"Table Outlining Differences Between Human Resource Management and Personnel Management"
Organization of American States Management Study of the Operations of the General Secretariat Part II – Detailed Observations and Options November 3, 2003 Final Report Final Report – November 3, 2003 Table of Contents Part I – Executive Summary Part II – Detailed Observations and Options Project Overview Overall Option Analysis Findings, Observations, and Options Organizational Structure Business Processes Human Capital Technology Part III – Appendices Appendix A: Project Timeline Appendix B: Current OAS Organizational Structure Appendix C: Member State Delegation Meetings Appendix D: Organizational Unit Meetings Appendix E: Facilitated Session Participants Appendix F: Current OAS Grade and Salary Structure and Description of United Nations Compensation System Appendix G: OAS Personnel Register (June 2003) with detailed OAS demographics Appendix H: OAS Performance Appraisal Form Appendix I: Detailed Deloitte Research Findings Related to OAS Human Capital Issues Appendix J: Series of Charts Reflecting Deloitte Analyses of OAS Human Capital Issues Final Report – November 3, 2003 2 Project Overview - Scope The management study is an analysis of the General Secretariat's organizational framework and personnel structure being performed by an independent organization. The objective of the study is to improve the effectiveness and control the costs of the General Secretariat. The study is being conducted on behalf of the Member States and the Permanent Council, who are the primary clients on the project. The project includes four elements: Assess the current organizational framework Analyze the current workloads, personnel structure, and processes Identify areas for reallocation of resources Identify strategies to increase effectiveness and efficiency, and enable the correct composition of staff to meet the organizational mandates in a cost- effective and efficient manner - Draft Report by September 16, 2003 (Originally November 30, 2003) - Final Report by September 30, 2003 (Originally March 1, 2004) - Presentations to the General Secretariat, the Permanent Council, and the Committee on Administrative Matters from October 2003 – May 2004 Final Report – November 3, 2003 3 Project Overview - Approach Develop a clear understanding of the organization’s mission, mandates, and strategic objectives. Conduct an activity-based analysis to develop a detailed understanding of current business processes, organizational structure, and resource allocations (people and expenditures). Analyze how the organization is currently using technology to enable its processes and resources. Develop an optimal "model" for processes, technology, organizational structure, and resource allocations to achieve short-term and long-term objectives. Compare the current state against the model and prepare a series of findings and options for the organization to consider with regard to: streamlining business processes leveraging technology redesigning the organizational structure to improve efficiency reallocating employees and other resources -- including outsourcing where appropriate new creative approaches to reduce/control operating costs (e.g., employee benefit costs) Final Report – November 3, 2003 4 Project Overview – Data Collection • Met with 14 Member State delegations to discuss project objectives and expectations (see Appendix C for participants) • Solicited information from more than 400 personnel across the General Secretariat: – Interviewed 78 senior directors, managers, and staff in 54 organizational units (see Appendix D for a list of interviewees) – Conducted 12 facilitated sessions with 72 staff and managers in the Secretariat for Management (see Appendix E for a list of attendees) – Administered an electronic survey of 250 employees in the Technical Areas and IACD – Administered an electronic survey of 54 Directors and Technical Assistants in 28 Offices in the Member States • Collected and reviewed a wide range of OAS/GS materials, e.g., financial statements, budgets, policies and procedures, staff allocations, etc. • Developed database of staffing information and historical financial data • Collected comparative benchmark data • Collected information and conducted interviews with representatives of the United Nations, PAHO, World Bank, IDB, and U.S. Government • Attended various Permanent Council and CAAP meetings • Attended the 2003 General Assembly • Interviewed donor and permanent observer state Final Report – November 3, 2003 5 Overall Option Analysis Introduction Summary of Options Option Evaluation Framework Option Dependencies Transition Management Office Change Management and Communication Strategy Final Report – November 3, 2003 6 Introduction Embarking on a major organizational and operational transformation should be viewed as a journey, not a series of quick fixes. The options described in this document are not intended to be viewed independently, but rather as interrelated and building upon one another. Many of the options presented in this document may take months or even years to implement and realize benefits. This section was developed to promote an overall picture of the options and their implementation, including: • A summary description of all 22 options. • A high-level evaluation of all of the options with regard to cost and benefit, ease of implementation, and time to implement. • A description of the potential linkages and dependencies of the options over the duration of the transition. • A description of a transition management office to be used to manage and coordinate the overall transition effort. • A listing of change management and communication strategy steps to assist in transitioning the organization and implementing changes. Final Report – November 3, 2003 7 Summary of Options: Organizational Structure Focus Area Sub Area Option Description Organizational Strategic Planning Implement Strategic Implement a strategic planning process to develop a strategic framework Structure Planning Framework including strategic objectives and vision. The framework would enable the OAS/GS to become more focused and align resources with objectives as well as provide direction for decision-making. Overall Organizational Redesign Organization Design and implement an organization structure that aligns business areas Structure Structure performing similar functions. With the creation of a more streamlined organization, the GS could realize a reduction in duplicative activities, increased efficiencies, and better alignment with strategic objectives. Chief Operating Officer Establish Chief Institute an executive-level COO to coordinate all of the activities of the GS (COO) Operating Officer and report directly to the Secretary General. The COO would provide Position leadership and facilitate the coordination of activities and resource sharing among units within the GS and not have a formal political role. Offices of the General Implement Regionalized Initiate a regionalization strategy for the OGSMS that would centralize field Secretariat in the Member OGSMS office operations, increase effectiveness of the offices, and decrease the level States (OGSMS) of resources required to maintain OAS presence throughout the hemisphere. If a presence is required in a member state without a direct OAS presence, options can be explored for establishing a General Secretariat Office colocated with other multilateral organizations in the country. Final Report – November 3, 2003 8 Summary of Options: Business Processes Focus Area Sub Area Options Description Business Budgeting Implement Results- Implement a results-based budgeting system to more effectively align resources with Processes Based Budgeting the strategic objectives and mandates of the OAS, resulting in a shift in focus from inputs and processes to results and outcomes. This process would include specific funds. Donor Relations and Implement Donor Centralize the external fundraising function to coordinate the solicitation, negotiation, Administration Relations Function administration, and reporting of specific fund projects. Centralization would decrease redundancies, increase economies of scale, and improve customer service to the donor community. Specific Fund Implement Cost Implement a cost recovery plan for specific fund projects to recover the full direct Administration Management and and indirect administrative costs they generate. The current strain on Regular Fund Recovery Plan resources to support the growing volume of specific fund projects could be managed and reduced. Quotas Adopt Formal Quota Agree upon a formal quota policy based on a set of quantifiable metrics. As a result, Assessment Policy Member State quotas could be determined more consistently. Mandate Implement Strategic Based on the