2012 ILG National Conference Waikoloa, Hawaii August 28, 2012 2012 ILG National Conference Waikoloa,...

2012 ILG National Conference

Waikoloa, Hawaii

August 28, 2012

2012 ILG National Conference

Waikoloa, Hawaii

August 28, 2012

Equal Employment Advisory Council1501 M Street, N.W. | Suite 400Washington, D.C. 20005

Presented by:Jeff Norris

Chris Gokturk

Preparing for an OFCCP Corporate Management Compliance

Evaluation

Preparing for an OFCCP Corporate Management Compliance

Evaluation

© 2012 Equal Employment Advisory Council 2012 ILG National Conference | August 28, 2012 |

The Equal Employment Advisory Council (EEAC) is a nonprofit association of private sector employers dedicated exclusively to the elimination of workplace discrimination through advancement of practical and effective equal employment opportunity, affirmative action, and diversity programs. The materials developed for this program and the discussions based upon them are designed to provide accurate and authoritative information regarding the subject matter covered. They are provided with the understanding that EEAC is not engaged in rendering legal, accounting, or other professional services. For legal advice or other expert assistance, the services of a competent attorney or other professional should be sought.


AgendaAgenda

• History of OFCCP corporate headquarters compliance evaluations

− Distinction between “routine” and “corporate management” headquarters audits

• OFCCP scheduling procedures for corporate headquarters compliance evaluations

− Inclusion of headquarters establishments on recent CSAL letters

• Preparing the desk audit submission

− Preparing your management and staff

− Responding to the Scheduling Letter

− Defining the scope of the audit

• History of OFCCP corporate headquarters compliance evaluations

− Distinction between “routine” and “corporate management” headquarters audits

• OFCCP scheduling procedures for corporate headquarters compliance evaluations

− Inclusion of headquarters establishments on recent CSAL letters

• Preparing the desk audit submission

− Preparing your management and staff

− Responding to the Scheduling Letter

− Defining the scope of the audit


AgendaAgenda

• Preparing for the onsite

− Key focus areas

− Marshall voluntary efforts beyond technical compliance

− Develop audit “themes”

• Managing the onsite investigation

• Closeout conference

− OFCCP presentation

• Concluding Q & A

• Preparing for the onsite

− Key focus areas

− Marshall voluntary efforts beyond technical compliance

− Develop audit “themes”

• Managing the onsite investigation

• Closeout conference

− OFCCP presentation

• Concluding Q & A


History of OFCCP Corporate Headquarters Compliance

Evaluations

History of OFCCP Corporate Headquarters Compliance

Evaluations


History of OFCCP Corporate Headquarters Compliance Evaluations


• Pre 1990 all headquarters audits “routine”– No special focus on management positions

• “Glass Ceiling” initiative developed in 1990– Addressed organizational and attitudinal

barriers to placement of women and minorities in mid- and senior-level management positions

– Focus on selections, development pipelines and compensation

– Initially, big deals for OFCCP and contractors

• Pre 1990 all headquarters audits “routine”– No special focus on management positions

• “Glass Ceiling” initiative developed in 1990– Addressed organizational and attitudinal

barriers to placement of women and minorities in mid- and senior-level management positions

– Focus on selections, development pipelines and compensation

– Initially, big deals for OFCCP and contractors


CMCE Figures (FY 1991 – 2011)CMCE Figures (FY 1991 – 2011)

•Glass ceiling audits (aka CMR or CMCE audits) now conducted routinely:

6 9

44 47

37

2736

40 4236

42

52 50 50

3135 34 32

26

138

0

10

20

30

40

50

60



History of OFCCP Corporate Headquarters Compliance Evaluations • Focus areas reflect Administration priorities

– Bush 1: individuals hitting the “glass ceiling”

– Clinton: individuals with their “feet stuck in the mud”

– Bush 2: victims of systemic discrimination

– Obama: renewed emphasis on affirmative action outreach for veterans and individuals with disabilities

• Differences between routine headquarters and CMCE audits today– Technical compliance issues (AAPs, transactions analyses,

compensation) identical

– CMCEs address selection, development and compensation practices for mid- and senior-level management positions

– CMCEs involve participation of senior OFCCP and contractor management

• Consider a CMCE to be a routine audit with a corporate management overlay

• Focus areas reflect Administration priorities– Bush 1: individuals hitting the “glass ceiling”

