This Web page has been archived on the Web.
2008 December Report of the Auditor General of Canada Chapter 6—Use of New Human Resources Authorities—Canada Revenue Agency
2008 December Report of the Auditor General of Canada
Chapter 6—Use of New Human Resources Authorities—Canada Revenue Agency
What we examined
In 1998, the government identified human resources management (HRM) at the Department of National Revenue as an area requiring significant change. In creating the Canada Customs and Revenue Agency (which later became the Canada Revenue Agency), Parliament empowered the Agency to design and develop its own tailor-made framework and systems to manage human resources. In particular, as a separate agency under the Public Service Staff Relations Act (which became the Public Service Labour Relations Act in 2003), the Agency took over the "employer" responsibilities from the Treasury Board and staffing authorities from the Public Service Commission of Canada. The Agency's direct responsibilities for human resources were extended to staffing, classification, compensation, labour relations, collective bargaining, training, and human resources policy development. The key objective was to help make the Agency's HRM regime more efficient, effective, and responsive to its business needs.
We examined the Agency's use of its new human resources authorities in the areas of staffing, classification, compensation, and labour relations. We also examined whether the Agency can demonstrate that its management of human resources is more efficient and that it is effective and responsive to the Agency's business needs.
Why it's important
The Canada Revenue Agency depends heavily on having a qualified workforce to deliver its tax administration mandate and protect Canada's tax base. It spends close to $2.8 billion annually for its workforce of some 43,000 employees—a significant portion of its operating costs. The Agency has said that this workforce must be supported by a responsive human resources management regime that is based on principles and values. One of the government's goals in creating the Agency was to make it a more efficient and effective organization. It highlighted human resources management as one key area in need of significant change.
What we found
- The Agency faced significant challenges in developing and implementing initiatives to use its new human resources authorities. It is a large, decentralized organization with a long history and a unique culture. It also had no public sector models to follow for some of its initiatives. Having set an ambitious agenda, it has worked to implement that agenda.
- The Agency has used the human resources authorities and flexibility it was granted by Parliament in 1999 to create a human resources management regime that is designed to respond to its specific business needs. For example, it has defined the competencies required to do almost all of its jobs and has updated many work descriptions; it has created distinct occupational groups and implemented three of them successfully; and it has made changes to employee compensation through collective bargaining to be more competitive. Further, it has introduced initiatives to improve labour relations, and union and management representatives told us that those relations are generally harmonious and better than they were in 1999.
- The Agency has had great difficulty implementing a critical part of its new staffing process. The process calls for an objective assessment of employees' competencies when filling vacancies. Due to the size of the workforce and to poor project management in the early years, these assessments are taking a lot longer than anticipated. As a result, the process has not yet resulted in faster staffing actions, one of its main goals. An efficient staffing process is critical in light of the recruitment challenges the Agency expects to face in the coming years. In addition, employees indicated that the process is confusing and frustrating, in part due to the many changes that have been and continue to be made.
- During the development of the initiatives to implement its human resources authorities, the Agency did not determine how it would measure their success. While its recent annual reports indicate that the Agency continues to meet most of its operational objectives, it has difficulty linking that result to the use of its new human resources authorities.
The Agency has responded. The Agency substantially agrees with all of the recommendations. Its detailed responses follow the recommendations throughout the chapter.
6.1 In 1998, the federal government tabled Bill C-43—The Canada Customs and Revenue Agency Act (since renamed the Canada Revenue Agency Act). The government argued that the Canada Revenue Agency (the Agency) needed a unique structure and more management flexibility to
- provide better service for Canadians,
- become a more efficient and effective organization, and
- establish a close partnership with the provinces and territories.
It highlighted human resources management as one key area in need of significant change.
6.2 The Act empowered the Agency as a separate agency to design and develop its own tailor-made human resources management framework. It changed the roles and responsibilities related to human resources management by having the Agency take over "employer" responsibilities, such as collective bargaining, from the Treasury Board as well as staffing responsibilities, such as setting the requirements for hiring and promotions, from the Public Service Commission. These new responsibilities included those related to staffing, job classification, compensation, labour relations, collective bargaining, training, and human resources policy development. The goal was to provide management with the flexibility required to manage its human resources by shifting away from rules and regulations it deemed to be both cumbersome and slow.
6.3 The Act also created a Board of Management, made up of members nominated by the federal, provincial, and territorial governments. The Board oversees the organization and administration of the Agency and, in particular, oversees the management of its resources, services, property, personnel, and contracts.
6.4 The Agency still had to comply with some of the requirements of the Public Service Staff Relations Act (PSSRA). In 2005, the Public Service Labour Relations Act, which replaced the PSSRA, reinforced the Agency's "employer" role. Changes to the human resources management framework at the Agency were expected to help it recruit and retain staff, particularly those with tax and technical expertise who were in high demand. In addition, the Agency committed to integrate its human resources and operational planning.
6.5 The Agency faced significant challenges in developing and implementing initiatives to use its new authorities and achieve the objectives set for it. It is a large, decentralized organization with a long history and a unique culture. Having set an ambitious change agenda, it has worked to implement that agenda.
