Audit of Human Resources Planning - AU1807

Audit and Evaluation Branch
Natural Resources Canada
Presented to the Departmental Audit Committee (DAC)
October 11, 2018

Table of Contents

• Executive Summary
  • Introduction
  • Strengths
  • Areas for Improvement
  • Internal Audit Conclusion and Opinion
  • Statement of Conformance
• Introduction
  • Audit Purpose and Objectives
  • Audit Considerations
  • Scope
  • Approach and Methodology
  • Criteria
• Findings and Recommendations
  • Governance
  • Human Resource Planning Process
  • Support from the HR Branch
• APPENDIX A - Audit Criteria
• APPENDIX B – Five Essential Steps to Human Resource Planning

Executive Summary

Introduction

Human resources (HR) planning seeks to predict future organizational labour needs. It requires an identification of the make-up of the current workforce; emerging HR practices; labour market, workforce, and demographic trends; and an understanding of the future service needs, including the type and size of workforce required to meet those needs. The Treasury Board of Canada Secretariat (TBS) defines HR planning as a process that identifies current and future needs to achieve the organization's goals. As such, HR planning should be linked to managing those resources and the organization's overall strategic and operational plans. The Integrated Planning Handbook for Deputy Ministers and Senior Managers states that the legislative base for HR planning is in the Financial Administration Act ^{Footnote 1}. As well, the Public Service Employment Act ^{Footnote 2} contains potential uses for HR planning, such as the identification of current and future operational needs.

The Clerk of the Privy Council, in his 2009 Annual Report, directed federal departments and agencies to improve HR planning as part of integrated business planning. This has continued to be a theme in almost all of the Clerk’s annual reports since then. The Clerk’s March 2017 report states that recruitment is the first step in ensuring the right people are working in the right place at the right time. Recruiting the next generation is important; so is bringing in talented people who are mid career and want to contribute to public service. The federal government also needs to help its existing employees grow and develop, through effective training and development opportunities, mentoring, and feedback to employees and managers. This all requires proper HR planning.

NRCan is a multi-faceted department requiring the skills of approximately 4,000 employees with competencies in science, engineering, policy, finance, information management, and administration, to name a few. The Department’s employees vary in level, experience, and expertise and are crucial to the achievement of its strategic priorities. To ensure that NRCan continues to meet its objectives in service to Canadians, the attracting, recruiting, developing and retaining of individuals with the necessary expertise is critical. As such, HR planning becomes key. Within NRCan, each sector is responsible for preparing and implementing its respective HR plan as part of their overall HR management planning activities. The Corporate Management and Services Sector (CMSS) is responsible for supporting HR planning in the sectors by providing guidance material, tools and templates.

The HR planning process, as outlined by TBS, is a five-step process designed to identify human resources gaps based on the organization’s strategic direction and operational requirements, and to develop plans to fill those needs, both in the long and the short-term. This process is broadly defined and can either be federated/transactional vs strategic partnership depending on organizational objectives and HR capacity. The process functions as follows:

1. Review your business goals – develop a clear understanding of where the organization is headed.
2. Scan the environment – identify external and internal factors that could affect the organization’s capacity to meet its objectives.
3. Identify the gaps – determine the organization’s current and future HR needs.
4. Develop your plan – determine the major HR priorities and strategies to be used to achieve the desired outcomes.
5. Measure your progress – constantly measure, monitor and report of progress, responding to changing circumstances.

By identifying workforce capabilities, considering what will be needed in the future and planning systematically, managers at NRCan can limit the risks associated with unanticipated events. In particular, HR planning can help NRCan to:

• Identify potential problems and to manage risk;
• Develop workforce skills that take time to grow;
• Provide a strategic basis for determining HR requirements related to budget requests, staffing requests, and strategic plans; and
• Allow managers to anticipate change rather than merely reacting to short-term needs.

The challenge is to ensure that NRCan can minimize the costs and take advantage of the opportunities that changes bring.

Strengths

Several components of the HR planning structure are in place at NRCan. Specifically, governance committees responsible for HR have been established and operationalized. CMSS is taking steps to strengthen strategic HR management by implementing NRCan’s People Strategy. CMSS also generates and provides reports to sectors to assist with HR planning. For sectors that have promoted HR planning, several good practices are present such as providing a strategic direction and articulating their HR strategies.

Areas for Improvement

Previous corporate resourcing decisions have hindered the Department in adopting a holistic view to HR planning. Sectors, therefore, are developing their own HR strategies and related activities in alignment with their business priorities. With limited departmental strategic direction on HR planning, only a few sectors have implemented HR planning to meet current and future resource needs. Some sectors have developed additional tools, and/or purchased applications to better analyse financial and internal HR information to make decisions. The NRCan People Strategy action plans, sector HR plans and related planning documents did not include sufficient performance indicators.

Internal Audit Conclusion and Opinion

In my opinion, while the HR planning process is carried out in some sectors, there is no comprehensive approach in place to address business needs and meet workforce requirements. To ensure better alignment of departmental workforce requirements, NRCan will need to ensure that its People Strategy is supported by a comprehensive action plan, with mechanisms in place to enable sectors to work collectively.

Statement of Conformance

In my professional judgement as Chief Audit and Evaluation Executive, the audit conforms with the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing and the Government of Canada’s Policy on Internal Audit, as supported by the results of the Quality Assurance and Improvement Program.

Christian Asselin, CPA, CA, CMA, CFE
Chief Audit and Evaluation Executive
October 11, 2018

ACKNOWLEDGEMENTS

The audit team would like to thank those individuals who contributed to this project and, particularly employees who provided insights and comments as part of this audit.

