Office of the Auditor General of Canada—Internal Audit Report
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Office of the Auditor General of Canada Internal Audit Report Management of the Human Resources and Professional Development Function April 2006 Janet Jones, Principal, Internal Audit Bob Grant, Author OAG Internal Audit - Management of Human Resources & Professional Development Function April 2006 Table of Contents Internal Audit Report Management of the Human Resources and Professional Development Function 1. Introduction .....................................................................................................................3 1.1 Audit Mandate..........................................................................................................3 1.2 Background..............................................................................................................3 1.2.1 Legislation....................................................................................................3 1.2.2 Organizational Structure ..............................................................................4 2. About the Audit ...............................................................................................................4 2.1 Audit objective .........................................................................................................4 2.2 Audit scope4 2.3 Criteria .....................................................................................................................4 ...
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Office of the Auditor General of Canada
Internal Audit Report
April 2006
Management of the Human Resources and Professional Development Function
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OAG Internal Audit - Management of Human Resources & Professional Development Function April 2006 Table of Contents Internal Audit Report Management of the Human Resources and Professional Development Function
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Introduction ..................................................................................................................... 3 1.1 Audit Mandate.......................................................................................................... 3 1.2 Background..............................................................................................................3 1.2.1 Legislation....................................................................................................3 1.2.2 Organizational Structure .............................................................................. 4 About the Audit ............................................................................................................... 4 2.1 Audit objective ......................................................................................................... 4 2.2 Audit scope .............................................................................................................. 4 2.3 Criteria ..................................................................................................................... 4 2.4 Approach ................................................................................................................. 4 Observations and recommendations ............................................................................ 5 3.1 The human resources management framework ...................................................... 5 3.1.1 Legislation....................................................................................................5 3.1.2 Committees.................................................................................................. 6 3.1.3 Delegated authorities ................................................................................... 6 3.1.4 Human resources management and professional development policies..... 6 3.2 Human resources and professional development function ...................................... 7 3.2.1 Planning ....................................................................................................... 7 3.2.2 The size and structure of the HR/PD function and its people ...................... 8 3.2.3 Roles and responsibilities .......................................................................... 11 3.2.4 Service to clients........................................................................................ 12 3.2.5 Reporting and Monitoring .......................................................................... 13 AppendixAudit Criteria ........................................................................................................ . 14
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OAG Internal Audit - Management of Human Resources & Professional Development Function April 2006 Executive Summary Introduction Strategic Planning and Professional Practices group conducted an internal audit of the management of the human resources and professional development function according to the Office of the Auditor General’s long-term internal audit plan, recommended by the Audit Committee and approved by the Auditor General for 2005-06. Conclusion We found that the human resources and professional development function is adequately managed to meet the legislative, service, and management support requirements of the Office.
Background The Auditor General Act provides the Auditor General with certain powers and functions of the Public Service Commission and the Treasury Board that relate to staffing and human resources management respectively. The human resources and professional development function is led by a senior manager. The Executive Committee is responsible for establishing policies and principles for managing people. It is supported by an Executive Working Group on Human Resources and two senior committeesthe Human Resources Committee and the Learning Committee. Audit Objective and Scope The objective of this internal audit was to determine the adequacy of the management of the human resources and professional development function to meet the legislative, service and management support requirements of the Office. The audit focussed on the human resources and professional development function as it was structured in the fall of 2005.
Audit Approach
Interviews were conducted with managers and staff of the human resources and professional development function and audit operations managers in the headquarters and regional offices. A survey of all human resources and professional development staff was conducted. Key documents were reviewed and analysed. Opportunities for Improvement Although we found that the human resources and professional development function is adequately managed, some opportunities for improvement exist. These include: • Reviewing human resources management policies where required; • Ensuring that an updated three-year human resources and professional development plan is reviewed by the Executive Working Group on Human Resources, approved by the Executive Committee, and monitored through an annual update; • Adopting a requirement for the successful completion of central agency training in staffing; • Establishing service standards for staffing and job classification actions; and • Producing an annual report on the activities of the function.
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OAG Internal Audit Management of Human Resources & Professional Development Function April 2006 Management Response The audit identifies strengths and opportunities for improvement in the management of the human resources and professional development function, and as such has provided useful guidance. We agree with the recommendations. A project on the establishment of service standards for staffing will commence in the next 12 months. The completion of the project will be incorporated into the three-year human resources and professional development plan. We expect to be able to implement the remainder of the recommendations over the next 12 months.
