reporting on  effectiveness; however, the act provides some leeway to the federal  financial agencies and the Reserve Banks to include “any other  information, findings, conclusions, and recommendations for legislative or  agency action, as the Director determines appropriate.” Measurement of  diversity practices is one of the nine leading diversity management  practices we previously identified. We have reported that quantitative  measures—such as tracking employment demographic statistics—and  qualitative measures—such as evaluating employee feedback survey  results—could help organizations translate their diversity aspirations into  tangible practice.
The Federal Reserve Board reported that it tracks job applicant  information to assess the diversity of applicant pools, candidates  interviewed, and employees hired as a result of diversity recruiting efforts,  and FDIC reported that it monitors participation and attrition rates and  diversity characteristics of participants in a development program. SEC  reported plans to develop standards for assessing its ongoing diversity  and inclusion efforts and include them in a strategic plan. The Reserve  Banks of Chicago, Philadelphia, Richmond, and San Francisco reported  on the number of internships each bank supported and the ethnic and  gender diversity of the interns. The Reserve Bank of Chicago also  reported on the number of job offers extended and candidates hired from  its internship program, as well as on the number of candidates  successfully hired from a diversity career expo. Further, the Reserve  Bank of Cleveland identified reporting tools developed to monitor the  bank’s inclusion in contracting efforts. In addition to using these  measures, some OMWI officials said they used annual employee surveys  as a measurement tool to gather information about the progress of their  diversity practices, including retention practices. For example, FDIC’s  annual employee survey includes specific questions related to diversity,  and the agency uses responses to assess the effectiveness of policies  and programs and outline action steps for improvement. OCC officials  told us the government-wide federal employee viewpoint survey provided  information on employee perspectives about diversity, and the agency  measured its results against government-wide scores. Further, OMWI  officials from the Reserve Bank of Minneapolis said exit surveys and  employee declination surveys provided additional information for  evaluating their retention and recruiting programs.
Federal financial agencies and Reserve Banks have focused their initial  OMWI efforts on implementing section 342 of the Dodd-Frank Act. While  many OMWIs have implemented or are planning efforts to measure and  evaluate the progress of their diversity and inclusion activities, which is  consistent with the leading diversity management practices, information  on such efforts is not yet reported consistently across the OMWI annual  reports. According to OMWI officials as well as industry representatives  we interviewed, measuring the progress of diversity recruitment and  retention practices is a challenging, long-term process. For example,  NCUA officials told us measuring the progress of certain recruiting  practices could be a challenge, as access to demographic information  about job applicants might be limited. Additionally, FHFA officials told us  that while measuring the progress of diversity practices was needed to  identify best practices, such measurement needs to be efficient and  meaningful. However, without knowledge of OMWI efforts to measure  outcomes and the progress of their diversity practices, Congress lacks  information that would help hold OMWIs accountable for achieving  desired outcomes. In addition, increased attention to evaluation and  measurement through annual reporting of these efforts could help the  OMWIs improve management of their diversity practices. Reporting such  information would provide an opportunity for the agencies and Reserve  Banks to learn from others’ efforts to measure their progress and indicate  areas for improvement.
section_title: Procedures to Meet Dodd-Frank Inclusive Contracting Requirements Are Largely in Place
paragraphs: Section 342 of the Dodd-Frank Act requires federal financial agencies  and Reserve Banks to develop procedures to ensure, to the maximum  extent possible, the fair inclusion and utilization of women and minorities  in contracting. Specifically, the act requires agency and Reserve Bank  actions to ensure that its contractors are making efforts to include women  and minorities in their workforce. Also, the act has requirements for  actions to increase contracting opportunities for minority- and women- owned businesses (MWOB). Most agencies and Reserve Banks have  developed and included a provision in contracts for services requiring  their contractors to make efforts to ensure the fair inclusion of women and  minorities in their workforce and subcontracted workforces. The extent to  which these agencies and Reserve Banks have contracted with MWOBs  varied widely. These entities reported multiple challenges to increasing  contracting opportunities for MWOBs and used various technical  assistance practices to address these challenges.
subsections: section_title: Most Agencies and Reserve Banks Are Implementing Requirements Related to Inclusiveness in Contractor Workforces
paragraphs: To address the act’s requirement to ensure the fair inclusion of women  and minorities, to the maximum extent possible, in contracted workforces,  agencies either have developed or are in the process of developing fair  inclusion provisions in their contracts for services, and all Reserve Banks  have done so. In addition, some agencies and all Reserve Banks have  developed procedures to assess contractors’ efforts for workforce  inclusion of women and minorities.