Introduction

Human resources (HR) planning seeks to predict future organizational labour needs. It requires an identification of the make-up of the current workforce; emerging HR practices; labour market, workforce, and demographic trends; and an understanding of the future service needs, including the type and size of workforce required to meet those needs. The Treasury Board of Canada Secretariat (TBS) defines HR planning as a process that identifies current and future needs to achieve the organization's goals. As such, HR planning should be linked to managing those resources and the organization's overall strategic and operational plans. The Integrated Planning Handbook for Deputy Ministers and Senior Managers states that the legislative base for HR planning is in the Financial Administration Act ^{Footnote 3}. As well, the Public Service Employment Act^{Footnote 4} contains potential uses for HR planning, such as the identification of current and future operational needs.

The Clerk of the Privy Council, in his 2009 Annual Report, directed federal departments and agencies to improve HR planning as part of integrated business planning. This has continued to be a theme in almost all of the Clerk’s annual reports since then. The Clerk’s March 2017 report states that recruitment is the first step in ensuring the right people are working in the right place at the right time. Recruiting the next generation is important; so is bringing in talented people who are mid career and want to contribute to public service. However, the federal government also needs to help its existing employees grow and develop, through effective training and development opportunities, mentoring, and feedback to employees and managers. This all requires proper HR planning.

NRCan is a multi-faceted department requiring the skills of approximately 4,000 employees with competencies in science, engineering, policy, finance, information management, and administration, to name a few. The Department’s employees vary in level, experience, and expertise and are crucial to the achievement of its strategic priorities. To ensure that NRCan continues to meet its objectives in service to Canadians, the attracting, recruiting, developing and retaining of individuals with the necessary expertise is critical. As such, HR planning becomes key. Within NRCan, each sector is responsible for preparing and implementing their respective HR plan as part of their overall HR management planning activities. The Corporate Management and Services Sector (CMSS) supports HR planning in the sectors by providing guidance material, tools and templates.

The HR planning process, as outlined by TBS, is a five-step process designed to identify human gaps based on the organization’s strategic direction, and to develop plans to fill those needs, both in the long and the short-term. The process functions as follows:

6. Review your business goals – develop a clear understanding of where the organization is headed.
7. Scan the environment – identify external and internal factors that could affect the organization’s capacity to meet its objectives.
8. Identify the gaps – determine the organization’s current and future HR needs.
9. Develop your plan – determine the major HR priorities and strategies to be used to achieve the desired outcomes.
10. Measure your progress – constantly measure, monitor and report of progress, responding to changing circumstances.

By identifying workforce capabilities, considering what will be needed in the future and planning systematically, managers at NRCan can limit the risks associated with unanticipated events. In particular, HR planning can help NRCan to:

• Identify potential problems and to manage risk;
• Develop workforce skills that take time to grow;
• Provide a strategic basis for making HR decisions on budget requests, staffing requests, and strategic plans; and
• Allow managers to anticipate change rather than merely reacting to short-term needs.

The challenge is to ensure that NRCan can minimize the costs and take advantage of the opportunities that changes bring.

The Audit of HR Planning was included in the 2017-2020 Risk-Based Audit Plan approved by the Deputy Minister on March 30, 2017.

Audit Purpose and Objectives

The objective of this audit was to determine whether HR planning at NRCan is carried out to assess and meet workforce requirements in support of the departmental mandate and priorities.

Specifically, the audit assessed whether:

• The Department has defined and communicated roles, responsibilities and accountability related to HR planning and that associated structures and processes have been established and implemented.
• HR planning information is available for decision-making by management
• Efficient and effective processes are established and tools are in place to support HR planning.
• HR plans are developed and implemented to meet organizational needs, including monitoring of and reporting on progress made against HR plans.

Audit Considerations

A risk-based approach was used in establishing the objectives, scope, and approach for this audit engagement. The following areas were identified as having significance in the management of HR planning process, and were therefore assessed as increased areas of risks for this audit:

• Governance structures adequately support the management of NRCan’s HR planning process and activities;
• The Department has the skills and competencies needed to do the work necessary to deliver on its mandate;
• Appropriate tools and guidance are established to support the HR planning process; and
• Monitoring and reporting processes are established to identify progress made against HR plans, and to support senior leadership in informed decision-making.

Scope

The scope of the audit included a review of HR planning activities of four Sectors from April 2017 to June 2018. The four Sectors are the Lands and Minerals Sector (LMS), the Strategic Policy and Results Sector (SPRS), the Innovation and Energy Technology Sector (IETS) and the Canadian Forest Service (CFS). Their combined population makes up approximately 60% of the NRCan workforce. The HR planning support provided by CMSS was also included in the scope of the audit.

The audit examined the data entered into PeopleSoft for HR planning. PeopleSoft is a commercial-off-the-shelf system modified to meet common Government of Canada HR and legislative requirements. It is meant to provide an integrated platform for the management of HR information. PeopleSoft is NRCan’s primary tool for supporting the processing of HR business transactions.

However, this audit did not examine the effectiveness nor the functionality of the PeopleSoft system itself, as NRCan is simply a user of the system. The system is housed in another government department and the networks utilized are provided and serviced by Shared Services Canada (SSC).

Approach and Methodology

The approach and methodology followed the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing and the Government of Canada’s Policy on Internal Audit. These standards require that the audit be planned and performed in such a way as to obtain reasonable assurance that audit objectives are achieved. The audit included tests considered necessary to provide such assurance. Internal auditors performed the audit with independence and objectivity as defined by the International Standards for the Professional Practice of Internal Auditing.