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OAG Internal Audit Management of Human Resources & Professional Development Function April 2006 Internal Audit of the Management of the Human Resources and Professional Development Function 1. Introduction 1.1 Audit Mandate The internal audit of the management of the human resources and professional development function was conducted by the Practice Review and Internal Audit Team of the Strategic Planning and Professional Practices Group. It is the second in a series of three internal audits focussing on human resources. It was included in the Office of the Auditor General’s Long-term Internal Audit Plan 200405 to 200607 recommended by the Audit Committee and approved by the Auditor General. An internal audit of classification and compensation was conducted in 200405; this audit was conducted in 200506; and an audit of staffing and recruitment will be conducted next.
1.2 Background 1.2.1 Legislation
Sections 15.(3), 16 and 17 respectively of the Auditor General Act provide the Auditor General with:
• the powers and functions of the Public Service Commission (PSC) under the Public Service Employment Act , subject to the terms and conditions that the PSC directs, except for the hearing of allegations under sections 118 and 119 (investigation and corrective action) and its power to make regulations; • the powers and functions of the Treasury Board that relate to human resources management under the Financial Administration Act with respect to determining terms and conditions of employment and employer and employee relations; and • the authority to prepare classification standards consistent with OAG requirements. The Office is also subject to the requirements of the Employment Equity Act , the Official Languages Act , the Canadian Human Rights Act and the Privacy Act .
The legislation governing many aspects of human resources management in the public service was recently revised with the introduction of the Public Service Modernization Act (PSMA). The PSMA resulted in changes to the Auditor General Act , the Public Service Employment Act , the Public Service Labour Relations Act and the Financial Administration Act . Under the new Public Service Employment Act , which is applicable to the Office, staffing is conducted on the basis of merit and qualification standards may also be established. The new Act is being implemented with a values-based approach to staffing that considers competency, representativeness, access, fairness, and transparency. Central to the PSMA are clearer roles and responsibilities for managers and strengthened managerial accountability.
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OAG Internal Audit Management of Human Resources & Professional Development Function April 2006 1.2.2 Organizational Structure
Human resources and professional development function. The human resources and professional development function is led by a senior Principal reporting to an Assistant Auditor General. The Principal has one human resources director and three professional development directors. There are 33 approved FTEs. About two-thirds of the FTEs are used in human resources and about one-third in professional development. The staff comprises mainly compensation and classification specialists, staffing officers, official languages staff, professional development staff, professional development staff on rotation from Audit Operations, and support staff.
Committee structure for human resources and professional development. The Executive Committee is responsible for establishing policies and principles for managing people. It is supported by an Executive Working Group on Human Resources (EWG-HR). This Group provides ongoing attention to issues falling within its areas of responsibility; ensures appropriate preparatory work is done to provide recommendations to the Executive Committee for decisions; monitors implementation of approved office strategies, policies and principles when necessary; and reports to Executive Committee on its activities. The Executive Committee is also supported by two senior committeesthe Human Resources Committee (HRC) and the Learning Committee (LC). Those committees do the following: provide a forum for discussion and coordination of issues; provide advice and recommendations to the Executive Committee; and take decisions in those areas delegated by the Executive Committee. 2. About the Audit 2.1 Audit objective The audit objective was to determine the adequacy of the management of the human resources and professional development function to meet the legislative, service and management support requirements of the Office.
2.2 Audit scope The audit focussed on the human resources and professional development function as it was structured in the fall of 2005.
2.3 Criteria The criteria for the audit are attached as an Appendix.
2.4 Approach Interviews were conducted with managers and staff of the human resources and professional development function. Interviews were also conducted with two assistant auditors general and several principals in the headquarters and regional offices. A survey of all human resources and
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OAG Internal Audit Management of Human Resources & Professional Development Function April 2006 professional development staff was conducted. Key documents were also reviewed and analysed. 3. Observations and recommendations Overall we found that the day-to-day operations of the human resources and professional development function were adequately managed and have accomplished a great deal in the last few years. Examples include implementing upward feedback, revamping the performance management process for managers and, in recent months, revamping the professional development program and the competency model.
In particular we found that the professional development function has clear roles and responsibilities, good planning, and strong reporting and client feedback mechanisms. In other areas of the human resources and professional development (HR/PD) function, some improvements are needed as outlined below.
3.1 The human resources management framework A human resources management framework consists of five key elements: legislation; policies; values; structure and authorities. Although we were not auditing the OAG human resources management framework, we noted that there are several areas in the framework that need attention before the HR/PD function can bring more precision to its roles and responsibilities. These areas include
• defining the requirements of legislation applicable to human resources management as well as the authorities and requirements of the Office under the Auditor General Act ,
• delegation of authorities, and
• having a complete set of human resources management policies (all key areas of human resources management including human resources planning) that define and delineate managerial and HR/PD roles and responsibilities.
We noted that the committee structure helps to define and reinforce management’s responsibility for human resources management.