Five agencies—FDIC, FHFA, NCUA, OCC, and the Federal Reserve  Board—and all Reserve Banks have created a fair inclusion provision and  are using it in contracts for services. Section 342 of the Dodd-Frank Act  requires agencies and Reserve Banks to develop procedures for review  and evaluation of contract proposals for services and for hiring service  providers that include a written statement that the contractor, and as  applicable subcontractors, shall ensure, to the maximum extent possible,  the fair inclusion of women and minorities in the workforce of the  contractor and, as applicable, subcontractors. The act does not specify  the elements to be included in the written statement and provides that  each OMWI director prescribe the form and content of the statement.
CFPB, SEC, and Treasury are each in the process of developing a fair  inclusion provision. CFPB is developing procurement procedures to  address the requirements of the act and required more time because its  OMWI office was established in January 2012. SEC is subject to the  Federal Acquisition Regulation (FAR) and is currently developing its  inclusive contract provision. While CFPB and SEC develop inclusion  statements pursuant to the act, both agencies have been using the equal  employment opportunity statement contained in the FAR in executed  contracts. Treasury has developed its fair inclusion provision to add to  future contracts. It has issued a notice of proposed rulemaking in the  Federal Register for public comments on this change to its contracting  procedures as required under the law. The comment period ended on  October 22, 2012. Treasury received eight comments which included,  among other things, suggestions to make the fair inclusion provision  applicable to all contracts regardless of the dollar amount of the contract  and to better specify the documentation required of contractors to  demonstrate that they have met the requirements of the fair inclusion  provision. Treasury is currently reviewing the public comments and  considering changes to the proposed rule.
The fair inclusion provisions we reviewed contained the following:
Equal employment opportunity statement: Fair inclusion provisions  include a commitment by the contractor to equal opportunity in  employment and contracting and, to the maximum extent possible  consistent with applicable law, the fair inclusion of women and  minorities in the contractor’s workforce.
Documentation: To enforce the fair inclusion provision, agencies  require contractors to provide documentation of their efforts to include  women and minorities in the contractor’s workforce, such as a written  affirmative action plan; documentation of the number of employees by  race, ethnicity, and gender; information on subcontract awards,  including whether the subcontractor is an MWOB; and any other  actions describing the contractor’s efforts toward the inclusion of  women and minorities.
Contract amount threshold: Agencies apply the fair inclusion provision  to contracts exceeding a certain dollar amount. For two agencies  subject to the act, this threshold is any amount over $150,000. For  three agencies subject to the act, this threshold is any amount over  $100,000. The Reserve Bank fair inclusion provisions we reviewed did  not generally include a dollar-amount threshold.
None of the officials from five agencies that have implemented a fair  inclusion provision required by the act described to us receiving an  adverse reaction from contractors, but officials from a majority of the  Reserve Banks we spoke with described resistance or concerns from  some contractors. OCC stated that smaller businesses had expressed  confusion about the requirement because the businesses are too small to  report workforce demographics to EEOC. Eight Reserve Banks described  contractors expressing some disagreement or concern at the inclusion of  the language in contracts. According to some Reserve Bank officials,  contractors were concerned that accepting the fair inclusion provision  would trigger other federal requirements for their businesses, or subject  the contractor to meeting hiring or subcontracting targets. Some  Reserve Banks described explaining the limited scope of the provision to  concerned contractors. Other Reserve Banks described modifying the  language in the fair inclusion provision, for example, in one case,  changing a phrase regarding the contractor’s efforts to include women  and minorities from “to the maximum extent possible” to read “to the  maximum extent required by law.” Other Reserve Banks described  occurrences where, in response to a contractor’s concern, they excluded  the fair inclusion language from contracts for a procurement with a small  dollar amount or because the vendor provided a service critical to the  Reserve Bank and alternate vendors were not available. Finally, one  Reserve Bank described declining a contract and seeking an alternate  vendor that accepted the provision.
Some agencies and all Reserve Banks have developed procedures to  assess contractors’ efforts toward workforce inclusion of women and  minorities. Section 342 of the Dodd-Frank Act requires the 8 federal  financial agencies in the act and 12 Reserve Banks to develop  procedures to determine whether a contractor and, as applicable, a  subcontractor, has failed to make a good faith effort to include minorities  and women in their workforces. Good faith efforts include any actions  intended to identify and remove barriers to employment or to expand  employment opportunities for minorities and women in the workplace,  according to the policies some agencies have developed. For example,  recruiting minorities and women or providing these groups job training  may be considered good faith efforts for diversity inclusion. Contractors  must certify that they have made a good faith effort to include women and  minorities in their workforces, according to most policies we reviewed. At  the same time, contractors may provide documentation of their inclusion  efforts such as workforce demographics, subcontract recipients, and the  contractor’s plan to ensure that women and minorities have opportunities  to enter and advance within its workforce. Agencies and Reserve Banks  plan to conduct a review of each contractor’s certifications and  documentation annually, once in a 2-year period, or at other times  deemed necessary, such as when contracts are executed or renewed, to  make a determination of whether the contractor made a good faith effort  to include women and minorities in its workforce. Failure to make a good  faith effort may result in termination of the contract, referral to the Office  of Federal Contract Compliance Programs, or other appropriate action.Four agencies and all Reserve Banks have established good faith effort  determination procedures, and four agencies have yet to implement such  procedures.
