Union Provides Further Breakdown of FY 2012 Ratings Distribution Data; Ratings Appear to Show Disparate Impact Based on Age and Race


4/23/13:  Today the Union published further demographic data concerning the ratings the SEC recently distributed to non-management employees at the agency for the FY 2012 rating period, based upon more detailed information provided by the SEC. You can review the Union’s data here.  

As the Union has previously reported, under the SEC’s so-called “evidence based” performance management system, employees may receive a rating of from “1” to “5.” These five categories roughly correspond to the five-level grading systems we have all experienced in the academic arena, with a “5” corresponding to an “A,” a “4” to a “B,” a “3” to a “C,” a “2” to a “D” and a “1” to an “F.”

Overall Scores for Non-Managers Are Being Pushed Lower

The Union’s ratings distribution analysis reveals some interesting trends. Perhaps most striking at first glance is the fact that, unlike in prior years, the ratings this year appear to have been pushed much lower for frontline staff. In fact, more than 50% of the SEC’s frontline employees received a “C” or a “D” rating this year. And this trend was even more pronounced in some individual offices.  For example, over 60% of the employees in the following offices received a “C” or a “D”:  LARO, NYRO, IM; OFM, OSO, OIEA, OIT and OS.

These lower scores appear to have been the result of a conscious effort on the part of senior management to drive bargaining unit scores down this year. Employees received repeated messaging from Chairman Schapiro and OHR assuring them that a “3” was a good rating. OHR also decided to shift the cutoffs for receiving a “3” or a “4” up, from 2.5 to 2.74 and from 3.5 to 3.74, respectively, making it harder to receive a higher rating. And the so-called “calibration committees” in each office appear to have been successful in pushing many managers to lower the ratings that they gave their employees.

This management push to lower the ratings of frontline staff was not, however, reflected in the ratings that the managers gave themselves. As previously reported by the Union, 73% of SEC managers nationwide received a “B” or an “A.” In some offices these numbers were off the charts – 96% of the managers in Boston, for example, received a “B” or an “A,” as did 93% in Atlanta, 91% in Chicago, 90% in OIA, 87% in San Francisco and Trading and Markets, 84% in OEC and OS, 83% in EEO, 82% in OCIE and New York, 88% in Denver, and 79% in Corp Fin. These divergent grading curves for managers and non-managers raise interesting questions, such as how it is, precisely, that the managers could possibly be doing such a great job managing when the people they are managing are apparently doing so poorly.

Data Also Appears to Show a Disparate Impact Based on Race and Age

Another disturbing trend in the data is differences in ratings percentages based upon age and race.

The data on age demonstrates that the older and more experienced that an SEC employee is, the lower his or her score is likely to be.  Approximately 58% of employees under the age of 40 received a “B” or an “A,” while only 40% of those over 40 received a “B” or an “A.” Similarly, approximately 60% of those over 40 received a “C” or a “D,” while roughly 40% of those under 40 received similar ratings.

This disparity is particularly acute in some individual offices. For example, almost 70% of the over-40 employees in Atlanta received a “C,” while 0% of the under-40 employees received a “C.” 100% of Atlanta under-40 employees received a “B” or an “A,” while only 30% of over-40 employees did so. Similarly, almost 80% of the under-40 employees in Boston received a “B,” while only 40% of the over-40 employees received a “B.”

The disparity in ratings based upon age raises a number of interesting questions. Why is it that, according to SEC management, frontline staff seem to get worse at what they do the longer they do it and the more experience they acquire at the agency?  And how is it that the managers who “manage” these supposedly lower performing experienced employees are so highly rated, with the vast majority of them receiving a “B” or an “A”? If a group of employees gets worse and worse the longer it is under a particular manager’s supervision, should not the manager bear some responsibility for this perplexing trend?

Issues are even more pronounced with respect to race. At the SEC, you are more than twice as likely to get a “5” if you are white than if you are African American. You are almost three times more likely to get a “5” if you are white than if you are Hispanic or Latino. Furthermore, over 70% of African Americans received a “C” or a “D,” whereas less than 50% of whites received a “C” or a “D.” These trends are even worse in some individual offices at the SEC, with some offices, for example, showing well over 80% of African Americans receiving a “C” or a “D.”

The SEC has long had disparate impact problems. Indeed, just a few years ago, in a case brought against the SEC by NTEU, an independent federal arbitrator found that the SEC’s old merit pay system had an illegal disparate impact against employees over the age of forty and also against African American employees, in violation of Title VII and the Age Discrimination in Employment Act. The agency was required to pay millions of dollars in damages and make retroactive salary adjustments. It is ironic that the agency’s new “evidence based” performance management system, which was created in part to address precisely this problem, appears to be woefully inadequate to do so.

The ratings this year were generated for the purpose of assessing the SEC’s new performance management system. For that reason, they will not be used for any official purpose, obviating the need for filing grievances. The Union will continue to keep you updated regarding performance management and compensation issues over the coming months.