OIG: Tech demand remains a talent challenge for the federal home loan agencies, but telework can help

An inspector general’s report spotlighting talent challenges at the government-sponsored enterprises administering federal home loans Thursday, found that while competition for people remains tight, factors like mission and workplace flexibilities have helped address them. 

The white paper, published Thursday by the Federal Housing Finance Agency’s OIG, evaluated the human capital risk trends facing the regulatory agency and the components it oversees — including GSEs Fannie Mae and Freddie Mac, Federal Home Loan Banks and Common Securitization Solutions, LLC — finding common challenges in recruiting and retainment in areas like tech talent demand and compensation constraints. 

Agency officials told the OIG that those challenges, combined with external factors like a robust labor market and low unemployment, helped drive a period of higher turnover at some of the regulated entities between 2021 and 2022, though it began to decline at Fannie Mae and reached “historic lows as of mid-2023.”

“Specifically, Fannie Mae reported vacancies in its 2021 and 2022 annual reports—an average of 8 percent to 9 percent of total positions and 10 percent to 12 percent of its technology-related positions,” the report said. “A Freddie Mac document shows its September 2022 overall voluntary turnover was three times its turnover level in 2020.”

Likewise, at the 11 FHLBanks overseen by FHFA, the people risk of turnover was higher for specialized skillsets such as information technology and risk management staff.

The report notes that this is not surprising, given the competition for tech talent nationally and its importance to the regulated entities’ IT operations and data modeling, but noted that market pressures had led Fannie Mae — who reported that 41% of its workforce are in technology-related jobs — to expand its campus hiring of critical skills in IT, modeling and analytics.

Other recent departures in the regulated entities have come from senior leadership positions. Among the factors driving that attrition within the C-suite of Fannie Mae and Freddie Mac were compensation limitations imposed by FHFA’s conservatorship of the two entities, which began in 2008 at the onset of The Great Recession, though the conservatorship itself was not a contributing factor to turnover.  

The senior leadership attrition at the regulated entities led them to make adjustments to their succession plans to help mitigate losses.

“One enterprise told us that bolstering its senior level ranks elsewhere in the company exhausted its succession talent pool. In response, this enterprise said it changed its succession planning approach,” the report said.  “It now focuses on mitigating people risk for the most critical roles and piloted an effort to strengthen the talent pool for positions below the officer level. The other enterprise says it enhanced its succession planning efforts, too. Its divisions can identify talent below the most senior levels and craft specific development for ‘high potential’ employees.”

Positives from the report also noted that diversity and inclusion efforts have helped talent recruitment and retention, while workplace flexibilities like hybrid work were a mixed bag, 

One enterprise told the OIG that hybrid work contributed to its recruitment and retention challenges, but Fannie Mae, CSS and the FHLBanks all cited it as a factor in mitigating turnover and recruiting talent. 

Factors like agency mission continue to be a draw for recruiting talent, the report said, but it noted that economic and labor factors will continue to challenge the regulated entities. That makes it important for them to focus on areas like succession planning, while being cognizant of other determinants like workplace flexibilities, organizational size and geographic location.