Federal Reserve Board: H.2 Release for Week Ending October 24, 2015; Board’s IG Identifies Major Management Challenges


The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday. The release for the week ending October 24, 2015, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Financial Holding Companies The Desjardins Group, Levis, Canada; Federation des caisses Desjardins du Quebec; Caisee central Desjardins du Quebec, Montreal; and Desjardins FSB Holdings, Inc., Hallandale, Florida — elections to become financial holding companies.
-Effective, October 22, 2015

Separately, the Board’s Office of Inspector General (OIG) has issued on September 30, 2015, a document titled “Major Management Challenges for the Board of Governors of the Federal Reserve System.”

In Management Challenge #4, the OIG identified the following item: “Building and Sustaining a High-Performing and Diverse Workforce.” (The item references the OIG’s audit report, covered previously in this blog). I will quote the text below.

Artist: michael sloan
Artist: michael sloan

Management Challenge 4: Building and Sustaining a High-Performing and Diverse Workforce

The Board’s success in achieving its mission depends on attracting, retaining, and developing a qualified, diverse, and agile workforce. Continually evolving workforce expectations and the highly competitive hiring environment for staff with the specialized skills that the Board needs create challenges for the Board. A key step in ensuring that the Board has a diverse workforce that can effectively carry out the Board’s mission is identifying the necessary technical, managerial, and leadership skills through workforce and succession planning. In addition, the Board must continue to support its new performance management process, which is intended to provide greater accountability for organizational objectives and to support employee development.

Recruiting, Engaging, and Retaining a Highly Skilled, Diverse Workforce

The Board faces challenges in recruiting and retaining a highly skilled, diverse workforce due to several factors. The Board must recruit in a competitive hiring environment for individuals with skills in science, technology, engineering, and math. In addition, to retain the highly skilled workforce it needs, the Board must successfully address evolving expectations regarding diversity, workplace flexibility, career progression, communication, and continuous learning.

To better engage its current workforce, the Board administered an employee engagement survey in 2014. To address the survey results, the Board has undertaken initiatives both Boardwide and at the division level to further explore and address staff members’ concerns, such as career development and communication. The Board will need to address these concerns to achieve its goal of being a sought-after place to work that attracts highly qualified individuals and embraces the characteristics that each individual brings to the workplace. Effectively employing the unique skills, knowledge, and experiences of the Board’s staff members is critical to supporting the innovative thinking that is needed to address the ever-changing environment in which the Board operates.

An important consideration for the Board in recruiting and retaining staff is engaging in workforce planning. The Board will need to determine the required skill sets and number of staff to enable each division to effectively and efficiently accomplish its goals. In addition, the Board will need to address any skill gaps and align resources to support emerging programs central to the Board’s mission. A key part of workforce planning is developing a succession plan to ensure continuity of knowledge and leadership in key positions. Failure to plan for and anticipate turnover and departures could have a negative effect on the Board’s ability to achieve its goals and fulfill its mission.

The Board has taken steps to enhance its diversity and inclusion practices; however, our recent audit work identified some improvement opportunities. The Board recognizes that although the representation of minorities among those in line to move into official staff roles has been increasing, it remains low. The Board stated that it has begun to implement processes to track senior-staff position applicant data to be able to better measure trends in diversity. As the Board continues to build and sustain a high-performing and diverse workforce, fostering diversity and inclusion and increasing the representation of minorities among those in line for official staff roles should continue to be areas of focus.

  Implementing a New Performance Management System

In 2015, the Board implemented a new performance management system organization-wide following a 2014 pilot program. This new program is intended to strengthen the alignment of expectations for staff members with Board and division strategic goals and responsibilities, provide greater accountability, and support employee development. The new program seeks to be a more forward-looking, development-centric process in which staff members and managers work together for the greater effectiveness of the Board. The Board will be challenged to ensure (1) that the new process is effective, fair, and not overly burdensome and (2) that a consistent approach is followed across the agency. Additionally, the Board’s plan to automate the forms for the new performance management system will present further challenges to this new process.

Agency Actions 

The Board’s first engagement survey was administered in September 2014. The survey was intended to help the Board foster an environment that engages employees in the Board’s mission and encourages them to contribute to a positive work environment. Some issues identified by the survey are being addressed at the Board level. In addition, Board divisions have created working groups to address the results of the survey; these efforts are ongoing.

