Public Accounts Committee on April 15th, 2008

[The Chair, Liberal, Shawn Murphy]

I want to welcome everyone here today, especially the witnesses.

This meeting is called pursuant to the Standing Orders. We're dealing with chapter 3, “Human Resources Management--Foreign Affairs and International Trade Canada”. This chapter is from the May 2007 Report of the Auditor General of Canada.

Before the committee today we're very pleased to have Auditor General Sheila Fraser. She's accompanied by assistant auditor Richard Flageole, together with principals Marie Bergeron and Paul Morse. We have, from the Department of Foreign Affairs, the accounting officer and deputy minister, Len Edwards. He's accompanied by Michael Small, assistant deputy minister, human resources. From the Treasury Board Secretariat we have Hélène Laurendeau, assistant secretary, labour relations and compensation operations.

I want to extend a warm welcome to everyone here on behalf of the committee.

I understand, Ms. Fraser, you have some opening comments, so I will turn the floor over to you at this time.

[Sheila Fraser, Auditor General of Canada, Office of the Auditor General of Canada]

Thank you, Mr. Chair.

We thank you for this opportunity to discuss chapter 3 of our May 2007 report on human resources management at Foreign Affairs and International Trade Canada. As you mentioned, I'm joined today by Richard Flageole, assistant auditor general, and Marie Bergeron and Paul Morse, the principals responsible for this audit.

The purpose of our audit was to assess whether the Department of Foreign Affairs and International Trade adequately plans its human resources and manages its workforce with respect to the recruitment, staffing, and assignment of Canadian and locally engaged staff to carry out its mandate. I wish to emphasize that the work for this audit was completed in the fall of 2006, so we are not fully able to comment on how the situation has evolved since then.

Of all the issues raised in our report, we would like to draw your attention to the following three: human resources planning, recruitment and staffing, and the foreign service directives.

On human resources planning, we noted that the department does not have a complete picture of the people, competencies, and experience it will need in the coming years. In our opinion, it is essential that the department develop a strategic resources plan to prepare for short-, medium-, and long-term staff shortages. We noted that 58% of its employees in the management category and 26% of all employees will be eligible to retire by 2010. The department therefore risks not having the people in place necessary to carry out its mandate effectively.

As for recruitment and staffing, the department was unable to provide us with the exact number of vacant positions it was trying to fill. In our report, we indicated that we had doubts about the reliability and usefulness of the data we were provided. For example, although the human resources information system showed a 35% vacancy rate as of March 31, 2006, the department estimated it at 20%. What's more, neither the recruitment nor the promotion processes were sufficient to find enough people with the required skills and competencies to fill the vacancies in the time required. For example, when the department launched a promotion competition for executives in April 2005, only 39 of the 370 candidates who had pre-qualified based on their experience had been promoted by May 2006, more than a year later.

With regard to assignments for rotational employees, that is, employees who can be required to take positions at headquarters in Ottawa or at missions abroad, we noted that a high number of these employees were in acting positions and had been for some time. On 31 March 2006, for example, 116 employees from non-executive categories were acting in executive positions.

The Department's rotational employees are on the front lines of its program delivery abroad, and their personal situations, as well as those of their spouses and family members, are also affected by these circumstances. Many missions are in environments that compare poorly with Canada in their standard of living, security, safety and health care.

The purpose of the foreign service directives is to compensate employees for living conditions abroad and to provide incentives for hardship postings. They are negotiated by the Treasury Board Secretariat and the National Joint Council. We noted that the directives did not allow the Department to respond rapidly to changing circumstances and to the problems employees face as a result. The ability of the Department to assign staff to missions abroad was therefore hindered.

For example, it took more than one year for the Deputy Minister to get confirmation from the Treasury Board that he could use his delegated authority under the Financial Administration Act to purchase adequate life insurance policies for its employees assigned to missions in countries at war, such as Afghanistan.

Spousal employment is another issue that has been a particular concern for a long time. In fact, the Royal Commission on Conditions of Foreign Service reported the problem as far back as 1981. The impact of these barriers can be significant for the family posted abroad as well as for program and service delivery at missions. With the increase in double-income families, the issue of spousal employment has become even more acute.