The audit approach included the following methods to gather evidence:

1. Review of relevant legislations, regulations, policies, directives, and guidelines;
2. Review of available committees’ Terms of References (ToR), and records of decisions;
3. Review and analysis of business plans, HR plans and related planning documents, and workforce analysis reports;
4. Interviews with key personnel and committee members;
5. Other relevant methods as deemed necessary by the audit team.

The conduct phase of this audit was substantially completed in June 2018.

Criteria

Please refer to Appendix A for the detailed audit criteria. The criteria guided the audit fieldwork and formed the basis for the overall audit conclusion.

Findings and Recommendations

Governance

Summary Finding

Most managers interviewed indicated they would benefit from additional guidance on the strategic direction of HR planning. The audit team found limited evidence that the Human Resources Renewal Committee (HRRC) played its role as “an integrator and ensuring alignment with other HRM entities, and supporting a holistic approach to addressing business needs and requirements for growing human capital”, as described in its terms of reference. HR planning roles and responsibilities are defined, but would benefit from being updated and clearly communicated.

Supporting Observations

Adequate governance processes allow management to exercise oversight towards achieving objectives and priorities. Proper HR planning assists departments in achieving those objectives by matching available knowledge, skills and abilities with upcoming opportunities. Governance bodies provide leadership and oversight for HR planning. The audit sought to determine whether:

1. Structures and processes are established and implemented at the appropriate levels of the Department to ensure direction and decisions on departmental and sector HR plans.
2. Branches within sectors are involved in the development of their sector HR plans.
3. Roles, responsibilities, and accountabilities related to HR planning are clearly defined and communicated.

NRCan has adopted a hybrid governance model for overall HR management, of which HR planning is an important foundation. HR governance at NRCan consists of the following bodies:

• Executive Committee (ExCom);
• Human Resources Renewal Committee (HRRC); and
• Sector HR committees.

NRCan HR strategic direction resides with ExCom, with support from HRRC. The ADM of the Corporate Management and Services Sector (CMSS) and the Department’s Chief Human Resources Officer hold functional responsibility for departmental HR. Sectors are responsible for their own HR management and some have established Sector HR committees.

Executive Committee (ExCom) – NRCan Strategic Direction

The ExCom is NRCan’s most senior decision-making committee; the Deputy Minister chairs this committee with the Associate Deputy Minister and the membership is comprised primarily of sector ADMs. Among its many responsibilities, ExCom establishes the Department’s direction, priorities, policy, and strategic relations with portfolio agencies. As well, it oversees departmental resource allocation (including human and financial resources) and manages corporate risk.

In examining the ExCom records of decision, the audit noted that HR discussions have focused primarily on HR issues such as talent management, workload management/capacity and like most other departments addressing challenges related to the pay function. Some discussions have occurred recently on a new HR strategy entitled the “NRCan People Strategy” which demonstrates some strategic focus on the departments overall HR management. However, until the strategy is fully implemented there is limited evidence of a department-wide, consolidated HR vision, strategy, and approach. In our audit interviews with NRCan managers, most indicated they would benefit from additional guidance on the strategic direction of HR planning.

In July 2017, CMSS presented the NRCan People Strategy to ExCom. This strategy proposes a new HR strategic direction and approach to support the departmental mandate. It provides sectors the direction to align their HR efforts with the departmental HR vision. The document also provides a roadmap to achieve three key priorities: strategic talent acquisition, building leadership, and productive career conversations. The HR Branch has completed consultation exercises on the Strategy with sectors and employees and is working to incorporate an additional component on workload issues into the Strategy. The HR Branch is to provide an update to ExCom in the Fall of 2018. This Strategy is in the early stages of implementation.

Human Resources Renewal Committee (HRRC) – NRCan Strategic Support

HRRC supports ExCom and the Deputy Minister in setting NRCan’s strategic direction for talent management. The Committee consists of Assistant Deputy Ministers, Directors General and Directors; it meets quarterly and provides recommendations and strategic advice on people management issues, with a focus on promoting a department-wide approach to HR management. HRRC has no decision-making authority. Specific HR topics and issues, such as staffing and classification, are discussed at meetings. Following each meeting, HRRC sends a memo to the Deputy Minister detailing topics discussed, along with presentations and other documentation discussed.

The terms of reference for HRRC indicates the following concerning its mandate:

“This committee will act as an integrator and ensure alignment with other Human Resources Management…entities (e.g. sector HR committees, Champions, bargaining agents) to support a holistic approach to addressing business needs and requirements for growing human capital.”

In examining meeting minutes and supporting documentation, the audit team confirmed that sectors did not submit their HR plans to HRRC and there were limited discussions concerning HR planning.

The two departmental committees that deal with strategic direction in HR - ExCom and HRRC - do have occasional discussions regarding the links between business plans and human resources, i.e. HR planning; however, they are limited only to specific people strategies. Additional HR areas discussed have included staffing needs, talent management and classification.

Sector and Branch Committees – Sector Strategic Direction

Some sectors have established committees to support HR management. They include CFS, IETS and LMS. A review of the terms of reference for each committee confirmed that their mandates differ significantly. The CFS HR Committee’s mandate is to examine key HR issues to position CFS for success. For the IETS HR Committee mandate, the role is to provide oversight regarding the implementation of the sector HR Plan. Meanwhile, the LMS HR Committee has been established as an “advisory body”. At the time of the audit, SPRS did not have an HR committee in place; however, the sector indicated they intend to establish one in 2018-19.

While existing sector HR committees do have differing roles and responsibilities, the audit did confirm that in sectors where they do exist, they are involved in the management of sector HR issues. Sector HR committees tended to include both headquarters and regional office representation.

The difference in mandates of the various HR committees highlights the varying approaches adopted by sectors for managing HR. An HR governance framework would help define the scope, roles and responsibilities of sector HR governance bodies and provide an opportunity to adopt common HR approaches to managing horizontal HR issues.

