Management Practices Audit of the Regional Operations Sector

Organizational and Environmental Context of the RO Sector

Given the RO Sector's broad and varied mandate, the context within which the Sector operates was an important consideration when planning and conducting the audit. The following paragraphs provide details on the Sector's organizational and operational context during the audit.

Not only is the Sector responsible for delivering programs and services in the Department's seven South of 60 regional offices, it is responsible for providing program and policy direction in two key programming areas. Accordingly, the Sector's management practices, including those within the scope of this audit, must be adequate and effective relative to the context within which RO operates. Against this backdrop, the Sector has also been impacted by a variety of organizational restructurings over the last several years dating back to September 2008 when RO Sector was created through a departmental reorganization that saw the Socio-Economic Policy and Regional Operations Sector divided into two separate sectors: the Education and Social Development Programs and Partnerships Sector and RO Sector.

When the Sector was created, the Governance Branch was transferred to RO from Lands and Trusts Services Sector (now Lands and Economic Development). In April 2011, a second branch, Community Infrastructure, was transferred to RO. In March 2013, prior to the completion of this audit, RO was restructured and a third branch, the Sector Operations Branch, was established. This branch includes the newly named Planning and Business Integration Directorate (formerly OPS) as well as three other functional areas: issue management; emergency and incident management; and the Business Management Unit (previously part of OPS). In addition to the various changes that have occurred at the branch level since RO was created, various Directorates have been added, removed, and restructured within the Sector. A chronology of the reorganizations impacting the RO Sector is provided in Appendix B.

The establishment of the Planning and Business Integration Directorate and the creation of the Sector Operations Branch illustrate the complex and dynamic nature of the Sector's mandate and how its roles and responsibilities continue to expand and change. Given the extent and frequency of the changes that have occurred, Sector plans, priorities and practices must continually be revised and updated. Accordingly, management must remain mindful of this requirement and take continuous steps to address it.

5.1.1 Accountability

In any organization, it is critical that authority, responsibility and accountability are clear and that delegated authority is aligned with an individual's responsibility. In addition, an effective organizational structure should be clearly defined and documented; ensuring clear lines of communication and reporting are in place, and providing for an appropriate span of control. Finally, the organization accountabilities in support of collaborative initiatives should be formally defined.

Within RO, delegated authority levels (both financial and human resources) are established by AANDC HQ. Responsibilities and accountabilities are defined and documented through employee work descriptions, the Employee Performance Management process, staff meetings, branch workplans and quarterly reports. For the Community Infrastructure and Governance Branches, responsibilities and accountabilities are further defined and communicated through program documentation such as Treasury Board authorities, program policies and guidelines, and the Department's Budget Management Regimes. In the case of the Capital Facilities and Maintenance (CFM) Program, a Management Control Framework has also been established that includes the roles and responsibilities of staff at HQ and in regions. While staff reductions as a result of DRAP have impacted responsibilities and accountabilities (and workload distributions) within some directorates, Sector management has taken steps to address these impacts. By way of example, the audit noted that the Professional and Institutional Development Directorate of the Governance Branch completed a skills mapping exercise to identify and link the experience and skills of its current staff to the current and future functional activities of the Directorate. The results of the mapping exercise were leveraged to support the development staff learning plans.

The audit found, however, that certain responsibilities and accountabilities of the recently restructured OPS Directorate were not clearly defined or communicated. Through interviews with management it was evident that the Directorate had a broad and varied mandate. In addition to housing the Business Management Unit for the Sector and acting as the secretariat for a number of departmental committees, the Directorate supports the regional implementation of departmental policies and programs. Equally as important, it supports the development and implementation of key transformative initiatives within the Department (including horizontal projects) and leads the Department's efforts to improve the delivery of services to Canadians. It is these latter areas of responsibility and accountability that were lacking in clarity. Management advised that this was, in part, the motivation for the recent Sector reorganization that led to the creation of the Sector Operations Branch.

Clearly defined and communicated responsibilities and accountabilities are particularly important for the recently restructured OPS Directorate (now the Planning and Business Integration Directorate) given the breadth of its mandate, the extent to which it works with other sectors in the Department, and the organizational restructuring underway.

5.2.1 Internal Communication

Open and effective channels for internal communications and feedback are important in ensuring that decisions are effectively implemented and that accurate feedback is received. They also ensure that relevant information is provided to staff and personnel on a timely basis.