Other government departments and agencies who assign staff abroad are also affected by the limitations of the directives. Despite the concerns expressed over the years by our office and by various stakeholders, the issue, which involves the Treasury Board Secretariat and the active participation of Foreign Affairs and International Trade Canada and other departments and agencies, had still not been resolved at the time of our audit.

Given the importance of the issues raised in our report, we encourage the committee to ask the government to take concrete action to clarify who is responsible for what, to establish clear timelines, and to report to Parliament regularly on its progress with regard to our observations and recommendations.

Mr. Chair, this concludes our opening statement. We would be pleased to answer any questions the committee members may have.

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Ms. Fraser.

Mr. Edwards, I understand you have an opening statement.

[Leonard Edwards, Deputy Minister, Department of Foreign Affairs]

Yes, I do, Mr. Chairman. Thank you very much, and again, may I introduce Michael Small, who is accompanying me here today. He is the brand new assistant deputy minister of human resources as of April 1.

I'm very pleased to have the opportunity to meet with you today to describe the steps we have taken in Foreign Affairs and International Trade over the past 11 months to implement our response to the Auditor General's review of human resources management in DFAIT. I would like to explain how this response will be accelerated by the transformation of the department, which is now under way.

The Auditor General presented her report in May 2007. In June, the government identified DFAIT as one of the first of 17 departments and agencies to undergo a process of strategic review. At DFAIT we embraced the challenge of strategic review by taking a top to bottom look at what the department's core business must be and how we should align our resources around it to best serve Canadians.

Conducting this strategic review has been job number one for me and my deputy colleague, the Deputy Minister of International Trade, and of course for my department's entire management team for the past 10 months. Now that our plans have been approved by cabinet and announced in budget 2008, we are ready to begin implementation of our transformation agenda.

Our transformation agenda, Mr. Chair, has six principal themes. First is aligning departmental resources with government priorities. Second is strengthening our key institutional asset as a department, namely our platform of missions abroad. Third is improving service to Canadians seeking passports, consular assistance, and trade opportunities. Fourth is focusing our policy expertise on core foreign and trade policy responsibilities. Fifth is improving our mechanisms for exercising accountability. And sixth is renewing our human resource management systems and renewing our human resource base.

Work on this last theme will be done by DFAIT in conjunction with the broader public service renewal being led by the Clerk of the Privy Council with the support of the Prime Minister. Our responsibilities to act on the Auditor General's findings fall directly under this theme and have picked up new momentum from it. Success in human resource renewal, we believe, will be critical to success under each of the other five themes I've cited in our transformation agenda. We believe we have made some significant progress in some areas, but there's still much work to do.

First, the Auditor General found last year that the department had no strategic human resources plan. Now we do. It was approved by our management team last June and released to all our employees last October. Our human resources strategic plan for 2007 to 2010 sets out the department's current and projected future workforce needs. This plan now gives us a basis for integrating human resource management with business planning for the department. Both will be driven by the priorities of our transformation agenda.

We are now taking this planning process to the next level and have tasked all our missions to develop a post-specific human resource plan that will address the local factors affecting our ability to recruit, retain, and develop our locally engaged staff.

Second, the Auditor General found that the lack of workforce data is hampering human resource planning and management. I agree. This continues to be a major challenge. Last summer we made a significant investment in improving our human resource data systems by establishing a large IT project team dedicated to this task. They are fully engaged in upgrading the software we use to PeopleSoft 8.9, a task that will take until the middle of 2009. A governance board, made up of all departmental stakeholders concerned with data integrity, will oversee this critical process.

Third, the Auditor General found that relying on traditional recruitment methods might not be sustainable. My colleague the Deputy Minister of International Trade, Marie-Lucie Morin, and I both agree, and consequently, over the past year, we and our executive teams have been engaged in non-traditional recruitment methods. This includes a cross-Canada outreach program to explain what the department is and what we do for Canadians.