Available sector HR plans are not discussed at HRRC meetings; therefore, this limited coordination and collaboration results in lost opportunities to gain efficiencies by managing common HR issues horizontally, such as sharing best practices and identifying collective staffing opportunities.

Roles and Responsibilities

The roles and responsibilities for HR planning are documented in several TBS policies and guides, as well as NRCan documents. For example, the TBS Policy on Management of Executives requires that Deputy Heads determine their departmental organizational structure and executive resourcing requirements through ongoing HR planning. The policy requires planning and implementing of people management practices that deliver on operational objectives and for assessment of the organization's people management performance.

The TBS Policy Framework for People Management indicates that the head of human resources (CMSS) is responsible for supporting the Deputy Head in fulfilling her responsibilities related to effective people management. This Policy Framework also indicates that managers are responsible for ensuring effective people management in all activities falling under their area of responsibility.

In addition to the TBS Policy, NRCan’s HR Planning Guide for Executives requires that ADMs develop their individual HR plans by:

1. Communicating the importance of integrating HR with business planning to stakeholders;
2. Ensuring that the organization's HR plan clearly reflects current and future HR needs;
3. Ensuring that performance agreements for managers at all levels include the responsibility for integrating HR with business planning; and
4. Measuring the progress by establishing accountability for implementing HR planning and ensuring performance agreements for managers at all levels include this responsibility.

NRCan has also utilized a common commitment in its executive performance management agreements to hold executives accountable for implementing planning, recruitment, development, and engagement strategies to support a high-performing workforce in an increasingly competitive labour market.

Therefore, HR planning roles and responsibilities are adequately defined through a combination of TBS and departmental policies, which indicate that HR planning is a shared responsibility between the departmental HR function (CMSS) and management within each of the sectors.

There are, however, opportunities to reinforce these roles and responsibilities by including them in NRCan documents, such as the “HR Planning – A Guide for Managers”.

RISK AND IMPACT

Without the proper governance structures and direction, individual sectors may make decisions that are incongruent with overall departmental strategic direction. Similarly, without the proper HR governance structures and direction, the Department risks utilizing its resources in an inefficient and ineffective manner.

Recommendations

Recommendation 1 - It is recommended that the ADM, CMSS, in collaboration with ADMs, ensures that the accountabilities, roles and responsibilities of all stakeholders pertaining to HR planning are updated and clearly communicated throughout NRCan.

Recommendation 2 - It is recommended that the HRRC Chairs:

1. Review the HRRC’s terms of reference to ensure that the Committee acts as an integrator in supporting a consolidated perspective on HR plans throughout the Department; and
2. Provide ExCom with consolidated departmental HR planning information needed to exercise its oversight role related to HR strategic direction and resource allocation.

Management Response AND Action Plan

Management agrees with Recommendation 1:
HRB will develop and update communications materials as well as leveraging discussions through current HR practices, processes and channels. Presentations and discussions will be undertaken at HRRC and sector SMTs.

Position Responsible: Senior Director, Corporate HR
Timing: Starting in FY 2018/19, completed by end of December 2020

Management agrees with Recommendation 2:

1. Discussion of HRRC’s mandate and terms of reference will begin in September 2018. Consultations to be completed and new Terms of Reference approved by January 2019.
   
   Timing: January 2019
   
   
2. ADM, CMSS, will ensure that integrated HR Planning information is provided to Exec members and their management teams.
   
   Timing: By September 2019 and ongoing
   Position Responsible: Chief Human Resources Officer (CHRO)

Human Resource Planning Process

Summary Finding

The Department has developed its HR Strategy and the supporting action plan is in the early stages of implementation. The audit team found that sectors included in the scope of the audit did discuss and address the HR planning process and have developed relevant HR plans to achieve their sector objectives. In reviewing sector HR plans the audit team identified good practices; however, these practices are not being shared among sectors. In most cases, performance indicators were not included as part of the HR planning process, including the NRCan’s People Strategy’s project plan and sector HR plans.

Supporting Observations

The audit sought to determine whether:

1. Efficient and effective HR planning processes were established;
2. HR planning information was available for decision-making by management;
3. HR plans were developed and implemented; and
4. Effective monitoring of and reporting on activities were established to assess progress against HR plans.

Strategic HR planning is an important component of strategic HR management, linking HR management directly to organizational strategic planning. A well-developed HR planning process will also link organizational needs to HR services, including recruitment & selection, learning & development, succession management, etc.

The Treasury Board of Canada Secretariat (TBS) defines HR planning as a process that identifies current and future needs to achieve the organization’s goals. As well, TBS expects departments to assess organizational human resources capacity in order to plan for projected shortages and surpluses in specific occupations and skill sets. To this end, TBS developed a five-step HR planning process, as shown in Figure 1 and illustrated in Appendix B, which NRCan reproduced in its HR Planning – A Guide for Managers. This process closely aligns with other available HR planning models. The audit sought to determine whether efficient and effective processes were established and tools and guidance from the HR Branch were in place to support the sector HR planning process. The sectors included in the scope of the audit provided the audit team with their final or draft HR plans and their related planning documents.

As there is limited NRCan strategic direction for HR planning, it is difficult to determine whether the HR plans are meeting overall organizational needs. Therefore, this section is not intended to compare the sectors to an established benchmark, but rather, to provide examples as illustrations of current practices adopted by sectors included in the scope of the audit.

Review your business goals

To meet organizational needs, sectors take into account departmental priorities in developing their HR plans. HR planning is especially important for a time-limited program that has neither ongoing funding nor policy authority (sunsetting program). When a change in priority necessitates ending a program, a plan is necessary to re-organize employees into new roles.

