Starting From Square One

The upside of being the newest federal agency is the opportunity to start from scratch in designing and staffing an innovative operation.

The downside for the Consumer Financial Protection Bureau is setting up and branding a fledgling agency while under fire from critics in Congress who’ve never abandoned hopes of limiting its scope or even killing it off.

Both sides endure. In nearly two years of steady motion, the bureau that was established to protect consumers in the financial marketplace has grown from an implementation team of fewer than 60 to nearly 1,000 employees—with plans to expand to as many as 1,700. Its roster of financial analysts, attorneys, examiners, human resources specialists and information technologists is recruited primarily through a ground-breaking, digital age team approach.

“We try to blend the best of the private sector outreach and recruiting strategies with the federal hiring process to create end-to-end recruiting and employee engagement,” says Dennis Slagter, CFPB’s chief human capital officer. “Being a new agency gives us the opportunity to try new things and be a little different, to hire based on mission and work and portfolio,  not based on a number. We build the function and hire to that.”

In essence, this means recruiting through front-line staff, electronic networking to ease navigation of the federal hiring obstacle course, quick decision-making, strong reinforcement of the CFPB brand and the promise of career flexibility.

“We attract people from all walks of life, socioeconomic status, diversity of skills and experience,” says Slagter, a former Army personnel strategist who came over from the Millennium Challenge Corporation, an independent agency dedicated to fighting global poverty. “We offer an opportunity not only to help consumers but to be a part of government as a service to one’s self and to others.”

Slagter got in on the ground floor at CFPB. Only the fifth employee hired, he started in September 2010 when the bureau was still under the auspices of the Treasury Department in temporary quarters in Washington. 

Officially opened on July 21, 2011, the bureau today occupies a four-story building a block from the White House that formerly housed the now-defunct Office of Thrift Supervision. Leading into the wood-paneled lobby, modest signs bearing the green-and-white CFPB logo have a hip, if temporary, feel.

With an estimated fiscal 2013 budget of $448 million, CFPB is described proudly by Director Richard Cordray as “a 21st century agency whose work is evidence-based.” 

In the past year, its accomplishments in education, enforcement and research are far-reaching, including:

•  The Know Before You Owe rule-making campaign to demystify mortgages and other loans.
•  An online student loan calculator.
•  The first-ever national database of individual complaints about financial products—which as of Sept. 3 had received 72,297 submissions.
•  A series of settlements with major credit card companies fined for misleading sales tactics.

Yet skeptics in Congress have summoned officials to defend the bureau’s budget and structure no fewer than 26 times, according to Rep. Barney Frank, D-Mass., ranking member of the House Financial Services Committee. Frank, who is retiring, co-sponsored the legislation that authorized the bureau with now-retired Sen. Christopher Dodd, D-Conn.  

But controversy and the bureau’s uncertain future hasn’t impeded the recruiting process, according to Slagter. “This work was important before the financial crisis and is even more important now, so we tell applicants that they can make a real difference,” he says. “They know they can go elsewhere, but we expect they will want to be here for a while because successes can be very satisfying. Our challenges are very aspirational.”

PERSISTENT CRITICS

Political tensions have shadowed CFPB from its very inception.

In the wake of the Great Recession and the switch from a Republican to a Democratic administration in 2009, the bureau was designed and planned by law professor Elizabeth Warren, who advised President Obama from a post at Treasury. Her hopes to head CFPB were quashed by Republicans newly empowered by their 2010 sweep of House elections, and Warren moved back to Massachusetts and won a U.S. Senate seat. Obama’s subsequent recess appointment of Cordray still rankles some in the GOP, who have plotted a court challenge.

Republican critics object to having a director rather than a bipartisan oversight board run the bureau, and they believe the independent regulator should be funded through an appropriation rather than through the Federal Reserve. 