– Clinton: individuals with their “feet stuck in the mud”

– Bush 2: victims of systemic discrimination

– Obama: renewed emphasis on affirmative action outreach for veterans and individuals with disabilities

• Differences between routine headquarters and CMCE audits today– Technical compliance issues (AAPs, transactions analyses,

compensation) identical






History of OFCCP Corporate Headquarters Compliance Evaluations • Differences between routine headquarters and

CMCE audits today– Technical compliance issues (AAPs, transactions

analyses, compensation) identical




• Differences between routine headquarters and CMCE audits today– Technical compliance issues (AAPs, transactions

analyses, compensation) identical





OFCCP Scheduling Procedures for Corporate Headquarters

Compliance Evaluations

OFCCP Scheduling Procedures for Corporate Headquarters

Compliance Evaluations


OFCCP Scheduling Procedures for Corporate Headquarters Audits


• Set out in 2001 in Directive 243

• Separate procedures for routine audits and CMCEs– Both start with FCSS evaluation of EEO-1, census, and other

appropriate data

– Establishments “flagged” for possible audit by FCSS placed on one of two lists:

• Standard supply and service contractor scheduling list, or

• CMCE scheduling list

• CMCE scheduling list limited to headquarters establishments of corporations having:– 4,000 employees or more, and

– More than one reporting contractor establishment

• Headquarters establishments not meeting these criteria placed on standard scheduling list

• Set out in 2001 in Directive 243

• Separate procedures for routine audits and CMCEs– Both start with FCSS evaluation of EEO-1, census, and other

appropriate data

– Establishments “flagged” for possible audit by FCSS placed on one of two lists:

• Standard supply and service contractor scheduling list, or

• CMCE scheduling list

• CMCE scheduling list limited to headquarters establishments of corporations having:– 4,000 employees or more, and

– More than one reporting contractor establishment

• Headquarters establishments not meeting these criteria placed on standard scheduling list




• District and area offices instructed to schedule audits sequentially off of both lists, but…

– For CMCEs priority given to headquarters establishments not previously audited

• Corporate scheduling announcement letters (CSALs) now provide pre-notification to companies for both routine compliance evaluations and CMCEs of headquarters establishments

• Recommendation: if you receive a scheduling letter for your headquarters contact OFCCP to determine whether it is a routine audit or a CMCE

• District and area offices instructed to schedule audits sequentially off of both lists, but…

– For CMCEs priority given to headquarters establishments not previously audited

• Corporate scheduling announcement letters (CSALs) now provide pre-notification to companies for both routine compliance evaluations and CMCEs of headquarters establishments

• Recommendation: if you receive a scheduling letter for your headquarters contact OFCCP to determine whether it is a routine audit or a CMCE


Preparing the Desk Audit Submission

Preparing the Desk Audit Submission


Preparing the Desk Audit SubmissionPreparing the Desk Audit Submission

• Confirm with OFCCP whether it is a routine audit or CMCE– Scheduling Letter might (or might not)

provide a clue

• Notify management and staff– Management likely to be personally

involved (avoid surprises!)

– Several staff functions potentially involved (compliance; legal; recruiting; executive staffing; management development; compensation)

– Essential that all work together as a team

– You have their attention – capitalize on it!

• Confirm with OFCCP whether it is a routine audit or CMCE– Scheduling Letter might (or might not)

provide a clue

• Notify management and staff– Management likely to be personally

involved (avoid surprises!)

– Several staff functions potentially involved (compliance; legal; recruiting; executive staffing; management development; compensation)

– Essential that all work together as a team

– You have their attention – capitalize on it!



• Conduct early overview briefings (adjust detail to audience)– Federal civil rights laws

• EEOC and OFCCP enforced

– Requirements of federal contractors• Nondiscrimination vs. affirmative action vs. diversity

• Standard of compliance (good faith efforts)

– OFCCP compliance evaluation process• Desk audit, onsite, off-site analysis

– Likely areas of OFCCP focus

• Entire workforce under audit; not just management positions

– Possible outcomes and remedies• Monetary, programmatic, contract remedies

• Conduct early overview briefings (adjust detail to audience)– Federal civil rights laws

• EEOC and OFCCP enforced

– Requirements of federal contractors• Nondiscrimination vs. affirmative action vs. diversity

• Standard of compliance (good faith efforts)

– OFCCP compliance evaluation process• Desk audit, onsite, off-site analysis

– Likely areas of OFCCP focus

• Entire workforce under audit; not just management positions

– Possible outcomes and remedies• Monetary, programmatic, contract remedies



• Assign roles and responsibilities– Team leader; information collection and co-

ordination; role of counsel; etc.