section_title: Levels of Contracting with Minority- and Women- Owned Businesses Varied by Agency and Reserve Bank
paragraphs: In 2011, the proportion of a federal financial agency’s contracting dollars  awarded to businesses owned by minorities or women varied, ranging  between 12 percent and 38 percent according to the OMWI reports of the   Seven federal financial agencies awarded a total  agencies (see fig. 14).of about $2.4 billion for contracting for external goods and services in  fiscal year 2011, with FDIC awarding about $1.4 billion of this amount.
Similarly, according to Reserve Bank OMWI reports, Reserve Bank  contracting dollars paid to businesses owned by minorities or women  ranged between 3 percent and 24 percent in 2011 (see fig. 15). Reserve  Banks paid about $897 million in fiscal year 2011 in contracting.
Among federal financial agencies, OCC awarded the largest proportional  amount of contracting dollars to MWOBs—about 38 percent (almost $67  million). OCC officials told us that its contract needs tend to be for  services for which there is often a pool of MWOB suppliers and most of  OCC’s 2011 contract dollars were spent on computer related services.  The Federal Reserve Board awarded the smallest proportion of its  contracting dollars to MWOBs, with about 12 percent going to such  businesses. According to the Federal Reserve Board, a significant  amount of its procurement is for economic data, which are generally not  available from MWOBs. Although federal agencies are not generally  required to report on MWOBs, most are required to report on certain  small business contracting goals, including goals for women and small  disadvantaged businesses (which include minority-owned businesses).  In a 2012 report, we found that 35 percent of funds all federal agencies  obligated to small businesses in 2011 were obligated to minority-owned  small businesses and 17 percent were obligated to women-owned  businesses.
Among Reserve Banks, the Reserve Bank of Minneapolis paid the largest  proportion of its contracting dollars to MWOBs with about 24 percent  going to such businesses (18.5 percent to minority-owned businesses  and about 5 percent to women-owned businesses). According to the  Reserve Bank of Minneapolis, almost half of its MWOB contract dollars  were paid for software and related technology integration services from  minority-owned firms. All other Reserve Banks paid under 13 percent of  contracting dollars to MWOBs, with the Reserve Bank of New York  awarding the smallest percentage of its contracting dollars to such  businesses (3 percent). The Reserve Bank of New York described its  commitment to increasing diversity in its pool of potential contractors  through its outreach efforts to us and in its 2011 OMWI report. For  example, the Reserve Bank of New York held an event with its primary  contractors and small firms to identify potential partnerships and an event  that provided small firms consultation on business plans and credit  applications to increase the capacity of the small firms.
section_title: Agencies and Reserve Banks Report Challenges to Increasing Contracting Opportunities and Have Offered Technical Assistance to Minority- and Women-Owned Businesses
paragraphs: Seven federal financial agencies included in this report and all 12  Reserve Banks identified challenges in increasing contracting  opportunities for MWOBs. Section 342 of the Dodd-Frank Act requires  federal financial agencies and Reserve Banks to include in their annual  OMWI report a description of the challenges they may face in contracting  with qualified MWOBs. As a new agency, CFPB has not been required to  complete an annual OMWI report and did not identify any contracting  challenges to us. In interviews with us and in the 2011 OMWI reports to  Congress, the remaining agencies and all Reserve Banks discussed a  number of common challenges to increasing contracting with MWOBs,  including the following:
Limited capacity of MWOBs: Some agencies and Reserve Banks  stated that reporting or other requirements under federal contracts  were often too great a burden for MWOBs or that MWOBs needed to  build capacity to meet federal contracting requirements. Some  agencies and Reserve Banks also stated that at times the need for  goods or services is not scaled to the capacity of MWOBs. For  example, some agencies and Reserve Banks faced challenges  identifying MWOBs that can meet procurement needs on a national  scale.
Developing staff or procedures to meet contracting requirements of  the act: According to some agencies, new OMWIs require additional  staff or staff development, or procedures to meet the requirements of  the act, including providing technical assistance to increase  opportunities for MWOBs, identifying qualified MWOBs in the  marketplace, and incorporating the use of a fair inclusion provision in  contracts and good faith effort determination processes, which we  discussed earlier, into established procurement processes.
