If not already provided, the CO must request documents on the contractor’s promotion, training, and transfer policies and procedures. With this information, the CO should discuss the procedures with human resources and other appropriate corporate officials. In particular, the CO must clarify how the procedures apply to headquarters positions at, above and below the management level where nonfavored group member participation declines. The CO must also clarify how these procedures apply to movement from subordinate establishments to corporate headquarters and vice versa.
For most corporate management positions, particularly at the higher senior levels, placement through internal movement like promotions and transfers, rather than by new hire, is generally the rule. Therefore, in order to conduct a proper analysis, it is important that the CO fully understand the various elements that can affect internal placement, particularly those unique to a CMCE, such as succession plans. Further, the higher the management level, the less likely it is that the contractor will include the jobs in any formal job announcement system the contractor may have, and the more likely it is that the contractor includes the jobs in some kind of formal or informal succession planning.285 Below are several sample question areas that COs may find helpful.
- How do you make promotion and transfer opportunities known to potential candidates? Is the process the same in all functional areas? Are there differences in the process for positions at the upper management levels?
- Do you make openings at corporate headquarters known to employees in subordinate establishments as well as to employees at headquarters? How? How do employees at subordinate establishments express an interest in being considered for an opening at corporate headquarters?
- Do you make openings at subordinate establishments known to employees at corporate headquarters? Who is responsible for doing so? How is it done? What is the process by which employees at the corporate headquarters express an interest in being considered for openings at subordinate establishments?
- How many employees applied for positions at the corporate headquarters? Identify these employees by race, sex, ethnicity, disability and protected veteran status, and identify how many were hired?
The CO should review promotion and transfer actions for conformity with the corporation’s stated policies and practices. The CO should also interview the contractor’s current, former and new employees regarding their understanding of, and experiences with, the corporation’s promotion and transfer practices at the corporate, regional and subordinate establishment levels.
The CO should examine personnel files of managers at and above the level where nonfavored group member participation declines.
a. Succession and Related Planning
The vast majority of corporations engage in some form of planning for future management and personnel needs. These plans go under many different names, such as “human resource development plans,” “succession plans,” “business plans,” “management reviews,” “replacement tables,” “developmental needs assessment,” “high-potentials,” “fast-track” and “promotion rosters.” The scope and detail of the plans may vary considerably. Areas where there may be the greatest variance include:
- The depth of the plan or how deep into the organizational structure the plan reaches;
- The degree of centralization or the degree of control exercised by corporate headquarters compared to the regional headquarters or subordinate establishments;
- The degree of formality involved with the plan (e.g., the existence of a written plan, the use of regular plan reviews); and
- The degree the plan is affected by standard performance appraisal or other personnel processes.
When succession planning is explicit or more formal, there may be more specificity and several contingent options when implementing the plan. For example, an explicit plan may specify that a specific person is ready to step into the job or position as a permanent replacement for the incumbent, if necessary. It will also have contingencies should that person be unable or unavailable to assume the position. If no one is currently ready to assume the position permanently, most formal plans still provide a way forward by:
- Designating a person who could take over until a permanent replacement is developed; or
- Designating one or more persons who could be a permanent replacement, given additional developmental experiences or training, or both. The plan would also identify needed training and experiences, how long it will take and other appropriate detail.
In addition, to this level of specificity, a corporation may identify:
- A pool of employees (either specific, named individuals or a description of an employee group such as the number of employees currently in feeder jobs) the contractor considers to have a high-potential to develop into middle to senior-level managers; and
- A broader pool of employees the contractor considers promotable (either specific, named individuals or a description of an employee group such as the number of employees currently in feeder jobs).
The identification of employees, whether for a particular job or generally, is usually fluid, i.e., people may move onto or off of lists depending on shifting business needs, changes in personnel or individual job performance.
COs may want to ask specific questions about succession planning to determine if all qualified candidates are considered, and whether employees with potential have access to training and other developmental opportunities. Several sample question areas are below.
- Does the corporation have a succession plan to fill particular management positions should there be one or more vacancies?
- Which management jobs or management levels are covered by a succession plan?
- What does the corporation’s plan cover? Does the succession plan include both short and long-term planning, i.e., for people who are currently ready to assume the position, and for those who may be ready after further developmental experiences and training?