Focus of the audit
6.6 The audit examined how the Agency has used the new human resources authorities it was granted by Parliament when it became a separate agency in 1999. Our objective was to determine whether the Agency can demonstrate that it has used its flexibility and its authorities to make human resources management more efficient. We also wanted to determine whether the Agency can demonstrate that human resources management is effective and responsive to the Agency's business needs. We focused on four aspects of human resources management: the staffing process, including staffing recourse; job classification; employee compensation; and labour relations and conflict resolution. These aspects reflect the biggest changes that were made to the Agency's human resources management regime when it became a separate agency.
6.7 More details on the audit objective, scope, approach, and criteria are in About the Audit at the end of this chapter.
Observations and Recommendations
Competencies are the basis for human resources management
6.8 The Canada Revenue Agency introduced Competency-Based Human Resource Management (CBHRM) as the foundation for its management of human resources. CBHRM is based on the principle that effective organizational performance will result from having the right people, in the right jobs, at the right time, and with the right skills. In other words, CBHRM is designed to help the Agency meet its business needs.
6.9 A competency is any measurable or observable skill, ability, knowledge, or behavioural characteristic. Each competency has levels of proficiency. An example of a competency (and its levels of proficiency) is analytical thinking (Exhibit 6.1). The Agency's competency catalogue includes more than 55 competencies developed by groups of managers and employees. These competencies are aligned with the Agency's business needs.
Exhibit 6.1—Each competency has levels of proficiency
|Analytical thinking: understanding a situation by breaking it into smaller pieces, or by tracing its implications, issues, or problems in a step-by-step way. Analytical thinking describes the behaviours required to perform a thinking process used to produce useful information that will support appropriate actions and decisions.|
|Scale||Underlying notion||Possible illustrations|
|Level 1—passive behaviour||Recognizing basic situations||Recognizes basic situations/issues and selects from a limited number of pre-established responses.|
|Level 2—active behaviour||Clarifying the situation||Clarifies what the situation/issue is by breaking it down into components. Selects appropriate action(s) from defined options, available guidelines, and precedents.|
|Level 3—proactive behaviour||Examining the facts and making assumptions||Analyzes and examines the available information, identifying gaps and developing potential explanations or causes in order to select the most appropriate response(s).|
|Level 4—strategic behaviour||Evaluating, interpreting, and integrating||Evaluates and interprets situations/issues that are typically multi-dimensional, abstract, and precedent setting and integrates them into a complete solution.|
|Source: Canada Revenue Agency|
6.10 Each job has a distinct competency profile, called a job competency profile (JCP), that includes no more than 13 competencies and the level of each competency required to do the job. Almost all of the Agency's jobs now have a JCP. Each employee has a distinct competency profile, called an employee competency profile (ECP). It includes the level achieved in the competencies for which the employee has been assessed. At the time of the audit, 65 percent of employees had at least one competency assessed; 30 percent had five or more.
6.11 The idea for using competencies at the Agency began when various teams of managers, employees, and union representatives met in 1997 and 1998 before the Agency was created. These teams studied the problems with the human resources management regime at the time, researched existing practices and ways to improve it, and recommended that competencies be the basis for human resources management in the new Agency. The Board of Management endorsed this recommendation.
6.12 The new human resources regime, including the move to CBHRM, was a major cultural shift for the Agency. As well, the Agency had no public sector models to follow. The Agency decided to introduce CBHRM through staffing and then expand it to other areas such as training and performance management. Our review of human resources management literature reveals that organizations usually introduce CBHRM through training and performance management before moving to staffing. Given these factors, the Agency now recognizes that introducing CBHRM through internal staffing was a risky strategy.
The staffing process
6.13 The Canada Revenue Agency Act gives the Agency the authority to hire and promote any employees that it considers necessary to conduct its business. It also requires the Agency to develop a program that governs staffing. We examined whether the Agency was using its staffing authorities. Staffing is a critical aspect of human resources management, the goal of which is to find the right person to do a particular job.
A staffing program is in place
6.14 We expected to find that the Agency had developed a staffing program to help it meet its operational needs. We found that it has put policies and processes in place to use its staffing authorities and has developed a staffing program based on a set of staffing principles rather than rules and regulations. These principles are compatible with those of the Public Service Employment Act, allowing employees to move to and from the rest of the public service (Exhibit 6.2).
Exhibit 6.2—The Canada Revenue Agency's staffing principles
Non-partisanship: The workforce must conduct itself in a manner that is free from political and bureaucratic influence. Staffing decisions must be free from political and bureaucratic influence.
Representativeness: The composition of the workforce reflects the available labour market.
Competency: The workforce possesses the attributes required for effective job performance.
Fairness: Staffing decisions are equitable, just, and objective.
Transparency: Communications about staffing are open, honest, respectful, timely, and clearly understood.
Efficiency: Staffing processes are planned and conducted having regard to time and cost, and linked to business requirements.
Adaptability: Staffing processes are flexible and responsive to the changing circumstances and to the unique or special needs of the organization.
Productiveness: Staffing decisions result in the appointment of the necessary number of competent people for the proper conduct of business.
Source: Canada Revenue Agency
6.15 A staffing program needs to be supported by sound human resources planning. We found that the Agency has recently developed its first Workforce Plan. We note that the Workforce Plan is based on the business needs outlined in the Agency's Corporate Business Plan. It identifies several issues to be addressed over the next three-year planning period due in part to demographic pressures such as retiring baby boomers. These issues include recruitment, retention, and employee mobility. The Plan is a strategic document that recognizes the need to develop action plans that will respond to each of the identified challenges.
