SEC Scores Poor Marks in Federal Human Capital Survey

10/30/2009

Earlier this year, the U.S. Office of Personnel Management (OPM) released the results of its 2008 Federal Human Capital Survey (FHCS). The FHCS results for the Securities and Exchange Commission (SEC) reflect an alarmingly high level of negative employee perceptions about the SEC’s senior leaders, the policies and procedures they implement, the quality and effectiveness of SEC managers, the fairness and transparency of promotions and performance awards and the extent to which front-line SEC employees have an impact on their own work-life.

OPM administers the FHCS every two years. According to OPM, the FHCS is a tool that measures employee’s perceptions of whether, and to what extent, conditions characterizing successful organizations are present in the agencies surveyed. The FHCS surveyed perceptions in six categories identified by OPM as important to measuring an organization’s success: (1) personal work experiences, (2) recruitment, development and retention, (3) performance culture, (4) leadership, (5) learning and (6) job satisfaction.

The report is extensive and data from it may be found on the Union’s website on the homepage. The FHCS surveyed federal employees’ perceptions of their organization’s senior leaders, their own supervisors and their own job satisfaction. The survey asked those who responded to indicate their level of agreement or disagreement in response to 74 statements. The responses were grouped into four categories for the purposes of survey reporting: “Positive,” “Neutral,” “Negative” and “Do Not Know.” The results report the percentage of responses falling into each category.

The SEC’s results reflect highly positive perceptions in areas where the Union and the agency have worked together to make improvements, such as telework, alternative work schedules and creating a work-life balance. However, the uniformly high negative perceptions reflected in other areas indicates that, by any measure, many of the conditions that OPM believes characterize successful organizations are not present at the SEC.

The SEC’s Performance Culture

A key section of the FHCS sought employee perceptions relating to whether the SEC had a performance oriented culture. Survey results in this area are disturbing. The results depict a culture that fails to encourage innovation or reward it when front-line staff successfully thinks outside the box. Indeed, only one third of the respondents believe that management rewarded creativity and innovation.

Furthermore, only a minority of respondents believe that management rewards good performance. For example, in connection with promotions and performance awards, about one third of respondents believe that promotions are based on merit. In fact, across the Agency, a startlingly high one third of respondents believe that when management makes promotions, those decisions are not based upon merit. The negative responses to this survey question totaled 57.4% in one regional office and 49.3% in another. In four other regional offices the negative responses exceeded 40%. The positive responses to this survey question exceeded the negative responses only slightly at Headquarters and in only two regional offices.

Concerns about cronyism are further reflected in perceptions about how management allocates performance awards. Only about one third of respondents believe that when management distributes performance awards they are based on merit. In fact, a greater percentage (35.2% compared to 34.9%) believe that performance awards are not based on merit. The percentage of positive responses to this survey question exceeded the negative responses slightly at Headquarters and in only three regional offices.

The survey also reveals a failure on the part of supervisors to clearly define expectations. Only slightly more than half of the respondents report understanding after their most recent performance review what they had to do to improve their performance. Similarly, only about half of the respondents believe that their supervisors provide them with constructive suggestions to improve their job performance. In fact, only about half of the respondents believe that discussions with their supervisors about their performance were even worthwhile at all.

The survey also shows that SEC staff feel that they have a dismal lack of personal input into their own work lives. For example, only about one third of respondents agree that they have a feeling of personal empowerment with respect to their own work processes. And only about half of respondents report being satisfied with their involvement in the decisions that affect their work.

Although the SEC’s results in this area of the survey were poor across the SEC’s divisions and offices, the results for Enforcement and Corporation Finance were notably lower than the other divisions and offices. The results for the SEC’s regional offices, though also generally poor, also varied. Two regional offices typically received the higher scores in these areas, while four other regional offices tended to receive the lowest scores.

