Archived - Audit of Integrated Human Resources Planning

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Prepared by Internal Audit and Evaluation for:
Department of Finance
Audit and Evaluation Committee

January 4, 2012

Table of Contents

Executive Summary
Background
Audit Objective and Scope
Approach, Assurance and Auditing Standards Employed
Conclusions
Findings by Audit Criteria
Recommendations and Management Action Plan

Appendices

Appendix A – List of Finance Employees Interviewed
Appendix B – Key Reference Documents Consulted
Appendix C – Members of the Audit Team

Executive Summary 

The Clerk of the Privy Council defines integrated planning as one of the four pillars of the Government of Canada’s ongoing commitment to Public Service renewal.   As such, federal departments and agencies have been encouraged to move towards improving human resources planning (HR planning), as part of integrated business planning, to further support the overall decision-making process.

The objective of the audit was to assess the Department of Finance’s integrated human resources planning, including corporate HR plans and related strategies, as well as their implementation.

The audit concluded that overall, the Department’s HR planning is in line with good management practices and the TBS guidelines on integrated planning.  Specifically, this includes alignment and effective integration of business and HR planning, a Corporate HR Plan supported by an environmental scan and gap analysis, regular reporting, as well as the implementation of several measures to address risks related to retention and recruitment.

Although overall HR planning is well positioned within the Department and in line with established guidelines, an opportunity for improvement was noted regarding further strengthening  of existing reporting practices by including an assessment of results against well defined targets, such as those within the Corporate People Management Framework, which is incorporated in the 2011-2012 Corporate HR Plan.

Background 

The Audit of Integrated Human Resources Planning was approved as part of the Department of Finance’s three-year risk-based audit plan, tabled at the departmental Audit and Evaluation Committee meeting on December 8, 2009.  This is the first time that an internal audit of HR planning was conducted for the Department.

Integrated planning is central to the successful implementation of the Public Service Modernization Act.  As such, the Department has had an integrated approach to business planning for several years. 

Specifically, the Department has a defined planning cycle, which integrates business, human resource, risk management, as well as other aspects of corporate planning.  The Department’s 2008-2011 HR plan, which spanned a three-year period, was developed prior to the decision to establish separate Corporate Services branches, in both the Department of Finance and the Treasury Board Secretariat in February 2009. Since the split, HR planning has progressed towards an integrated approach, which included annual Corporate HR action plans for fiscal years 2009-2010 and 2010-2011 in support of the three-year plan, as well as annual progress reports. 

Within the Department, the Corporate Services Branch (CSB) is responsible for providing a variety of corporate services, which include services related to corporate planning and human resources.  All departmental branches play an integral role in the integrated planning process, as they provide the raw data and information which forms the basis of integrated business and HR planning.  In addition, branches use the integrated plan to manage business needs.

Audit Objective and Scope 

Objective

The objective of the audit was to assess the Department’s integrated human resources planning, including corporate HR plans and related strategies, as well as their implementation.

Scope

The audit scope comprised of all activities related to the development, monitoring and reporting within the Department’s integrated human resources planning function from February 2009 up until October 2011.  These included:

  • Roles and responsibilities related to HR planning.
  • The integration and alignment of HR planning with business planning.
  • The identification of organizational HR needs based on environmental scans and gap analyses conducted during the audit period.
  • The monitoring and reporting on progress against HR priorities on a regular basis.
  • The Department’s strategies, including relevant aspects of their implementation, related to recruitment and retention.

The scope did not include:

  • An assessment of other departmental HR management practices, such as classification, labour relations, pay, etc.
  • An audit of branch specific HR action plans.
  • Analyzing environmental scans conducted prior to the split of corporate services between the Department and the Treasury Board Secretariat in February 2009.