- Are candidates in regional headquarters or other subordinate establishments considered when designating possible successors? If so, how are nonheadquarters and headquarters candidates identified?
- Are there written materials describing the plan and offering guidance on selection and development of candidates? Who developed the plan? Are employees advised of the plan?
- If the succession plan identifies specific individuals as potential successors for certain jobs, does the permanent successor most often come from among those identified? What are some examples?
- When is the plan reviewed and modified? Who is responsible for the review?
- What is the representation by race, sex, ethnicity, disability and protected veteran status among those identified as potential permanent successors?
- How does the representation of members of protected groups who are identified as potential permanent successors for management jobs compare to their representation in the total candidate pool (e.g., in feeder jobs) for those jobs?
- If the proportion of one or more of these groups in the succession plan is well below their proportion in the total candidate pool, what is the reason for this discrepancy?
- What steps do you take to rectify the problem and recruit and/or prepare more group members to be manager successors? Who (by group member status) has graduated from a succession planning system into management?
- What, if any, developmental experiences does the corporation require or prefer (e.g., on-site training, off-site training, rotational assignments, special projects)? Are there any individual development plans?
- Does the corporation have any policies or practices for identifying people below the management level with a high potential for advancement?
- How does the process work? How are the individuals identified? What factors are used? Does a person need to be “sponsored” by a current manager? Why or why not?
- What is the lowest level at which an employee will be considered for succession?
- Are there any written materials describing the process, offering guidance on selecting and developing participants?
- How closely and how often does corporate headquarters monitor the process? Does the monitoring include ensuring that affirmative actions are taken to guarantee EEO in all aspects of succession planning and management development?
- What is the representation by race, sex, ethnicity, disability and protected veteran status among those identified as “high-potential” versus those eligible to be so identified?
- If the proportion of representation by race, sex, ethnicity, disability and protected veteran status is well below their proportion of those eligible, what, if any, analysis was done and what were the findings?
When the contractor has succession planning programs and there is a disparity in the proportions of representation by race, sex, ethnicity, disability and protected veteran status included in the candidate pool, COs must determine the reasons for the disparity. In order to do so, COs must explore several areas and follow-up including:
- If there is EEO monitoring and an explanation is offered for a disparity, COs should verify the explanation in the course of examining data and files concerning internal mobility, and through interviews with selected employees and managers.
- If there is no EEO monitoring or no explanation is offered for a disparity, COs should analyze the disparity based on the information provided concerning the scope of the program and the criteria for inclusion. A few examples may be:
- Where there is multi-establishment participation in the succession planning program, do any establishments have a particularly large gap between the percentage representation by race, sex, ethnicity, disability and protected veteran status in the program, as compared with the percentage of identified group members eligible for inclusion (e.g., in feeder jobs)?
- Were the selection criteria for inclusion in the program uniformly applied?
b. Movement Within Headquarters
- Transfers within Headquarters. As with lateral cross-establishment moves, transfers within headquarters may represent planned rotational assignments. Based on information already gathered, COs should identify those moves within headquarters that appear to meet that definition. Also, if the data permits, COs should identify instances in which people transferring were subsequently promoted. When those transfers or promotions are into the level at, above or below the level where nonfavored group participation declines, COs should incorporate the information into the analysis, and interview the employees and selecting officials involved to confirm the reason(s) for each move and how it was initiated.
- Promotions within Headquarters. When beginning to determine the frequency, types and paths to internal promotions within headquarters, COs must first make several determinations:
- What is the typical grade increment involved (e.g., one grade increase, two)?
- To what extent do promotions tend to remain within broad functional areas (e.g., finance, engineering, personnel)?
- To what extent do promotions cross functional areas (e.g., from engineering into personnel)?
- Are there any patterns that stand out regarding functional or cross-functional promotions (e.g., promotions are functional up to a certain level, then switch to cross-functional, or vice versa)?
When there is considerable cross-functional movement, a refined IRA, or other analysis, may be useful for focusing the investigation. For example, if employees typically progress in one grade increments, promotions by favored and nonfavored group status at each relevant grade may be compared with incumbency by favored and nonfavored group status in the next lower grade.