Good project management has been lacking
6.16 As with its other human resources programs, Compentency-Based Human Resource Management (CBHRM) is the foundation for the Agency's staffing program. Introducing such an ambitious change as CBHRM, especially in a very large organization, requires good project management:
- a clear vision of what is to be achieved,
- a clear statement of the expected benefits,
- a clear understanding of how the vision will be achieved and what it will cost,
- project milestones,
- frequent progress assessments, and
- a strong communications strategy to reinforce the message and the progress being made.
We expected to find all these aspects of good project management in place at the Agency.
6.17 Both the Human Resources and Corporate Audit and Evaluation branches have studied various aspects of the implementation of the staffing component of CBHRM and have raised a number of concerns about a lack of good project management. We expected that the concerns about project management would have been addressed. We found that the Project Portfolio Integration Office was established in January 2005 to strengthen the management of projects in the Human Resources Branch. We also requested copies of project charters, risk assessments, project plans, and status reports for the various staffing initiatives. We were told that, except for a few recent cases, these documents did not exist. Although the Agency is implementing the staffing component of CBHRM and has several initiatives to address problems that have arisen along the way, there is still no overall plan with projected costs, milestones, and expected results. An overall plan would enable the Agency to consider the effects of its various initiatives on the whole process and to effectively integrate them into the process. It would also provide a basis for monitoring and assessing progress in reaching the goal of a pre-qualified workforce for staffing.
6.18 The staffing design team that met before the Agency was created had proposed a staffing system that would include
- a competency framework to identify the knowledge, skills, abilities, and employee attributes required at different job performance levels;
- pools of pre-qualified employees that would be set up to fill vacant jobs—employees would ask to have their competencies assessed to qualify for a pool and would be given feedback if they did not qualify;
- an automated search procedure that hiring managers would use to obtain a short list of pre-qualified candidates from the appropriate pool; and
- a placement process that would use specified criteria and methods to select a candidate from the short list.
6.19 "Base competencies" introduced to speed up staffing. The Agency set out to develop the proposed staffing system. Given the large number of employees and the number of competencies in each Job Competency Profile (JCP), it decided to assess competencies only for employees seeking promotion. But it realized by 2003 that the project would take much more time and effort than anticipated. To speed up the process, it decided that, as a short-term measure, it would define a Base Competency Profile (BCP) and focus on assessing those competencies for staffing purposes. For employees, the base competencies are client service orientation, effective interactive communication, analytical thinking, teamwork and cooperation, and writing skills. We note that more competencies from the JCP can also be assessed if the hiring manager believes they are critical.
6.20 We expected to find that this short-term measure had been well planned and then communicated to staff. In fact, we found it had been put together without fully considering the impact it would have on the vision for staffing. For example:
- How would the competencies in the JCP, other than the base competencies, be assessed for staffing purposes, or would they be assessed?
- If it was important for employees to have all of the competencies in the JCP to be effective in the job and contribute to organizational success, when and how would employees be required to demonstrate the remaining competencies?
- Would pools of pre-qualified candidates be too large because many employees had the same BCP? Would this situation prevent hiring managers from obtaining a "short list" and force them to look for other ways to differentiate the candidates?
6.21 Furthermore, the temporary shift to BCP for staffing was not clearly communicated to employees. The Agency's internal website describes a vision of a pre-qualified workforce where employees have their competencies assessed outside of a selection process so that they are ready to compete for positions that interest them. This vision assumes that all of the competencies in a JCP will be used during the staffing process. Yet neither the vision statement nor its related documents explain that, as an interim measure to achieving this vision, the Agency will focus on assessing base competencies for staffing. Furthermore, the Agency has not clearly stated how it expects to achieve its ultimate goal of a workforce pre-qualified on all of the competencies needed for current and possible future jobs.
6.22 Little costing information. We also expected to see a full accounting of the costs of implementing the staffing component of CBHRM. We learned that the Agency had recently hired a consultant to develop an activity-based costing model for staffing, which should provide costing information for future years. However, in the absence of good information, the Agency was unable to tell us how much it has spent to date on the new staffing program.
The staffing process is confusing and frustrating for employees
6.23 The Agency's staffing model includes a Pre-Qualification Process (PQP) that requires objective assessment of an employee's competencies. The results of this assessment become part of the employee's competency profile and can be used in any selection process, a significant improvement over pre-Agency days when competencies or qualifications had to be re-tested for every selection process. Shortly after launching PQP in 2002, the Agency recognized that it did not have the capacity to fully implement the model, so it took steps to make the process more workable:
- It introduced more standardized tools to assess competencies, some of which took less of the assessors' time.
- It moved to the BCP discussed earlier, which dramatically reduced the number of competencies that needed to be assessed for staffing purposes.
- It introduced Observe and Attest where an employee's supervisor could observe the employee's behaviour over six months and then attest that the employee had a particular competency.
- It trained and accredited additional competency consultants. It also introduced Competency Overview Qualified Assessors and trained them to do some of the assessments on a part-time basis.
- It introduced voluntary assessments whereby employees could ask to have their competencies assessed outside of a selection process (this idea was part of the original plan but had not been put into practice due to the limited number of assessors).
6.24 The Agency's internal website contains a lot of information on the staffing process. As well, the Agency provides training to employees who apply for promotion. Despite this support, we found that, in general, employees have a poor understanding of how PQP works, in part because of the many changes that have been and continue to be made.
