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PACC Committee Report

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Pursuant to Standing Order 108(3)(e), the Standing Committee on Public Accounts has the honour to present its


The Standing Committee on Public Accounts has considered Chapter 6 of the May 2003 Status Report of the Auditor General of Canada (Reform of Classification and Job Evaluation in the Federal Public Service)and the Committee has agreed to report the following:


In 1989, the federal government launched Public Service 2000, an initiative to renew the public service. Its objective was to achieve a more client-oriented and results-based culture. In support of that objective, the government wished to simplify the employment and personnel management regime so that resources devoted to these activities could be redirected toward the delivery of services to the public. In 1990, a task force was formed to review classification and job evaluation in the public service. It suggested developing a single job evaluation plan that would reflect the requirements of the Canadian Human Rights Act.

For over 12 years, the federal government, through the Treasury Board Secretariat (TBS), has been trying to reform the classification and job evaluation system in the federal public service in an attempt to address long-standing human resources management problems. From 1991 until early 2002, the TBS worked to reduce the number of occupational groups and simplify the practice and administration of human resources management by adopting a single compensation structure throughout the federal public service. In April 2001, however, the TBS realized that it could not implement the universal plan within the constraints it faced. In May 2002, the government announced that the second attempt at comprehensive reform, the Universal Classification Standard (UCS), could not be implemented. In trying to convert positions from the old classification system to the new UCS, the TBS progressively realized that a single pay structure for all positions in the public service could not be achieved without causing unmanageable disruptions to the federal workforce. The Secretariat could not find a way within the existing salary protection policy to reconcile the funds available for the conversion with a manageable rate of salary protection that management and unions would accept. The planned universal pay structure approach has now been abandoned, after a large investment of time and effort by tens of thousands of federal employees and an estimated $200 million in incremental costs incurred between 1998 and 2001.

Since then, the Secretariat has been engaged in a more incremental approach at reforming federal classification and job evaluation systems. The new attempt adopts a step-by-step approach to classification reform that is more tailored to specific occupational groups and is a modification of the old classification system. Some of the work already accomplished under the previous attempts at reforming the public service will serve as a basis for developing new group-specific standards, thus recovering part of the investment made in developing the UCS. Even using specific standards for each occupational group, it is impossible to compare the value of work of different occupational categories.

In the federal public service, the classification and job evaluation systems are considered the cornerstone of human resources management. Because collective bargaining is based on occupational groups, there are important linkages between classification and job evaluation and other aspects of human resources management, such as staffing, organizational design, and bargaining unit structure. As of March 2002, the federal public service employed some 168,000 people and had a payroll of about $9 billion. Given the size and complexity of the federal workforce, any changes to the classification and job evaluation systems can have significant multiple effects on the rest of the federal human resources management regime.

Almost from the outset, the Office of the Auditor General of Canada has been actively monitoring the past and current attempts at reforming the federal public service, in particular the classification and job evaluation systems. In 1993, the Office audited the “final draft” of the new job evaluation system developed by the TBS to determine whether it would achieve the goal of reducing the number of existing occupational groups from 72 to 29. In a later audit, the Office confirmed that the UCS was a step in the right direction but that it would also require substantial improvement in order to be workable. The TBS had already acknowledged the shortcomings of the UCS and had begun to redesign it. In 1999, the government had successfully managed to reduce the number of occupational groups, with a new legal definition of each group. However, not all occupational groups had a distinct classification standard. New occupational groups that had merged a number of former occupational groups continued to use the old groups’ classification standards and designations. Of the 29 new groups, 25 groups retained their union affiliations; the remaining 4 were exempted from union representation and collective bargaining.