strategic plan, adopt and implement a mandate development and Development and Mandate Framework implementation framework that ties mandates directly to the desired results of the Implementation OAS. Consequently, the mandate tracking process would be more accountable and quantifiable. Procure-to-Pay Streamline Procure- Implement procurement and payment improvements such as Procurement Cards, to-Pay Process automatic payments, and electronic fund transfers to gain efficiencies. Doing so would allow resources to focus on more strategic initiatives such as strategic sourcing and cash management, instead of transaction processing. Final Report – November 3, 2003 9 Summary of Options: Human Capital Focus Area Sub Area Options Description Human Capital Compensation Continue to use the United Nations While salary increases have been unexpectedly high in some compensation system. years, the OAS' overall salary levels are comparable and competitive with the Washington market. As market competitiveness is a primary guiding principle for any compensation system, there is no reason to change from the UN system unless salary levels begin to exceed the local market. However, OAS should work closely with the UN to more accurately project future salary and post-adjustment increases for OAS budgeting purposes. Compensation Link staff compensation more to The current OAS compensation system tends to reward longevity performance than to tenure. more than performance. Salary increases and step increases are given to employees with little or no linkage to performance appraisal. To the extent possible within the UN system, OAS should link salary increases to staff performance. Compensation Conduct an audit to ensure that OAS While OAS has used the UN classification system for several post classifications are consistent years, there appears to be little coordination between OAS and with the UN. PAHO (which also uses UN parity) with regard to the classification of comparable positions. An audit of OAS positions with PAHO will ensure that the UN classification standards are being applied appropriately. Benefits OAS should maintain its current Overall, the OAS should strive to maintain its current benefit benefit levels, but consider options to levels as they are consistent with the competitive market in the manage future benefit costs. Washington area. However, there are a number of options noted in our report the OAS should consider to constrain future benefit costs. Final Report – November 3, 2003 10 Summary of Options: Human Capital Focus Area Sub Area Options Description Human Capital Performance Improve the performance Create a performance management system that (1) identifies each (Cont.) Management management system to use it as a tool manager’s and employee's most critical job requirements, (2) for strategic management. links those requirements to the organization's strategic priorities, and (3) holds managers and employees accountable for meeting their requirements and objectives. The completed appraisals should be used as a key factor in evaluating staff for promotion, salary increases, reassignments, and potential disciplinary action. Unsatisfactory performers should be identified, given an opportunity to improve, and removed from the organization if they do not improve to a satisfactory level. Training and Implement a management training Effective management is a primary driver of productivity and Development program. organizational success. Many OAS/GS managers and supervisors possess the technical skills needed to perform their duties, but lack training in critical areas of project management, financial management, budgeting, and managing human resources. Training and Offer targeted training and OAS/GS currently has very few opportunities available to staff Development development opportunities to enhance for developmental assignments and outside training. The staff competencies. organization needs to create a systematic program for enhancing staff competencies, including needs assessment, in-house training, internet-based e-learning, university training, and other sources – depending on the nature of the need. Career Facilitate career advancement. Explore options to more clearly define career paths and promotion Advancement opportunities for high-performing staff. Career paths will improve the organization’s ability to attract and retain its best performers. Types of The OAS should continue its current The current use of term contracts is cost effective and is serving Appointments practice of using term contract the OAS’ interests well. The Organization’s interests are served appointments to meet its human by using multiple appointments, including CPRs, short-term capital needs. appointments, and long-term appointments. The decision to phase out Career appointments is appropriate. Final Report – November 3, 2003 11 Summary of Options: Technology Focus Area Sub Area Options Description Technology IT Organization Reorganize IT Functions Redesign the IT function to incorporate all technology-related business areas under a Director of IT. In addition, consolidate database and application support of the Oracle system to standardize processes, coordinate and streamline activities, and to focus on increased delivery and customer satisfaction. Reporting and Data Streamline Reporting and Data Implement procedures to improve the timeliness and accuracy of Integrity Integrity the Oracle reporting process. Better coordination among the stakeholders of report development as well as documented procedures for data reconciliation would improve the quality of reports as well as reduce distrust of the data. Automation and Employee Implement Automation and Implement Oracle self services and other automation functions to Self Services Employee Self Services lower costs and increase efficiencies. Final Report – November 3, 2003 12 Option Evaluation Framework The following option evaluation framework presents high-level ratings of different criteria that can be used for comparing the options, including: • Implementation Cost — This criteria measures the financial impact associated with implementing the option. A full ball ( ) is considered ―expensive to implement‖ i.e., a high financial cost, and an empty ball ( ) represents a low financial cost to the Organization. • Difficulty to Implement — This criteria measures the difficulty to implement the option, defined by a combination of cost, effort, and intangible factors, such as political or cultural resistance. A full ball ( ) is considered difficult to implement, and an empty ball ( ) is considered relatively easy to implement. • Time to Implement — This criteria measures the amount of time required to implement the option. A full ball ( ) is considered a year or longer to fully implement, and an empty ball ( ) is considered something that could be implemented relatively quickly. High Moderate Low • Potential Benefit —This criteria indicates the level of potential benefit the OAS could realize by implementing the option. Final Report – November 3, 2003 13 Option Evaluation Framework—Organizational Structure Option Implementation Difficulty to Time to Potential Cost Implement Implement Benefit Implement Strategic Planning Framework High Redesign Organization Structure High Establish Chief Operating Officer Position Medium Implement Regionalized OGSMS High • Implementation Cost —This criteria measures the financial impact associated with implementing the option. A full ball ( ) is considered ―expensive to implement‖ i.e., a high financial cost, and an empty ball ( ) represents a low financial cost to the Organization. • Difficulty to Implement—This criteria measures the difficulty to implement the option, defined by a combination of cost, effort, and intangible factors, such as political or cultural resistance. A full ball ( ) is considered difficult to implement, and an empty ball ( ) is considered relatively easy to implement. • Time to Implement—This criteria measures the amount of time required to implement the option. A full ball ( ) is considered a year or longer to fully implement, and an empty ball ( ) is considered something that could be implemented relatively quickly. • Potential Benefit —This criteria indicates the level of potential benefit the OAS could realize by implementing the option. Final Report – November 3, 2003 14 Option Evaluation Framework—Business Process Option Implementation Difficulty to Time to Potential Cost Implement Implement Benefit Implement Results-Based Budgeting High Implement Donor Relations Function Medium Implement Cost Management and Recovery Plan Medium Adopt Formal Quota Assessment Policy Medium Implement Strategic Mandate Framework High Streamline Procure-to-Pay Process Medium • Implementation Cost —This criteria measures the financial impact associated with