In particular, we explain to young Canadians at universities why they may wish to consider a career in DFAIT. The Trade Commissioner Service, in particular, undertook a high-visibility campaign last autumn, using younger officers returning to their university campuses and innovative techniques such as Facebook to reach new potential recruits.

Within the department, we have opened all competitions into the rotational foreign service category to all officers in DFAIT in order to expand our pool of officers ready for assignments abroad. Next month, for the first time ever, we are conducting interviews across the country and in three international cities for new recruits, not only for the rotational foreign service--our traditional approach--but also for our CO and ES policy specialists. That's our economists and commercial officers. In the autumn we will launch a comprehensive national outreach and recruitment drive to hire a new cadre of foreign service commercial officers, economic officers, and administrative officers who will start work in spring 2009--just a year away.

These campaigns will be the first steps in implementing the resourcing strategy we have developed to meet the needs forecast in our HR strategic plan. Overall, these methods have worked. In 2007 and in 2008, this last fiscal year, we made indeterminate job offers to 294 new post-secondary recruits--just under 10% of the 3,000-person target the Clerk of the Privy Council set for the entire public service under public service renewal.

Fourth, the Auditor General found that the department cannot fill its needs on a timely basis through promotions. There too we have agreed, and we think we have made major strides on this front. In the past year we have launched or concluded collective promotion processes for every category in the EX level, for a total of 124 executives promoted. The results of an EX-2 promotion process will be released shortly, and we have just launched a new promotion exercise in both EX-1 and EX-5 ranks, with EX-4 soon to follow. At the level of EX-2 and above, we have opened all of our competitions into our rotational ranks to the entire public service. With the support of the Public Service Commission, we have developed an innovative approach to promoting officers who had been acting in EX-level positions and who had demonstrated their ability to perform well at a high level for two years or more. This led to 45 new appointments at the EX-1 level, with 15 more expected shortly. Thus we have significantly exceeded the target in our strategic plan for 2007-08 of 34 new EX hires.

Below the executive level, we have completed the largest round of promotions in all ranks of the rotational group in the history of the department, totalling 469 officers. And we have hired 124 new FS political and trade officers, plus 39 badly needed new management consular officers to replenish the bottom of our rotational cadre.

Fifth, the Auditor General found that “the assignment process does not yield the intended results”. Much of this section of the report focused on the large number of officers assigned to act in positions above their classifications. Acting assignments can be, in my view, an important tool to develop promising officers and fill specialist needs, especially in a rotational foreign service. It is a practice we will continue to use.

That being said, we have reduced the number of acting assignments in the past year by promoting many of those who were acting at the EX level, as well as running competitive processes, and by being more vigilant in the assignment process in looking first to fill positions at level. Our assignment procedures are now much more transparent to our employees and the decisions made are much better documented. All foreign services officers' assignments are reviewed by an oversight board of directors general to ensure that corporate needs are met and standards are observed, especially for acting appointments.

Sixth, the Auditor General found that “foreign language needs are not met”. Unfortunately, this remains the case. Our Committee on Foreign Languages has adopted a new process for identifying more accurately the positions abroad that require different levels of foreign language proficiency. But we will need to make significant new investments in language training positions and in backfilling behind officers on language training in order to bring up our performance to a satisfactory level. This will be a major test for my department's transformation agenda.

Seventh, the Auditor General found that “the management of locally engaged staff gets little attention”. To be more precise, while it is a major responsibility of our mission management teams abroad, it gets comparatively little attention in Ottawa, where too many decisions affecting locally engaged staff are centralized.

It will get a great deal of attention in the coming years with the establishment this month of a new International Platform Branch. The new branch will seek efficiencies through building service nodes and networks abroad as a major plank of the department's transformation agenda. We are currently reviewing our service model for locally engaged staff in order to find a more flexible, decentralized approach. In the meantime, we have launched a blitz to update the many out-of-date handbooks governing the employment regulations for locally engaged staff. One contract to consolidate into one and update 23 handbooks for our missions in the USA is now under way; another to update the handbooks in 69 more of our missions overseas has gone to tender.