In 2000, the Office of the Auditor General followed up on the development of the UCS and noted that some significant issues still needed to be addressed: (1) the TBS needed to ensure that departments were applying the new standard appropriately; (2) departments needed to ensure that their work descriptions and position evaluation results were valid and reliable; (3) the TBS needed to test the UCS further to determine to what extent it was universal and gender-neutral; and (4) the government needed to ensure that a reasonable and realistic level of financial resources would be available to convert positions to the new standard.[1]

The Public Accounts Committee is also interested in the federal government’s attempts at reforming the public service classification and job evaluation systems. A few years ago, the Committee examined issues relating to government efforts to streamline the human resources management regime, including classification reform, and post‑secondary recruitment. For this reason, the Committee decided to convene on 9 June 2003 to consider the evidence and weigh witnesses’ testimony on the federal government’s recent efforts at classification reform. Representing the Office of the Auditor General of Canada were Mrs. Sheila Fraser (Auditor General of Canada) and Mrs. Kathryn Elliott (Principal). Those present for the Secretariat of the Treasury Board of Canada were Mr. James Lahey (Associate Secretary, Human Resources Reform), Mr. Richard Burton (Assistant Secretary, Human Resources Management Office, Organization and Classification) and Mrs. Hélène Laurendeau (Assistant Secretary, Human Resources Management Office, Risk Management).


Investment in Classification Reform

The Committee was very concerned to learn that there was no estimate of the total costs for the whole 12-year period of the UCS initiative. No formal mechanism had been set up to track and monitor the costs of this major project in the TBS or in federal departments. In 2001, the TBS requested a third party to design a costing methodology and to estimate the size of departmental investments in the UCS project between 1998 and 2001. The estimate was to comprise only incremental costs, defined as “costs that would not have been incurred in the absence of the Universal Classification Standard project” ― in other words, only the costs of additional salaries for new positions or for replacements for employees seconded to the project, overtime, infrastructure, training of managers and employees in the use of the new standard, contracts, and systems development directly related to the project.[2] It was not to include the ongoing costs of salaries for classification staff or for employees and managers involved in writing work descriptions or participating in evaluation committees.

While the Office of the Auditor General of Canada could not audit the estimate itself, it did review the work on which it was based and concluded that it was a reasonable estimate of incremental costs. The study, estimating the total incremental cost of the UCS for only two years, established the cost at about $200 million from 1998-1999 to 2000-2001. According to the TBS, most of the UCS project costs were absorbed by reallocations within departmental budgets, and the initiative required a further injection of only $25 million in new funding. Nevertheless, the fact remains that there is no firm estimate of total costs for the whole life of the project.

The absence of project cost tracking and monitoring systems for an initiative of this scope and scale is extremely perplexing. Prudent project management would require the development of cost tracking systems and procedures during the preliminary conception and planning phases of a major project, and then the establishment of functional monitoring systems to ensure that all relevant project costs were effectively being tracked from the outset of the initiative. Why this was not done is not explained; nor has any explanation been offered as to why the government chose instead to wait 10 years after the start of the UCS project before undertaking an estimate of project costs for the previous 2 years. Project cost monitoring is not an accountant’s foible but an essential tool to assist managers, administrators and other decision makers in evaluating how effectively resources are being allocated and used, and (when combined with other financial and non-financial information) in measuring program performance and results.

After a dozen years and two failed attempts at reforming the job classification and evaluation systems in the federal public service, the government is now committed to its third attempt. There are still no indications from the TBS, however, concerning the establishment of proper monitoring systems and procedures to track project costs accurately. The lack of progress on this issue is a source of serious concern and the Committee urges the TBS to address this problem immediately.


That without further delay, the Treasury Board Secretariat, in collaboration with all participating federal departments and agencies, establish appropriate systems and procedures to track and monitor all relevant costs associated with the current attempt at reforming the classification and job evaluation systems of the federal public service.


That the Treasury Board Secretariat trace the progress achieved in setting up cost monitoring and tracking systems and procedures related to the classification reform and ensure that the information is contained in the Secretariat’s annual departmental performance report for the fiscal year ending 31 March 2004, and also in the next annual update report of the classification reform.

Monitoring and Oversight of the Classification of Positions

According to the latest Status Report: “One of the Secretariat’s responsibilities is to establish adequate classification standards and the controls to ensure that positions are classified according to those standards.”[3] In light of these responsibilities, it was expected that the TBS would undertake measures to ensure that positions would be classified adequately throughout the development of the UCS and until the standard was fully implemented.

While federal departments have been delegated the authority to classify and also reclassify positions and are responsible for ensuring the integrity of their classification systems, the TBS had the responsibility to support and monitor departments in how they applied the classification standards. However, leading up to the planned classification reform, the TBS suspended its central monitoring of classification and conducted its last classification audit in 1991-1992. In the years when the TBS still monitored classification, about 6% of public service positions were determined to be either overclassified or underclassified.