Approach, Assurance Statement and Auditing Standards Employed

The audit was conducted in accordance with Treasury Board policy, directives and standards on internal audit and the procedures used to meet the professional standards of the Institute of Internal Auditors.  These standards require that the audit be planned and performed in such a way as to obtain reasonable assurance that the audit objective is achieved.  During the audit, appropriate procedures were followed and sufficient evidence was obtained to support the accuracy of findings and the overall audit opinion presented in this report.  The findings are based on a comparison of the conditions, as they existed at the time of the audit, against the audit criteria identified within this report, which was accepted by management.  The opinion is applicable only to the entity examined and are supported by relevant and sufficient evidence to ensure its integrity.

Audit procedures included, but were not limited to, interviews, observations, review of supporting documentation, and analytical testing.  The audit criteria used to develop the required audit tests were based on good management practices such as (1) the Treasury Board Secretariat’s Integrated Planning Guide and (2) relevant elements of the Office of the Comptroller General’s Audit Criteria Related to the Management Accountability Framework.

In total, fifteen individuals were interviewed including personnel from seven of the Department’s branches (list of interviewees is provided in Appendix A).  These employees were consulted on one or more criteria, and to different levels of depth, depending on their role related to Integrated HR Planning.  The audit team also conducted a review and analysis of applicable authorities and policies, as well as others documents from various relevant sources (list of key documents consulted is provided in Appendix B).

The audit approach allowed for the audit results to be communicated in such a manner as to enable management to review and provide feedback on the findings and conclusions before they were finalized.

Conclusions 

The audit concluded that, overall, the Department’s integrated human resources planning function is in line with good management practices and the TBS guidelines on integrated planning.  In particular, the following good management practices and key aspects are worth noting:

  • The Department’s 2011-2012 Corporate HR Plan is aligned with business and corporate planning, with effective oversight and direction from senior management.
  • The Department’s integrated HR planning is supported by an environmental scan and gap analysis.
  • The Department’s 2011-2012 Corporate HR Plan included specific, measurable and timely HR performance measures and has provided management with reports on a regular basis.
  • The Department has developed and implemented recruitment and retention strategies to address related priorities identified in the integrated HR plan.

Although overall integrated HR planning is well positioned within the Department and in line with established TBS guidelines, an opportunity for improvement was noted in the following area:

  • Further strengthening existing reporting practices by including an assessment of results against well defined targets, such as those within the Corporate People Management Framework which is incorporated in the 2011-2012 Corporate HR Plan.

Findings by Audit Criteria 

The following pages present the assessment of risk exposure identified in the audit. Risk exposure for each audit criteria is categorized as follows:

High exposure
Medium exposure
Low exposure

A high, medium or low ranking corresponds to the potential risk exposure auditors believe may have an impact on the achievement of Department objectives, and is indicative of the priority management should give to the recommendations.

The assessment summarizes the audit observations based on the factual evidence gathered and analyzed during the audit. Based on these assessments, issues/themes along with potential causes, impacts, management initiatives and recommendations are summarized in the “Recommendations and Management Action Plan” section.

Findings by Audit Criteria 
Criterion Risk Exposure Assessment
1.0 Integration of Human Resources and Corporate Planning
The Department’s integrated human resources plan (IHRP) is aligned with business and corporate planning, with effective oversight and direction from senior management. Low

The Department’s integrated human resources plan is aligned with business and corporate planning, with effective oversight and direction from senior management.

Integrated planning, i.e. the alignment of HR planning with business and corporate planning, plays a key role in supporting the organization to achieve its objectives. It supports the alignment of human resource needs, both current and future, with the organizations strategic direction and other organizational needs.