Leadership at the SEC

A second key category in the FHCS involves “leadership.” These results reflect a massive gap in the confidence that employees have in SEC leaders from what one would expect to see in a successful organization. This confidence gap is unhealthy and it raises serious questions as to whether it is a result of poor training and organization or whether there is something more problematic at work within the SEC’s culture.

Indeed, the SEC failed to break the 50% positive response rate in connection with a number of key “leadership” survey areas. For example, less than 40% of respondents believe that SEC leaders generate high levels of motivation. Only about 40% of respondents report being satisfied with the policies and procedures of their senior leaders. And about half of all respondents report something less than a high level of respect for the SEC’s senior leaders.

In what must be one of the most striking pieces of data reflected in the results, less than half of the SEC’s employees believe that they can disclose a suspected violation of any law, rule or regulation to SEC management without fear of reprisal. Five regional offices had a negative response rate to this survey question that exceeded 20%. This is a remarkable perception to be held by the professional staff working in a federal law enforcement agency.

Job Satisfaction

It is worth noting that in certain areas, the FHCS respondents report a comparatively positive perception. For example, respondents generally agree that there exists a collaborative atmosphere among employees. And there is widespread approval of the SEC’s ability to provide a healthy and safe environment.

Furthermore, in areas in which NTEU has been active, the SEC also received positive results. For example, the SEC received high marks on paid leave for illness and family care situations and for the general availability of alternative work schedules. Perceptions relating to the availability of telework varied widely. One regional office enjoyed a 75% positive response rate while another received only 21%.

Focus Group Process

In response to the FHCS, the SEC’s Office of Human Resources (OHR), in consultation with the Union, has launched an effort to gain a deeper understanding of why the perceptions reflected in the FHCS survey results are so negative. In connection with that effort, OHR has convened a series of agency-wide focus groups designed to begin the difficult process of developing ways to address the highly negative perceptions. These focus groups include bargaining unit-only meetings led by an outside consultant retained by OHR to work towards developing a comprehensive response to the survey. The Union supports OHR’s focus groups and has encouraged bargaining unit members to participate in this process.

We are disappointed, however, that Enforcement Division management has flatly refused to participate in this focus group process, instead taking the position that it will delay seeking any feedback from its employees regarding the FHCS results until it has fully implemented its current reorganization plan. This decision is an extremely unfortunate one.

Indeed, the Division of Enforcement is the largest unit in the entire agency. It had a significant role to play in many of the problems that have led to substantial criticism of the agency over the past year. And, although a portion of the FHCS results relate to areas that may be addressed by the Enforcement reorganization, most of the survey results do not.

It cannot be gainsaid that a major part of Enforcement’s reorganization plan involves flattening management within the Division. This change will involve the elimination of approximately 115 branch chief positions, and the addition of about 45 assistant director positions. It was the Union that originally recommended the elimination of the branch chiefs and it strongly supports this move. We also note pointedly, however, that this very large number of new assistant directors will be chosen by many of the same SEC leaders who have created the current environment that is reflected in the FHCS results.

It is not without irony that at the same time that the Enforcement Division is moving towards a “specialization” model in connection with its program, purportedly to make the Division “smarter” and more “successful,” it is simultaneously moving ahead with the selection of a huge new class of Enforcement leaders without the benefit of OHR’s focus groups – the creation of which reflects the judgment of the SEC’s own human capital specialists. The Union believes that rushing to make these new promotions without the benefit of the wisdom that can be gleaned from the focus group process and the efforts to understand why the SEC’s late 2008 FHCS results were so troublesome will be a grave mistake that may haunt the Division well into the future.

Clearly, there are many skilled, well respected leaders at the SEC. But it is just as apparent that the FHCS results pull back the curtain on a management culture that far too frequently fails to inform, motivate, leverage or, frankly, even respect the frontline SEC employees who actually perform the agency’s mission every day.

The SEC has been criticized in recent years for failing to stay abreast of the markets and the enterprises that it regulates in the areas of technology, market expertise and risk assessment. However, the FHCS survey results reflect the SEC’s continuing failure to attend to its own human capital – clearly its most important asset.