MWOB classification challenges: Multiple agencies and Reserve  Banks described difficulty identifying and classifying suppliers as  diverse entities. Some Reserve Banks noted that no central agency is  responsible for certifying MWOBs. Some agencies and Reserve  Banks also discussed a need for new procedures or information  systems to identify and classify diverse ownership of businesses.
Availability: Some agencies and Reserve Banks noted that  specialized services are often only available from a limited pool of  suppliers that may not include MWOBs.
Centralized procurement: Reserve Banks may use the National  Procurement Office (NPO), the centralized procurement office for the  12 Reserve Banks, to contract for some goods and services. When  a Reserve Bank procures through the NPO, access to MWOBs may  be limited because the NPO procures for volume discounts with larger  contractors. However, the Reserve Bank of Richmond, in its 2011  OMWI report, described efforts to work with existing large contractors  to increase subcontracting with smaller, diverse firms.
No MWOB bids: In some cases, agencies and Reserve Banks found  that potentially eligible MWOB applicants decided not to bid without  explanation.
Other challenges were described on a limited basis by one agency or  Reserve Bank. For example, NCUA explained that MWOBs are not  familiar with the agency. According to NCUA, to address this issue it  increased its outreach budget and attendance to MWOB events and  published an online guide on doing business with the agency. According  to FDIC, in some cases MWOBs do not have relationships with large  federal contractors for subcontracting opportunities. To address this  problem, FDIC emphasizes to larger firms the importance of  subcontracting with MWOBs and has negotiated increases in MWOB  subcontracting participation with large contractors. FDIC participated in  procurement events where small and large contractors could meet and  match capabilities. The Reserve Bank of Chicago stated that MWOBs  have a hard time standing out in highly competitive industries, such as  staff augmentation services. Finally, according to the Reserve Bank of  Richmond, MWOBs may have incorrect perceptions that Reserve Banks  are subject to federal procurement rules that they cannot meet.
To counter challenges MWOBs may face in accessing federal contracting  opportunities, all agencies and Reserve Banks described providing  various specific forms of technical assistance to MWOBs, which they  described in discussions with us and in 2011 OMWI reports to Congress.
No agency or Reserve Bank stood out as coordinating technical  assistance better than others, although some agencies pointed to  longstanding efforts at FDIC to provide technical assistance to MWOBs  as model practices. Section 342 of the Dodd-Frank Act requires federal  financial agencies and Reserve Banks to develop standards for  coordinating technical assistance to MWOBs. These activities included  developing and distributing literature, such as manuals and brochures  describing contracting procedures and resources to prospective  contractors. Most agencies also established websites that function as  informational portals on doing business with agencies and act as an  agency entry point to prospective contractors. Agencies and Reserve  Banks described outreach activities to MWOBs, including conducting  expert panels, hosting meetings and workshops, and exhibiting at trade  shows and procurement events. Some of these outreach activities have  been coordinated with SBA. For example, FDIC has partnered with SBA  to develop a technical assistance program for small businesses, including  MWOBs, on money management. OCC worked with SBA to create a  technical assistance workshop that they conducted in 2012 with women- owned small businesses. Some agencies have included SBA  representatives in supplier diversity events they sponsor. Even prior to  the passage of the Dodd-Frank Act, the Federal Reserve Board had  participated in SBA procurement fairs and used SBA information and  events to market its procurement opportunities among diverse suppliers.  Treasury has participated in SBA outreach events and created a mentor- protégé program to assist small businesses with contracting  opportunities.
Agencies and Reserve Banks also provide one-on-one technical  assistance, which is intended to meet the specific needs of a prospective  MWOB contractor. According to Treasury, they coordinate with SBA to  leverage SBA’s knowledge of one-on-one technical assistance practices  with MWOBs. FHFA and SEC have created dedicated e-mail addresses  and telephone lines for MWOBs to reach their OMWIs, and SEC has  established monthly vendor outreach days when MWOBs can speak one- on-one with SEC’s supplier diversity officer and small-business specialist.  Some Reserve Banks described conducting one-on-one meetings with  prospective contractors in 2011, some of which were held during  procurement events. Finally, FDIC offered its database of MWOBs to the  OMWIs and some agencies described using or planning to use it to  identify potential contractors for outreach regarding procurement  opportunities. According to FDIC, it sends an updated version of the  database to the agencies each quarter.