3.1.1 Legislation
The legislated responsibilities of the HR/PD function are mainly based on the provisions of the Auditor General Act and other legislation applicable to human resources management in the Public Service. The Auditor General Act sections 15.3, 16 and 17 provides the Auditor General with the powers, duties and functions of the PSC under the Public Service Employment Act , except redress; and of the Treasury Board under the Financial Administration Act with respect to determining terms and conditions of Employment, and employer and employee relations. The Auditor General Act also provides the authority to prepare classification standards consistent with OAG requirements. We found that these legislated responsibilities have yet to be clearly
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OAG Internal Audit Management of Human Resources & Professional Development Function April 2006 defined as part of the basis for human resources management policies and practices and the capacities of the HR/PD function.
Recommendation. The requirements of the legislation applicable to human resources management in the Office of the Auditor General should be clearly defined as the basis for delegated authority, human resources and professional development policy and the determination and assignment of managerial and human resources and professional development roles and responsibilities.
Management Response. Agreed. The requirements of the legislation applicable to human resources management will be added to each of our policies as they are reviewed and updated.
3.1.2 Committees
The Committee structure in the Office, including the Executive Committee, EWG-HR, Human Resources Committee and the Leaning Committee, helps to define and reinforce management’s responsibility for human resources management.
The Executive Committee establishes policies and principles for managing people and products. The Executive Committee operates with the support of seven executive working groups (EWGs), including an EWGHuman Resources. The membership of the EWGHR includes the AAG responsible for the HR/PD function. The EWGHR advises the Executive Committee on human resources functions and human resources policies. It reports to Executive Committee monthly.
The EC is also supported by two senior committeesthe Human Resources Committee (HRC) and the Learning Committee (LC). The HR function is represented on the HRC and LC. The HRC and LC are structured to provide input from the HR/PD function. The mandate of the HRC is to provide advice and recommendations to the EC on human resources functions and human resources policies.
3.1.3 Delegated authorities
The authority for human resources management in the Office is based on the Auditor General Act . This authority has not been defined in policy nor is there evidence of a specific instrument of delegation setting out the overall delegated authorities for HRM within the Office. The lack of delegated authorities was the subject of a recommendation in the Internal Audit of Classification and Compensation and is now being addressed by the Human Resources Group.
3.1.4 Human resources management and professional development policies
Five key HRM and PD policies were reviewed: classification and compensation, resourcing and staffing, employment equity, professional development and performance management. Of the five, four needed revision because they failed to include a clear statement of intent and/or criteria to evaluate effectiveness. Further, the four policies have yet to be linked to the
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OAG Internal Audit Management of Human Resources & Professional Development Function April 2006 committee structure governing HRM in the Office and other related matters such as the responsibilities for people management set out in the competency model. The recent policy on employment equity includes a clear statement of intent and defines roles and responsibilities and reporting (accountability) requirements.
The policies pertaining to professional development (PD) include the policy objectives and define supervisory and managerial roles and responsibilities. PD policies identify managerial and functional roles and responsibilities for training. The PD policies are linked to the committee structure of delegated decision-making authority. The Learning Vision statement is aligned with Office values.
For professional development, the Executive Committee delegated authority to the Learning Committee to approve the learning plan and priorities. The learning plan and priorities are aligned with Office priorities. For the human resources function, planning is not approved by the Human Resources Committee and is not as clearly aligned with Office priorities.
While policies may state that the responsibility for monitoring rests with the human resources and professional development function, these policies do not describe how this monitoring is to be carried out or reported.
The human resources and professional development function has identified the need to establish new policies where required and to review and revise existing policies for human resources management. A process should be put into place to systematically establish, review and revise OAG policies for human resources management, in accordance with guidelines approved by the Executive Committee. Such guidelines should consider the following: legislative framework (impending legislative change and policy direction); delegated authority; a statement of intent; values and priorities; effectiveness evaluation; roles and responsibilities; accountability and reporting; committee structures and mandates; and good practices.
Recommendation. The initiative to establish human resources management policies where required and to review and revise existing policies should be accelerated.
Management Response. Agreed. A new director will be hired by September 2006 and this initiative will be a priority task. Estimated completion date is April 2007.
3.2 Human resources and professional development function
3.2.1 Planning
The Office has a strategic plan which was established in September 2002. One of the five strategic challenges of the plan is to provide a better place to work. The objectives of that challenge are to attract and retain qualified employees, increase levels of employee satisfaction, and achieve a truly bilingual workforce.
Since that time, the human resources and professional development function has produced a series of action plans that list projects to be completed, estimated timelines, the individuals
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OAG Internal Audit Management of Human Resources & Professional Development Function April 2006 responsible, and the results. As well, a document entitled HR Strategic Objectives sets out strategic objectives, goals, and actions for September 2004 April 2007. This document has not been formally approved and progress has not been monitored. The Executive Committee has also requested specific initiatives since then; for example, a recruitment and retention plan was requested in June 2005. The September 2005 update to the action plan includes the following tasks: documenting the job classification process, reviewing job descriptions, implementing upward feedback, better explaining the responsibilities of human resources and professional development, and assessing client needs. Most of the action-plan items are aligned with the office values concerning “respectful workplace and “leading by example. Human resources and professional development staff indicated, during interviews, that the main priorities of the function in the fall of 2005 were: people management (upward feedback), strategic human resources planning, updates of the competency models, and a new professional development curriculum.