– Establish legal privileges

– Establish team communication protocols

– Establish timelines for desk audit package preparation

• Emphasize need for confidentiality– Exchange information on a “need to know”

basis

– Do not publicize or overdramatize audit

– If asked, indicate compliance audits are routine for federal contractors; no big deal

• Assign roles and responsibilities– Team leader; information collection and co-

ordination; role of counsel; etc.

– Establish legal privileges

– Establish team communication protocols

– Establish timelines for desk audit package preparation

• Emphasize need for confidentiality– Exchange information on a “need to know”

basis

– Do not publicize or overdramatize audit

– If asked, indicate compliance audits are routine for federal contractors; no big deal



• Develop strategy for defining the scope of the audit

– OFCCP views entire corporation as potentially in play

• Employees located elsewhere whose careers are managed from headquarters

• Centrally-administered policies (e.g., compensation and benefits; employment tests; recordkeeping; etc.)

– Encourage limiting scope of audit to individuals encompassed by the corporate establishment AAP

• Corporate AAP is the castle

– But headquarters AAP likely to include some (perhaps many) corporate initiative positions from the field

• Make OFCCP explain need for extending beyond castle

• Develop strategy for defining the scope of the audit

– OFCCP views entire corporation as potentially in play

• Employees located elsewhere whose careers are managed from headquarters

• Centrally-administered policies (e.g., compensation and benefits; employment tests; recordkeeping; etc.)

– Encourage limiting scope of audit to individuals encompassed by the corporate establishment AAP

• Corporate AAP is the castle

– But headquarters AAP likely to include some (perhaps many) corporate initiative positions from the field

• Make OFCCP explain need for extending beyond castle



• Prepare the desk audit submission package– Identical (structurally) for routine

headquarters evaluations and CMCEs

– Strive for a submission that shows OFCCP:• You know what you are required to do as a

federal contractor

• Your corporate commitments exceed minimum legal requirements

• You look forward to explaining your pro-active employee development programs to OFCCP

– A timely and complete submission package would be a good way to start

• Prepare the desk audit submission package– Identical (structurally) for routine

headquarters evaluations and CMCEs

– Strive for a submission that shows OFCCP:• You know what you are required to do as a

federal contractor

• Your corporate commitments exceed minimum legal requirements

• You look forward to explaining your pro-active employee development programs to OFCCP

– A timely and complete submission package would be a good way to start



• Affirmative action plans– Technically compliant

– Current data

– Narratives that address issues revealed in the data

– Do not underestimate the value of a well-written, neat-looking AAP

• Transactions data– Check and double check data for accuracy

– Conduct both traditional (minority/non-minority) and minority subgroup impact ratio analyses

– Consider pro-actively addressing in submission potentially problematic statistical results

• Affirmative action plans– Technically compliant

– Current data

– Narratives that address issues revealed in the data

– Do not underestimate the value of a well-written, neat-looking AAP

• Transactions data– Check and double check data for accuracy

– Conduct both traditional (minority/non-minority) and minority subgroup impact ratio analyses

– Consider pro-actively addressing in submission potentially problematic statistical results



• Compensation data – Check and double check data for accuracy

– Conduct thorough pre-submission analyses• Base pay

• Variable pay

• Perquisites and other “add-ons”

– Attend this afternoon’s session on “Constructing and Conducting a Compensation Analysis”

• Compensation data – Check and double check data for accuracy

– Conduct thorough pre-submission analyses• Base pay

• Variable pay

• Perquisites and other “add-ons”

– Attend this afternoon’s session on “Constructing and Conducting a Compensation Analysis”


Preparing for the OnsitePreparing for the Onsite



• Post-submission, pre-onsite is perhaps the most important time in a CMCE (and can be important in a routine audit as well)

• Try to anticipate where OFCCP might want to investigate further based upon the desk audit submission– Complete inquiry into any problematic selections revealed in

transactions data

– Finalize a preferred methodology for evaluating compensation

• Cohort analyses are particularly important for management positions

– Consider making appropriate pay equity adjustments (regardless of the race, ethnicity or gender of the recipients)