The audit assessed the 2011-2012 Corporate HR Plan, which forms part of the Department’s 2011-2012 Integrated Business Plan and found that overall:

  • It was clearly and effectively integrated with business and corporate planning.
  • Priorities identified in the plan were aligned and consistent with those of the Department, as well as those of the Government of Canada (Clerk of the Privy Council).
  • The plan plays an integral role, similar to previous HR plans and related documentation, as a mitigation strategy for related risks identified within the Department’s Corporate Risk Profile.
Furthermore, the audit confirmed that management committees, such as the Management Advisory Committee (MAC), receive and review key information related to the corporate HR plan, and provide direction and oversight on a regular basis.  For example, the approved 2011-2012 Corporate People Management Framework exemplified such effective oversight as it was discussed in detail at multiple MAC meetings and effectively incorporated the feedback received.
2.0 Environmental Scan and Gap Analysis
The Department’s Integrated HR planning is supported by an environmental scan and gap analysis. Low

The Department’s integrated HR planning is supported by an environmental scan and gap analysis.

An integral part of integrated planning includes analyzing the environment and assessment of gaps to determine whether the organization has the appropriate resources to meet current and future needs.  The audit found that a thorough environmental scan was conducted by analyzing key areas such as aging labour force, diversity, employment equity representation and official languages through the Department’s 2011-2012 Strategic Outlook and collecting HR staffing planning input from all branches, as part of the annual integrated business planning exercise.

The audit also found that an effective gap analysis was conducted and formed the basis for the priorities identified in the 2011-2012 Corporate HR Plan - which were also supported by specific planning actions.  For example, Priority #1, maintaining a highly qualified and represented workforce was supported by the following :

  • new recruits through the University Recruitment campaign;
  • economist Development Program appointments; and
  • addressing a specific employment equity gap
3.0 Monitoring and Reporting
The Department monitors and reports on progress of its integrated HR plan on a regular basis. Low

The Department’s 2011-2012 integrated HR plan included specific, measurable, attainable and timely HR performance measures, which will allow for improved reporting of performance against established targets, within existing annual HR progress reports.

A key element of performance measurement is the establishment of clear objectives and targets that are specific, measurable, attainable and time-oriented.  The existence of such a measurement framework allows an organization to effectively measure and report on whether targets identified to achieve a desired outcome have been met.

The audit found that, overall, performance measures established as part of the People Management Framework in the 2011-2012 Corporate HR Plan generally included targets which were specific, measurable, attainable and timely.  This was a significant improvement over the previous 2008-2011 Integrated HR Plan.  Examples of such improvements include:

2008-2011 IHRP Targets

  • Progressive decreases in attrition rates.
  • Meet workforce labour availability targets for the Department.
2011-2012 Corporate HR Plan Targets
  • Maintain an acceptable retention rate between 85% and 90%.
  • Decrease the representation gap for Aboriginal peoples.
  • Decrease the representation gap for persons with disabilities.

Over the past two fiscal years, the Department has been monitoring progress on its HR Action Plans and reporting on their achievements through the annual Report on Achievements and Priorities.  Achievements were assessed against some of the initial goals in the three-year plan or against the strategies from the following annual corporate HR action plans.  These performance measures; however; were not well defined with specific, measurable, attainable or time-oriented targets.  Therefore, the reports did not always include an assessment of results against well defined targets, thus limiting the Department’s ability to determine whether desired outcomes were fully achieved. 

As the 2011-2012 Corporate HR Plan includes a People Management Framework with improved performance measures, the audit recommends that future reporting on Corporate HR plans include an assessment of results against well defined targets, such as those within this Framework.  This will contribute to further improve the quality of performance information reporting.

4.0 Implementation of Recruitment and Retention Measures
The Department has implemented recruitment and retention measures to address related priorities identified in the integrated HR plan. Low

The Department has developed and implemented a number of recruitment and retention measures to address related priorities identified in the integrated HR plan.

The Department’s 2011 Corporate Risk Profile (CRP) identifies recruitment and retention challenges as one of the areas of significant risk facing the Department.  Similarly, previous versions of the CRP have also identified these as major areas of risk.

The Department has a Recruitment and Staffing Strategy (RSS) in place, which includes a number of targeted staffing activities to address the Department’s people management needs, including those related to recruitment and retention. 