section_title: Conclusion
paragraphs: Across financial services firms, federal financial agencies, and Reserve  Banks, available data showed the representation of minorities and women  varied, and there was little overall change in workforce diversity from  2007 through 2011. Our findings suggest the overall diversity of the  financial services industry has generally remained steady following the  financial crisis. Since 2011, federal financial agencies and Reserve Banks  have taken initial steps to respond to the Dodd-Frank Act’s requirements  to promote workforce diversity, and OMWIs have begun reporting on both  planned and existing diversity practices, in addition to reporting on  workforce demographic statistics according to EEOC requirements. While  many OMWIs have implemented or are planning efforts to measure and  evaluate the progress of their diversity and inclusion activities, a leading  diversity management practice, information on these efforts is not  reported consistently across the OMWI annual reports. Although the act  requires information on successes and challenges, it does not specifically  require reporting on measurement; however, the act provides that the  federal financial agencies and the Reserve Banks can include additional  information determined appropriate by the OMWI director. Measurement  of diversity practices is one of the nine leading diversity management  practices we have previously identified. Reporting on these efforts as part  of annual OMWI reporting would provide Congress, other OMWIs, and  the financial services industry with potentially useful information on the  ongoing implementation of diversity practices. Such information could be  helpful industrywide, as management-level diversity at federal financial  agencies, Reserve Banks, and the broader financial services industry  continues to be largely unchanged. Without information on OMWI efforts  to report outcomes and the progress of diversity and inclusion practices,  Congress lacks information that would help hold agencies accountable for  achieving desired outcomes or whether OMWI efforts are having any  impact.
section_title: Recommendations for Executive Action
paragraphs: To enhance the availability of information on the progress and impact of  agency and Reserve Bank diversity practices, we are recommending to  CFPB, FDIC, the Federal Reserve Board, FHFA, NCUA, OCC, SEC,  Treasury, and the Reserve Banks that each OMWI report on efforts to  measure the progress of its employment diversity and inclusion practices,  including measurement outcomes as appropriate, to indicate areas for  improvement as part of their annual reports to Congress.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided drafts of this report to CFPB, the Federal Reserve Board,  FDIC, FHFA, NCUA, OCC, SEC, Treasury, and each of the Federal  Reserve Banks for review and comment. We received written comments  from each of the agencies and a consolidated letter from all of the  Reserve Banks. Their comment letters are reproduced in appendixes V  through XIII.  The agencies and Reserve Banks generally agreed with our  recommendation. CFPB, Federal Reserve Banks, FDIC, FHFA, NCUA,  OCC, and SEC provided technical comments, which we incorporated as  appropriate. We also provided a draft of the report to EEOC for comment.   EEOC is not subject to the requirements of section 342 of the act but did  provide technical comments, which we incorporated as appropriate.
With respect to our recommendation that each OMWI report on efforts to  measure the progress of its employment diversity and inclusion practices,  including measurement outcomes as appropriate, to indicate areas for  improvement as part of their annual reports to Congress, all the federal  financial agencies and Reserve Banks indicated that they plan to  implement the recommendation:  the OMWI Director of CFPB explained that its OMWI was the newest  of such offices because the agency was created with the enactment of  the Dodd-Frank Act and that it planned to include measurement  information in future reports;  the OMWI Director of the Federal Reserve Board stated that the  recommendation was consistent with its ongoing practices and that it  would look for additional ways to report on diversity practices;
FDIC’s OMWI Director agreed with the recommendation and stated  that it will include efforts to measure the progress of its diversity  practices in its annual reports to Congress;  the Acting Associate Director of FHFA’s OMWI stated that it would  include measurement information in its 2013 OMWI report to  Congress; the Executive Director of NCUA said the agency will work toward  reporting on its efforts to measure the progress of workforce diversity  and practices;  the Comptroller of the Currency stated that OCC had a well- developed diversity and inclusion program through which the agency  measures its progress and that OCC has included additional metrics  in its 2013 OMWI report to Congress;
SEC’s OMWI Director noted that the agency plans to incorporate  measurement information on its diversity and inclusion practices in its  future OMWI reports to Congress;
Treasury’s OMWI Director agreed with our recommendation and  stated that it was consistent with the agency’s efforts to use more than  demographic representation to measure the progress of diversity and  inclusion efforts; and    the Federal Reserve Banks’ OMWI directors noted that the banks  currently include some measurement information in annual reports  and said that they will consider additional ways to measure and report  on Reserve Banks’ diversity practices.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution of this report until 30  days from the report date. At that time, we will send copies of this report  to the appropriate congressional committees; the Chairman, Board of  Governors of the Federal Reserve; Director, Bureau of Consumer  Financial Protection, commonly known as the Consumer Financial  Protection Bureau; Chair, Equal Employment Opportunity Commission;  Chairman, Federal Deposit Insurance Corporation; Acting Director,  Federal Housing Finance Agency; Chairman, National Credit Union  Association; Comptroller, Office of the Comptroller of the Currency;  Chairman, Securities and Exchange Commission; Secretary, Department  of the Treasury; and to the Directors of the Offices of Minority and  Women’s Inclusion for the Federal Reserve Banks; and other interested  parties. We will make copies available to others upon request. The report  will also be available at no charge on our website at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  me at (202) 512-8678 or garciadiazd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs are listed on the last  page of this report. GAO staff who made major contributions to this report  are listed in appendix XIV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives for this report were to examine (1) what available data  show about how the diversity of the financial services industry workforce  and how diversity practices taken by the industry have changed from  2007 through 2011; (2) what available data show about how diversity in  the workforces of the federal financial agencies and the Federal Reserve  Banks (Reserve Banks) has changed from 2007 through 2011; (3) how  these federal financial agencies and Reserve Banks are implementing  workforce diversity practices under section 342 of the Dodd-Frank Act,  including the extent to which their workforce diversity practices have  changed since the financial crisis; and (4) the status of federal financial  agencies’ and Reserve Banks’ implementation of the contracting  provisions of the Dodd-Frank Act related to the inclusion of women and  minorities.