In its 2017-18 Departmental Business Plan, NRCan listed its departmental priorities, as well as the Clerk of the Privy Council’s HR priorities. While NRCan does not have an amalgamated HR plan, the available sector HR plans and related planning documents discuss departmental and sector priorities. For example, SPRS has a number of commitments upon which it must deliver. These include contributing to departmental priorities such as advancing clean technology, science and innovation; transitioning to low-carbon economy; improving market access and competiveness; advancing reconciliation with Indigenous peoples; and ensuring greater safety and security for Canadians.

Scan the environment

To meet organizational objectives, NRCan requires information to develop current demographic, skill and competency profiles of its workforce, as well as to identify shortages in meeting current and future organizational needs. Without accurate and timely information, NRCan may make the wrong decisions affecting its efficiency and effectiveness in delivering on its mandate. The audit observed that the sectors in the scope of the audit use the workforce data provided by CMSS and stored in the HR Management System (i.e PeopleSoft) to support their HR planning processes, as illustrated in the sections below.

Internal factors. CMSS is responsible to set policies for the department and provide guidance and support to sectors. The HR Branch has the functional role of providing HR expertise to sectors. In some cases, sector HR committees invite HR advisors to discuss HR issues to help sectors plan their business needs in a timely manner. To help sectors identify internal factors that could affect their capacity to meet their objectives, the HR Branch also generates and provides standard reports of available HR information to sectors. These reports include employee distribution by sector, occupational group and levels, age, gender, etc. Other data, such as employee linguistic capacity by occupational groups, first official language declaration by sector, reasons for departure, promotions, and employment equity are included.

Corporate HR can also produce customized reports to meet sectors’ unique demands. However, many PeopleSoft data fields are neither used nor analyzed, as the data is incomplete or out-dated (e.g. education). The quality of the stored information is contingent on both the managers providing correct information to the HR Branch and the HR Branch entering that information into PeopleSoft in a reasonable time.

Some sectors expressed concern about the reliability of data related to the organizational structure since this PeopleSoft data is based on classification processes and managers’ organizational changes, both of which can take time to update in PeopleSoft. For example, for a significant re-organization, such as the creation of LMS from the previous Minerals and Metals Sector and Earth Sciences Sector in January 2017, it may take a while for all of the data related to these organizational changes to be incorporated into PeopleSoft, which will impact data reliability.

Furthermore, managers cannot access some data for analytical purposes, such as internal staff movement. As well, PeopleSoft and SAP^{Footnote 5} do not interface directly with each other. As a result, some sectors have developed additional tools, and/or purchased applications to better analyse financial and internal HR information to make decisions.

External factors. To gain a complete perspective of the factors impacting them, sectors must also incorporate external factors in scanning their environment, such as labour market trends. Corporate HR confirmed during our interviews that they do not have the necessary capacity to perform HR market analysis. Some sectors have conducted external assessments on issues like capacity to better assess the supply of needed skills and competencies in the future. Some sectors procured external resources to better identify talent in specific and unique fields. However, the audit found that there is no mechanism in place for sectors to collaborate with each other to conduct market research on common areas of interest.

In some instances, sectors demonstrated initiative, going beyond expectations in their planning. The audit team observed that CFS, for example, conducted an analysis of the research capacity in the forest science sector to better align HR strategies to identify and coordinate their talent requirements. This analysis provides high-level information about research capacity in government, academia, and other organizations. It further identifies and explains current research expertise in certain disciplines.

Identify the Gaps

To determine NRCan’s current and future HR needs, the Department identifies possible skills shortages in specific occupational groups and/or potential new skills requirements. As well, the Department identifies possible future requirements for succession planning and talent management, towards ensuring diversity, employment equity, and official languages obligations are met.

The HR Branch developed templates to collect information regarding succession planning and talent management. In addition, sectors utilize workforce information dashboards provided by Corporate HR annually, to identify workforce gaps in occupational group or organizational requirements.

To help sectors identify their workforce gaps and to comply with mandatory central agencies’ requirements, NRCan generates and releases long-term departmental action plans related to official languages and employment equity. These action plans include the following:

• In its 2015-2018 Official Languages Action Plan, NRCan identified three main priorities.
• Ensuring leadership at all levels and establishing an organizational culture that promotes the use of both official languages.
• Strengthening its actual bilingual capacity and the effective use of both official languages.
• Promoting science in French and supporting the different communities through its scientific expertise.

Although the completion of action plan initiatives were set over a three-year period, the achievement of the NRCan vision, i.e. to become a model organization in the use of both official languages, requires a longer-term focus of sustained efforts and continued engagement.

• The 2016–2019 NRCan Employment Equity and Diversity Action Plan lays out the strategic objectives and action items with the intent of moving NRCan toward a culture of equity and diversity and a workplace reflective of Canada’s workforce. The plan looks toward the coming years and considers the department’s challenges and opportunities. The plan includes concrete actions to ensure the Department complies with the Employment Equity Act, while also underlining its commitment to creating a diverse and inclusive workforce of employees from all backgrounds.

Sector HR plans and related planning documents that the audit team examined include gap analyses that focus more on staffing plans and related appointment activities. Performance management, retention and development, succession planning are included in their HR plan and related planning documents; however, the audit team noted that these topics are discussed briefly without providing detailed information on the process and methodologies used to meet the intended objectives.

In their HR plans, sectors determine gaps or shortfalls related to staffing. However gap analyses are not done for areas such as talent acquisition and recruitment; talent management, succession planning and performance management; and retention, career progression and performance achievement awards. Identifying the gaps between what NRCan has and what is needed will help sectors in meeting their business goals and facing challenges in today's labour market (i.e. competition for talent, aging workforce). Analyzing the gaps will also help sectors identify areas that need attention and assign the appropriate priority to HR strategies in the next step of the HR planning process - developing the plan.