Based on interviews with management and staff and a review of sample communications, a variety of internal communication channels were identified to facilitate the flow of information within the Sector. These communications channels include management and staff meetings that occur within the Sector's branches and the OPS Directorate, email communications, the use of AANDC Express – a weekly electronic newsletter, and informal communication (i.e. discussions within working groups and communities of interest). Between HQ and regional offices, the audit noted that the Senior Assistant Deputy Minister holds weekly videoconferences with his direct reports (the Regional Directors General, the Director General of Governance Branch, the Director General of Community Infrastructure Branch and the Director of OPS). This management group also meets at various times during the year as the RO Senior Management Committee (see section 4.5.1). It was also noted that Community Infrastructure Branch and Governance Branch program staff communicate regularly with their regional counterparts on program related matters.

The audit identified an opportunity to enhance open, effective and timely communication channels within the Sector through formal mechanisms designed to provide greater opportunity for two-way communication. Feedback from interviews and a review of related documentation indicated that the emphasis on, and opportunity for, vertical communication in the Sector has not been consistent. By way of example, we noted that HQ management meetings that include the Sector's SADM, Directors General and Directors have become less frequent in the past year. These meetings provide an opportunity for upward (as well as downward) communication; a mechanism for staff to provide feedback to senior management; and an opportunity to obtain senior management's insight on operational priorities.

The audit also found that meetings at the Director General-Director and Director-Manager levels did not always occur as planned and that RO HQ all-staff meetings were rare. All-staff meetings with well defined agendas provide an opportunity for enhanced horizontal communication across the Sector's branches/directorate. During the CSA session, it was suggested that increased horizontal communication at the operational management level could better inform the linkages between the branches/directorate in the Sector, thereby reducing duplication of effort and reducing confusion regarding roles and responsibilities.

5.3.1 Policy Development and Program Design

It is important for an organization to have a formal and rigorous approach to policy development and program design. Such an approach should include: sufficient, dedicated and capable resources to support research and policy analysis; established processes to support the development of policies and the design of programs; and, mechanisms to ensure that operating directives, procedures, and guidelines are established in support of policies.

The audit found that resources are in place to support policy development and program design activities, including research, consultation and analysis of policy options and related program impacts. While resource levels were impacted as a result of DRAP, including policy and program advisors and analysts, management within the Sector's program branches (Community Infrastructure and Governance) advised that working groups/teams can and will be established when needed to support policy development and program design within the Sector. They advised that these teams can be established from staff within their Directorates, from other Directorates, from other branch or sectors, and/or from regional offices.

The audit revealed that management and staff are knowledgeable of the processes to be followed within the Sector when developing or revising policies and designing programs, including the need to ensure that adequate consideration is given to past audit and evaluation results, other policy or legislative requirements, and the needs of internal and external stakeholders. It was also noted that mechanisms are in place and are regularly updated (i.e. program specific frameworks, protocols, templates and tools) to support program management that represent directives, procedures, and guidelines in support of policies. In particular, an approved Management Control Framework for the CFM Program has been developed to support policy development and implementation.

The audit did, however, identify that the Sector's processes and procedures to support policy development and program design have not been formally documented. While the Department has a formal process for the review and approval of significant policy changes, reliance is placed on program branches to conduct the necessary consultation, research and analysis in support of policy development and program design. Interviews indicated that the Sector places considerable reliance on the knowledge of existing staff to ensure that the necessary steps in this regard are completed. Although it is not a departmental requirement for sectors to formally document such processes and procedures, the audit supports such documentation as a good management practice, particularly in light of the resource challenges created by DRAP and the Sector's increased leverage of teams (with its shared responsibilities and accountabilities) to support policy development and program design.

Well defined and formally documented processes and procedures would help ensure that Sector expectations are clear to staff when developing policies and designing programs and would also provide a framework to ensure that the Sector is able to demonstrate how the results of consultation, research and analysis are used to support policy development and program design. Documenting such processes and procedures may require input and consultation with other sectors within the Department such as Policy and Strategic Direction and Chief Financial Officer Sectors.

5.4.1 Budgeting and Forecasting

An organization should ensure that timely budgets and forecasts are developed at an appropriate level of detail through a rigorous process, with budgets allocated to responsibility centres in a timely manner. During the planning phase of the audit, the aspect of budget and forecasting identified as being the high risk was the timely distribution of grant and contribution program budgets to regional offices. As a result, the scope of the audit was designed to focus on the Sector's practices as they relate to the timely allocation of the targeted program funds to regional offices.