The staff employed in the human resources and professional development function have performance objectives that serve as the basis for their performance assessment. The performance objectives for human resources specialists are mainly based on ongoing and recurring requirements such as the student recruitment program and ongoing staffing and classification actions. In some cases there are individual objectives aligned with the action plans for human resources and professional development such as classification review and client feedback. For those in professional development, there is a more structured approach to work planning and review linked to performance objectives.
Without exception, PX staff who were interviewed stated that the Office should have a plan for human resources management and that the supporting research and analysis should be at a level of detail that identifies risk. PX staff also identified training as a priority. They described the need for a training plan structured to meet the identified, assessed, and validated training needs of the Office with due regard to priorities such as professional and managerial training. Subsequent to the interviews with PXs, a revised training curriculum was developed and presented to staff. This curriculum is expected to address the need for a training plan identified by PXs.
Recommendation. The human resources function should have a three year plan for human resources management. The plan should then be updated on an annual basis. The plan should serve as the basis for establishing the performance objectives of human resources staff, and for monitoring and reporting on results achieved. The document should be reviewed by EWG-HR and approved by Executive Committee.
Management Response. Agreed. We will build on the document we currently have to develop a three-year plan that will be updated annually. This document will be reviewed by EWG-HR and approved by Executive Committee on an annual basis. The plan will identify areas of risk for the Office.
3.2.2 The size and structure of the HR/PD function and its people
In 1995 the Office was faced with significant staff and budgetary reductions. Accordingly, the human resources and professional development function was reduced to a service and support
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OAG Internal Audit Management of Human Resources & Professional Development Function April 2006 delivery function with the capacity to meet operational and legislative requirements. In the last few years the number of FTEs has not increased; however, the capacity has improved somewhat due to hiring new staff with relevant experience and skills. The HR/PD function has a good mix of experienced staff and people who are developing their HRM knowledge, skills, and abilities. For example, in professional development, the average number of years of service is 17 (most with more than 15 years of experience). In other HR fields the average number of years of service is about 10 (most with about 12 years of experience). Four HR staff members have less than 2 years of experience.
Much of the work of the HR/PD function is recurring (university recruitment, performance evaluation, collective bargaining, and performance pay) and ongoing (staffing, classification, pay and benefits, etc). The HR/PD function is presently structured and managed to carry out these essential HR/PD activities, provide ongoing support and services to management and other employees, and to report through the committee structure on HR/PD matters of priority such as professional training, employment equity and official languages. The HR/PD staff survey indicated that in HR staff devoted about 67 percent of their time to operational activities like staffing, pay and benefits. Support services accounted for about 19 percent and management and administration for another 14 percent of the time.
The Office of the Auditor General recently had a corporate services bench-marking exercise carried out by Deloitte and reported in July 2005. It found that the size and cost of the human resources and professional development function (excluding training) is fairly consistent with that of other public service organizations. The Deloitte report noted that the greatest allocation of HR effort was placed on service and transactional activity. It also noted that while the HR staff indicated that it believes it plays a greater strategic advisory role in the organization than comparable organizations, it actually allocates a lower proportion of HR effort to strategic and planning activities than those organizations.
In PD, the emphasis has always been placed on having people with the professional qualifications/experience required to produce and deliver a credible product. Professional development has a three-year plan to develop and implement courses required in the new auditing curriculum. The plan shows the resources required to complete and deliver the training needed. PD relies on rotational staff from audit operations for the professional expertise important to the design and delivery of training aligned with the OAG’s operational requirements and evolving practices. PD staff expressed concerns that it is sometimes difficult to staff the rotational positions.
The human resources and professional development function is not required to have staffing officers who have successfully completed central agency training, such as the staffing officer validation training provided by the Public Service Commission. The Office is, however, subject to provisions of the Public Service Employment Act. The requirement for staffing officer validation training would help to provide the Office with increased assurance that staffing activity is in full compliance with pertinent legislation. The manager responsible for job classification in the Office is a Certified Human Resources Professional. Collective agreements set out the terms and conditions of employment applicable to a large proportion of Office staff and consequently have the potential to influence operational efficiency and effectiveness. The Principal of HR/PD is aware of the importance of collective agreements. She is responsible for developing the Office strategy for collective bargaining, taking trends, Treasury Board direction, and managerial input into account. The mandate for collective
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