From 1993 to 1999, reclassifications of employees as a percentage[4] of total promotions in the public service remained relatively constant ― around 30%. Yet, because of the suspension of its central monitoring function, the TBS had no available mechanism to ascertain whether any of the roughly 28,000 reclassification actions that occurred during this period might have resulted in a misclassification. In the fall of 2002, the TBS carried out a survey on classification practices across the federal public service; the survey results indicated that in the absence of appropriate central guidance, departments may have evaluated new UCS-style work descriptions against old standards in an inconsistent manner.

Committee members were clearly concerned about this state of affairs, and repeatedly questioned the witnesses about the TBS’s intended plan of action to correct this specific issue. Mr. James Lahey responded that the TBS agreed with the Auditor General’s recommendation about ensuring the integrity of the classification system in the federal public service. In accordance with the Treasury Board policy on Active Monitoring, departments are responsible for monitoring how positions are classified within their organizations, and the TBS itself is responsible for supporting departments and monitoring the overall situation across all departments. Mr. Lahey stated that the TBS would soon implement a new monitoring program at both the departmental and government-wide levels. The TBS will help departments to build their own active monitoring program or align existing programs. At the corporate level, the TBS will test and refine the methodology by monitoring its own application of classification standards. As a first step, the TBS will undertake a comparative study of the Computer Systems (CS) and Financial Management (FI) groups, occupational categories that are widely employed throughout the federal government. The TBS will then evaluate its own department-wide monitoring methodology by testing it on one department, Natural Resources Canada. These initiatives are expected to be carried out during fiscal year 2003-2004 and the TBS report on the results. No further details were provided, however, about how and in what format the information will be communicated, nor was there any indication of the specific timeframe within which these initiatives are to be completed. Given that there is currently no mechanism to ensure the integrity of the classification system in the public service, the Committee urges the TBS to complete the initiatives without further delay and proposes the following recommendations.


That the Treasury Board Secretariat provide detailed action plans together with implementation timetable for the initiatives aimed at improving and strengthening departmental monitoring of classification practices. That these action plans and implementation timetables be tabled in Parliament no later than 31 March 2004.


That the Treasury Board Secretariat complete the testing of its methodology for the government-wide monitoring of the integrity of departmental classification practices and report the results in its annual departmental performance report for the fiscal year ending 31 March 2004.

Lessons Learned and Future Direction of Classification Reform

Another item of concern was the lack of formal review or comprehensive post‑mortem to determine the root causes of the demise of the classification reform project over the last 12 years, and certainly over the course of the UCS project since 1995. According to the Status Report, a post-mortem would include all key stakeholders and, especially after the second unsuccessful attempt, would be guided by an independent group. The audit noted that no formal post-mortem had been carried out. However, TBS officials did execute a more limited “lessons learned” exercise based on the scope of their responsibilities and on their interpretation of the causes of failure of the previous attempts at classification reform. The TBS subsequently prepared a document summarizing the views of its officials and indicating how the lessons learned from past experiences with classification reform were used in developing the new incremental and tailored approach now being applied to reform the job classification and job evaluation systems.

This exercise identified at least one area of weakness, namely, poor communication and coordination between various TBS divisions responsible for the delivery of the new classification standards. This observation eventually led to a reorganization of the TBS’s Human Resources Branch in order to improve the sharing of information among the Branch’s different divisions. The TBS has recently consolidated its compensation, labour relations, classification, and pay equity sectors for a more integrated approach to these areas. The audit believes that the reorganization should assist the TBS in dealing with some of the issues that must be resolved before classification reform can proceed.

However, by limiting itself to a simple “lessons learned” exercise, the TBS may have deprived itself of the benefits resulting from a more complete investigation of the causes underlying the failure of the two earlier attempts at classification reform. Given the complexity and duration of the classification reform project, a comprehensive post‑mortem executed by an independent entity and including all key stakeholders would likely have captured a more complete picture of the root causes that led to the present situation and provided more options in terms of corrective measures. Moreover, had the TBS undertaken a comprehensive post-mortem, it would have likely compelled all stakeholders to maintain better record-keeping and tracking systems and procedures. These, in turn, would have provided a more complete picture of events and a better assurance of capturing most of the relevant data to support analysis, and would have reinforced corporate memory to ensure that the organization fully benefited from the experience gained.