To describe how diversity in the financial services industry has changed  since the beginning of the 2007-2009 financial crisis, we analyzed 2007- 2011 workforce data from the Equal Employment Opportunity  Commission’s (EEOC) Employer Information Report (EEO-1). EEO-1 is  data annually submitted to EEOC generally by private-sector firms with  more than 100 employees. We obtained EEO-1 data on October 2012,  from the finance and insurance industry categorized under the North  American Industry Classification System (NAICS) code 52 for these  industries from 2007 through 2011. EEO-1 data were specifically obtained  from the EEOC’s “officials and managers” category by gender,  race/ethnicity, firm size, and industry sectors. The EEO-1 “officials and  managers” category was further divided into two management-level  categories of first- and mid-level managers and senior-level managers  and then analyzed by gender, race/ethnicity, and firm size.understand the potential internal candidate pools available for  management positions in the financial industry, we obtained EEO-1 data  under NAICS code 52 for all positions, including nonmanagement  positions, by gender and race/ethnicity. To determine the reliability of the  EEO-1 data that we received from EEOC, we interviewed knowledgeable  EEOC officials and reviewed relevant documents provided by agency  officials and obtained on its website. We also conducted electronic testing  of the data. We determined that the EEO-1 data were sufficiently reliable  for our purposes.
We used monthly averages over 3 months—July, August, and September—from the  Basic Monthly CPS for each year and then calculated the estimated percentages, as  EEOC’s EEO-1 reports are collected over this period of time every year. obtained from a publicly accessible federal statistical database, we  gathered and reviewed relevant documentation from the Bureau of the  Census website, conducted electronic testing, and determined the  standard errors of the CPS estimates. We determined that the CPS data  were sufficiently reliable for our purposes.
To gather information on a potential external pipeline of diverse  candidates for management positions in the financial industry, we  obtained demographic data on minority and female students enrolled in  undergraduate, Master of Business Administration (MBA), and doctoral  degree programs from 2007 through 2011 from the Association to  Advance Collegiate Schools of Business (AACSB). We focused on MBA  programs as a source of potential future managers and senior executives.  Financial services firms compete for minorities in this pool with one  another and with firms from other industries. We combined this  information with undergraduate and doctoral degree programs to provide  information on the overall diversity of the university system. AACSB  conducts an annual voluntary survey called “Business School  Questionnaire” of all its member schools. In 2011, AACSB updated its  survey to include two additional race/ethnicity categories to include “two  or more races” and “Native Hawaiian or Other Pacific Islander.” For  consistency purposes, we combined these two additional categories  along with the representation of Native Americans into an “other”  category. To determine the reliability of the AACSB data, we interviewed  a knowledgeable AACSB official and reviewed relevant documents  provided by the official and obtained on its website. We determined that  the data from AACSB were sufficiently reliable for our purposes.
To determine how diversity practices in the financial services industry  have changed since the beginning of the financial crisis, we conducted a  literature review of relevant studies that discussed diversity best practices  within the financial services industry from 2007 through 2011. In addition,  we interviewed 10 selected industry representatives to determine whether  the nine leading diversity practices we previously identified are relevant  today and how diversity practices changed since 2007. We also reviewed  documents produced by these industry representatives. These  representatives were selected based on their participation in our previous  work, suggestions from federal agencies we interviewed for this report, as  well as the type of industry representative—such as an industry  association or private firm.