implementing the option. A full ball ( ) is considered ―expensive to implement‖ i.e., a high financial cost, and an empty ball ( ) represents a low financial cost to the Organization. • Difficulty to Implement—This criteria measures the difficulty to implement the option, defined by a combination of cost, effort, and intangible factors, such as political or cultural resistance. A full ball ( ) is considered difficult to implement, and an empty ball ( ) is considered relatively easy to implement. • Time to Implement—This criteria measures the amount of time required to implement the option. A full ball ( ) is considered a year or longer to fully implement, and an empty ball ( ) is considered something that could be implemented relatively quickly. • Potential Benefit —This criteria indicates the level of potential benefit the OAS could realize by implementing the option. Final Report – November 3, 2003 15 Option Evaluation Framework—Human Capital Option Implementation Difficulty to Time to Potential Cost Implement Implement Benefit Continue to use the United Nations compensation system Medium Link staff compensation more to performance than to tenure High Conduct an audit to ensure that OAS post classifications are Medium consistent with the UN Consider options related to employee benefits Medium Improve the performance management system to use it as a tool High for strategic management Implement a management training program High Offer targeted training and development opportunities to enhance High staff competencies Facilitate career advancement Medium Continue current practice of using term contract appointments to High meet most human capital needs. • Implementation Cost —This criteria measures the financial impact associated with implementing the option. A full ball ( ) is considered ―expensive to implement‖ i.e., a high financial cost, and an empty ball ( ) represents a low financial cost to the Organization. • Difficulty to Implement—This criteria measures the difficulty to implement the option, defined by a combination of cost, effort, and intangible factors, such as political or cultural resistance. A full ball ( ) is considered difficult to implement, and an empty ball ( ) is considered relatively easy to implement. • Time to Implement—This criteria measures the amount of time required to implement the option. A full ball ( ) is considered a year or longer to fully implement, and an empty ball ( ) is considered something that could be implemented relatively quickly. • Potential Benefit —This criteria indicates the level of potential benefit the OAS could realize by implementing the option. Final Report – November 3, 2003 16 Option Evaluation Framework—Information Technology Option Implementation Difficulty to Time to Potential Cost Implement Implement Benefit Reorganize IT Functions High Streamline Reporting and Data Integrity Medium Implement Automation and Employee Self Services Medium • Implementation Cost —This criteria measures the financial impact associated with implementing the option. A full ball ( ) is considered ―expensive to implement‖ i.e., a high financial cost, and an empty ball ( ) represents a low financial cost to the Organization. • Difficulty to Implement—This criteria measures the difficulty to implement the option, defined by a combination of cost, effort, and intangible factors, such as political or cultural resistance. A full ball ( ) is considered difficult to implement, and an empty ball ( ) is considered relatively easy to implement. • Time to Implement—This criteria measures the amount of time required to implement the option. A full ball ( ) is considered a year or longer to fully implement, and an empty ball ( ) is considered something that could be implemented relatively quickly. • Potential Benefit —This criteria indicates the level of potential benefit the OAS could realize by implementing the option. Final Report – November 3, 2003 17 Option Dependencies Description: While many options can be implemented independently at any time, other options are dependent and/or linked (i.e., it would be beneficial to implement after or during the implementation of other options). The following flow chart highlights dependencies with certain options, as well as an estimate on the amount of time to implement. Option Dependencies Implement Strategic Planning Framework Implement Management Training Program Link Compensation to Performance Explore Options Related to Benefits Conduct Audit of UN and OAS Post Classifications Continue Using UN Compensation System Continue Using Term Contract Appointments Redesign Organization Structure Implement Donor Relations Function Implement Cost Management and Recovery Plan Improve Performance Management System Offer Targeted Training and Development Facilitate Career Advancement Implement Regionalized OGSMS Reorganize IT Functions Implement Results-Based Budgeting Implement Strategic Mandate Framework Adopt Formal Quota Assessment Policy Establish Chief Operating Officer Position Streamline Procure-to-Pay Process Streamline Reporting and Data Integrity Implement Automation and Employee Self Services 0 6 12 18 24 32 36 42 48 54 60 Timeline (Months) Final Report – November 3, 2003 18 Transition Management Office (TMO) Description: To coordinate and manage the changes adopted by the OAS/GS, the Organization could create a Transition Management Office (TMO). In general, the function of this office would be to serve as a coordination mechanism for all of the projects initiated as a result of the Management Study. A typical TMO for this type of effort has three to five full-time employees dedicated to coordinating the change. Responsibilities include periodic and ad hoc communications, coordination of resources, monitoring of budgets and timelines, provision of best practices and management resource, and other general duties as assigned. The TMO should report to top management and have an indirect report to the Political Bodies, likely through the CAAP. Benefits: • Implementing a TMO would allow the OAS/GS to build, maintain, and improve the project management mechanism to drive completion of multiple projects and keep them on schedule and budget. • A TMO structure supports project managers and implementation teams by providing organization-wide coordination, which enables more accurate quality control measures and cohesiveness across all projects and new initiatives. • A TMO would serve as a central repository for project management expertise, best practices, and knowledge. CAAP and Political Bodies Secretary General/Assistant TMO Secretary General/Other GS TMO Lead Executive TMO Staff (2-4 FTEs) General Secretariat Operations Possible TMO Structure Final Report – November 3, 2003 19 Change Management and Communication Strategy Description: Change management and communication are integral components of a successful implementation or change to an organization’s structure, processes, technology, or human capital. Due to the political nature of the OAS, it is of particular importance that the changes are managed carefully to promote support and commitment and reduce stress. Change management, which is the active management of a change or transition, is a crucial component of transitional phases that increases understanding, cooperation, and acceptance by stakeholders. A communication strategy is an important component of an organizational change management process. Effective and consistent communication during a transitional period educates all stakeholders on what changes are taking place, why the change is occurring, and their consequences or outcomes. In the short term, the management study steering committee should play a role in both change management and communication in order to provide continuity and to keep the Permanent Council and CAAP engaged in the process. Critical Steps in Change Management: Critical Steps in Communication Strategy: • Demonstrate commitment to change in the Permanent • Establish open communication lines and a sense of Council by providing resources and direction for dedication to work collaboratively toward a common goal transition. between the General Secretariat and the Permanent Council. • Establish a detailed rollout plan that specifies the time, • Establish a communication strategy that makes stakeholders resources, and responsibilities of all those involved, and aware of the advantages, disadvantages, and challenges they distribute throughout the Organization. will face as a result of the proposed change. Stakeholders • Where possible, maintain existing programs or processes include Permanent Council, Staff Association, Donors, etc. in parallel for a period of time to promote a seamless • Develop framework for communicating to the transition. Organization’s external customers to educate them on the • Develop strategy and guidelines for