As one of the major central agencies, the TBS is often involved in assisting and coordinating departments and agencies in complex and challenging government-wide initiatives, such as the Year 2000 project, the Financial Information Strategy (FIS), the Modern Comptrollership Initiative (MCI), and the current attempt at reforming the job classification and evaluation systems. The experience gained from such ambitious undertakings can provide important insights into the strengths and weaknesses of federal organizations, what achievements can reasonably be expected, and the requirements for successful implementation of subsequent reforms. The TBS can benefit from these experiences only if it takes the time and makes the effort to carry out a comprehensive examination of past and current attempts at reform through the execution of proper post‑mortem exercises. This would require the TBS to consult all key stakeholders participating in the initiative, engage in the timely and structured sharing of information with all relevant participants, and use the information as a basis for decisions. The Committee thus makes the following recommendations.


That the Treasury Board Secretariat develop the practice of executing proper post-mortems within reasonable delay for all its large-scale, government-wide projects.


That the Treasury Board Secretariat develop better record-keeping and tracking systems and procedures to support comprehensive post mortem exercises.

Corporate Compensation Policy

The Committee was concerned by the fact that the federal government had still not developed a formally approved compensation policy to guide its compensation decisions. A compensation policy is designed to support an organization’s realization of its strategic objectives for human resources management as well as its business objectives; it does this by striking a balance between affordability and internal and external equity for the occupational groups within the organization.

Although the principles of compensation policy have been discussed for years among various officials in the TBS, at the time of the audit, there was still no formal framework established to balance competing goals and review the repercussions of collective bargaining decisions for one group on negotiations for others. According to the audit report, there was no evidence of a concerted, structured approach within the TBS and with stakeholders during the development of the UCS that would have led to significant changes in the approach to collective bargaining changes that might, in turn, have facilitated the creation of a single pay structure, thereby allowing for conversion to the UCS.[5] While the TBS has accomplished considerable work in developing a compensation policy for the federal public service, it has not yet been finalized. This leads the Committee to propose the following recommendations.


That the Treasury Board Secretariat complete the development of a corporate compensation policy for the federal public service at an early date and ensure that the principle of pay equity is maintained.


That the Treasury Board Secretariat prepare an action plan together with an implementation timetable for the complete introduction of the corporate compensation policy for the federal public service. That the Treasury Board report on these initiatives to Parliament with ongoing updates in its annual performance reports and also table a specific annual report to the Public Accounts Committee and begin reporting for the period ending 31 March 2004 .


Despite more than 12 years of effort and considerable resources, the reform of job classification in the federal public service remains at a standstill. Twice, the attempts at developing a single pay-structure for the whole of the public service proved too ambitious to accomplish, given the various constraints imposed upon the government. The federal government is currently embarked on a third, more modest, attempt, which aims to make incremental changes in the federal classification and job evaluation systems. However, many critical issues remain to be resolved, such as how classification reform fits with the broader modernization of federal human resources management initiative, what overall results the federal government aims to achieve, and within what timeframe. The Committee urges the government to address these issues promptly. If they are not satisfactorily resolved, the final outcome of the third attempt at classification reform will remain in doubt.

Pursuant to Standing Order 109, the Committee requests that the Government table a comprehensive response to this report.

A copy of the relevant Minutes of Proceedings (Meeting Nos. 35 and 37) is tabled.

Respectfully submitted,


[1]       Office of the Auditor General of Canada, December 2000 Report, Chapter 22, Development of the Universal Classification Standard, Ottawa, December 2000.

[2]       Office of the Auditor General of Canada, Status Report, Chapter 6, Reform of the Classification and Job Evaluation in the Federal Public Service, Ottawa, 27 May 2003, p. 7.

[3]       Office of the Auditor General of Canada (May 2003), p. 15.

[4]       A reclassification is the appointment of an employee, without competition, to a position whose occupational group, subgroup, or level has changed as a result of the position’s re-evaluation.

[5]       Office of the Auditor General of Canada (May 2003), p. 10.