– Address areas where good faith efforts may be marginal (particularly with respect to individuals with disabilities and protected veterans)

• Post-submission, pre-onsite is perhaps the most important time in a CMCE (and can be important in a routine audit as well)

• Try to anticipate where OFCCP might want to investigate further based upon the desk audit submission– Complete inquiry into any problematic selections revealed in

transactions data

– Finalize a preferred methodology for evaluating compensation

• Cohort analyses are particularly important for management positions

– Consider making appropriate pay equity adjustments (regardless of the race, ethnicity or gender of the recipients)

– Address areas where good faith efforts may be marginal (particularly with respect to individuals with disabilities and protected veterans)



• Estimate where glass “ceilings” or “walls” may exist in your organization– Drop off in women/minority representation by level

(ceilings) or by division, function or business unit (walls)

– These may be areas where OFCCP auditors focus their attention

• Develop an understanding of how individuals are selected and developed for mid- and senior-level management positions– Recruitment and hiring practices

• External selections and internal promotions

– Performance appraisals and performance management systems

• Review processes, documentation, indicators of adverse impact in ratings

• Estimate where glass “ceilings” or “walls” may exist in your organization– Drop off in women/minority representation by level

(ceilings) or by division, function or business unit (walls)

– These may be areas where OFCCP auditors focus their attention

• Develop an understanding of how individuals are selected and developed for mid- and senior-level management positions– Recruitment and hiring practices

• External selections and internal promotions

– Performance appraisals and performance management systems

• Review processes, documentation, indicators of adverse impact in ratings



• Develop an understanding of how individuals are selected and developed for mid- and senior-level management positions (cont’d)– Formal human resource development systems

• Succession planning; mentoring; management development programs; etc.

– Informal human resource development practices

• Special assignments; training; task force participation

– Turnover and retention• Are women and minorities leaving at unexpected

rates? Why?

• Evaluate female and minority participation rates in these programs

• Develop an understanding of how individuals are selected and developed for mid- and senior-level management positions (cont’d)– Formal human resource development systems

• Succession planning; mentoring; management development programs; etc.

– Informal human resource development practices

• Special assignments; training; task force participation

– Turnover and retention• Are women and minorities leaving at unexpected

rates? Why?

• Evaluate female and minority participation rates in these programs



• Marshall voluntary efforts beyond technical compliance (“good stories”)– Want to demonstrate that mere compliance with regulations

not sufficient; additional voluntary efforts necessary to accomplish company objectives

– Examples include:• Development forums (with open participation)

• Employee engagement surveys

• College relations programs– Secondary and college level partnerships

– Scholarships and grants (to individuals and organizations)

– School career initiatives

– Best if related to developing needed skills of current or future workforce (not simply “nice to do” initiatives unrelated to employment)

– Create “halo” effect

• Marshall voluntary efforts beyond technical compliance (“good stories”)– Want to demonstrate that mere compliance with regulations

not sufficient; additional voluntary efforts necessary to accomplish company objectives

– Examples include:• Development forums (with open participation)

• Employee engagement surveys

• College relations programs– Secondary and college level partnerships

– Scholarships and grants (to individuals and organizations)

– School career initiatives

– Best if related to developing needed skills of current or future workforce (not simply “nice to do” initiatives unrelated to employment)

– Create “halo” effect



• Based on investigation develop “themes” for the audit– Examples:

• CEO has demonstrated a firm personal commitment to AA/EEO

• Company has developed and continues to improve HR programs that will ensure employee and company interests are aligned:

– Recruitment, outreach and selection…

– Employee development…

• Company has established a network of partnerships with veteran and disability referral organizations

• Based on investigation develop “themes” for the audit– Examples:

• CEO has demonstrated a firm personal commitment to AA/EEO

• Company has developed and continues to improve HR programs that will ensure employee and company interests are aligned:

– Recruitment, outreach and selection…

– Employee development…

• Company has established a network of partnerships with veteran and disability referral organizations



• Themes should highlight strengths and indicate problem areas being addressed

• Themes serve as tool for ensuring that all presentations, interviews, and interactions with OFCCP convey a consistent message

• Themes should highlight strengths and indicate problem areas being addressed

• Themes serve as tool for ensuring that all presentations, interviews, and interactions with OFCCP convey a consistent message