managing the human effects the changes will have on their relationship with capital effects that result from the changes to job OAS. classifications, staff location, job title, job description, • Develop and distribute newsletters during the initial stages etc., and suggest methods of maintaining and improving of change implementation to demonstrate success and morale and motivation. encourage participation of staff in the new initiative. • Develop training and implementation guidelines and policies for adoption among business areas. Final Report – November 3, 2003 20 Findings, Observations, and Options Organizational Structure Business Processes Human Capital Technology Final Report – November 3, 2003 21 Organizational Structure • Implement Strategic Planning Framework • Redesign Organization Structure • Establish Chief Operating Officer Position • Implement Regionalized OGSMS Final Report – November 3, 2003 22 Organizational Structure: Implement Strategic Planning Framework Observations: • The General Secretariat does not have a strategic plan that provides an operational vision for the OAS Charter and mandates. • Multiple bodies have input into the development of OAS strategic direction and mandates, which the General Secretariat is then tasked with implementing. Consequently, the strategic vision and mandates are not significantly coordinated, and have created a fragmented strategic message for the General Secretariat. Time Target Background Document Frame Area Focus • The General Secretariat (GS) does not have a single, formal, organization-wide strategic OAS Charter- Chapter 1: planning process that can be used to determine its goals and objectives. Nature and High level strategic • Although each program area within the GS is required to develop a mission and Purposes 1997 OAS direction for mandates justification statement for budgeting purposes, there is no process to connect these to an OAS Charter- Chapter 2: High level strategic direction to drive focus for overall strategic vision or to the OAS’ Charter. Principles 1997 OAS mandates • Mandates are developed independently of the GS’s operations, resulting in a disconnect Discussion of influences of the past decade and areas of between the mandates and the ability to execute them. In addition, the GS operates A New Vision focus within major strategic without clear information about the priorities of the political bodies. of the OAS 1995 OAS areas • While several documents provide strategic direction, there are differences among them Toward the New Discussion of influences of Millennium: the past decade and areas of in terms of timeframe and area of coverage that may make strategic objectives and The Road focus within major strategic Traveled 1999 OAS areas priorities unclear to the organization (see table). Discussion of the strategic initiatives for the Partnership for Issues CIDI-IACD 2002- Development outlining Strategic Plan 2005 IACD IACD objectives • Due to the fragmented strategic message, there is no clear organizational vision or Inter-American Discussion of democracy related priorities of the direction known by all levels of staff. As a result, there is no prioritized set of objectives Democratic Charter 2001 UPD Member States that drives the activities of the UPD and resource allocation to corresponding priority areas. • The lack of strategic planning at OAS leads to a lack of overall accountability, as it is The above table shows some of the documents that define OAS strategy and are currently referred to by the GS staff. difficult to determine the level of success a completed mandate has brought to meeting They were developed during different timeframes and, the strategic objectives of the Organization. although they overlap, they define different focuses, goals, objectives, and are not coordinated in any formal process. Final Report – November 3, 2003 23 Organizational Structure: Implement Strategic Planning Framework Description: Implement a strategic planning framework to help the General Secretariat (GS) better define ―what it is,‖ ―what it does,‖ and ―why it does it.‖ The framework should be designed to help the organization become more focused and align resources with core competencies (―core competencies‖ are areas in which an organization has a comparative advantage or an inherent capability). In addition, the document should leverage and clarify the operational message of existing OAS strategy documents. By coordinating multiple OAS strategy documents into a focused GS strategy, a strategic plan serves as the common thread for linking the Organization’s overall direction with its activities, budgeting, planning, performance measurement, and accountability. A formalized strategic planning process provides a framework to focus energy and allocate appropriate levels of resources to priority areas. Criteria that can be used in evaluating organizational areas include: • Charter Focus – Assessment of the extent each focus area adheres to one or more of the OAS "essential purposes" as stated in the OAS Charter. • Mandate Focus – Assessment of the mandate volume currently assigned to each business area as well as over the past five years. • Comparative Advantage – Assessment of the extent each area is uniquely positioned to meet its mandates and strategic objectives more effectively than other similar organizations operating in the hemisphere. Advantages: Disadvantages: Strategic planning allows an organization to adjust its focus • The strategic planning process can be time consuming and resources in response to a changing environment. during the initial cycles as the organization adjusts and A strategic planning framework could serve as the driving learns to operate in a more strategic manner. force for all GS initiatives and help effectively support the monitoring of productivity and accountability. A strategic plan could unite the Organization and its stakeholders under a shared vision and set of values. A strategic plan would serve as a means to limit or reallocate resources from functions determined to be non- strategic. A strategic plan could provide the OAS/GS with the flexibility and information needed to respond to operational and budgetary changes. Final Report – November 3, 2003 24 Organizational Structure: Implement Strategic Planning Framework Action Steps for Implementation Plan: 1) Define a representative team of stakeholders consisting of six to twelve members to form a committee that will participate in the formal strategic planning session (this should be done by a committee of the Permanent Council such as the Committee on Administrative and Budgetary Affairs). Members should include representatives from both the Permanent Council and the General Secretariat, such as Member State representatives, General Secretariat Directors, Staff Association representative, and other stakeholders. In addition, the Secretary General and Assistant Secretary General should also participate as either full members or, at the very least, sources for guidance. 2) Agree on the process and method to be used for developing the framework. 3) Conduct strategic planning sessions (typically over one to two weeks), to include development of: • A mission and vision statement, which describes purpose, business, and values. The vision statement should provide a guideline of what the Organization will look like as a result of the strategic planning process. • An analysis of the current environment and issues to be addressed by the plan. It is useful to perform a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to identify strategic situation and position • Core strategies, goals, and objectives to establish an outline of the strategic plan. 4) Develop and distribute the written strategic plan for the Organization to use as a guide for decision making and resource allocation. To assist with dissemination and increase awareness, develop and distribute user friendly versions of the strategy, e.g., pocket versions, etc. 5) Educate stakeholders on the components of the strategic plan and communicate the process of how the plan will be used. 6) Monitor and occasionally revisit strategic plan throughout its lifespan, and make adjustments to account for minor changes in the operating environment and organizational priorities. 