6.25 We also found that the staffing process is frustrating for employees. An employee survey by an external consultant in 2005 showed a high level of dissatisfaction with PQP. Our focus groups revealed that employees continue to be concerned about the overall fairness and transparency of the process. For example, many of the standardized tools to assess competencies require that employees write about or verbally describe one situation where they demonstrated a certain competency. Employees told us they felt that those who could write or speak well were more likely to achieve the required competency level even if they did not display the competency on a regular basis.
6.26 Employees also told us that their manager's view of whether they had demonstrated the particular competencies needed to do the job often did not agree with the results of the assessment of those competencies. While the introduction of Observe and Attest has allowed managers to assess some of the competencies of their employees, the Agency needs to strengthen the link between performance management, which includes a discussion of the demonstration of competencies, and the formal assessment of competencies. In a fully integrated CBHRM environment, these two functions would be strongly linked.
6.27 Finally, employees told us that it took a long time to write up their competencies or to prepare for an interview with an assessor. As well, the employee survey described earlier found that almost 60 percent of employees who were part of a PQP spent more than 30 hours preparing for the assessment stage. The Agency has allocated 7.5 hours during an employee's career to complete this task and expects employees to invest some of their own time.
Progress is slow in achieving expected staffing efficiencies
6.28 One of the goals in creating the Agency was to make it a more efficient and effective organization. This goal included significantly shortening the time it took to staff a position. The Agency has more than 600 internal staffing processes each year with an average of 47 applicants per process. It also has some 200 external recruitment processes each year with an average of 263 applicants. We examined this aspect of the new regime and expected to find that the changes had streamlined and simplified the staffing process.
6.29 The staffing process at the Agency has three distinct phases—prerequisite, assessment, and placement. The prerequisite stage ensures that only candidates who have the requisites stated in the job posting, such as educational attainment, will move on to the assessment stage. At the assessment stage, candidates who achieve or already possess the assessment results outlined in the job posting, such as proficiency levels on the base competencies, move into a pool of pre-qualified candidates. The hiring manager can then use placement criteria listed in the job posting, such as depth and breadth of experience, to select a candidate from the pool.
6.30 Before the Agency was created, it took 166 days on average to staff a position internally; if the staffing decision was appealed, the appeal could add several months or even years to the process. The time to staff was defined as the average number of calendar days from the start of the staffing process to the date of the first letter of offer to a candidate.
6.31 Under its new process, the Agency has defined time to staff as the average number of calendar days that elapse from the time the job posting appears until the pool is created (a pool is created once all of the candidates have been assessed and have requested recourse, if they choose to do so). The Agency's proposed performance indicators have a target of 60 days to staff a position internally and 97 days for external recruitment. Using this new definition and a new methodology, the Agency has calculated that it takes an average of 173 days to staff a position, through either internal staffing or external recruitment. However, this number does not give a full picture because the Agency does not track how much time it takes to appoint candidates from the pool to a position. The pools are used to staff positions that are currently vacant and similar positions that will become vacant in the future. For positions that were vacant at the time the job posting appeared, it would take more than 173 days to staff the position because the hiring manager would have to interview potential candidates or conduct further tests using the placement criteria. For positions that become vacant after the pool is created, the hiring manager simply needs to use existing placement criteria since potential candidates are already pre-qualified. Thus it should take much fewer than 173 days to staff those positions.
6.32 Due to a lack of data, we were unable to determine the average time it takes to staff a position from the time it becomes vacant until it is filled. However, using the Agency's indicator for time to staff, we conclude that the staffing process is not yet efficient. We note that in the past year, the Agency has increased its use of lengthy acting appointments to fill positions. While the Agency has not analyzed the reasons for this increase, inefficiencies in the staffing process could be one of them.
6.33 The Agency has stated that once most of its employees are assessed on their base competencies, staffing will be much quicker because those competency levels can be used in future selection processes. However, the Agency has not estimated how long it will take to assess its employees and those it will recruit or how much it will cost. At the time of the audit, only 30 percent of 43,000 employees had been assessed for the five base competencies. The Agency has around 225 qualified assessors. As well, managers can use Observe and Attest to assess three of the five base competencies. But it will take a long time to reach the goal of having base competencies assessed for all employees. Even then, the base competencies will essentially become prerequisites for a position and more testing will have to be done for most selection processes, thereby adding time.
6.34 Executive cadre. The human resources processes that apply to the Agency's executives differ somewhat from those used for the rest of the Agency's workforce. For example, the Agency decided to continue using the same key leadership competencies that are used for executives in the rest of the public service to maintain job mobility. Since 1999, the Agency has been using a more flexible version of the PQP process for executives. It relies more on assessment committees and other means—both of which tend to take less time. We found that the staffing process for executives has been streamlined and simplified—80 percent of staffing requests are completed within three months, an improvement over the 1998–99 fiscal year when the figure was 46 percent.
6.35 CBHRM is a sound foundation for human resources management, but the Agency has had great difficulty implementing the staffing component of it. Despite being responsive and creative in working to resolve the various problems that arose, the Agency is far from achieving its vision of a workforce pre-qualified on all of the competencies in the Job Competency Profile for staffing purposes. In our view, before pushing ahead with further initiatives, the Agency needs to reflect on the vision at a strategic level and develop a sound project plan to achieve it.