Managing the Onsite Investigation

Managing the Onsite Investigation


Managing the Onsite InvestigationManaging the Onsite Investigation

• Brief senior management– Status of audit

• Onsite schedule and logistics

• OFCCP concerns and proposed responses

• Company concerns and proposed responses

• Company plan for managing onsite– Opening and closing conferences

– Individuals to be interviewed

– Witness preparation (management and non-management)

– Role to be played by senior management

– Plans for preparing managers assigned a role in the audit

• Brief senior management– Status of audit

• Onsite schedule and logistics

• OFCCP concerns and proposed responses

• Company concerns and proposed responses

• Company plan for managing onsite– Opening and closing conferences

– Individuals to be interviewed

– Witness preparation (management and non-management)

– Role to be played by senior management

– Plans for preparing managers assigned a role in the audit



• Preparing for the Opening Conference– Not consistently scheduled any more

– Regional Directors now more likely to show up at closing conference than opening conference

– Consider asking for one:• An opportunity to “put best foot forward,”

including CEO personal commitment

• Can proactively address issues of likely concern to OFCCP

• Can provide a helpful framework for remainder of onsite

• Location of opening conference– Comfortable, but not ostentatious

– A relaxed atmosphere advantageous

• Preparing for the Opening Conference– Not consistently scheduled any more

– Regional Directors now more likely to show up at closing conference than opening conference

– Consider asking for one:• An opportunity to “put best foot forward,”

including CEO personal commitment

• Can proactively address issues of likely concern to OFCCP

• Can provide a helpful framework for remainder of onsite

• Location of opening conference– Comfortable, but not ostentatious

– A relaxed atmosphere advantageous



• Attendees at opening conference – CEO participation expected by OFCCP

– Other senior management depending upon issues to be discussed

– Persons who will be interfacing with OFCCP

– Demographics of company representatives matters

– All who attend should be conversant with basic OFCCP requirements and terminology

• Opening conference agenda– Welcome by CEO

– Opening statement by OFCCP

– Company presentation on such items as:• CEO vision for company and importance of AA/EEO to accomplishment of that vision

(avoid “diversity” trap)

• Company programs that address (or will address when fully implemented) areas of weakness (e.g., low female or minority representation at senior levels)

• Good stories

– Agreement on onsite logistics

• Attendees at opening conference – CEO participation expected by OFCCP

– Other senior management depending upon issues to be discussed

– Persons who will be interfacing with OFCCP

– Demographics of company representatives matters

– All who attend should be conversant with basic OFCCP requirements and terminology

• Opening conference agenda– Welcome by CEO

– Opening statement by OFCCP

– Company presentation on such items as:• CEO vision for company and importance of AA/EEO to accomplishment of that vision

(avoid “diversity” trap)

• Company programs that address (or will address when fully implemented) areas of weakness (e.g., low female or minority representation at senior levels)

• Good stories

– Agreement on onsite logistics



• Post opening conference management of onsite no different for routine headquarters and CMCE audits than for regular establishment audits

– Establishing with compliance officer standards for access to employees and secure areas of facility

– Conducting tours

– Responding to requests for additional information

– Scheduling interviews

– Preparing management and non-management witnesses for OFCCP interviews

• Post opening conference management of onsite no different for routine headquarters and CMCE audits than for regular establishment audits

– Establishing with compliance officer standards for access to employees and secure areas of facility

– Conducting tours

– Responding to requests for additional information

– Scheduling interviews

– Preparing management and non-management witnesses for OFCCP interviews


Closeout ConferenceCloseout Conference


Closeout ConferenceCloseout Conference

• May be scheduled at conclusion of onsite or following completion of offsite analysis

• Opportunity for OFCCP Regional Director to present agency findings

• CEO expected to attend

• Regional Director may offer suggestions for how the company can enhance commitment to AA/EEO

• A time more for listening than for debating (particularly if the company has been found in compliance)

• May be scheduled at conclusion of onsite or following completion of offsite analysis

• Opportunity for OFCCP Regional Director to present agency findings

• CEO expected to attend

• Regional Director may offer suggestions for how the company can enhance commitment to AA/EEO

• A time more for listening than for debating (particularly if the company has been found in compliance)


Wrap-Up and Questions

[email protected]

[email protected]

Wrap-Up and Questions

[email protected]

[email protected]

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