7) Periodically repeat entire strategic planning process to adjust for major changes to the environment and organizational priorities. Timeframe for Implementation Plan: Implement Strategic Planning Framework Appoint Strategic Planning Committee Develop Mission and Vision Statement Perform SWOT Analysis Establish Goals and Strategic Objectives Develop and Distribute Strategic Plan Educate Stakeholders Monitor and Adjust as Necessary Begin Process Again 0 3 6 9 12 15 18 21 24 27 30 Timeline (Months) Final Report – November 3, 2003 25 Organizational Structure: Implement Strategic Planning Framework Implementation Costs Direct costs associated with implementing a strategic planning framework include: The cost of an outside facilitator to conduct planning sessions. Production costs of the strategic plan and supporting materials. If interpreters, translators, and other support services are required for the sessions, these costs should also be included. Indirect costs associated with implementing a strategic planning framework include: The time commitment of the strategic planning committee for the plan’s development. Costs that will be incurred as the organization learns to operate in a more strategically focused manner. • These costs may be absorbed by the organization and offset by a reduced effort in other areas such as non-strategic management meetings and other activities that will hopefully decrease. Barriers Critical Success Factors The General Secretariat and the Permanent Council must work Consensus between the political bodies and the GS may collaboratively on the process. This can be encouraged by be time consuming to obtain. establishing common goals and values for both entities early in the process, and letting the goals and values drive the process instead of individual politics and opinions. The strategic plan must be revisited and adjusted periodically to Without dedication and commitment to successful evolve with the changing environment of the Organization. It should adoption of a strategic plan from top leadership down, it be stressed that revisiting the strategy must be the result of a is difficult to successfully complete a strategic planning compelling change in the environment or capabilities of the initiative. organization, and not simply to reopen discussion on past decisions. The Organization must be willing to make hard decisions. Final Report – November 3, 2003 26 Organizational Structure: Redesign Organization Structure Observations: • The Office of the Secretary General has nineteen direct reporting lines that make it difficult to provide operational direction and coordination across the Organization (see chart on following slide). • The organizational structure is not aligned functionally or by customer, resulting in a fragmented structure that is difficult to coordinate and limits collaboration. Background Issues The General Secretariat (GS) organizational structure has There is no centralized conduit between General Secretariat evolved through the creation of new units and areas of focus operations and the General Assembly, Permanent Council, and over the years. other political bodies, resulting in a disconnect between actual While there is strong political leadership within the General and desired outcomes. Secretariat, there is limited centralized operational leadership. The lack of cooperation and communication between Technical Areas that perform similar functions operate autonomous program areas that perform similar or related independently, resulting in a lack of ability to coordinate and activities results in limited sharing of knowledge and best increased instances of duplicative activities. practices. Certain activities, such as project accounting and reporting, Fragmented organizational areas decrease effectiveness and fundraising, and website development, are performed in ability to coordinate by limiting specialization, decreasing multiple organizational areas with limited coordination. economies of scale, and increasing duplication of activities. Public Functional Area: Policy Project Support Administrative Affairs The table shows the major Offices and Secretariats of the GS, and some of the Office of the Secretary General functions they perform. Organizational (including Technical Areas) areas often perform similar functions. Office of the Asst. Secretary General Areas performing the function are marked with a . Area(s) performing Secretariat for Legal Affairs the function who also have primary responsibility for the function are marked Secretariat for Management with a . Secretariat for IACD Final Report – November 3, 2003 27 Organizational Structure: Current Organizational Structure Numbers indicate the number of direct reporting lines to the Secretary General, which total nineteen. 1 5 8 12 2 9 13 3 6 10 14 4 7 11 15 16 17 18 19 Final Report – November 3, 2003 28 Organizational Structure: Redesign Organization Structure Descriptionu Design and implement an organizational structure that groups similar functions, increases efficiency, rationalizes overhead, and aligns the organizational units with the strategic objectives identified by the strategic planning process. The key areas addressed by the redesign options are the Technical Areas, Support Areas, and Administrative Areas. By grouping the organizational units that perform similar functions together and rolling them up to an executive office, the Organization could realize a reduction in duplicative activities as well as an increase in knowledge sharing and collaboration among the units within each organizational area and across the functional areas. While the organizational structure should reflect the results of the strategic plan, the following pages present some alternatives to illustrate different approaches the Organization could pursue: • Option 1: Option 1 reorganizes the current General Secretariat structure, keeping most organizational units largely intact. • Option 2: Option 2 reorganizes the current General Secretariat structure by realigning most functions into new organization units. It should be noted that these options are not mutually exclusive, and that Option 1 could be a transitional structure that evolves into Option 2 or that elements of each could be incorporated into a third hybrid option. What is critical, however, is that the new structure reflects and is aligned to the strategy of the organization. Advantages: Disadvantages: Grouping the Support and Administrative functions As a result of a functional instead of a divisional design, together could enable the units to focus on their Administrative and Support areas would not be closely common customers (typically, the other parts of the aligned to, or experts in, supporting any one particular General Secretariat and the Permanent Council), likely Technical Area’s business needs. providing an overall increase in customer service. By grouping the Technical Areas and the IACD functions into larger subject matter areas, economies of scale could be gained and the Organization could present a stronger service capability to donors in the program areas. Final Report – November 3, 2003 29 Organizational Structure: Redesign Organization Structure – Option 1 Final Report – November 3, 2003 30 Organizational Structure: Redesign Organization Structure – Option 2 The technical areas (including IACD) would be staffed by a combination of subject matter experts and project managers, both supported by a staff of generalists that have general skills in both policy and project execution. The structure would encourage collaboration and provide flexibility for peak and down times on projects. Final Report – November 3, 2003 31 Organizational Structure: Redesign Organization Structure Action Steps for Implementation Plan: 1) Develop committee consisting of representatives from stakeholder groups including all major areas of the General Secretariat and the political bodies. Keep the political bodies informed of potential changes that may require amendment to the OAS Charter. 2) Based on the results from the strategic planning process, identify impact on the Organization design. 3) Develop inventory of the key areas of the Organization with a description of their functions. 4) Determine the primary activities of the Organization that contribute to the provision of key outputs (e.g., Technical Areas delivering mandate-driven projects). 5) Determine the support activities that assist the primary activities as well as each other (e.g., Public Information, Protocol, Library, etc.). 6) Determine the administrative activities that assist the primary activities as well as each other (e.g., HR, Financial Services, Procurement, etc.). 7) Examine these activities and identify activity linkages, inefficiencies, and areas of improvement in relation to how well they support the Organization in achieving its strategic objectives. 8) Design and evaluate Organizational design options. 9) Develop management and personnel structure including levels of hierarchy and spans of control as well as analysis of the requirements according to job level. 