The Board’s Organizational Development and Learning section is administering a two phase, formal agency-wide succession planning program, which began in late 2012, to help identify a diverse pool of candidates for senior management positions throughout the Board. The Board’s program will identify development opportunities for employees to prepare them for potential advancement. Both phases are scheduled for full implementation by 2017.

Additionally, the Board continues to develop its Leading and Managing People program, which draws on the expertise of leaders from around the Board to help all Board managers and supervisors develop their skills and strengthen their capacity to identify, coach, and support the future leaders of the organization.

The Board stated that it is finalizing a diversity and inclusion strategic plan and rolling out a new diversity and inclusion scorecard to all Board divisions. Beginning in 2016, the annual scorecards will be assessed by the Office of Minority and Women Inclusion and compiled into one report that will be reviewed by the Board’s Chair. The Board also plans to formalize the standards that the Office of Diversity and Inclusion relies on for equal employment opportunity and the racial, ethnic, and gender diversity of the workforce and the senior management of the agency, which will be included in the diversity and inclusion strategic plan.

The Board is updating its performance management policy to better reflect the new performance management system. In addition, 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.


Futility of “Colorblindness”: Nonviolent Spring Valley High School (South Carolina) Discipline Issue “Resolved” with Violence by a Police Officer

[Update 10-28-2015: The student thrown down is a grieving person; she has an estranged mother,and now she is in foster care. This is simply an extremely sad case, with multiple levels of failure.]

The placement of police officers in schools to use the criminal justice system to resolve issues of nonviolent school discipline issues must end. It affects students by prematurely blocking them from the society with criminal records. It allows police tactics to replace the educational purpose of the schools, both in teaching academic subjects as well as helping students learn to self-manage their emotions and actions. Police officers are trained to handle threats and serious, violent crimes, not nonviolent student disciplinary issues, like using cellphones in class, backtalk, or other displays of minor, but irritating, teenage disobedience.

[Author’s note: For further background information about police officers (also referred as school resource officers) in educational institutions, see Raymond, Barbara, “Assigning Police Officers to Schools.”]

In Spring Valley High School in South Carolina, an alleged minor rule infraction was escalated to a criminal justice issue by the teacher and ultimately the high school’s administrator, subjecting the student to violence for an issue that well could have waited until the class ended to discuss with cool heads.

Instead of that, students were taught an alternative lesson: absolute compliance with authority is expected or expect the violent powers of the state to be used against you. In addition, your physical safety matters not one iota to us if you block us in any way. To the black students–you are not safe at all; we do not respect you as a human being but rather as a thing to be dominated and controlled.

Virginia Slave Law, 1705
Virginia Slave Law, 1705

In the book, “Between the World and Me,” by Ta-Nehisi Coates, Coates wrote the following:

In America, it is traditional to destroy the black body–it is heritage.

Reverend Thomas Merton (referenced by Pope Francis during a speech before Congress in September 2015) in discussing the civil rights movement and its meaning in a letter to a white liberal wrote the following:

“The Negro children of Birmingham, who walked calmly up to the police dogs that lunged at them with a fury capable of tearing their small bodies to pieces, were not only confronting the truth in an exalted moment of faith, a providential kairos. They were also in their simplicity, bearing heroic Christian witness to the truth, for they were exposing their bodies to death in order to show God and man that they believed in the just rights of their people, knew that those rights had been unjustly, shamefully and systematically violated, and realized that the violation called for expiation and redemptive protest, because it was an offense against God and His Truth.” (Merton (1964), “Seeds of Destruction,” page 44.)

So, the whole class was traumatized; all learning stopped as a result of the violence used against a student who apparently used a cellphone in class to the chagrin of the teacher.


Federal Reserve Board: H.2 Release for Week Ending October 17, 2015

The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday. The release for the week ending October 17, 2015, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Bank Holding Companies PacWest Bancorp, Los Angeles, California — commenter’s request for reconsideration of the Board’s approval of the application by PacWest Bancorp to merge with Square 1 Financial, Inc., Durham, North Carolina, and thereby indirectly acquire Square 1 Bank.
-Denied, October 14, 2015
Reserve Bank Operations Federal Reserve Bank of New York — authorization to provide accounts and services to the National Securities Clearing Corporation and Fixed Income Clearing Corporation, in accordance with the Dodd-Frank Act and Regulation HH.
-Approved, October 14, 2015
Savings and Loan Holding Companies Synchrony Financial, Stamford, Connecticut — to operate as a publicly owned savings and loan holding company and retain control of its subsidiary federal savings association, Synchrony Bank, Draper, Utah, and to continue to engage in certain business activities through its control of non-savings association subsidiaries.
-Approved, October 14, 2015
Enforcement Crédit Agricole S.A., Paris, France, and Crédit Agricole Corporate and Investment Bank — issuance of a consent cease and desist order and assessment of a civil money penalty.
-Approved, October 16, 2015