Develop your plan

Providing strategic direction in an HR plan is important toward meeting organizational needs. As previously mentioned, in March 2018, CMSS presented NRCan’s People Strategy to ExCom, which listed HR strategies, such as:

• Strategic talent acquisition by creating opportunities to attract skilled talent;
• Building leadership by strengthening leadership and capacity among feeder groups;
• Career development by making career discussions meaningful and useful; and
• Enabled processes and systems so that the management of people is supported by streamlined HR policies, lean practices and client-focused services.

Sector strategic direction. Sectors also provide strategic direction in their own HR plans. For example, SPRS presented its strategic direction as follows:

• Defining its new vision, mission, culture and expectations in a way that resonates with employees. SPRS will take an inclusive approach to defining its new vision statement by engaging staff in the process.
• Building, through development and/or recruitment, a strong and committed management team. Fostering employee engagement through positive management practices that foster and support the employees’ wellbeing and commitment to the organization’s mission and values.
• Collaborating with Partners and Stakeholders from diverse communities, with differing and sometimes conflicting interests.
• Promoting innovation and driving change on an ongoing basis.

IETS described its HR strategic direction in its 2015-18 Integrated Business Plan. It also described how the sector would integrate work and resources to achieve its vision and deliver on its priorities. The plan explains the collective path forward to fulfill its mandate of enhancing Canada’s competitiveness in energy innovation while improving environmental performance. It also meant to serve as a key tool and narrative to help guide discussion and engagement on how it advances as an organization, and to help it make decisions about the right investments for the future. For IETS, they believe their ability to recruit, develop and retain staff is critical to ensuring an effective, productive and high-performing workforce. IETS states that it supports an integrated HR approach by:

• Attracting the best-qualified candidates for positions in a timely and effective manner (Recruit);
• Helping employees further their careers which are aligned with the sector’s business priorities (Develop); and
• Providing a supportive work environment that focuses on people first (Retain).

Although CFS does not have an HR plan, the Sector provided the audit team with various HR planning related documents. CFS highlighted the current strategic HR context that supports its on-going operational commitments as well as those from CFS’ Human Resources Committee or NRCan’s Human Resources Renewal Committee (HRRC). CFS’s strategic direction is as follows:

• Facilitate a collective leadership approach to ensure that HR challenges are appropriately addressed;
• Contribute to and enhance our on-going HR planning and reporting responsibilities; and,
• Support senior management in making better-informed people management decisions.

LMS presented priorities, plans and activities for the management of human resources in its Strategic Human Resources Framework. The plan spans three years (2017-2020). It explains the role of LMS in NRCan, as well as challenges and expectations under the current strategic context; however, the plan does not present specific HR strategies to ensure different HR activities work together towards achieving the sector’s priorities and objectives.

HR activities. The next step for sectors in developing their HR plans is to translate their HR strategies into HR activities. When the HR Branch submitted NRCan’s People Strategy presentation to ExCom in March 2018, they also presented an action plan listing some HR activities and timelines for completion. This People Strategy includes a foundation piece entitled “Integrated HR Planning”. However, this same foundation piece does not contain either a comprehensive project plan or any associated timelines for completion. The audit team recognizes that the Strategy is a work in progress and according to the HR Branch, it is in the early stages of implementation. ExCom has approved NRCan’s People Strategy and has requested additional information on workload issues, which HR Branch expects to provide to ExCom in the Fall of 2018. Communicating the Strategy to sectors should assist in aligning it with sector HR activities and increasing collaboration for its implementation.

To test the development and implementation of HR plans by each sector within the scope of the audit, the audit team selected specific HR initiatives to determine their status.

Strategic Policy and Results Sector (SPRS) - SPRS states that it strives to ensure that managers throughout their sector adopt constructive measures in addressing the following HR activities:

• Maintain and distribute up to date organizational charts reflective of the Sector’s structure.
• Review all job descriptions to ensure that they are current and relevant in conjunction with NRCan’s Classification Renewal and the HR Modernization Project for a selected branch.
• Include workload discussions and training needs in one-on-one meetings to improve management’s understanding of employee responsibilities, challenges and insights. Capture the content so that senior management can benefit and incorporate the results into their ongoing planning.
• Review Sector decision-making processes and ensure that decisions taken are communicated to those affected in a timely and clear manner.

From the four activities above led by SPRS, the audit selected the job classification review to test the implementation of this HR activity and found the sector had demonstrated that it is performing the necessary duties to implement this HR activity.

Innovation and Energy Technology Sector (IETS) - Under its HR strategy of development, IETS stated that it:

1. Strengthens and engages staff in their development, while ensuring alignment and delivery of its core business objectives;
2. Nominates and supports candidates who will benefit from broader talent management.
3. Provides tools to support managers and supervisors to help ensure a high performing organization is also top of mind for the sector;
4. Is committed to taking measures to meet official languages obligations, with a particular focus on EX-Feeder Groups (EX-Equivalent, EX-Minus 1 and EX-Minus 2); and
5. Supports leadership development by better utilizing experiential on‐the‐job learning opportunities based on succession and business needs and identifying staff to participate in the NRCan’s Leadership Bootcamp training.

From the five activities above led by IETS, the audit selected official languages to test the implementation of this HR activity and found that the sector had demonstrated that it is performing the necessary duties to implement this HR activity.