When movement is predominantly within function, the COs should identify functions where promotions occurred. COs should evaluate whether nonfavored group members were not promoted even though there was good participation of nonfavored group members in the source grade. COs should pay particular attention to any functional areas they identified at the desk audit with the greatest disproportion between the participation of nonfavored group members above and below the grade where their participation declines in the workforce as a whole.
When some functions have concentrations of favored or nonfavored group members and other functions have underrepresentation of favored or nonfavored group members, these employees are likely to stay in these positions. This scenario is most likely when movement is primarily within function. COs should examine a sample of the contractor’s files on nonfavored group members in the concentrated personnel areas to identify any placement problems.
For example, if nonfavored group members are heavily concentrated in staff positions in a “high-tech” firm, the contractor should determine whether any of them have technical backgrounds that would have qualified them for line functions. If so, did they start in staff positions or move into staff positions later? In either case, did the contractor determine why nonfavored group members are heavily concentrated?
- Average Time in Grade or Corporate Service. One way for COs to evaluate whether nonfavored group members are progressing in the managerial ranks is to look at the average time they spend in their current pay grade in comparison to members of the favored group in the same grade. COs can also extend this comparison to corporate service or tenure. COs should refine the focus of their inquiry if nonfavored group members spend considerably more time in the same grade than their counterparts. To do so, COs may focus on the possible reasons for the differences. For example, they can seek to determine whether nonfavored group members hold the type of jobs that limit opportunities, or whether the contractor passes over nonfavored group members for promotion. Alternatively, the analysis may show that nonfavored group members have less time in a grade than their peers. If this is the case, service time may be an explanatory factor for nonfavored group members not advancing to higher positions.
- “Typical” Career Paths. COs should ask whether promotions show repetitive patterns that appear to represent “typical” career paths within major functional areas. For example, in the functional area of purchasing, COs may want to explore whether promotions tend to be from being a Buyer, to becoming a Purchasing Supervisor, and then to a Purchasing Manager. In sales, COs may want to determine whether the typical career path is from Account Executive III to II to I, to Area Sales Manager, and then to District Sales Manager. When these progressions appear, COs should compare the representation of nonfavored and favored group members with the feeder titles of the composition of those promoted.
c. Cross-Establishment Movement
- Movement to Headquarters from Subordinate Establishments. Early in the corporate management evaluation, COs must determine the degree to which the contractor fills management openings at corporate headquarters by promotion or transfer from subordinate establishments, rather than from within headquarters itself. This balance may vary depending on the management level or functional area. For example, at lower management levels, promotions or transfers may be predominantly within headquarters, while at higher levels, they may come predominantly from outside headquarters.
Such information will assist COs in identifying feeder pools for management jobs and, therefore, may influence whether COs expand the evaluation to include one or more subordinate establishments.286
- Movement from Headquarters to Subordinate Establishments. Promotions and transfers out of headquarters to subordinate establishments also may be relevant, particularly in situations where the contractor views exposure to different operating business components as important to advancement to or above the level where nonfavored group member participation declines.
- Rotational Assignments. Cross-establishment transfers, whether into or out of headquarters, or between nonheadquarters establishments, may represent planned rotational assignments as a part of a formal or informal development program.
As with the choice to fill a job by hire or promotion, the choice to fill it by transfer rather than promotion, or from a subordinate establishment rather than within headquarters, is itself a selection decision. While that decision may appear to be EEO neutral, COs should be alert for any pattern that suggests a correlation with a prohibited factor. Sample question areas that may be helpful on this and related points are below.
- Is work experience in subordinate establishments important to advancing to corporate management positions? In what fields? Is working at corporate headquarters important to advancing to senior management at subordinate establishments?
- When is a cross-establishment move generally made during an employee’s career?
- Are cross-establishment moves ever part of a formal career planning process? How does this fit into long-term succession planning?
- Are rotations through the corporation’s overseas locations a ‘preferred’ or ‘required’ qualification for moving into senior management positions, either officially or unofficially?
- What happens if an employee refuses a job offer requiring relocation? Are the effects of refusing to relocate on career prospects the same for all employees who refuse to relocate?