Regions Bank, Birmingham, Alabama — issuance of a consent order of prohibition and assessment of a civil money penalty against Thomas A. Neely Jr., a former executive vice president and institution-affiliated party.
-Approved, October 14, 2015

Department of Defense: General Schedule May Have a Long Tenure, But Still Effective; Dick Grote-Style Pay-for Performance is a True Failure

Artist: michael sloan
Artist: michael sloan

It seems that the idea of pay for performance-no matter the numerous failures (documented, in part, in this blog)-has yet again reared its failed head at the U.S. Department of Defense (DoD). Pay for performance is to replace an “aged” General Schedule system, the DoD proponents posited. A system’s age is irrelevant; whether it functions in a way that those it applies to can accept is more important.

The DoD proponents propose undemocratic, unfair, and dictatorial pay-for-performance policies that betray the democratic republic foundations of the country. In addition, the DoD proponents should never forget that the employees are also United States citizens and permanent residents and taxpayers and that agencies have authority through the consent of U.S. citizens and residents.

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

The DoD, and their bosses in the Congress and in the Executive Branch, should tread carefully in any move to alter the General Schedule unless the replacement can be well accepted as the General Schedule. Pay-for-performance systems are at their foundation unfair, subject to management abuse and manipulation without equivalent accountability for those managers, and render the employee powerless and subject to management ambush and destruction of employee livelihoods.

Dick Grote’s Forced Ranking Amazon.com [New York Times article] Department of Defense [Washington Post column by Joe Davidson]
Anytime Feedback Tool-allows co-workers to send feedback to one’s manager without the targeted employee’s knowledge. Jeff Bezos, chief executive officer of Amazon, is an investor in Workday, which seeks to bring this “gem” to other organizations which purchase it. “Force of the Future launches a strong attack on the General Schedule, saying it “is wholly inflexible and ill-suited to attract critical skills or motivate high performers.” In the name of fairness, “the promotion system primarily rewards time in grade,” the document adds, “instead of identifying, rewarding, and motivating high performers, the GS system rewards mediocrity.” ” [Note: Dick Grote uses similar language. http://www.groteconsulting.com/the-rationale-for-forced-ranking/]
Manager sets tough objectives and expects the employee to figure out how to satisfy the manager’s expectations “Molly Jay, an early member of the Kindle team, said she received high ratings for years. But when she began traveling to care for her father, who was suffering from cancer, and cut back working on nights and weekends, her status changed. She was blocked from transferring to a less pressure-filled job, she said, and her boss told her she was “a problem.” As her father was dying, she took unpaid leave to care for him and never returned to Amazon.

“When you’re not able to give your absolute all, 80 hours a week, they see it as a major weakness,” she said.”

“Officials want managers to have more authority so they can “divest low performers” —  in other words, fire them. “The current performance management system does not effectively hold low performers accountable, offering few negative consequences when an employee falls short of expectations, and gives supervisors unwieldy options for intervening,” the DOD proposal says.”
Callibration meeting Each year, the internal competition culminates at an extended semi-open tournament called an Organization Level Review, where managers debate subordinates’ rankings, assigning and reassigning names to boxes in a matrix projected on the wall. In recent years, other large companies, including Microsoft, General Electric and Accenture Consulting, have dropped the practice — often called stack ranking, or “rank and yank” — in part because it can force managers to get rid of valuable talent just to meet quotas.

Preparing is like getting ready for a court case, many supervisors say: To avoid losing good members of their teams — which could spell doom — they must come armed with paper trails to defend the wrongfully accused and incriminate members of competing groups. Or they adopt a strategy of choosing sacrificial lambs to protect more essential players. “You learn how to diplomatically throw people under the bus,” said a marketer who spent six years in the retail division. “It’s a horrible feeling.”

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. Performance Improvement Plan--“confidential” and among other expectations of the PIP is that the responsibility for bringing performance to the acceptable level rests with the targeted employee. “It would allow top officials to suspend an employee without pay. They would have 30 days to prepare a written statement of specific charges, but the employee would have just seven days to respond. That time discrepancy is one example of the plan’s power shift.”