Canadian Forest Service (CFS) - As part of its on-going strategic HR planning efforts, CFS stated that it conducts demographic analysis of its workforce and the distribution across its priority and ongoing areas of work. This analysis is meant to enable CFS senior management to make informed decisions for succession planning, delivering the CFS annual recruitment plan, and salary budget forecast. The sector noted that regular analysis of the workforce distribution by programs provides a more detailed and in-depth understanding of the allocation of resources horizontally across different programs regardless of geographical representation of the employees. CFS provided documentation demonstrating that these initiatives are taking place.

Measure your progress

While the HR activities are being implemented, it is important that sectors assess their progress against HR plans.

Monitoring the results of HR activities is essential to evaluate progress towards their achievement, as well as to allow the Department and/or sectors to improve performance towards meeting overall objectives. Monitoring progress assists decision-makers in adjusting HR strategies and/or plans, as necessary and allowing senior management to be more agile in resource reallocation. A key element of monitoring is the establishment of clear objectives and targets that are specific, measurable, attainable, results-oriented, and timely.

The audit found that some monitoring of HR activities is occurring in sectors. For example, certain sectors within the scope of the audit use dashboards to monitor progress against their HR plans. Some sectors analyze current and future organizational needs and identify HR vacancies and develop strategies on how to fill them. Most sectors monitor their salary envelope, forecast and baseline; they also assess delays in staffing to adjust salary envelope and forecast accordingly. The audit team noted that sectors with strong HR planning processes, who also implemented their plans and monitored their progress, tended to show smaller salary variances.

Most sectors monitored staffing plans and related classification actions. Other matters of importance, such as, performance management, recruitment, harassment, and labour relations are discussed when they arise or an update is needed. Sectors with HR committees also included topics on their agendas that went beyond staffing and classification.

The audit team noted that NRCan’s People Strategy project plan does not contain performance indicators for all components of the strategy. The audit also found that in most cases sectors did not include performance indicators in their HR planning documents. However, the HR Branch and sectors were able to discuss progress made against selected HR activities.

The audit team found only two instances where performance indicators were identified. The first instance was part of the IETS comprehensive HR action plan, focusing on enhancing awareness of official languages rights and obligations to sector managers and staff and ensuring the equal status of English and French in the NRCan work environment.

The second instance was part of the LMS HR Plan. Although the plan is a work in progress, LMS produced a document, entitled “Proposed HR Framework Indicators” for five areas, including “Strategic HR planning and talent management”. The proposed indicators for this component included:

• Each division has identified current and potential skills and knowledge gaps;
• Each division has outlined a plan to address gaps, which could include staffing, training, etc.

However, the Sector did not provide timeframes for any of the indicators identified. Moreover, in developing performance indicators, LMS should consider the need to develop and share a common methodology to all of its divisions, to ensure that they share the same interpretation.

RISK AND IMPACT

A lack of established and clear targets that are specific, measurable, attainable, relevant, results-oriented and timely may hinder HR planning decisions that can impact the department ability to meet its objectives. It may also hinder decision makers in adjusting HR strategies and/or plans over time preventing them from being more agile in resource reallocation.

Recommendations

Recommendation 3 – It is recommended that the Chief Human Resources Officer completes an action plan for the NRCan People Strategy with ExCom endorsement with periodic updates on progress.

Recommendation 4 - It is recommended that Sector ADMs establish HR Planning performance indicators aligned with the departmental People Strategy to measure their progress.

Management Response And Action Plan

Management agrees with Recommendation 3:
HRB will complete an annual action plan for the strategic priorities of the NRCan People Strategy, and obtain ExCom endorsement. The first update to ExCom on progress will occur by the end of the fiscal year.

Position Responsible: CHRO
Timing: by March 2019

All sectors agreed with this Recommendation 4:
With the support of NRCan Chief Human Resources Officer, each sector ADM will develop their own performance indicators aligned to the departmental People Strategy and implement them. Sector performance indicators will be established and in place by April 2019.

Support from the HR Branch

Summary Finding

The audit team noted that the HR Branch provides information to managers to identify and plan for HR activities, but reported not having sufficient capacity to support sectors in HR planning. The HR Branch also has no mechanisms in place to share good practices across sectors.

Supporting Observations

The audit sought to determine whether CMSS provided tools and guidance to sectors to support their HR planning exercise. The purpose of a standardized process is to improve HR planning efficiency. Common HR planning tools help managers understand process requirements and apply them accordingly.

In alignment with the TBS guide, NRCan has established an HR planning process, tailored to the Department. The audit team noted that the HR Branch provides information to managers to identify and plan for HR activities, but reported not having sufficient capacity to support sectors in HR planning. The 2011-12 Administrative Review and Deficit Reduction Action Plan had a significant impact on capacity and resources for HR planning. In 2017-18, the HR Branch did not provide training related to HR planning to managers. Apart from the HR Planning – A Guide for Managers, the audit team did not find any standardized tools with instructions to help managers in their HR planning exercise. There is an opportunity to increase the value of this Guide by incorporating various new tools that are available for HR planning.

Not all managers interviewed as part of the audit were familiar with the benefits of the HR planning. However, the audit team observed that sectors who have dedicated resources to conduct HR planning have been able to prepare and better integrate their business and HR activities.

During interviews, managers reported different perspectives regarding HR planning support. Since the HR planning exercise is not centrally driven, sectors develop their own processes and tools to support HR planning activities, depending on their needs. Sectors reported to the audit team that they do not share HR planning practices and tools with each other. Although the departmental intranet site, The Source, provides information on HR planning, some managers reported having difficulty finding it. Other managers understood the HR planning process and developed tools to meet their sectors’ individual needs, and used HR Branch support as necessary. Despite managers’ views on HR planning support, most indicated they did not want more templates. Nevertheless, the HR Branch has an opportunity to play a valuable role providing assistance and best practices in HR planning and revisiting its website to make it more user-friendly for managers.