Eighth, the Auditor General found that there is little flexibility to compensate and provide timely incentives to staff living abroad. I entirely agree. DFAIT has long found that the foreign service directives no longer reflect the actual needs of Canadian families, and the process of negotiating them is too inflexible to respond to rapid changes in the living conditions facing the staff we ask to serve Canada abroad.

We very much welcome the commitment of the Treasury Board to lead a partnership of departments and agencies to comprehensively identify the challenges facing the public service in assigning staff abroad. In the meantime, the Treasury Board agreed that it was within my authority as deputy head to purchase accidental life and dismemberment insurance for our staff posted to Afghanistan, and at the beginning of the year we received Treasury Board approval to pay special risk allowances to employees assigned to Kabul and Kandahar. But we have not yet found a way to compensate families sufficiently for the extra personal costs they incur when serving in the United States.

Finally, the Auditor General found that barriers to spousal employment are disincentives to working abroad. This will not be news to any normal two-income Canadian family contemplating a foreign assignment on only one income. In addition to the difficulties, and frequently the impossibility of finding work in the foreign country and culture, spouses also face obstacles in collecting unemployment benefits when they return to Canada and start their job searches here.

My department is committed to doing what it can within our own means and mandate to help the spouses of our employees manage the career disruptions that come with belonging to rotational families. We welcome the opportunity to address the issue of spousal employment in the context of the comprehensive review recently launched by the Treasury Board.

In conclusion, Mr. Chairman, I thank you for providing me with this opportunity to address you today and to explain what we have done in response to the Auditor General's report. I can assure you that improving human resource management is an important part of my job in the department, and to do so consistent with the Auditor General's finding, and that will in turn be integral to the success of our transformation strategy in the Department of Foreign Affairs and International Trade.

Thank you. Merci.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Edwards.

Madame Laurendeau, I understand you have some opening comments.

[Hélène Laurendeau, Assistant Secretary, Labour Relations and Compensation Operations, Treasury Board Secretariat]

Yes, I will be very brief.

Thank you, Mr. Chair and members of the committee. I thank you for this opportunity to speak to you today about the Treasury Board Secretariat's response to the May 2007 Report of the Auditor General of Canada.

Among many other recommendations that have been reviewed by Mr. Edwards, the Auditor General asked that the Treasury Board Secretariat, with the full participation of the Department of Foreign Affairs and International Trade and other departments and agencies, do a couple of things.

First, it was required to lead a comprehensive review of the challenges in posting employees abroad and ensure that mechanisms are in place to allow departments and agencies to respond to changing circumstances affecting assignment to staff around the world.

The Treasury Board Secretariat and the Department of Foreign Affairs and International Trade both agreed with the recommendation and committed to first, establishing a partnership of key departments and agencies and second, developing and implementing a plan of action.

I am pleased to report that this partnership has been established. We have created an interdepartmental committee for the review of the public service abroad, co-chaired by the Treasury Board Secretariat and by the Department of Foreign Affairs and International Trade. Membership also includes representation from the four major departments with employees abroad: Citizenship and Immigration Canada, the Canadian International Development Agency, the Department of National Defence and the Royal Canadian Mounted Police.

I'd like to take this opportunity on behalf of the Treasury Board Secretariat to thank the Department of Foreign Affairs and International Trade for its tremendous cooperation in all aspects of the establishment of this committee.

The terms of reference of the interdepartmental committee have been developed and agreed upon. Members of the committee have received a copy of these terms of reference, and work has started. The interdepartmental committee has already met twice, and I am pleased to report on the progress it is already making in mapping out the activities it will be conducting and the direction it will take.

The committee has set up two working groups: one on workforce demographics, chaired by the Treasury Board Secretariat; and one on business needs, chaired by the Department of Foreign Affairs and International Trade.

At the end of January, over 1,570 Canadian public servants of the core public administration were working outside Canada. About a third of these employees are not working for the Department of Foreign Affairs and International Trade. Every year at least $100 million dollars are spent in payments to address the special needs of employees who serve Canada abroad.