6.36 Recommendation. The Canada Revenue Agency should review its approach to staffing in a Competency-Based Human Resources Management environment in order to
- assess progress that has been made to date in reaching its vision of a pre-qualified workforce for staffing purposes;
- put in place a detailed action plan with incremental costs, timelines, and milestones to move the process from its current state to its desired state;
- better reflect employees' performance on the job in the formal assessment of competencies;
- communicate to employees the interim steps that are being taken to implement the vision and its progress toward achieving that vision to increase their level of comfort with the direction the Agency is taking; and
- assess the impact of any new changes after they are implemented, and communicate the results of this work to all employees.
The Agency's response. At this time, the Canada Revenue Agency agrees with four of the five points itemized in the recommendation. As explained in detail below, the Canada Revenue Agency will review the feasibility of the third point. Aligned with available resources, the Canada Revenue Agency will do the following:
- Conduct an analysis of the progress achieved to date in reaching our vision, and make appropriate recommendations to ensure alignment with the Agency's business needs.
- Put in place a detailed action plan to move the process from its current state to its desired state.
- Build on the existing communication that has taken place in order to increase employees' level of understanding of the direction being taken with Competency-Based Human Resources Management. This would include additional information concerning staffing and regular progress reports on the steps being taken for the implementation of future enhancements.
- Review and build on strategies currently in place to assess the impact of future enhancements and share these results with employees.
In regards to the third point, the Canada Revenue Agency will review the feasibility of including employee performance on the job in the formal assessment of competencies. This review will necessitate extensive stakeholder consultations, including consultation with unions as performance reviews are included in the collective agreements. Following this review, the Canada Revenue Agency will determine the appropriate future steps.
We expect to have completed these activities by 31 March 2010.
Approach to appeals of staffing decisions has been improved
6.37 We examined whether the Agency was using its staffing recourse authorities and expected to find that it had developed and implemented initiatives to allow it do so. Under the old regime, staffing recourse could only happen once an appointment was announced. Unsuccessful candidates or certain other employees could then appeal the appointment using the Public Service Commission's appeal process. In 1999, the Agency design team said that this process was too much of a burden, too time-consuming, and needed to be improved.
6.38 We found that the Agency had implemented a formal, three-part process for staffing recourse to determine whether an employee was treated arbitrarily.
- Individual Feedback (IF) is provided to employees by the hiring manager or a competency assessor to explain a decision made during a staffing process. Employees can also request IF to discuss career development.
- Decision Review (DR) is a review of a staffing decision by the supervisor of the hiring manager.
- Independent Third Party Review (ITPR) is a review of a staffing decision by a person external to the Agency.
6.39 Individual Feedback is available to employees at any of the three stages of the staffing process. At the assessment stage, the employee can also request DR. At the placement stage, the employee can request DR or ITPR as well as IF. The Agency expected the process to address concerns in a timely manner and to provide feedback on developmental needs. In addition, the process allows corrections to be made efficiently and candidates to re-enter the staffing process, a major advantage over the former appeal process.
6.40 Employees and their representatives have raised concerns that the new process is less transparent and fair than the former process and that the feedback they received was not effective. To respond to these concerns, the Agency did two reviews of recourse principles and processes (as well as doing a review that was required by the Canada Revenue Agency Act). The most recent review was done by senior operational managers, union representatives, and a human resources specialist. This working group was able to agree on most issues that were discussed and recommended ways to improve the process while maintaining its basic structure. The Human Resources Branch plans to implement those recommendations. The bargaining agents continue to disagree with management's position that employees cannot be represented at IF and DR.
More work needed on performance measures
6.41 One of the main reasons for creating the Agency in 1999 and giving it new authorities and flexibility in human resource management was so it could meet its business needs better. We expected to find performance measures for the staffing program that would demonstrate whether the Agency had accomplished this objective.
6.42 We found that during the development of its staffing program, the Agency did not determine how it would measure the program's success. Nor has it collected data that would help it demonstrate that its use of its staffing authorities is allowing it to meet its business needs better. While recent annual reports show that the Agency continues to meet most of its operational objectives, it has difficulty linking that result with the use of its new staffing authorities.
6.43 Despite a recognition by the Agency in 2000 that good performance indicators were needed and despite statements by the Agency since then that significant progress had been made in developing them, only recently has the Agency prepared a draft performance measurement and evaluation framework for resourcing (staffing), competency, performance, and recourse programs. Although the Agency has some indicators for staffing, such as time to staff, demographic data, and the number of requests for recourse, it still lacks other basic human resources indicators, such as cost per hire, mobility trends within the Agency, and the proportion of successful candidates in various selection processes. When implemented, the draft framework will provide much of this basic information.
6.44 Recommendation. The Canada Revenue Agency should finalize and implement its draft performance measurement and evaluation framework for resourcing, competency, performance, and recourse programs so it can provide management with the information it needs to plan, monitor, and improve those programs on an ongoing basis.
The Agency's response. The Canada Revenue Agency agrees with this recommendation. The performance measurement and evaluation framework for resourcing, competency, performance, and recourse programs will be finalized by 31 March 2009. This framework will be reflected in operational performance expectations for 2009–2010 and appropriate monitoring and reporting will follow.
