Feds peel away red tape from corporate culture

This story goes back years, decades even.

It goes back to 1976, when the auditor general sounded the alarm that the federal government was close to losing effective control of the public purse.

Move forward a few years, when a royal commission found that government growth was straining management practices — that was 1979.

And on and on. For the following two decades, there were reports, initiatives, recommendations, reviews, all asking essentially the same question. How to effectively and accountably run this behemoth of an organization?

But now, forced by circumstances — budget cuts, an aging workforce, a general dissatisfaction among Canadians about federal service — the federal bureaucracy is in the midst of a makeover on a major (make that gargantuan) scale.

The objective is nothing short of a complete departure from the present command-and-control management style that binds public-sector employees in the red tape of some 320 financial and control practices, policies and procedures.

“For many years, the argument was the federal public sector was too bureaucratic, too command and control, too hierarchical, too focused on fairly detailed centralized control. It basically meant that you had a very rigid, not very nimble, not very responsive federal public service,” said Leslie Pal, director of Carleton University’s School of Public Policy and Administration in Ottawa.

The objective is flexibility, said Pal. He offered one way to illustrate the task: if you’re a manager and you want to make sure your employee is doing his job, you can look over his shoulder all day long. But if you think that’s a waste of resources, you can delegate some authority to him. One way to do that is to make sure he understands his authority and accountability. Another way is to make sure that he’ll report to you now and then, and that you and he agree on the outcomes to look for.

Still another way, Pal added, is to train the employee to value the qualities the organization stands for.

At the federal government, the leadership has decided to do all three, with all 150,000 federal public employees.

This reform is based on “modern comptrollership,” the name of a home-grown philosophy that aims to instil a management culture in which decision-making, coupled with risk management and managing for results, is delegated to all levels of management.

“The philosophy is: stewardship has to stop being the responsibility of the specialist. It has got to be the responsibility of every manager,” said Ivan Blake, director of communications and integration at the Comptrollership Modernization Directorate.

“Managers can’t keep saying the comptroller will take care of it. The idea is people have to start thinking of themselves as the comptroller. Their job is to manage the resources of their organization as though they were their own resources,” said Blake.

“But if it’s going to be everybody’s job, then you have to support everybody making better choices, which means people have to have a different relationship with the specialists, including HR. They’ve got to have access to good and timely information about financial and non-financial matters. They have to have good information about risk tolerances associated with their jobs. They have to have good public service values and ethics.”

Blake is in charge of the Treasury Board office spearheading this reform, which was quietly introduced on a pilot basis at five departments since 1997. He said this massive reform project is expected to take seven to 10 years to implement.

Despite all the reporting mechanisms and procedures, department managers currently don’t have the basic knowledge to make decisions, such as what programs to cut when they’re tasked with the responsibility of trimming $1 billion as mandated by the most recent budget, for example, said Blake.

That’s because managers aren’t given a clear understanding of risk tolerance and of the financial and non-financial performance of initiatives to make such decisions.

Describing modern comptrollership as an effort to lay down the foundations for good public service, Blake said the federal bureaucracy has to have four essential elements in place. These include: the use of integrated financial and non-financial performance information in decision-making, an integrated approach to corporate risk management, appropriate control systems and a shared set of values and ethics.

The idea is it’s no longer good enough for a department to find its weak spot and fix it, Blake added. All these elements have to be carried out in a concerted fashion. The first step is a baseline assessment, using a 32-point standardized self-assessment tool that touches on every operational aspect from strategic leadership, through to performance agreements, employee satisfaction and assets control. Further down the road, modern comptrollership should result in the development of a core curriculum of managerial competencies, so that these ideas are simply embedded in the way public servants carry out their work.

Pal said this reform is compelled by changes such as the development of alternatives for service delivery, the aging of the public-sector workforce and a growing recognition that HR is critical to effective government.

“So it’s not like this is an empty exercise. There are real empirical forces that are driving the government to make itself a more attractive, a more flexible and responsive employer,” said Pal.

Acknowledging that over the years public-sector initiatives have come and gone, Pal said this new philosophy will likely stick because it’s backed up by legislation, namely the Public Service Modernization Act brought in early in the year.

“You can’t read a document that comes out of Ottawa these days that doesn’t in one shape or form reflect the language of modern comptrollership,” said Pal. Among the lower ranks, “I wouldn’t say that it’s tripping off everybody’s tongue, but people understand that change is afoot.”

While hesitating to offer a prognosis for this initiative, Pal said the project has a few things going for it, including the fact that the Liberal government’s long run ensures some longevity to the reform effort.

“And although the Liberals were seized with budgetary issues early on, budget cuts actually energized public-service reform, in terms of cutting staff and forcing changes to delivery methods.”

Among the departments involved in the pilot phase, none endured as much agonizing scrutiny than Human Resource Development Canada (HRDC), where an internal review of a sample of projects representing $200 million out of $1 billion in job-creation grants found “insufficient monitoring” in 80 per cent of the cases.

Alan Winberg is now a senior visiting fellow for management practices at the Canadian Centre for Management Development, the federal bureaucracy’s training centre. He was senior financial officer at HRDC when these problems surfaced. He said modern comptrollership ideas were being rolled out at the time, but they had to compete for attention against other policy priorities such as changes to Employment Insurance, to the Canada Pension Plan, among a host of others.

And at the time, compelled by budget cuts, a good deal of responsibility was delegated to the offices, including the regional HRDC bureaus.

“We were very strong in getting people to find ways to do things better for less money. We delegated authority throughout the department so people could make decisions as close as possible to the clients to improve client service,” said Winberg.

“But although authority was delegated, we weren’t clear on the framework within which that delegation had to occur. That led to a lot of confusion among people. People wanted to be innovative, they wanted the authority, but they wanted to know what the boundaries were within which they could be innovative.”

Cost-cutting also resulted in the departure of 7,000 employees and a substantial amount of organizational memory, he added.

“When they left and new managers were appointed, they applied good common sense but we didn’t have the money to do the training that was needed. So people just did their best. The onus was put on service to clients, and that aspect of the work was maintained. But other work was seen as lower priority was not, including audits, monitoring, performance measurements, reporting, and so on. So we had to put all that back.”

In response, the department introduced a quality control mechanism where a small sample of grants and contributions would be audited, gave responsibility to a unit to make sure all audits and reviews would be followed up, and trained everyone in the minimum requirements for entering a contract and making payments against results, for example. Meetings were also held at all levels to identify risks and how to manage them, he added.

“People were managing risks before but they did that on their own. In these series of meetings, people discussed as a group, in their units, what the operational risks are and how to mitigate against the risks. And where the risks went beyond their unit, the discussion was moved up to the next level. So this helped us decide how to use the money according to priority based on a thorough assessment of risks and performance.”

Modern comptrollership helped provide a framework for putting these measures in place, he said, adding the result is, three years down the road, the department is now a very well run, “wonderfully balanced place where there’s a balance between delegation and a clear framework within which people can act.”

Back at the Treasury Board, Blake said there remains some skepticism among people whose attitude to this initiative is, “Let’s wait this one out as we’ve waited the other ones out.”

“What I say to that is, yes, there have been a number of initiatives over the years, but each time, the screw gets tightened a bit more.”

And using this admittedly awkward term of modern comptrollership, he added, “only helps remind me that modern comptrollership is just about getting the essentials right. Modern management is about a lot more; it’ll be about service and HR modernization. Eventually you’ve got to get the rest right but you have to start by getting the four essentials right — risk, performance, values and ethics.”

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