Regarding recruitment measures, the audit found that the RSS includes an active annual University Recruitment Program (URP) in place to target new graduates.  The program aims to recruit recent graduates and includes visits to university campuses.  The 2010-2011 Report on Achievements and Priorities, for example, highlights the achievements of this program which included a significant increase in on-campus visits, on campus interviews and the successful recruitment of 22 new graduates. In addition, recruitment continued to be a priority for 2011-2012as evidenced in the Department’s 2011-2012 Recruitment and Staffing Strategy, where the Department plans to hire nine new URP recruits.

The audit also found that the RSS includes activities that specifically address retention.  For example, it includes a development program for economists, which allows them to receive promotions based on a distinct process whereby a candidate that has demonstrated a high-level of performance can be considered for progression provided that they meet the merit criteria for the next level. The 2011-2012 People Management Framework also specified a target of maintaining a departmental retention rate of 85-90% for 2011-2012.  In addition, the Department’s senior management further supports retention through other activities planned in the People Management Framework, such as the development of a work-life balance action plan and the implementation of a new policy on Awards and Recognition. 

Recommendations and Management Action Plan

The following section presents the key opportunities for improvement identified during the audit.  The impact and recommendations are also presented. When applicable, relevant management initiatives already underway are included.For eachrecommendation, management has provided:

  •  an action plan, which addresses the recommendation;
  •  the position responsible for implementing the action plan; and,
  •  the target date for completion

1. Strengthen reporting of results against targets

Observations and Impact

While the 2008-2011 Integrated Human Resource Plan (IHRP), which was prepared prior to the split of corporate services in February 2009 included a Performance Measurement Framework, the Framework did not include performance targets that were specific, measurable, attainable and timely.  Targets were vague, not quantified or easily measurable.  Furthermore, they were not committed to a particular timeline, as the plan covered a three-year period.  As a result, the Department’s ability to effectively report achievements against specific targets was reduced. 

Over the past two fiscal years, the Department has been monitoring progress on the HR Action plans and reporting on their achievements through the annual Report on Achievements and Priorities. Achievements were assessed against some of the initial goals in the three-year plan or against the strategies from the following annual corporate HR action plans.  These performance measures, however; were not well defined with specific, measurable, attainable or time-oriented targets.  Therefore, the reports did not always include an assessment of results against well defined targets, thus limiting the Department’s ability to determine whether desired outcomes were fully achieved.

The audit found that the 2011-2012 Corporate HR Plan includes a People Management Framework with improved performance measures that are specific, measurable, attainable and timely. As such, the audit recommends that future reporting on Corporate HR plans include an assessment of results against well defined targets, such as those included within the People Management Framework.  This will contribute to further improve the quality of performance information reporting.

Recommendation

The audit recommends that future reporting on Corporate HR plans include an assessment of the performance achieved against well defined performance measures, such as those within the 2011-2012 People Management Framework.  Specifically, future reporting should include an assessment of results against specific, measurable, attainable and time-oriented targets.

Management Response

The Branch has already implemented measures to address this observation. The 2011-2012 Integrated Planning exercise which culminated with the approval of the Department’s Integrated Business and HR Plan contains 26 specific people management activities in order to reach 10 outcomes under 3 main priorities.  Each of these outcomes includes a target that is specific, measurable, attainable and time-oriented. 

For 2011-2012, the Department is pro-actively monitoring each target and has already reported on them in the context of a mid-year update presented to the Management Advisory Committee (MAC) members on November 16, 2011. The Department of Finance’s 2012-2013 Integrated Business Plan will publish a comparison of results against all established targets. This document is expected to be communicated to all employees in the second quarter of 2012-2013. The Integrated Planning exercise is cyclical and the model adopted will continue to articulate specific activities with desired outcomes for human resources.