Classification of jobs
6.45 The Agency was given the authority to classify its positions, in part so its classification system would fit its business needs more closely. We examined whether the Agency was using this authority and expected to find that the Agency had developed and implemented initiatives to allow it do so.
Total number of occupational groups has been greatly reduced
6.46 We found that the Board of Management approved a restructuring of the Agency's occupational groups in 1999 based on a recommendation by a design team of employees, managers, and union representatives. The restructuring reduced the number of occupational groups within the Agency, from 34 to seven—Executive; Management; Management Development; Services and Programs; Audit, Financial, and Scientific; Human Resources; and Information Technology.
6.47 The Agency has used its authorities to develop and implement classification standards for three of the seven groups: Management, Executive, and Services and Programs. While it plans to develop a classification standard for the Audit, Financial, and Scientific group and to revise the classification standards for two other groups—Human Resources and Information Technology—it has not yet set firm timelines for these projects.
New occupational group for managers was created
6.48 One of the Agency's goals was to create a management community that would recognize the importance of the manager's role in supporting employees throughout the Agency and be a focal point for leading and managing change within the Agency. We found that in 2002 it introduced the Management (MG) occupational group composed of managers from 22 occupational groups. The MG group increased the emphasis on people management skills and recognized this emphasis through performance incentives and specialized training.
6.49 During our focus groups and interviews, managers told us that, overall, the transition to the MG group was successful. The manager's role is understood and recognized by both managers and employees. We reviewed the Agency's 2005 survey of employees and noted improvements since the 2002 survey in the relationships between employees and their immediate supervisors. This result suggests that the emphasis on people management skills is taking hold.
6.50 Executive cadre (EC). The Agency implemented the EC group of about 550 executives in 2005 by merging the senior managers (SM) and executive (EX) groups. We found that the classification standard for EC jobs is based on the executive classification plan used in the rest of the public service, but customized for the Agency.
Over 25,000 employees now form one occupational group
6.51 In November 2007, the Agency implemented the Services and Programs (SP) occupational group by merging 16 occupational groups, totalling more than 25,000 employees, into one new group. The Agency had planned this change earlier, but put the project on hold in December 2003 following the creation of the Canada Border Services Agency and the departure from the Canada Revenue Agency of many employees who would have been part of the SP group. The project was revived in April 2005.
6.52 We found that the project was well managed. As an early step, the Agency consolidated some 1,300 existing jobs that were to be converted to the SP group into about 600 jobs. For example, it consolidated 70 different administrative jobs from across the Agency into the job of "Administrative Clerk" and then developed a generic work description for that job that encompassed the work descriptions of the previous jobs. This exercise made the final conversion easier because there were fewer jobs to convert. It also gave the Agency an opportunity to review the related Job Competency Profiles and to link competencies and work descriptions. During this process, the Agency consulted frequently with the Public Service Alliance of Canada (PSAC), which is the union representing all employees in the SP group. PSAC endorsed the conversion. We were told during our focus groups that the conversion was generally well received by employees and managers. We note that employees' pay rose by an average of 1.67 percent as a result of the conversion.
Benefits of classification changes need to be assessed
6.53 The Agency expected several benefits from restructuring its occupational groups, including a reduced administrative burden and costs due to fewer pay structures, fewer classification actions, and a simpler collective bargaining process. It also expected that the change would enhance employee mobility within the Agency by reducing the need for employees to change groups or work descriptions when they move into new jobs.
6.54 The Agency cannot yet demonstrate that its changes to job classifications have streamlined classification and other human resources management processes. Most changes that were expected to lead to efficiencies have only recently been undertaken, such as the conversion of the SP group and the consolidation of various jobs across the Agency. Therefore, it is too early to see or measure their effects.
6.55 The Agency has developed a classification case management tool that it plans to use to track the time and costs required to classify positions. It has recently finalized a framework to monitor the effectiveness of its classification activities and it is starting to use it.
The Agency is committed to a competitive compensation package
6.56 The Canada Revenue Agency was given the authority to determine and regulate its employees' pay and benefits, as well as to decide the hours of work and leave of those employees, and any related matters. This authority rests with the Treasury Board for most of the federal public service. We examined whether the Agency was using this authority. Since one of the reasons for creating the Agency was to allow it to offer a compensation package that would enable it to attract and retain the expert employees it needs to meet its operational objectives, we expected to find that it had developed and implemented initiatives to allow it do so.
6.57 We found that the Board of Management had approved a compensation policy in 2001 that commits the Agency to maintaining rates of pay that are competitive for its employees, and to address any pay gaps that studies showed were affecting its ability to attract and retain qualified staff.
6.58 For the Executive Cadre, the Agency has adopted the findings and recommendations of the federal government's Advisory Committee on Senior Level Retention and Compensation, including revisions to salary ranges and performance pay for its executives. The Agency also adopted the Treasury Board's pay-at-risk scheme for executives but added an effective people management component.
6.59 For other employees, the Agency has researched economic and labour market conditions and recent collective agreements from both the public service and private sectors before each round of collective bargaining. It has also reviewed demographics and compensation data that pertain to its workforce and has commissioned compensation studies for two occupational groups—auditors and computer specialists—to ensure that its bargaining position would be enough to attract and retain these skilled employees.