COs must review any written material on corporate policies related to promotions and transfers, as well as the data requested earlier on promotions and transfers to management jobs at, above and below the level where nonfavored group member participation declines. At a minimum, the data in the analysis should include:
- The date of each promotion or transfer;
- Race, ethnicity and sex information of each selectee;
- Disability and protected veteran status of the selectee, when known; and
- The job title, grade and department, as well as the establishment from which and to which the promotion or transfer occurred, if it is not within corporate headquarters.
d. Promotions and Transfers into Headquarters versus within Headquarters. COs must determine the extent to which feeder pools for headquarters positions are internal and external to headquarters. COs must separate promotions from subordinate establishments into headquarters from promotions within headquarters. COs should do the same with transfers.
COs should ask or seek to determine how, at given grades or types of functions, the volume of promotions and transfers into headquarters compares with the volume within headquarters.
e. Promotions and Transfers into Headquarters from Subordinate Establishments. If subordinate establishments are an important feeder pool, COs must examine the participation of nonfavored group members in this pool. For promotions and transfers from subordinate establishments into headquarters, COs must note the grade level and originating establishment.
COs should address several question areas related to promotions and transfers into headquarters to identify potential problems:
- How does the majority of the movement into headquarters occur? Is it from only a few establishments? Are these establishments part of a particular intermediate business group?
- How does the participation of nonfavored group members in exempt positions in establishments from which promotions or transfers, or both, occurred compare to their participation in exempt positions in other establishments?
f. Performance Appraisals. Performance appraisals are an important and essential management tool. This tool can inform promotion and other decisions. The vast majority of corporations have a formal performance appraisal process for exempt staff. These processes differ in a number of ways, among them:
- The frequency with which performance appraisals are conducted, although most are conducted annually.287
- The degree to which the employee being appraised contributes to the process. For example, in some instances, the process begins with the employee giving a written self-evaluation of his or her progress against performance goals established in the last appraisal cycle. Sometimes this evaluation includes indicating what his or her goals are for the coming year.
- The manner in which the appraisers express the evaluation ratings. Some appraisers use only numeric values and others may use a narrative.288
- The requirement that employees sign their appraisals and whether employee comments are permitted.
- The level of the individual responsible for reviewing the appraisal.
Corporations link appraisals to salary increases, bonuses and promotions. Section 4H touches on issues related to promotions and Section 4I reviews issues related to salaries and bonuses. COs will want to know whether the corporation gives employees in the same grade level who receive a given rating the same percentage raise. COs will also want to know when a formula is used for determining raises and bonuses, and how heavily the rating is weighted. COs may find the below sample questions on performance appraisals useful.
- What is the corporation’s performance appraisal process for exempt staff? Does the corporation use the same appraisal process for all exempt staff? Is the process different for the various levels or grades in the company?
- Does the corporation use a numeric or narrative appraisal rating? If neither of these is used, how is the rating method described?
- What are the highest and lowest scores for the corporation’s numeric rating system? What is the range of acceptable scores? How is the range of acceptable scores established? When was the range established and when was it last modified?
- What score or performance rating does an employee generally need for promotion?
- Are there any written guidelines or training on how to administer the appraisal? Describe the guidelines the corporation provides to the rating official. Is reference made to EEO? If so, explain.
- How often are your employees appraised? Who appraises them and who approves the ratings? What is the degree of employee input?
- Is career planning included in your process? Is this planning short term, long term or both?
- Are “benchmark” or career interval appraisals used?
- Does the corporation monitor appraisal results for EEO? If so, how? What have been the results?
- Are raises, including bonuses and promotions, based on appraisals? If so, what is the relationship?
After gaining a better understanding of the appraisal system and the use of employee ratings, COs should analyze this information. For example, if a CO learns that a numeric system is used, the CO should determine the average rating for the nonfavored group at the grade level just below where nonfavored group member representation declines. If the average appraisal rating is substantially lower for nonfavored group members, the CO must determine if the contractor’s EEO audit offers any reasons or explanations. Other areas of inquiry include determining:
- What, if any, actions the contractor took to eliminate the disparity; and
- Whether the disparity is traceable to certain functional areas.
If the corporation uses a narrative system, then the CO would explore any differences in the tone between appraisals of nonfavored and favored group members.
g. Visibility. One element of career advancement can be the amount and type of exposure to senior corporate management through assignment to special projects, task forces, corporate committees or through appointment to special assistant and executive assistant type positions.