The Director, Strategic and Executive Services, Human Resources Directorate, who is monitoring the progress of the corporate HR Plan, is responsible for the full implementation of this recommendation. Specifically:

  • for 2011-2012, a comparison of results against all established targets will be published and communicated to all employees in the second quarter of 2012-2013; and
  • future HR plans will continue to include an assessment of performance achieve against well defined targets/measures.

Appendix A 

List of Department of Finance Canada Personnel Interviewed

  • Executive Director, Human Resources Division (Corporate Services Branch)
  • Senior Director, Corporate Planning Division (Corporate Services Branch)
  • Director, Strategic and Executive Services, Human Resources Division (Corporate Services Branch)
  • Assistant Director, HR Planning and Strategic Initiatives, Corporate Planning Division (Corporate Services Branch)
  • Assistant Director, Strategic Initiatives, Human Resources Division (Corporate Services Branch)
  • Senior Analyst, Corporate Planning Division (Corporate Services Branch)
  • Senior EX Services Officer , Strategic and Executive Services , Human Resources Division (Corporate Services Branch)
  • HR Advisor, Strategic and Executive Services , Human Resources Division (Corporate Services Branch)
  • Senior Chief, Equalization, Payments Administration and Research (Federal-Provincial Relations and Social Policy Branch)
  • Administrative Assistant (Federal-Provincial Relations and Social Policy Branch) 
  • Director, Economic Studies and Policy Analysis (Economic and Fiscal Policy Branch)
  • Head, Program Operations & Administrative Services (Consultations and Communications Branch)
  • Analyst (International Trade and Finance Branch)
  • Administrative Assistant (Tax Policy Branch)
  • Senior Advisor, Business Management Division (Law Branch)

Note: Employees interviewed were consulted on one or more criteria, and to different levels of depth, depending on their role related to Integrated HR Planning.

Appendix B 

Key Reference Documents

Legislation

  • Public Service Employment Act
  • Public Service Modernization Act
  • Employment Equity Act
  • Official Languages Act

Reports

  • Seventeenth Annual Report to the Prime Minister on the Public Service of Canada , for the year ending March 31, 2010
  • Eighteenth Annual Report to the Prime Minister on the Public Service of Canada , for the year ending March 31, 2011

Guidelines

Other Documents

  • Clerk of the Privy Council’s Action Plan (2008-2009)
  • Clerk of the Privy Council’s Action Plan (2009-2010)
  • Clerk of the Privy Council’s Action Plan (2010-2011)

Documents Specific to Finance Canada

  • Integrated Human Resources Plan 2008-11
  • Corporate HR Plan 2011-2012
  • Integrated Business Plan 2009-2010, 2010-2011 and 2011-2012
  • Human Resources Strategic Outlook 2011-2012
  • Recruitment and Staffing Strategy 2010-2011
  • HR Recruitment and Staffing Strategy 2009-2010
  • Report on Achievements and Priorities 2009-2010
  • Report on Achievements and Priorities 2010-2011
  • HR Action Plan 2009-2010
  • HR Action Plan 2010-2011
  • Departmental Performance Report 2008-2009 and 2009-2010
  • Reports on Plans and Priorities 2008-2009, 2009-2010 and 2010-2011
  • EC Development Program Guide
  • Employment Equity Plan 2007-10
  • Other relevant internal documents

Appendix C 

This audit was conducted by:

  • Rim Ben Saad, B.Comm, Senior Auditor, Internal Audit and Evaluation
  • Abdillahi Roble, CGA, B.Comm - Senior Auditor, Internal Audit and Evaluation
  • Olivia Zhu, MPA, CIA - Senior Auditor, Internal Audit and Evaluation
  • Ziad Shadid, CGA, B.Comm - Audit Manager, Internal Audit and Evaluation
  • Christian Kratchanov, MBA, CIA, Adm.A, CMC, Chief Audit and Evaluation Executive, Internal Audit and Evaluation