6.60 Employees told us that the compensation they receive, including pay, benefits, job security, work/life balance, and flexible work arrangements is generally competitive, especially at the entry level where the Agency does most of its recruiting. The Agency has a 95 percent employee retention rate overall (98 percent if retirements are excluded) and attracts employees in most locations across the country.
6.61 The Canada Revenue Agency Act gave the Agency the status of separate agency under the Public Service Labour Relations Act (PSLRA). The PSLRA sets the main legislative framework supporting labour relations in the federal public service. Under the PSLRA, the Agency can now conduct collective bargaining directly with its bargaining agents, establish consultative and coordination mechanisms with unions, and establish recourse processes including mediation. These authorities previously rested with Treasury Board.
6.62 We expected to find that the Agency had used its authority to develop and implement labour relations initiatives in compliance with the PSLRA.
Collective agreements have been successfully negotiated and signed
6.63 In 1999, the Agency had six bargaining agents representing 13 bargaining units. The Board of Management approved a plan to consolidate the bargaining unit structure and the plan was presented to the Public Service Staff Relations Board (PSSRB). The PSSRB (now the Public Service Labour Relations Board) approved two bargaining agents, the Public Service Alliance of Canada (PSAC) and the Professional Institute of the Public Service of Canada (PIPSC), to represent two bargaining units. The Agency expected several benefits from this consolidation, including fewer collective agreements to negotiate and a streamlining of the terms and conditions of employment in those agreements.
6.64 The Agency's Board of Management approves the negotiating mandate before management begins the collective bargaining process. The Act requires the Agency to consult with the Treasury Board on its human resources plan, including total increases in employee salaries or benefits, before it begins collective bargaining. While this requirement is for consultation and not approval, the Treasury Board is still responsible for approving the Agency's total budget and Corporate Business Plan.
6.65 We found that since its creation, the Agency has negotiated and signed four collective agreements with PSAC and four with PIPSC with no major labour unrest except for a strike by PSAC in 2004. It recently reached an agreement with PSAC before the old agreement had expired. This event is seen by both the Agency and the union as a significant achievement in labour relations. The new agreement includes pay increases of 2.5 percent in each of the next three years. Renegotiation of the collective agreement with PIPSC was ongoing at the time of the audit.
6.66 We also found that the Agency has used its ability to negotiate its own collective agreements to make some changes to rates of pay and benefits to meet its business needs and the needs of its employees. We note that, for the most part, its compensation remains similar to that of the rest of the public service.
New approaches are helping resolve conflicts early
6.67 In 1998, a design team was set up to identify and develop new approaches and options for dealing with workplace conflicts, such as cultural or generational differences. The team recommended that the Agency move to a fully integrated conflict management system in which the rights of employees to seek redress through formal means would be maintained (a rights-based approach) while new methods, such as open communication, individual consultation, conflict coaching, and mediation (interest-based approaches) would be introduced to help staff at all levels settle conflicts early.
6.68 The Board of Management approved this approach and the Office of Dispute Management—since renamed the National Conflict Resolution Office—was set up within the Human Resources Branch. The Office develops guidelines, policies, and learning tools. It also oversees third-party intervention services (such as mediation) and administers the Independent Third Party Review that is part of staffing recourse.
6.69 Employees told us that they are using both web-based tools and advisers provided by the Office to resolve conflicts early, before they turn into formal grievances. The Public Service Labour Relations Act encourages organizations to find ways to resolve workplace conflicts at the lowest level possible in collaboration with unions. We found that the Agency is using a number of approaches to resolving conflicts, such as coaching, advice, and guidance from experts, facilitation, and mediation. As well, the Agency requires that managers and employees take training courses to help them deal with conflict in the workplace. We note that the number of formal grievances has fallen since the 2002–03 fiscal year.
Union-Management Initiative seeks to improve workplace relations
6.70 In 2005, the Agency established a national Union-Management Initiative (UMI), which built on a similar initiative developed by the Atlantic Region. UMI's goal is to improve workplace relations and to resolve conflicts as soon as possible. The philosophy of UMI is based on
- equality of the parties within the consultative process;
- mutual trust and respect;
- a commitment to be constructive, fair, sensitive, and courteous;
- facilitation of constructive decision making and problem solving at the lowest possible level;
- knowledge of and mutual respect for laws and policies that govern union-management relationships; and
- an understanding of the functions and objectives of each party.
6.71 UMI involves workshops that happen in two phases. We found that most offices across Canada had completed phase one and some were working on phase two. In many locations, union representatives and managers told us that UMI formalized what already existed and it was well received. In other locations, they said it has helped to improve union-management relations. In a few locations, they told us that the expected benefits have yet to be realized.
6.72 The Agency has also worked with the unions in introducing other changes to the human resources management regime, such as the Services and Programs (SP) conversion (discussed in the section on Classification of Jobs), a review of term employment, changes to the conflict resolution policy, and a review of staffing recourse. Union representatives and managers at the national, regional, and local levels told us that labour relations are generally harmonious and better than they were in 1999.
6.73 The Canada Revenue Agency has used the human resources authorities and flexibility it was granted by Parliament in 1999. It has faced significant challenges in developing and implementing initiatives to use its new authorities. Having set an ambitious change agenda, it has worked to implement that agenda.
6.74 The Agency has developed a human resources management regime that is responsive to its specific business needs. For example, it has defined the competencies required to do most of its jobs and updated work descriptions. It has created distinct occupational groups and implemented three of them. It has bargained directly with its bargaining agents. Using its authorities, the Agency has also worked with unions to improve labour relations.