10) Design and implement an Organizational structure for implementation. Pursue amendments to the OAS Charter as required. Timeframe for Implementation Plan: Reorganization of Organization Structure Appoint Committee of Stakeholders Identify Strategic Objectives impact on Organization Structure List and Describe Organizational Areas Determine Primary, Support, and Administrative Activities Identify Linkages and Inefficiencies Design and Evaluate Organizational Design Options Develop Management and Personnel Structure Implement and Train Personnel 0 3 6 9 12 15 18 21 24 27 30 Timeline (Months) Final Report – November 3, 2003 32 Organizational Structure: Redesign Organization Structure Implementation Costs Direct implementation costs associated with reorganizing the General Secretariat (GS) organization structure include: Costs associated with the actual implementation of the desired organization structure, which include human resource costs, information technology, etc. Costs associated with the development and delivery of training programs for personnel with new job roles and responsibilities. Costs associated with the physical reorganization such as personnel relocation, furniture moving, etc. The indirect costs associated with reorganizing the GS organization structure include: Depending on the ease of transition, the major business areas may experience a period of inefficiency. However, these costs could be recovered as the new organization gains efficiencies. Barriers Critical Success Factors The reorganization could have a negative effect on employee morale, productivity, and sustained commitment to the Organization. A successful strategic planning process that clearly determines the strategy and objectives of the Organization must be completed to serve as a foundation organizational design decisions. All OAS stakeholders should be engaged and used to solicit feedback during the design of the organization structure. An unclear migration strategy could lead to resistance and lack of understanding from staff. Final Report – November 3, 2003 33 Organizational Structure: Establish Chief Operating Officer Position Observations: • There are multiple senior level executives focusing on the internal operations of the GS. Background Issues The General Secretariat (GS) has strong political leadership in The Secretary General and Assistant Secretary General are the Offices of the Secretary General and Assistant Secretary focused on political issues and crises, and not day-to-day General. Both of these positions tend to focus externally on operational matters, resulting in a disconnect between the political and policy related issues, leaving limited time for political and operational sides of the organization. internal operations of the General Secretariat. Operational and management initiatives are diffused among There is not a clear operational leader of the organization to different executives and directors. interact with the Secretary General, Assistant Secretary General, Without an operational senior-level executive, other executives and political bodies on issues of organizational resources and often play the role on a de facto basis, although they lack the capability. authority and resources to succeed in the position. Final Report – November 3, 2003 34 Organizational Structure: Establish Chief Operating Officer Position Description: Institute an executive-level Chief Operating Officer (COO) position with associated staff to coordinate all of the activities of the General Secretariat and report directly to the Secretary General. The COO would provide operational focus and leadership to manage the resources of the entire organization based on overall strategic objectives. The COO should have a negotiated performance contract to achieve certain goals of the political bodies. The COO role should be insulated from undue political influence through longer terms and specific removal authority (e.g., a five-year term subject to removal by Permanent Council vote or failure to meet performance agreement). The COO should receive strategic direction and mandates from the political bodies, but be given operational and tactical flexibility in achieving those goals. The COO role could be achieved by a new position, or by a reconfiguring and refocusing the current Assistant Secretary General role (while the current Assistant Secretary General position is conferred certain operational and administrative functions, the position tends to still focus externally, and internally only in specific aspects of day-to-day operations). Advantages: Disadvantages: A high level executive focused on operations could A COO may limit the authority and flexibility of the free up the Secretary General and Assistant Secretary current executive structure that empowers individual General to focus on urgent policy and political Secretariats and Departments. functions, and give them more flexibility to spend time away from GS headquarters working on A COO may distance the Secretary General and Assistant hemispheric issues and crises, and also more time to Secretary General from the day-to-day operations of the coordinate political matters within the units. GS. A COO could encourage coordination of GS efforts and resources, and creativity in achieving the mandates of the political bodies. By insulating the COO, the GS operations could avoid excessive political and national influences that can distract operations and personnel. The first set of priorities of the COO could be the implementation of the approved initiatives of this study. Final Report – November 3, 2003 35 Organizational Structure: Establish Chief Operating Officer Position Action Steps for Implementation Plan: 1) Develop the institutional structure and role of a COO, including term, appointment procedures, performance agreement, reporting lines (upward and downward), and incorporate into the Charter of the General Secretariat. 2) Interview candidate(s) and appoint a COO with the background, skills, and experience to play a leadership role in the organization. The first COO should have experience in overseeing organizational transitions and should probably be external to the organization to avoid institutional history that might hinder the transition. Eventually, the COO role could be migrated into the Assistant Secretary General role, although careful consideration should be given to avoiding the politicizing of the role by electing a COO. 3) Develop and negotiate performance agreement with new COO, including goals, outcomes, outputs, and measures. The initial performance agreement should be focused on the objectives of the transition in addition to operational objectives. 4) Monitor the performance of the COO through the Permanent Council and CAAP, and provide feedback and direction balanced with flexibility and resources to achieve goals. Timeframe for Implementation Plan: Establish Chief Operating Officer Position Develop COO Institutional Structure Interview candidates and appoint COO Develop COO performance agreement Monitor COO performance 0 3 6 9 12 15 18 21 24 27 30 Timeline (Months) Final Report – November 3, 2003 36 Organizational Structure: Establish Chief Operating Officer Position Implementation Costs Direct implementation costs associated with establishing a COO include: Salary cost of the COO and an immediate staff (one to two FTEs). Indirect costs associated with establishing a COO include: Cost of institutionalizing the role of COO (likely time of the Permanent Council, CAAP, Director of Legal Services, and Secretariat of Legal Affairs). Barriers Critical Success Factors Undue political influence on the operational role of the COO. Strike an appropriate balance between operational flexibility and political direction and oversight. Define this balance clearly in the A lack of authority and resources to effectively beginning of a COO term and adhere to the terms. perform the role of COO. Carefully define the COO position description, qualifications, and appointment process to encourage selecting the appropriate candidate. Lack of clarity around the role of the COO. Final Report – November 3, 2003 37 Organizational Structure: Implement Regionalized OGSMS Observations: • While the Offices of the General Secretariat in the Member States (OGSMS) are generally considered useful by the GS HQ operations, they are used inconsistently, have varying levels of capability, and represent a major commitment of resources. Background The three primary purposes of the OGSMS are to: Represent the GS in Member States. Serve as a liaison between OAS HQ and Member States. Provide technical project support and execution. In 2002, the budgets of the 28 OGSMS consumed 7.8% of the Regular Fund budget for an average of $212,000 per office, approximately 80% of which is for human capital expenses. There is no detailed framework outlining the intended interaction between the OGSMS and General Secretariat HQ operations. Graph shows the frequency of interaction with Personnel turnover at the OGSMS is limited. OGSMS of surveyed technical area staff based on the Technical areas tend to interact with OGSMS