Being assigned special projects and working on teams and groups are ways employees gain increased visibility within the corporation. There is considerable variation in the degree to which corporations use special projects, working groups and teams. Some projects may be more desirable than others in terms of opportunities for skills development and visibility. In some industries, this difference will be fairly clear simply because of the nature of the industry, or the corporation may have a formalized structure. For others, COs may need to rely on employee and management interviews, as well as any group award program maintained by the contractor, that may reflect projects that were particularly desirable.289
COs will want to compare the nonfavored and favored group composition of special project teams and task forces with the nonfavored and favored group composition of the jobs or functional areas from which members were or reasonably could be drawn. Below are several sample questions that can result in useful information on opportunity and participation of nonfavored group members on teams and groups.
- Does the corporation make use of special projects, and teams and working groups? If so, in what areas of the business?
- How are members selected and by whom?
- What special projects, teams and working groups are currently operating? What is the favored and nonfavored group composition of each?
- Are selections monitored to ensure equal opportunity for all eligible nonfavored group members? If so, by whom? Have there been any cases where a concern was raised and, if so, how was it handled?
h. Corporate Committees. Most boards of directors appoint standing committees to monitor and keep the board informed on a specific subject area. In many cases, these committees may simply reflect functions. The appointment to these committees is usually nondiscretionary and based solely on position. It can be useful for COs to know the composition of such committees in order to understand the nonfavored group composition corporate-wide of such positions.
There may also be special purpose committees that draw from a wider range of positions and levels within the corporation. Serving on these committees often provide members career enhancing opportunities through exposure to corporate leadership, networking, mentoring relationships and broadening knowledge of the corporation. COs should examine nonfavored group member participation. COs should compare the membership for each committee with those eligible for such membership. For functional and position-based committees, COs should ensure that all qualifying employees are included as members and determine the reasons for any discrepancies.
i. Special Assistants and Executive Assistants. People holding such positions, particularly ones reporting directly to senior corporate management regardless of actual title, may be on a “fast-track” to middle management positions by offering the incumbent enhanced developmental opportunities. In some cases, there may not be formal guidance on the creation or appointment of employees to these positions. In such cases, interviews can be critical to gathering useful information.
In addition to other sources of information on these positions, COs should review the organizational profile for any special assistant and executive assistant type of positions. Note that if such titles are nonexempt, or relatively low-level exempt, the incumbents may be in support staff rather than “fast track” positions.
j. Assignments in Particular Industries and Lines of Work. In some industries, a number of people may share the same or very similar titles and yet differ substantially in the career growth potential offered by their assignments. For example, in sales positions, some product lines may offer higher commission potential than others. Some territories may have been worked extensively, and thus offer primarily opportunities for renewal or upgrade of orders. Others may be relatively unworked and thus offer a greater opportunity for new business. For account managers, the dollar volume and growth potential of accounts managed are important to advancement.
After identifying distinctions between favorable and less favorable assignments, COs should determine if nonfavored group members are underrepresented in the former and concentrated in the latter. COs should determine how the corporation makes assignments, particularly for the most and least valuable. They should ask if these assignments are monitored to ensure equal opportunity for all eligible employees. It is also important to know if there is a formal structure that defines the value of these assignments.
285. See FCCM 4H04 – Succession Planning.
286. See FCCM 4A01 – Scope of CMCEs.
287. If a regular appraisal cycle is supplemented by a “benchmark”, a longer-term career assessment process such as career reviews at the third and seventh years of employment may take place. The career assessment processes may be a component of succession planning. More on succession planning is in FCCM 4H04.
288. For example, an “outstanding” rating may be valued at four points or assigned the number four, while an “unacceptable” rating may value at zero. A narrative rating would consist of a brief overview summarizing an employee’s level of performance and accomplishments to substantiate a particular rating. Still, other corporations may use both numeric and narrative forms of evaluation. Be aware that appraisal factors for supervisors and managers typically differ from those for professionals and, the higher level the manager, the less likely it is that the appraisal is only numeric.
289. FCCM 4I01 – Recognition: Awards and Honors.