The working group on demographics will be tasked to gather data on public servants who serve the country outside Canada, whether they are employees who are posted abroad on single assignments or employees who have made the foreign service their career. The committee will also study the issues faced by employees' dependants, including spouses. At this point most of the information we have is, unfortunately, anecdotal; hence the reason we need to collect data. The data collected will be the crucial starting point in providing good and sustainable solutions, which we are committed to achieving.

The second working group, the working group on business needs, will examine immediate and future business needs abroad. Its work will include an assessment of how the foreign service directives, the FSDs, are addressing the needs of public servants eligible for international assignments, with the objective of identifying opportunities to respond to changing or urgent needs.

Again, to take proper decisions, good information is needed, and this working group should provide a solid ground towards sustainable solutions.

We believe that the work of the interdepartmental committee has been an important first step towards achieving a long-term solution. It will also provide us with an important opportunity to gather the data we need to analyze the situation properly and find sustainable solutions to address the challenges faced by departments and agencies in staffing Canada's positions abroad.

The interdepartmental committee is first focusing on establishing the building blocks to allow for evidence-based decision-making for current and future issues.

It should be noted that the foreign service directives are currently being reviewed. The foreign service directives are co-developed by the employer and bargaining agents through the National Joint Council and are deemed part of collective agreements.

The main focus of the current review is to realign the FSDs to better meet the changing demographics. Other priorities are to increase responsiveness of the FSDs and to streamline and simplify the language to ensure consistency in application across the various places where they are applied. We hope this review will be completed sometime in the spring. We're targeting June 2008. Improved FSDs are part of the long-term sustainable solution, and we think we are on the right track to achieve good progress with this current review.

Mr. Chair, this concludes my remarks. I will be happy to answer any questions you may have.

[The Chair, Liberal, Shawn Murphy]

Merci beaucoup, Madame Laurendeau.

We're going to go now, colleagues, to the first round, for seven minutes each.

The first slot is to the Liberal Party, Mr. Wrzesnewskyj, for seven minutes.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you, Chair.

In an increasingly globalizing planet--and the rate of globalization is accelerating--our embassies and their consular sections' trade desks are to play a critical role for Canada. It's discouraging, when you read this report, that we find such serious human resource issues. They seem to be twofold. We have an attrition rate that exceeds our recruitment rate, and then secondly we're filling slots with people who don't have adequate capabilities.

When I look at exhibit 3.1 in the Auditor General's report, under “Foreign language requirement”, it says “Required for some postings”. For not all foreign postings is language knowledge required.

Then I go to paragraph 3.63, and the Auditor General notes that only 16% of people occupying the posts where there is a language requirement meet that language requirement. In fact, among incumbents, only 33% have undergone language testing.

Then I look and I notice that among western democracies we have the highest rate of hiring locally. I can't help but be puzzled by this disconnect, that certain western democracies are better able to place people. I've travelled to many countries and been to many embassies, and they were able to find people to staff them in the local language, yet in Canada, a multicultural country where we have this huge reservoir of human capacity--you just have to go to any of our urban centres and you'll hear every language of the world being spoken--we can't find those recruits for these critical positions.

Is that an issue of your department, having this residue of a closed-shop, elitist attitude in terms of its recruitment, or is it something like what I encountered in the former East Bloc when embassies were being set up? Over and over I was told, “Well, we can't recruit people who have this ancestral homeland for the top positions, because we're unsure of what particular biases they may have.”

I'd like you to address that particular issue: how is it possible, when we have this reservoir of capacity within our country? Have attitudes changed since the early nineties, when I heard on numerous occasions within DFAIT, “We can't hire people from those particular communities, because they may be biased in their points of view if they work in the top positions in the embassies”?

[Leonard Edwards]

Thank you, Mr. Chair.

I will respond to that question. There are several points in there and I'll try to cover a couple of them.

If I may, just before I get to the question you asked, you made the point that we're having trouble attracting people to the department, and that we can't recruit higher than our attrition rate. In fact, we are doing just that. For the year that finished in 2007, we brought on about 600-and-some employees and about 330 left, so we are in fact staffing over our attrition rate.

