Poor HR practices under microscope

Ombudsman report details flawed recruitment, promotions and comp practices at Toronto Community Housing
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 05/20/2014

A scathing report from the City of Toronto’s Office of the Ombudsman looking at Toronto Community Housing (TCH) has led to the departure of its CEO and vice-president of HR — and pressing concerns about its HR practices.

The report followed an investigation that began in August 2013 after the ombudsman received complaints from former and current TCH employees, ranging from improper hiring and promotions to irregular compensation and unfair terminations. In the end, “it is an alarming tale of senior executives ignoring policy and running an organization as though it were their own personal fiefdom,” said ombudsman Fiona Crean.

Incidents of wrongdoing included: executives promoted with little process or screening; promotions and raises given with no competition or process; changes to employment contracts that alter fundamental terms of employment, with no approvals or adequate notice; senior executives in conflict of interest when hiring; and inconsistent salary grades.

“I was shocked. I don’t consider myself naive but this one was a shocker. It was particularly a shocker because the corporation actually has a very good HR policy framework. Some of the policies are out-of-date, but what they have on the books is very good. They simply aren’t following them,” said Crean. “In the 30-plus years I’ve been doing this, I’ve never seen anything so egregious… I am sure these things go on but not to this extent.”

A social housing provider, TCH is owned by the City of Toronto. Former CEO Gene Jones was hired in 2012 with a mandate to make changes and move the corporation forward. A total of 96 new staff were hired over the next year-and-a-half, including a CFO, COO, chief development officer and vice-president of HR, according to the report. There were also 76 promotions and reclassifications and 88 departures — 45 terminations, 32 resignations and 11 retirements — among 350 management/exempt positions. The process created chaos, according to Crean, and TCH did not follow HR policies, practices and protocols.

It’s a story about “the abject failure of leadership from the top,” said Crean in her report Unrule(y) Behaviour, where the CEO believed his actions were his prerogative and he had no responsibility for knowing the rules because it was up to the vice-president of HR to ensure they were followed.

HR’s role

When questioned by the ombudsman’s office, the former vice-president of HR, Anand Maharaj, said he was not satisfied with the outdated HR policy framework he inherited and it was not practical to enforce outdated policies that did not reflect current practices.

Even if rules are out of date, they are what the workforce understands, said Crean.

“What happened in the creation of this chaos and paralysis in the workplace is people didn’t know what the rules were anymore — there’s a great deal of fear,” she said. “You can make massive change overnight if you want but you’ve got to stick by the rules or change the rules and give notice — but ignoring them is just not acceptable.”

HR professionals have a duty to advise, educate and act, said Janet Salopek, president and senior consultant at HR consulting firm Salopek & Associates in Calgary.

“There was a lack of education, there was a lack of senior advice coming through to the CEO from their HR practitioners and there was not a sense of diligence from HR practitioners that they have a legal obligation to act — and they do,” she said. “It’s our responsibility that if we can’t get through to the senior management team, we have a duty to act and go to the board then. Because just ignoring the fact that statutory law is being broken, once we see that, we need to act — we can’t ignore it or we can lose our certification.”

You would expect the head of HR would raise flags very quickly, said Philip Wilson, Ottawa-based chair of the board of the Toronto-based Human Resources Professionals Association (HRPA).

“Maybe the individual didn’t have a strong background in the human resources field and maybe that was something that, from a strategic perspective, allowed the CEO to have full reign,” he said. “One of the key roles of the HR person is to partner with the executive team, to partner with the CEO, and get the organization to make the right decisions.

“And sometimes those aren’t popular decisions… but you need to protect the organization and make sure that you’re making the right decisions on behalf of the organization. So the role of the chief human resources officer or VP of HR is to convince the senior executives that ‘There’s very good reasons why we’re doing it this way’ and get them to support that decision.”

It’s OK to talk about changing the rules but the vice-president of HR is expected to gain full support and approval from the HR committee or full board, said Wilson.

“You’re talking about how you’re treating employees and whether or not you’re within your legal rights to treat employees in a certain way, so by changing those policies and practices with the intent… to enhance the process, accelerate hiring, all of that good stuff, you still can’t go roughshod over policy — policy is policy and you need to follow it.”

It’s not that they’re nice to have — they’re required by law, said Jennifer Harrison, a PhD student in HR management at York University in Toronto.

“When people decide to break these rules for efficiency reasons, over time… it becomes a culture of rule-breaking and it’s not that the rules and policies and practices aren’t working, it’s that people and culture have decided that they don’t necessarily need to adhere to those rules.”

And when you have a CEO who is brought in to “shake things up,” employees want to help, she said.

“But where this becomes problematic is when the mandate ‘cleaning house…’ becomes used analogous to breaking rules and making changes at all costs. And who is responsible for communicating and perpetrating that message or vision? Typically the head of the organization or the CEO.”

Board’s role

While the board made many attempts to get answers, it accepted the rationalizations given by the CEO and other executives, without ensuring proper procedures were followed, said the ombudsman report.

“The board is ultimately responsible for the actions of the CEO and it is the board’s responsibility to make sure the CEO, first of all, has strong policies and procedure in place, has strong process in place, and that it’s being followed,” said Salopek. “They were not diligent enough in probing and asking the right questions…. They let it go.”

Basically, the board is the legal employer of the organization so it has a responsibility to ensure compliance with the policies, procedures and legislation as they relate to employment, said Wilson.

“They can delegate responsibilities in terms of operations and tactical things but when it comes back to the board in terms of processes not being followed, it just makes me shake my head in terms of the leeway that was given to the CEO to basically break up the team, build the team — (regardless) of the process. It seems that he had a lot of autonomy.”

Next steps

In response to the report, TCH said it agreed with many of the findings. Going forward, the board will be more rigorous, said the corporation, while a comprehensive review of HR policies and procedures has been initiated to identify and address gaps and apply best practices.

TCH is also developing a draft recruitment guide for HR staff and hiring managers, and the compensation program for management and exempt positions is being reviewed, along with the job evaluation system. A talent management framework is also being developed to strengthen performance management, succession planning and pay for performance, while a leadership training program will focus on core competencies and management systems skills.

Online bonus: Read the ombudsman’s full report. Simply go to www.hrreporter.com, click on “Advanced Search” and enter article #21005.

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