frequently—but not on a day-to-day basis— 74 employees who responded to this question. Over 50% of respondents interact with OGSMS on at least a and generally find interaction useful (see graphs). monthly basis, although less than 10% interact daily. Issues Although one of the stated purposes of the OGSMS is to provide technical support in the field for General Secretariat projects, utilization of OGSMS resources is sporadic and technical support capacity may not be fully realized. Currently, the OGSMS purpose and capabilities are not widely understood and the perception of them throughout the technical areas at GS Headquarters varies. Currently, there are no metrics used to determine the level of success each OGSMS achieves in helping the OAS meet its strategic objectives. Graph shows the perception of OGSMS usefulness of As a result of longer terms for OGSMS personnel, the perception is that over time they lose surveyed technical area staff based on the 72 employees who responded to this question. Over 70% momentum or become linked more to the socio-political culture in the host country than the of respondents consider the Offices either Useful or OAS mission. Very Useful, while only 3% consider them Not Useful. Final Report – November 3, 2003 38 Organizational Structure: Implement Regionalized OGSMS Description: Implement a regionalization strategy for the OGSMS to operate in a more centralized fashion in the major OAS geographic regions. By implementing a regionalization strategy, the OAS could reduce the operating budget of the OGSMS while still meeting their intended objectives. The proposed structure would establish regional offices throughout the major regions of the hemisphere including the Caribbean, Central America, and South America. All OAS field operations and supervision would be headquartered in these regional offices. Under this structure, the regional offices could be rotated on a periodic basis (e.g., a five-year cycle), which would allow all Member States within each region the possibility of hosting an OGSMS regional office. The Offices should receive clear direction on the Organization’s expectations of them, and have their performance evaluated against these expectations. In addition, to maintain a healthy rotation of directors, provisions could be included for term limits of office directors concurrent with the rotation of offices. If a presence is required in a member state without a direct OAS presence, options can be explored for establishing a General Secretariat Office collocated with other multilateral organizations in the country. Advantages: Disadvantages: Regionalization would allow the OAS to maintain a Due to the large span of control within the regionalized presence in the major regions of the Hemisphere and offices, the effectiveness of hands-on project support would retain the relationships and cultural understanding require more travel and resource costs. developed throughout the years of maintaining OGSMS in individual Member States. Due to the fact that the OGSMS represent the ―face‖ of the Consolidation of the OGSMS would increase the OAS in the Member States, regionalization would decrease levels of utilization and sharing of staff and overhead the on-site presence of the OAS in countries without costs. offices. Implementing a rotation plan for Office Directors The cost of relocating the OGSMS as part of the rotation would lead to a fresh cycling of leadership within the throughout the region will have to be absorbed every OGSMS. rotation, and this may also hinder staff continuity in the Regionalizing the OGSMS would decrease the volume offices. of staff and resources required to operate in the field, thereby reducing costs. By implementing a cyclical rotation of OGSMS within each region, all Member States could benefit from hosting the OAS regional office within their borders. Final Report – November 3, 2003 39 Organizational Structure: Implement Regionalized OGSMS 2002 Regular Fund Executed (USD 000’s) Estimated Future Costs (USD 000’s) for for 28 Office Structure 6 Regional Office Structure Approved Posts $4,436 Approved Posts $1,451 Travel $8 Travel $240 Documents $7 Documents $7 Equipment and Supplies $237 Equipment and Supplies $200 Building Mgt/Maintenance $607 Building Mgt/Maintenance $450 Performance Contracts $18 Performance Contracts $18 Other Costs $32 Other Costs $32 TOTAL $5,345 TOTAL $2,398 Assumptions • Costs are for ongoing operations and do not include transition/implementation or rotation costs. • Staff level would decrease from 110 to 36 (6 per office). Straight per-person averages used to determine future personnel costs. • Travel costs would increase due to requirement for more travel throughout region. Assumption is $10,000 in travel per professional employee (4 professional employees per office x 6 offices x $10,000 in travel) • Equipment and Supplies would decrease due to decreased requirements in fewer offices. • Building Management and Maintenance would decrease due to lower volume of office space to rent and maintain and potential increase in in-kind contributions because of high profile of hosting an office. Final Report – November 3, 2003 40 Organizational Structure: Implement Regionalized OGSMS Action Steps for Implementation Plan: 1) Develop a working group for the regionalization of the OGSMS consisting of stakeholders from current OGSMS, General Secretariat, and Permanent Council. 2) Analyze the current OGSMS structure to determine the strengths and weaknesses of each office and identify aspects of the structure that should be carried forward to the regionalized environment. In addition, do a detailed cost analysis of current structure to establish baseline for future comparison and to develop a business case for regionalization. 3) Develop formalized regional OGSMS framework, guidelines, performance measures, and plan of action that outline the structure, intended function, term characteristics, location and rotation of each office, and communication strategies between the OGSMS and Headquarters. Develop business case to sell the idea within the Organization and to other stakeholders. 4) Create regionalized offices as a result of lottery or other agreed upon approach to determine location and staff. 5) Establish a memorandum of agreement with other organizations to receive services when needed. 6) Monitor the use and performance of the offices to maximize their effectiveness in their role. Also, communicate the services of the offices to the rest of the OAS to increase understanding of their usefulness. Timeframe for Implementation Plan: Implement Regionalized OGSMS Develop Working Group Identify Strengths and Weaknesses of Current OGSMS Develop OGSMS Regional Framework (structure, performance measures, staff, etc.) Create Regionalized OGSMS Based on Lottery Establish Memorandum of Agreement Monitor Operations and Make Changes as Necessary 0 3 6 9 12 15 18 21 24 27 30 Timeline (Months) Final Report – November 3, 2003 41 Organizational Structure: Implement Regionalized OGSMS Implementation Costs Direct implementation costs associated with regionalization of the OGSMS include: Cost of phasing out current offices such as travel, moving, liquidation, severance, etc. Cost of establishing the new offices throughout each region every five years, such as travel, leases, establishing office infrastructure, human resource activity, etc. These costs may be reduced by seeking in kind contributions from host countries, who stand to benefit by having the regional offices located in their countries. Costs associated with developing policies and procedures for utilization of the regional offices and interaction between the OGSMS and GS HQ staff. Indirect costs associated with regionalization of the OGSMS include: The time spent supporting the working group establishing the offices. Barriers Critical Success Factors The difficulty of cycling the location and directors within each OGSMS as well as the expenses associated with it every five years may cause a burden on the OAS, It is important not to group too many countries with active current especially during the first few iterations. OGSMS operations together into one regional office in an effort to balance workload throughout the regional offices. Effective transition and operation guidelines must be established The loss of staff that would result from the closing of and understood by all parties. several OGSMS may lead to resistance among certain stakeholders. Final Report – November 3, 2003 42 Business Processes • Implement Results-Based Budgeting • Implement Donor Relations Function • Implement Cost Management and Recovery Plan • Adopt Formal Quota Assessment Policy • Implement Strategic Mandate Framework • Streamline Procure-to-Pay Process Final Report – November 3, 2003 43 Business Processes: Implement Results-Based