That does not, of course, hide the fact that attracting good people in this day and age is extremely difficult. The public service as a whole is facing competition from the private sector and elsewhere, so as the Auditor General pointed out in her report, the requirement to find non-traditional ways of recruiting and attracting employees is a paramount challenge for us. That's what we are trying to do, and I tried to explain in my opening comments that we are moving in that direction.

With respect to the kinds of people we hire, I have to say that I have not run across, in my time in the department, any rule against hiring people because of their countries of origin. There may be some hearsay around that, perhaps, but certainly we have no restrictions on that. In fact, it's quite the contrary. We are very anxious to hire new Canadians, Canadians who are visible minorities, Canadians who can bring their particular cultural, linguistic, and other backgrounds to the service of Canada's foreign service. The recruitment drives that we have across the country are very much open to recruiting these kinds of people. In fact, I would say they are the future of our foreign service.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

That last comment is encouraging.

[Leonard Edwards]

And of the department, not only the foreign service.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

It would be encouraging to see that sort of attitudinal shift, but do you have some numbers to back it up? Do you have numbers that can show us at the top levels of our diplomacy how many people there are, various types of backgrounds, and whether or not there's any effort made to match them to some of our more difficult postings, especially those who have the language requirements?

[Leonard Edwards]

I don't have the information in front of me, but I'd be prepared to provide it to the committee. It would take some research.

I can give you a couple of examples. The one that springs to mind most readily is our ambassador to Afghanistan, Arif Lalani, who comes from a middle eastern background, is familiar with the region and so forth. He's an outstanding younger officer who comes from exactly the pool you're referring to.

The fact is, though, that in our efforts to hire new Canadians and Canadians from the new communities of Canada, it takes a while for them to get to the senior levels of the organizations. In Mr. Lalani's case, I believe he was probably hired in the early 1990s. But we have now a large number of visible minority Canadians coming in who will take over the senior positions, but right now we are, I think, hindered by the fact that we did not have the good recruitment success, I'd say, in the 1980s that we needed to have to get those sorts of persons at senior levels.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you very much.

On a quick point of order, could you confirm that you'll provide the statistics on that?

[Leonard Edwards]

We will.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you.

Mr. Sweet.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Are there printed copies of the opening remarks of our witnesses?

[An. hon. member]

Yes, right here.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

I'm sorry, I didn't get it in distribution.

[The Chair, Liberal, Shawn Murphy]

We'll ensure that you get one of everything, Mr. Sweet.

Thank you very much, Mr. Wrzesnewskyj.

Monsieur Laforest, sept minutes.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chair.

Good morning, everyone. My first question is for Ms. Fraser.

In your report, you identify a number of factors and serious problems with regard to human resources management. You talk about erratic recruitment methods, an ineffective promotion system and problems relating to foreign languages and personnel management. Your report paints a fairly grim picture.

In your opinion, what is the main problem? You also talked about the lack of a comprehensive plan.

[Sheila Fraser]

In our opening statement, we tried to focus on what we consider to be the three most serious problems: the lack of a strategic plan, inadequate human resources management and the lack of workforce data, so that the department knows who is working in the department and has a more accurate picture of vacancies, for example, and the number of acting positions. The department needs this information. The other problem involves the whole issue of foreign service directives, compensation and so on.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

It is difficult to compare this department to others, but in the audits you conduct, you often find that there is a lack of planning, whether in the area of human resources or in another area of management. In this particular case, it seems clear that the lack of a plan certainly has not helped.

[Sheila Fraser]

The member is quite right. We believe that the fact that there is no plan is a major weakness. We are pleased that the department has since developed a plan. I would also like to say that the Department of Foreign Affairs was not the only department without a plan. It is especially important for departments such as Foreign Affairs and Defence, where traditionally, people at lower levels in the organization rose through the ranks. There were very few lateral entries. It is therefore even more critical that these departments have a good overview of new recruitment methods in order to deal with the exodus that will soon be taking place.