Federal Reserve Board (OIG Audit 2015-MO-B-006): Performance Ratings Differences Wrongly Diminished; Board’s New Performance Management Approach May Be Based on Grote Approach and Fierce Conversations; Glassdoor.com Review Discussed

I have reviewed a report by the Office of the Inspector General (OIG) for the Federal Reserve Board (Board) [The Board Can Enhance Its Diversity and Inclusion Efforts, Audit Report 2015-MO-B-006], and I am disappointed with the weakness of investigatory probing in the part of the report discussing the Board’s performance management policy. Specifically, I question the independence of the OIG when the OIG is following the Board’s performance management policy, yet the OIG does not describe the program in its audit report.

Moreover, the position of the Board’s Chief Operating Officer, Don Hammond, does not inspire confidence. Rather than addressing any signs of unfair and inequitable workplace practices, he makes arguments to defend the status quo. A status quo that includes Artis v. Bernanke (or Yellen) and Robert Auerbach’s observations.

In addition, Mr. Hammond focuses on job level measures, yet ignores that the Board’s policy is implemented on an agency level (in 2011-2013 and after that period). As such, the agency level measures (between Whites and African Americans as well as between Whites and Asians) are relevant measures and need to be further studied and addressed.

Statement of Don Hammond, Federal Reserve Board Chief Operating Officer

Glassdoor.com Review

With respect to the more relevant job level analysis [performed by an independent consultant, see Appendix E of the OIG audit report], the independent consultant concluded that there is no trend of statistically significant differences between White and African American performance ratings when the data are analyzed at the job level. (OIG report, page 100 (carryover paragraph)) (Emphasis (in bold) by blog author.)

[Author’s note: However, the independent consultant did find statistically significant differences at the agency level between Whites and African Americans and between Whites and Asians. (OIG report, Appendix E, page 90 (third full paragraph))

Review submitted 24-August-2013:

I have been working at Federal Reserve Board full-time (more than 3 years)

Doesn’t Recommend Neutral Outlook Disapproves of CEO


Prestige (for what it’s worth), adjacent to National Mall, OK cafeteria, annual leave, insurance (health, dental, vision), raises available (but if you are not one of the 20% “high performers”, you will tread water economically with low raises with 70% of the staff at the “commendable” (nice way of saying average) level.)


Performance evaluations (that is, the dreadful so-called PMP) use the forced distribution, or “rank and yank” method. Google it; forewarned is forearmed. A set percentage are given bad reviews, with encouragement to quit. The internal webpage shows no one gets below commendable; do not believe it. The entire performance evaluation system is a true insult to workers who bravely try to meet impossible-to-satisfy expectations. Again, my fellow human beings–beware.

[To employees (current and future): As low-level managers will be taking notes for the PMP on computer, you must make sure to ask for a copy of any managerial documentation with your name on it. If denied, make note of the denial. Also, take assignments, do well on them, write a success list (for your own eyes only) so that you can update your resume and leave at will. Your heart, soul, and mind will thank you when you leave the building for the last time.]

Resistance to necessary change. Just because it worked in 1970 does not mean the exact practice must continue in the Internet era.

Excessive division between PHD and non-PHD staff. PHD staff advances; the rest languish.

Advice to Management

Complete transparency (that is, sunshine) should be standard operating procedure. Employees have a right to know if managers are making adverse decisions about their careers behind closed doors with a outside facilitator.

Forced distribution ultimately will cause systemic failure, requiring congressional attention to fix the mess.

With regard to the Board’s new performance management process, there is no specific description of the plan provided by either the OIG or the Board. However, there is a Glassdoor.com employee review (August 24, 2013) that provides some idea about what the Board may have implemented–A Dick Grote-style system (see Glassdoor.com review in table). If true, this Grote system will provide no improvement; the annual statistical review (OIG recommendation 3 and management response, page 101 of the OIG report) that the Board questions on a cost basis becomes an absolute necessity.

The new performance management process was piloted in five divisions and the OIG for performance year 2013–2014, with full implementation in all Board divisions in the 2014–2015 performance year. The purpose of the new process is to align staff to the work of the Board, provide greater accountability, support the growth of staff, improve the value of time spent, and increase the fairness of the process. In addition, the new process involves frequent conversations between employees and their managers that are designed to develop and grow employees’ capabilities. The Board contracted for the necessary expertise to assist with the program’s implementation, which includes information sessions, tools and guides, training, and other support. [Page 30 of the OIG report] (Emphasis (in bold) by blog author.)



Percentage (amounts can be adjusted) Effect
A 20 Lavish rewards, encouragement
B 70 Little to paltry increase
C 10 Pressure to quit or firing

Given the Glassdoor.com review, there is reason to believe that the new performance management process, implemented across the Board (including the OIG), is the Grote Approach. In addition, the conversation method is governed by the Fierce Conversations program. Dick Grote favors forced distribution, a system that does not benefit protected class members. (The forced distribution issue is covered in numerous posts in this blog.)

But what if a company’s forced ranking procedure, honestly and objectively done, reveals that the blacks or women or disabled employees just aren’t as talented as the white ones? Should they do what some Harvard professors are said to do and award A’s to all the blacks, just to keep them from squawking?” (Grote, page 4 (a quote from a previous post)).

(Note: Consider this statement from Grote with the ever-present and persistent legacy of slavery and Jim Crow subjugation in the United States of America.)

The general approach of the Grote process is to make the employee responsible for satisfying the whims of the manager. If the employee cannot read his or her manager’s mind, the employee must quit or be fired.

Unique to Discipline Without Punishment is the final step before an employee’s termination – the Decision Making Leave. The employee is suspended for a day with full pay. On this day he must make a final decision: either solve the problem and commit to fully acceptable performance, or quit and find more satisfying employment somewhere else.

The Grote Approach is summarized below (information from Grote Consulting’s website).

Performance Appraisal

Corrective Action


Does everyone know exactly what you expect and exactly how well they’re doing? We can help you create a new performance appraisal system that is simple and effective. Or tune up a worn-out one. And we can train your managers to be masters of performance management. Does your existing corrective action system solve problems, enhance relationships, and build personal responsibility? Does it reflect your organization’s values? Are your managers comfortable holding tough performance improvement conversations? We can help. Calibration systems assure appraisal accuracy, guarantee differentiation, and drive the truth into performance management. We can help you create a successful approach and train your managers and facilitators to use this this deceptively simple procedure skillfully.