“I would also like to know more about the limitations on the bureau’s spending authority,” Sen. Richard Shelby, R-Ala., ranking member on the Banking, Housing and Urban Affairs Committee, said at a September hearing more than two years after such issues dominated Senate floor debate. “Dodd-Frank granted the bureau the power to set its own budget and spending priorities without any congressional oversight.”

Rep. Randy Neugebauer, R-Texas, who chairs a Financial Services oversight panel, complained in a September op-ed in The Wall Street Journal that the bureau, which says it “is committed to promoting a culture of transparency and accountability,” had rebuffed his requests to review detailed budget planning documents. 

He also blasted CFPB salaries, which, like those of other financial agencies, are scaled not according to the General Schedule but to those of the Federal Reserve. “A review of the bureau’s salaries as of Aug. 28, 2012, reveals that approximately 60 percent of its 958 employees make more than $100,000 a year,” wrote Neugebauer, who has introduced a bill to end the Fed’s budget authority over CFPB. “Five percent of its employees are out-earning U.S. Cabinet secretaries by raking in $200,000 or more annually. The director’s secretary alone is paid $165,139 a year.” 

Another attack came from the conservative watchdog organization Judicial Watch, which criticized the bureau’s spending on legal training and sign language translation, as well as salaries it considers extravagant compared with those of average Americans.

“Currently, the lowest salary range for job openings on the agency’s website is $85,000 to $149,000 for some analyst positions,” Judicial Watch wrote in a recent report. “IT specialists can make between $103,000 and $187,000 per year, while a job description for a deputy associate director comes with a salary band of $185,000 to $247,500.” Cordray’s salary is $179,700.

In response, a CFPB spokesperson told the watchdog group, “the bureau’s resources are used to support our mission to make markets work for consumers. We follow all appropriate procedures and laws related to hiring and procurement to ensure funds are spent in a responsible and prudent manner.” 

Cordray, responding to Neugebauer’s op-ed at a Sept. 20 hearing, said, “the bureau’s budget documents are growing larger and more fulsome at each time in the process, and we are well on our way to doing the kinds of things you wanted.” He noted CFPB recently received clean audits from the Government Accountability Office, the Federal Reserve inspector general and an outside auditor. “I take this seriously and personally,” he said.

CULTIVATING AGILITY

After passage of the Dodd-Frank bill in July 2010, Slagter joined the embryonic CFPB implementation team at Treasury, which was required to work in partnership with the Office of Personnel Management, the Federal Reserve and the Office of the Comptroller of the Currency. Like other startup agencies, CFPB shared services from Treasury’s Bureau of the Public Debt and the National Finance Center to establish payroll and other human resources functions.

But a culture of recruiting was never far from the agency’s priorities.  Under the statute, Slagter says, certain individuals could have been transferred to CFPB, but the bureau’s strategy was to solicit volunteers by going to employees from six or seven other agencies and asking what information on our roles and duties would help them decide whether to transfer.

Slagter says he was thrilled on that day in February 2011 when 95 newly minted employees took the federal oath at a standing-room-only ceremony, with military veterans leading the pledge. “Every two weeks, we do another ceremony in which new CFPB staff members take the oath along with an agency leader,” he says. 

By July 21, 2011, the bureau’s “designated transfer date” to independence, CFPB boasted 500 employees, 200 of whom had transferred from elsewhere in government.

Moving to double that number, Slagter says, the team began to focus beyond senior and mid-level managers to specific jobs and skills the bureau needed. “We wanted an agile organization to bring in people at all different levels,” he says, an effort in which his Army personnel strategies would figure. 

In the military, Slagter says, “we needed to leverage all of our personnel; active troops, the National Guard, the reserves and contractors into one big reserve of human capital, not five different ones. The mission is bigger than any small group, and so we hope to bring value to the American consumer if we develop a workforce that is agile and capable in a complementary way. We use the term ‘human capital’ intentionally, because you get a return on your investment.”