To describe diversity in the workforces of the federal financial agencies  and Reserve Banks, we analyzed data we received from agencies and  banks. To review changes in the representation of minorities and women  in the workforces of federal financial agencies, we obtained from the  agencies annual Equal Employment Opportunity Program Status Reports  from 2007 through 2011, required under U.S. EEOC Management  Directive 715 and known as MD-715 reports.seven of the eight federal agencies required to meet the workforce  diversity provisions in section 342 of the Dodd-Frank Wall Street Reform  and Consumer Protection Act (Dodd-Frank Act). These included the  Departmental Offices of the Department of the Treasury, the Federal  Deposit Insurance Corporation, the Federal Housing Finance Agency  (FHFA), the Board of Governors of the Federal Reserve System, the  National Credit Union Administration, the Office of the Comptroller of the  Currency, and the Securities and Exchange Commission. The Bureau of   We obtained data from  Consumer Financial Protection, commonly known as the Consumer  Financial Protection Bureau (CFPB), was created in July 2010 and  assumed responsibility for certain consumer financial protection functions  in 2011; workforce diversity data for the agency to show trends from 2007  through 2011 were unavailable. Additionally, our trend analysis excluded  FHFA, as the agency was created in 2008 and did not report on diversity  employment statistics for 2007, 2008, or 2009. Further, our senior  management-level trend analysis excluded SEC, as the agency revised  how it reported officials and managers during the 5-year period. To review  changes in the representation of minorities and women in the workforces  of Reserve Banks, we obtained from banks their annual EEO-1 reports  from 2007 through 2011. For agencies and Reserve Banks, we reviewed  workplace employment data by occupational categories, distributed by  race/ethnicity and gender. In our analyses, we considered all categories  other than white as race/ethnic minorities and analyzed trends in diversity  at both the senior management-level and agency- and bankwide.analyzed senior management-level and overall diversity trends across all  agencies and all Reserve Banks, as well as diversity trends for each  agency when trend information was available.
To assess the reliability of MD-715 and EEO-1 data we received from  agencies and Reserve Banks, we interviewed EEOC officials on both  types of data as well as agency officials on MD-715 data and Reserve  Bank officials on EEO-1 data about how the data are collected and  verified as well as to identify potential data limitations. We found that  while agencies and banks rely on employees to provide their race and  ethnicity information, agencies and banks had measures in place to verify  and correct missing or erroneous data prior to reporting them and officials  with whom we spoke generally agreed these data were generally  accurate. Based on our analysis, we concluded that the MD-715 and  EEO-1 data were sufficiently reliable for our purposes.
To assess how federal financial agencies and Reserve Banks are  implementing workforce diversity practices under section 342 of the  Dodd-Frank Act, we reviewed agency and bank documentation of efforts  to respond to the act’s requirements. Sources included annual Office of  Minority and Women Inclusion (OMWI) reports to Congress by agencies  and banks, annual agency MD-715 reports, and other documentation  provided to us by agency and bank OMWI officials. Additionally, we  gathered testimonial information from agency and Reserve Bank OMWI  officials on changes in the inclusion of women and minorities in their  workforces and any changes in the practices used to further workforce  diversity goals. Through our review of agency and Reserve Bank  documentation and interviews with OMWI officials, we assessed agency  and Reserve Bank efforts to measure and report on the progress of their  diversity practices, as measurement was one of the nine leading diversity  practices we previously identified.
To determine the extent to which agencies and Reserve Banks are  implementing the requirements of the Dodd-Frank Act regarding the  inclusion of women and minorities in contracting, we reviewed 2011  OMWI reports submitted to Congress and interviewed officials on their  efforts in this area. We also reviewed OMWI reports to determine the  dollar amount and percentage of total contracts federal financial agencies  reported awarding to minority- and women-owned businesses (MWOB),  and the dollar amount and percentage of total contracts Reserve Banks  reporting paying MWOBs in 2011. We verified these figures and our  presentation of the information with each agency and Reserve Bank, and  we determined that these data were sufficiently reliable for our purposes.  We interviewed agency officials on their efforts to coordinate with the  Small Business Administration and other federal agencies to provide  technical assistance to minority- and women-owned businesses. We  collected and reviewed agency documentation of procedures developed  to address the act’s requirements, such as policy manuals, process  workflows, and technical assistance materials. We also collected and  reviewed examples of fair inclusion provisions used in agency and  Reserve Bank contracts as required in section 342 of the Dodd-Frank Act.
We conducted this performance audit from January 2012 to March 2013  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Additional Analysis of the Financial Services Industry
paragraphs: This appendix provides additional detailed analysis of EEOC data on the  financial services industry by workforce position and industry sector from  2007 through 2011.
subsections: section_title: Analysis by Workforce Positions
paragraphs: The representation of minorities by gender was below 45 percent across  all the positions throughout the same 5-year period (see fig. 16). For  example, in sales positions, the representation of minorities was higher  among women (about 31 percent) than among men (about 17 percent).  Similarly, at the professional level, the representation of minority women  was about 27 percent, compared to about 23 percent for minority men.