Federal Reserve Board: H.2 Release for Week Ending October 10, 2015

The Federal Reserve Board (Board) publishes a weekly digest of its activities on its website. The digest is called the H.2 Release and is published every Thursday. The release for the week ending October 10, 2015, is below.

H.2 Release–Actions of the Board, Its Staff, and the Federal Reserve Banks; Applications and Reports Received

Category Action Taken
Bank Holding Companies Royal Bank of Canada, Montreal, Canada, and RBC USA Holdco Corporation, New York, New York — to acquire City National Corporation, Los Angeles, California, and thereby indirectly acquire City National Bank; election by RBC USA Holdco Corporation to become a financial holding company; and one-year extension of time for RBC USA Holdco Corporation to comply with the Board’s capital plan and stress-testing rules.
-Approved, October 5, 2015
Forms Forms — initial Board review to extend without revision the Consolidated Holding Company Report of Equity Investments in Nonfinancial Companies (FR Y-12), Annual Report of Merchant Banking Investments Held for an Extended Period (FR Y-12A), Domestic Branch Notification (FR 4001), Suspicious Activity Report (FR 2230), and disclosure requirements of Subpart H of Regulation H (Reg H-7).
-Proposed, October 8, 2015
Personnel Division of Reserve Bank Operations and Payment Systems — appointment of Jennifer Chang as assistant director and Lisa Hoskins as senior adviser.
-Approved, October 5, 2015

[Separately, as covered on this blog, the Board’s legal cases page was updated to reflect that the plaintiffs in Artis v. Greenspan Bernanke Yellen, an employment discrimination case, filed an appeal with the U.S. Circuit Court of Appeals for the District of Columbia. (Board website update as of October 5, 2015.)]

Futility of “Colorblindness”: Georgetown, D.C., Retailers Use of Smartphone Application Devolves to White=Good, All Others=Bad, Paradigm

Virginia Slave Law, 1705
Virginia Slave Law, 1705

From one of my previous posts on “colorblindness,” which applies to the present post–

The majority culture believes in “colorblindness,” but also believes that the majority of the society (whites) are better than everyone else in the society. Open expression of this idea is not socially acceptable, but the institutions of society are empowered to act solely for the benefit or advantage of the majority white population without apology. Questioning of those white hegemonic institutions is met with defensiveness as well as a blaming of the questioner.

In the Washington Post, there is a story about retailers in Georgetown, D.C., using an smartphone application to communicate with other application users and the District of Columbia’s Metropolitan Police Department about persons that have raised their suspicions. Most of those persons rendered as suspicious are Black.

I have several concerns about this application (and its users):

  • Persons are having their pictures taken and published in electronic form and accused of breaking laws with only innuendo, suspicion, and lack of hard facts.
  • Police officers are participants in the application, potentially and likely coloring their views of all nonwhite people, their minds filled with posts of suspicious nonwhite people. (Likewise, this effect can affect the rest of the users of the application.)
  • The application nor its users deal with persistent retail shrink (or inside-job shoplifting). Nothing to date has been able to address it. Focusing on suspicion of a particular race of people (which can be based on biased thoughts) is a harmful and destructive distraction from the real issues of shoplifting and its close relative retail shrink.
  • It appears that Black people are essentially not welcome in a particular portion of the United States (Georgetown, D.C.) based on their race, with participants in interstate commerce. [A tidbit from Georgetown’s history from Wikipedia–“Slave trading in Georgetown began in 1760, when John Beattie established his business on O Street and conducted business at other locations around Wisconsin Avenue. Slave trading continued until the mid-19th century, when it was banned.[25]” See also a column in the Washington PostGeorgetown’s Hidden History by Andrew Stephen.]

Shoplifting is a complex, persistent issue among all human beings; mere reliance on racial bias is unacceptable.


Federal Reserve Board: Appeal Filed in Long-Lived Employment Discrimination Case, Artis v. (Greenspan) (Bernanke) Yellen

Following a dismissal with prejudice in the United States District Court for the District of Columbia, the plaintiffs in Artis v. Greenspan Bernanke Yellen filed an appeal with the U.S. Court of Appeals for the District of Columbia Circuit in September 2015 (docket number 15-5260, available at http://www.pacer.gov).