Perhaps the central plank to CFPB’s recruiting strategy is the deployment of 20 percent of employees as volunteer recruiters. “Like the private sector, we have an aggressive, active brand, and we want to attract high-quality, diverse people nationwide, not just those in Washington looking at USAJobs,” Slagter says. “So we empowered the inside recruiters, a third of whom are outside Washington. We leverage our talent because hiring great people creates opportunities to leverage others.”

These talent scouts help build the bureau’s reputation through networking. They scan Facebook, Twitter, Foursquare and LinkedIn to follow prospects in such places as Silicon Valley and college campuses. And they share information about vacancies with their own professional networks. “We’re not making a commitment to these applicants but enhancing access,” Slagter says. “We make sure they know how to get to USAJobs.” 

Hiring reforms that OPM Director John Berry initiated have improved transparency, Slagter says, but also have demonstrated that the main challenge is guiding talent to navigate the federal maze. “We’re working to improve the process through our website, but we’re not there yet,” he says. 

The 200 talent scouts receive a weekly email from Dave Uejio, the bureau’s lead for talent acquisition, highlighting progress—down to such details as how many job seekers have accessed the bureau’s Web page—and requesting assistance.

Another selling point is a flexible career path. “We want to create opportunities for all of our staff, including becoming the best employer at any particular point in a career trajectory,” Slagter says. “Someone can come and add value and help protect consumers, and then go on to other opportunities, then return later in their career.”

The bureau also prides itself on rapid decision-making, which is uncharacteristic of most federal bureaucracies. In February 2012, managers decided they needed a summer intern program. By April, they had begun bringing in 51 diverse undergraduates and graduates, Slagter says, “some of whom carried significant portfolios while here. They then went back to campus and shared their experiences with others who might come next summer or apply for our jobs.”

Final hiring decisions are made through team assessments by specialists in areas ranging from Web design to bank examinations. “In such circumstances, we do portfolio reviews and use a structured interview process with multidisciplinary panel sessions,” Slagter says. We look for strong competencies around communication, collaboration, problem-solving, adaptability and diversity.” Maintaining consistent high quality is difficult, he adds, and the staff development team has designed programs to improve the approach.

Once a new employee reports, a welcome is delivered strategically. “We invest heavily in orientation and the onboarding experience,” Slagter says. “We hope our employees create meaningful, collaborative professional relationships and establish communication and trust at the beginning of their employment.”

JUST GETTING STARTED

Has CFPB recruited a star team? David Stevens, president and chief executive officer of the Mortgage Bankers Association, says, “I have found them to be very open-minded, very accessible and passionate about getting the best information and arriving at the right answer. They listen to the consumer advocacy side as well as the industry side.”

Pamela Banks, senior policy counsel at Consumers Union who has worked on Capitol Hill and in the private sector, says, “these people focused on consumers’ rights and are competent in their area of expertise. I have several people I’ve known in former lives now at CFPB whom I know are stellar in their field. They’re getting a very good cross section, not only from the consumer world but from industry. It creates the right tension in terms of doing rule-making.”

Slagter says he is pleased by the culture created for his “1,000 shareholders,” pointing to a wall poster with the bureau’s values statement reading “Serve, lead, innovate,” which was created by an in-house team.

Regular “lunch and learn” presentations—on such topics as the financial markets the bureau regulates and specific rules it has promulgated—have resonated, he says, because they allow employees to learn more about what colleagues in other offices are doing.  Results of the bureau’s OPM employee viewpoint survey will come later. In addition, the staff’s collective wisdom is being tapped to design a new office layout—“an agile and innovative work environment that is very collaborative,” Slagter says. The space will accommodate twice the number of employees housed by the previous agencies in the 1970s-era building.

The human capital team plans to use data from the bureau’s hundreds of job descriptions to build a staff development program. “We deliberately thought about job descriptions in the implementation phase so that we didn’t shortchange ourselves in the human capital department,” he says. “It took hard work and long hours, often using manual processes before the technology was good.”

Perspiration is the price CFPB managers pay for being a new and “aspirational” agency, Slagter says. “It’s been like a merger and acquisition. That is not easy in the private sector or the federal one.”