6.75 The Agency lacks data to clearly demonstrate that it has used the human resource authorities and flexibility it was granted by Parliament to make its human resources management regime more efficient. However, the Agency believes that its classification reforms will result in efficiencies, although it is too early to tell. As well, it believes that the reduced number of bargaining agents has likely resulted in efficiencies. The new staffing process has not yet resulted in faster staffing actions.
6.76 While the Agency also lacks performance measures and data to clearly demonstrate whether its human resources management regime is effective, it has a high employee retention rate and recent annual reports show that it is meeting most of its operational objectives.
6.77 The Agency's 2008–2009 to 2010–2011 Workforce Plan identifies several human resource challenges that the Agency is facing in the short- and medium-term. In our view, while the Agency's reforms in the areas of classification, compensation, and labour relations should help it successfully meet those challenges, it needs to reflect on its approach and prepare detailed plans before pushing ahead with further reforms to its staffing process.
About the Audit
The objective of the audit was to determine whether the Canada Revenue Agency can demonstrate that it has used the human resource authorities and flexibility it was granted by Parliament to make its human resources management regime more efficient and to ensure that it is effective and responsive to the Agency's business needs.
Scope and approach
We looked at the human resources authorities granted to the Agency under the Canada Revenue Agency Act and examined the Agency's use of these authorities. We also examined whether the Agency can demonstrate that its management of human resources is more efficient in providing it with the workforce that it needs to meet its mandate and that it is effective and responsive to the Agency's business needs.
This audit focused on the following lines of enquiry, each of which reflects the significant changes that came about when the Agency became a separate agency:
- staffing, recruitment, and staffing recourse authorities;
- classification authorities;
- compensation authorities;
- labour relations and recourse authorities and conflict resolution.
We did not examine those areas where changes occurred that were not directly related to the new authorities. Nor did we examine issues where there was no change in the regime such as Official Languages or Employment Equity.
We interviewed officials in the various Directorates of the Human Resources Branch at headquarters in Ottawa as well as members of the Board of Management and representatives from the two bargaining agents. We also conducted focus groups of managers and employees at headquarters. We obtained and reviewed relevant documents, analyzed information, and extracted data related to demographics, staffing processes, classification, compensation, and labour relations. We also examined the 2005 employee survey and internal audit reports for information related to our four lines of enquiry.
In addition to headquarters, we visited eight Tax Services Offices, two Tax Centres, four regional offices, and one Compensation Centre. During those visits, we interviewed senior officials and conducted 31 focus groups with employees, managers, and executives to obtain their views on the progress, issues, and challenges related to our four lines of enquiry. Participants in the focus groups were chosen by the local office.
The period covered by the audit was from the time the authorities were given (1999) to 30 June 2008.
Listed below are the criteria that were used to conduct this audit and their sources.
|Use of authorities|
We expected that the Agency would have developed and implemented initiatives to use the human resources authorities it was granted by Parliament under the Canada Revenue Agency Act.
|Streamlining of human resource operations|
We expected that the changes the Agency made to its human resources management regime would have streamlined and simplified its human resources operations.
|Attraction and retention of its workforce|
We expected that the Agency's human resources management regime would enable it to attract and retain the workforce it needs to meet its operational objectives.
Audit work completed
Audit work for this chapter was substantially completed on 30 June 2008.
Assistant Auditor General: John Rossetti
Principals: Jamie Hood, Marie Bergeron
Director: Claude Brunette
For information, please contact Communications at 613-995-3708 or 1-888-761-5953 (toll-free).
Appendix—List of recommendations
The following is a list of recommendations found in Chapter 6. The number in front of the recommendation indicates the paragraph where it appears in the chapter. The numbers in parentheses indicate the paragraphs where the topic is discussed.
|The staffing process|
6.36 The Canada Revenue Agency should review its approach to staffing in a Competency-Based Human Resources Management environment in order to
At this time, the Canada Revenue Agency agrees with four of the five points itemized in the recommendation. As explained in detail below, the Canada Revenue Agency will review the feasibility of the third point. Aligned with available resources, the Canada Revenue Agency will do the following:
In regards to the third point, the Canada Revenue Agency will review the feasibility of including employee performance on the job in the formal assessment of competencies. This review will necessitate extensive stakeholder consultations, including consultation with unions as performance reviews are included in the collective agreements. Following this review, the Canada Revenue Agency will determine the appropriate future steps.
We expect to have completed these activities by 31 March 2010.
6.44 The Canada Revenue Agency should finalize and implement its draft performance measurement and evaluation framework for resourcing, competency, performance, and recourse programs so it can provide management with the information it needs to plan, monitor, and improve those programs on an ongoing basis. (6.41–6.43)
The Canada Revenue Agency agrees with this recommendation. The performance measurement and evaluation framework for resourcing, competency, performance, and recourse programs will be finalized by 31 March 2009. This framework will be reflected in operational performance expectations for 2009–2010 and appropriate monitoring and reporting will follow.
Competency-Based Human Resource Management (CBHRM)—A human resources framework that is based on the premise that employees will be selected, evaluated, developed, and promoted based on competencies that support organizational success. (Return)
Staffing recourse—A process that gives people a chance to raise concerns about staffing and to have those concerns addressed in a timely manner. (Return)