AANDC's annual budget allocations are based on a global funding regime which consists of 'core' and 'non-core' (or targeted) funds. In preparation for the allocation of the annual budgets, regions and sectors are required to submit Resource Plans indicating their forecasted expenditures and budget activity level across all programs. Based on the Resource Plans submitted, the Department's Financial Management Committee allocates budgets to regional offices prior to the start of the fiscal year. These allocations include core program funds, as well as funds in relation to certain non-core programs. The remaining non-core budgets, typically those associated with proposal-driven programs, are allocated to HQ branches such as the Community Infrastructure Branch and the Governance Branch for subsequent distribution to regional offices (or direct distribution to recipients).

The audit found that the RO Sector's allocation of non-core budgets to regional offices occurs in a timely manner, between April and June of the fiscal year depending on the specific program and branch. While there is evidence that non-core budget funds having been allocated to regions later in the fiscal year than the historical norm, the delays are generally beyond the Sector's control (e.g. budget announcements impacting Community Infrastructure Branch or Governance Branch programs that occur later in the fiscal year, a temporary holdback of program funds at a Departmental level). Accordingly, the audit found no evidence indicating that program budgets are not being allocated to regional office by Community Infrastructure Branch or Governance Branch on a timely basis.

5.5.1 Management and Oversight Bodies

Effective governance includes the decision-making process and the process by which decisions are implemented (or not implemented). To support good governance, it is important that management oversight structures and mechanisms are established and functioning, with clearly communicated mandates, and that these governance structures have a clear role and purpose.

At a departmental level, the Operations Committee has authority to review and provide management direction on departmental operations requiring the attention of the Deputy Minister (DM) or the Associate DM.  Strategic Policy Committee has authority to review, approve and provide direction on policy proposals requiring the attention of the DM or the Associate DM. The Strategic Policy Committee also considers key emerging strategic policy issues or challenges. Taken together, these committees provide overall departmental oversight in regard to AANDC's policy development/program design and program delivery activities, both of which are areas of responsibility of the RO Sector.

Within the RO Sector, the governance and management oversight structure that oversees RO activities is the RO Senior Management Committee (SMC). RO SMC meets several times a year to discuss Sector specific activities and initiatives, as well as other departmental matters affecting AANDC's regional operations.  The audit found that while records of discussion are maintained for the committee, no Terms of Reference or mandate has been established to document its oversight role or the process by which decisions are made and implemented.  Interviews also confirmed that members of RO SMC participate in a weekly teleconference call, however neither agendas nor meeting minutes are maintained.  Without a clearly defined (and communicated) role and purpose, we could not assess whether RO SMC represents an appropriate oversight body in support of Sector governance.

Sector management advised that efforts are underway to formalize the governance structure for RO Sector, including the role of RO SMC.

5.5.2 Operational Objective-setting and Planning

In support of an effective governance regime, an organization should have in place operational plans and objectives aimed at achieving its strategic objectives. In this regard, an organization first needs to clearly define and communicate its strategic direction and objectives, ensuring that they are aligned with its mandate. It should then establish operational plans and objectives aimed at achieving these strategic objectives.

On an annual basis, RO prepares a Business Plan as per departmental requirements. The RO Sector Business Plan identifies key planning activities by Branch (and, in the case of OPS, by Directorate), with these activities aligned to the Department's Strategic Outcomes and its key priorities. For each planned activity/commitment, performance indicators/milestones are established, and quarterly targets are set to measure progress. On a quarterly basis, management reports on their progress against the plan through the Quarterly Reporting process, which includes an assessment of the risk of not meeting each objective. Objectives are revisited, as required, based on the risk assessment and the extent of progress made towards achieving the objective.

We found that although RO's priorities and objectives are defined and communicated through its annual Business Plan, management has not defined or communicated a strategic direction or objectives for the Sector. As noted earlier in this report, the Sector has a broad and varied mandate, making the establishment of a strategic direction and objectives both challenging and important. The breadth of its mandate is evident in the fact that Sector commitments within its annual Business Plan align with two of the four departmental Strategic Outcomes as well as Internal Services. Furthermore, while the Sector is responsible for infrastructure and governance programming, a significant part of its mandate represents the delivery of the programs and services through the Department's seven South of 60 regional offices. In this regard, the Sector is responsible for implementing the strategic priorities and objectives identified by other branches and sectors.

Although current departmental directives do not require individual sectors to develop strategic objectives and priorities (or a Strategic Plan), interviews with Sector management suggested a value in having a formally developed and communicated strategic plan at the Sector level. Formalizing and communicating a strategic direction and objectives would help to promote a common understanding of the Sector's longer term strategic vision amongst both management and staff.