Even as contractors and subcontractors struggle with the complexities of Affirmative Action compliance, data suggests organizations can realize substantial financial benefits when there is a strong commitment to diversity, according to Tech Crunch and Gallup.
The U.S. Federal Government takes Affirmative Action seriously.
If you are an organization with 50 or more employees, and at least one contract or subcontract for $50,000 or more, you are required by law to develop an annual Affirmative Action Plan (AAP). It must include your organization’s policies, practices, programs, and statistical reports on race, gender, and disability status. Contracts of $150,000 or more must also include Protected Veterans status.
Creating an AAP means working through many issues, including changing regulations, identifying and reconciling key data, and conducting reviews.
To see the current state of Affirmative Action Planning, PeopleFluent and HR.com recently conducted a survey, “The State of Affirmative Action Planning: How to Address Challenges and Boost the Quality of Affirmative Action Initiatives.” Together, we examined current issues and practices federal contractors and subcontractors have around Affirmative Action compliance.
88% of respondents are developing AAPs
Of the findings, 88% of responding organizations are engaged in developing AAPs, which should include plan process and methodology, Good Faith Efforts, awareness training, and risk mitigation.
While a positive step, AAPs are just one of the many pieces tied to compliance. There are other important steps you need to take.
Most important is a focus on your workforce data and its integrity. It is the foundation of your overall Affirmative Action Program. This means your data must be cleaned and scrubbed, then validated, reconciled, and transformed to be used.
Keeping proper records is crucial to your organization. It is key to being compliant, and provides a historical record of what has been done and why.
Less than half are engaged in risk mitigation
Risk mitigation is a key component of a good Affirmative Action program. Significantly important, it decreases your possibility of noncompliance with the Office of Federal Contract Compliance Programs (OFCCP).
With only 46% of surveyed organizations engaged in risk mitigation, such as analyzing data, developing statistical reports, and preparing for an audit, there is great concern. This means only one in two companies will be ready if a Compliance Scheduling audit letter is received from the OFCCP.
An audit letter gives your company only 30-days to submit your AAP and accompanying data for applicants, hires, promotions, separations, and compensation. Which means, if you don’t have key components in place, 30 days won’t be enough time to properly analyze and correct your data to submit your organization’s AAP and prevent possible noncompliance fines.
Pay Equity Studies – A Proactive Approach
Only about 50% of enterprises participated in Pay Equity Studies, a crucial analysis to help you identify and address pay inequities and potential workforce discrimination. Pay Equity Studies leverage statistical methods used by the OFCCP to reduce risks and defend HR practices. They can help you anticipate legal liabilities before an OFCCP audit or EEO charge and avoid costly financial consequences and negative impact to your company reputation. Analyzing compensation and pay equity is a proactive approach more organizations need to undertake either internally or through an external partner to significantly reduce compliance risk.
More Good Faith Efforts needed
An area where many organizations are unprepared is Good Faith Efforts. While 56% can provide a list of all their Good Faith Efforts and the effectiveness for women and minorities, another 44% either couldn’t or didn’t know if they could. Good Faith Efforts are crucial for your organization to show forward progress on plans, document efforts, and demonstrate the success of various initiatives.
56% do not engage in mandatory training
Of additional concern, 56% of contractors do not engage in employee-awareness training, which is mandatory under Affirmative Action and includes five key areas in addition to the AAP. We have found, when there is a lack of training or it is done inconsistently, the sessions do not work and can be counter-productive. Planned training must be incorporated into your AAP program for it to work effectively.
It all starts with clean data
Keeping proper records is crucial—not just to ensure compliance, but also so your organization can defend employment decisions in case of lawsuits. This starts with clean workforce data. By implementing a proactive data review and cleansing practice, your organization can avoid the time crunch and concerns over invalid data and a poorly prepared AAP.
Let PeopleFluent be your partner and guide. We believe exhaustive data cleansing and reconciliation steps should be done immediately. Without it, incorrect conclusions can misdirect your management with false positives or negatives, which can be costly—in time and money.
To get started, contact us today.
To learn more, listen to our webinar “State of Affirmative Action Planning: How to Address Challenges and Boost the Quality of Affirmative Action Initiatives”.
The information contained in this blog article is provided for informational purposes only, and should not be construed as legal advice on any subject matter.