Most managers stated that HR services provided by the HR Branch were transactional, rather than strategic. They believe HR support is more focussed on classification and staffing functions than on HR planning. The audit team noted that the reported lack of capacity within the HR Branch hampers the ability of sectors to meet their desired HR planning results. Meanwhile, the HR Branch stated that it would appreciate insight into sector HR service requirements as early in the process as possible to assist in better planning their service delivery.

The HR Branch is willing to provide more strategic information to sectors to help them perform their work better. For example, the audit team noted that the Analytics team has the capacity to prepare customized reports to respond to special requests from sectors, based on information available in PeopleSoft. Few sectors have requested additional information to supplement their HR planning or operational activities. Although the HR Branch is not fully aware of all sector needs in HR planning, the HR Branch believes that it does not currently have enough resources to service the sectors. The HR Branch informed the audit team that it is restructuring to better support sectors in their HR planning. The HR Branch has recently created and begun staffing a unit reporting to a manager, dedicated to supporting HR planning across the Department.

The HR Branch provides sufficient information to managers to identify and plan for HR activities. However, support can be enhanced with more instruction, training and sharing of sector HR planning practices.

RISK AND IMPACT

The lack of an understanding of sectors information needs may hinder CMSS to provide them with correct and timely information, which in turn may as well hinder sectors’ abilities to deliver on their program mandates. Without a proper departmental plan to support the HR strategy, sectors’ HR activities may not align with the overall goals and objectives of the Department.

Recommendations

Recommendation 5 - It is recommended that the ADM, CMSS ensure the capacity to provide assistance, advice and best practices to all sectors related to HR planning.

Management Response And Action Plan

Management agrees with Recommendation 5:
In July 2018, CMSS created the Workforce Planning and Data Analytics Unit to increase capacity to assist sectors with HR Planning. The HRB is currently running selection processes to staff the team and will develop performance indicators, a maturity model, and tools for sectors.

Position Responsible: CHRO
Timing: by April 2019

APPENDIX A – Audit Criteria

The criteria were developed primarily from the key controls set out in the Treasury Board’s (TB’s) Core Management Controls and the NRCan’s HR Planning – A Guide for Managers. The criteria will guide the fieldwork and will form the basis for the overall audit conclusion.

The objective of this audit was to determine whether HR planning at NRCan is carried out to assess and meet workforce requirements in support of the departmental mandate and priorities.

Audit Sub-Objectives	Audit Criteria
Audit Sub-Objective 1: To determine whether the Department has defined and communicated roles, responsibilities and accountability related to HR planning and that associated governance structures and processes have been established and implemented.	1.1 Governance structures and processes are established and implemented at the appropriate levels of the Department to ensure direction and decisions on departmental and sector HR plans. 1.2 Branches within sectors are involved in the development of their sector HR plans. 1.3 Roles, responsibilities, and accountabilities related to HR planning are clearly defined and communicated.
Audit Sub-Objective 2: To determine whether HR planning information is available for decision-making by management.	2.1 Sectors are provided with reliable information to support the HR planning process. 2.2 Departmental and sector HR information is used to support strategic and operational planning.
Audit Sub-Objective 3: To determine whether efficient and effective processes are established and tools are in place to support HR planning.	3.1 Departmental and sector HR planning processes are established. 3.2 Tools and guidance from Corporate HR is provided to sectors/branches to support the HR planning exercise.
Audit Sub-Objective 4: To determine whether plans are developed and implemented to meet organizational needs, including monitoring of and reporting on progress made against HR plans.	4.1 HR plans are established and implemented to meet organizational needs. 4.2 HR plans take into account NRCan priorities and programs to be delivered during the period covered by the plan. 4.3 HR plans are updated to report on progress and adjusted as necessary. 4.4 Effective monitoring of and reporting on activities are established to assess progress against HR plans.

Appendix B – Five Essential Steps to Human resource planning

Human resources planning is the process of identifying current and future human resources needs. It involves securing the right people, building a supportive work environment and developing the capacity to ensure the organization’s success and a confident future for the Public Service.

STEP 1. Determine your Business Goals First you need to have a clear understanding of where your organization is headed. Review the government’s key priorities or emerging directions that could have an impact on your organization’s mandate Review your organization’s business priorities, budget allocations and performance indicators
STEP 2. Scan the environment Identify the external and internal factors that could affect your organization’s capacity to meet its objectives.
External Factors Labour market trends Current and projected economic conditions Changes in legislation Technological advancements Cultural and social values	Internal Factors Workforce composition (profile, trends, skills) Changes in policy platform, guidelines, program delivery, organizational structure Government-wide initiatives, such as diversity and employment equity; official languages; training, learning and development; values and ethics; workplace well-being
STEP 3. Identify the Gaps Based on Step 1 and Step 2, determine your organization’s current and future human resources needs. Identify possible skills shortages in specific occupational groups or potential need for new skills Identify possible need for succession planning and management Ensure that you have met your obligations related to diversity and employment equity; official languages; training, learning and development; and values and ethics
STEP 4. Develop Your Plan Based on steps 1 to 3, determine the major human resources priorities and the strategies you will use to achieve the desired outcomes. Include human resources priorities and key planning issues in your organization’s Report on Plans and Priorities Factor in budgetary considerations into your human resources plan Communicate your human resources plan to all employees and stakeholders and engage managers in its implementation
STEP 5. Measure Your Progress The human resources plan is an evergreen document. Key to successful implementation is constantly measuring, monitoring and reporting on progress, and responding to changing circumstances. Ensure human resources performance measures are aligned with indicators in the Management Accountability Framework and the People Component of the same Framework Establish a process that allows for regular review, adjustments and communication of changes