Diversity remained about the same across all industry sectors in terms of  both the representation of women and minorities. From 2007 through  2011, the representation of women decreased slightly in most industry  sectors and remained below 50 percent in all sectors (see fig. 17). The  “insurance carriers and related activities” sector was the only sector that  showed an increase in the representation of women, from 47.7 percent to  48.2 percent. In contrast, the representation of minorities increased  across all sectors. Specifically, from 2007 through 2011 the  representation of minorities in the “monetary authorities-central bank”  sector increased from 17 percent to 19.8 percent, and the “funds, trusts,  and other financial vehicle” sector increased from 16 percent to 18.5  percent.
section_title: Appendix III: Additional Analysis of Overall Workforce Diversity at Agencies and Reserve Banks
paragraphs: This appendix provides information accompanying our review of changes  in overall workforce diversity at federal financial agencies and the 12  Reserve Banks from 2007 through 2011.appendix IV provide data supporting the figures in this appendix.
Tables 11 through 14 in  According to MD-715 data, the representation of minorities in the overall  workforce of the agencies, in aggregate, changed little from 2007 through  2011. Percentage point changes in the representation of minorities at  FDIC, the Federal Reserve Board, NCUA, OCC, SEC, and Treasury  varied from a 5 percentage point decrease at Treasury to a 3 percentage  point increase at NCUA. In 2011, the representation of minorities in the  overall workforce of the agencies and FHFA ranged from 25 percent at  NCUA to 44 percent at the Federal Reserve Board.
Similarly, we found that the representation of women in the overall  workforce of the agencies did not change significantly from 2007 through  2011. Percentage point changes in the representation of women at the  agencies from 2007 through 2011 varied from a 2 percentage point  decrease at FDIC, the Federal Reserve Board, and Treasury to no  percentage point change at NCUA and SEC. In 2011, the representation  of minorities in the overall workforce of the agencies and FHFA ranged  from 42 percent at FDIC to 48 percent at SEC and Treasury.
According to EEO-1 data provided by the Reserve Banks, the  representation of minorities in the overall workforce of the Reserve Banks  decreased somewhat from 2007 through 2011. The banks showed  changes in the representation of minorities from 2007 through 2011, from  an 8 percentage point decrease at the Reserve Bank of Philadelphia, to a  2 percentage point increase at the Reserve Banks of Minneapolis and  New York. The Reserve Bank of Boston showed no percentage point  change from 2007 through 2011. In 2011, the representation of minorities  in the overall workforce of the Reserve Banks ranged from 16 percent at  the Reserve Bank of Kansas City to 53 percent at the Reserve Bank of  San Francisco.
In addition, we found that from 2007 through 2011, the representation of  women in the overall workforce of the Reserve Banks also declined  slightly according to EEO-1 data provided by the Reserve Banks. The  Reserve Banks showed decreases in the representation of women in the  overall workforce from 1 percentage point at the Reserve Bank of New  York to 7 percentage points at the Reserve Bank of Cleveland. The  representation of women in the overall workforce in 2011 ranged from 40  percent at the Reserve Banks of Philadelphia and Richmond to 53  percent at the Reserve Bank of Minneapolis.
section_title: Appendix IV: Representation of Minorities and Women at Federal Financial Agencies and Reserve Banks
paragraphs: We reviewed agency and Reserve Bank reports and found that since the  financial crisis, senior management-level minority and gender diversity at  the agencies and Reserve Banks has varied across individual entities.  We also found the representation of minorities and women in the overall  workforce of the agencies changed little from 2007 through 2011, while  the representation of minorities and women in the overall workforce of the  Reserve Banks declined slightly. The following tables provide data  supporting the senior management-level and total workforce figures in  this report.
section_title: Appendix V: Comments from the Consumer Financial Protection Bureau
section_title: Appendix VI: Comments from the Federal Reserve Banks
section_title: Appendix VII: Comments from the Federal Reserve Board
section_title: Appendix IX: Comments from the Federal Housing Finance Agency
section_title: Appendix X: Comments from the National Credit Union Administration
section_title: Appendix XI: Comments from the Comptroller of the Currency
section_title: Appendix XII: Comments from the Securities and Exchange Commission
section_title: Appendix XIII: Comments from the Treasury Department
section_title: Appendix XIV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Kay Kuhlman, Assistant  Director; Heather Chartier; Brendan Kretzschmar; Alma Laris; Ruben  Montes de Oca; Cheryl Peterson; Jennifer Schwartz; Jena Sinkfield;  Andrew Stavisky; and Julie Trinder made major contributions to this  report.