Budgeting Observations: • Specific funds are not part of the formal organization-wide budgeting process, yet total close to half of the total operating budget. • Budgeting is focused on the consumption of resources, and not the outputs and objectives of the organization. Background Issues • The current operating budget, • There is little correlation between which has been declining in real resource allocation and terms for the past several years, is organizational objectives, strategic determined using a resource- priorities, and mandates. based budget process. As a • As a result of the increased mandates result, resource allocations are combined with a flat Regular Fund based on staff level within each budget, there has been an increasing unit and historical data as reliance on specific funding, which is opposed to strategic priorities and not part of the current budget process desired results. (see graph). • As a result of the increased demand on administrative and support activities funded by the Regular Fund, as well as the blending of Specific and Regular Funds across the organization, it is difficult to determine budget allocations and Graph shows the trend in Regular Fund versus Specific controls, as well as accurate tracking Fund contributions over the past six years. While total of resource expenditures across the funding has been increasing, the Regular Funding has Organization. declined. Final Report – November 3, 2003 44 Business Processes: Implement Results-Based Budgeting Description: Implement a Results-Based Budgeting system (also known as Performance-Based Budgeting) to more effectively allocate resources according to the desired outcomes and strategic objectives of the OAS. A Results-Based Budgeting (RBB) system is a method that shifts accountability from a focus on inputs, processes, and projects to one on results, outcomes, and performance. The system requires an organization to concentrate on the relationship between objectives, results, and resources, thereby encouraging a focus on operational performance. A Results-Based Budget would allow the OAS to identify its desired outputs along with the business areas responsible for those outputs in accordance with a strategic plan. Resource allocation would be shifted toward aligning costs with strategic initiatives. In the case of areas that respond to mandates, results and outcomes could be defined by desired mandate results and outcomes, allowing resources to be better coordinated to meet the objectives of the mandates of the GS (as well as providing an understanding of when resources cannot achieve the desired results of a mandate). Advantages: Disadvantages: • A shift from the current budgetary focus on inputs to one that • Expressing objectives in quantifiable terms is difficult for aligns the resources and activities of the Organization toward certain program areas that do not have easily measurable obtaining the desired results would allow the OAS to more results. efficiently meet strategic objectives. • Implementing RBB requires a larger time investment on • A RBB would increase the level of accountability of business the part of program managers and directors in formulating managers in meeting the Organization’s objectives within performance plans and training. budgetary constraints. • A RBB would assist the OAS in implementing better fiscal control mechanisms, thus eliminating the policy of extending resources to program areas who over execute their budgets. • Implementation of evaluation mechanisms allows for the assessment of program merit, determination of resource allocation, and activities performed by OAS. • Implementation of performance plans helps prioritize activities and resources according to the desired results of the Organization, improving the ability to meet objectives with limited resources. Final Report – November 3, 2003 45 Business Processes: Implement Results-Based Budgeting Action Steps for Implementation Plan: 1) Define a budget transformation committee coordinated by DMAPSS (or successor organization) consisting of representatives from all program areas of the General Secretariat as well as the Permanent Council. Due to the close relationship between the strategic planning process and budgeting, the same committee that was nominated to participate in the strategic planning process could be used for budgeting. 2) Based on strategic plans, develop specific performance measures to be used in measuring how well objectives are being met. In the case of mandates, develop mandate outcomes and define the activities required to achieve them, and base measures on these activities. 3) Work with HR to incorporate measures into professional development and performance measurement process. 4) Implement Results-Based Budgeting system to link objectives to performance measures. 5) Establish accountability framework to assess the success of achieving the desired objectives. 6) CAAP to work with budgeting function to monitor progress and assist business areas in implementation, as well as serve as the governing body over the budget to which program managers are accountable. Timeframe for Implementation Plan: Implement Results-Based Budgeting Establish Budget Transformation Committee Develop Specific Performance Measures Incorporate Performance Measures into Professional Development Process Implement RBB and Link Objectives to Measures Establish Accountability Framework CAAP to Monitor Progress 0 3 6 9 12 15 18 21 24 27 30 Timeline (Months) Final Report – November 3, 2003 46 Business Processes: Implement Results-Based Budgeting Implementation Costs Direct costs associated with implementation of a Results-Based Budgeting system include: If new budget software is required, the software implementation costs. The development and delivery costs of training courses to educate personnel of the principles of the system as well as timelines, responsibilities, and how to operate the new software system. Indirect costs associated with implementation of a Results-Based Budgeting system include: The cost of operating both the current Resource-Based Budgeting system and the Results-Based Budgeting system in parallel until the Organization fully adopts the Results-Based Budgeting system. The cost of the time spent by the committee and stakeholders designing, agreeing upon, and supporting the implementation of the new budgeting system. Barriers Critical Success Factors Current OAS culture focused primarily on resources, not • Create a Strategic Planning framework that clearly identifies OAS results. organization objectives and links performance metrics to objectives. Lack of clearly identified strategic objectives to link • The OAS must achieve Organization-wide adoption and adherence with activities and operations. to a strategic planning framework to lay the foundation for the mapping of resources according to desired results. • The Organization must determine and implement key performance Difficulty determining appropriate performance measurements to ensure accurate assessment of success and measurements. guarantee that resources are properly aligned. Final Report – November 3, 2003 47 Business Processes: Implement Donor Relations Function Observations: The dollar amount and number of Specific Funds in the organization has continued to grow; however, there is no formal coordination of the activities associated with raising and managing these funds. Background Issues As a result of the effective decrease in the Regular • Due to the fact that all fundraising initiatives are Fund budget and the increase in mandates during handled independently of one another, there is recent years, the OAS has relied more heavily on little coordination of donor relations resources specific funds to supplement project activities. and redundant tasks being performed by All core fundraising initiatives are the personnel throughout the Organization. responsibility of individual areas, which develop • The fragmented fundraising environment leads to their own relationships with donors, negotiate competition for the same donor dollars. agreements, solicit funds, provide customized • Uncoordinated and unorganized appeals to project reporting, etc. According to survey results donors undermine the professional reputation from a sample of Technical Area personnel, staff and credibility of the organization, and are spending approximately 10% of their time ultimately reduce the ability to forge strategic supporting the aforementioned activities. alliances and engage in co-financing with donors. Final Report – November 3, 2003 48 Business Processes: Implement Donor Relations Function Description: Implement a donor relations function to coordinate activities relating to the solicitation, negotiation, administration, and reporting of Specific Fund projects throughout the OAS. The proposed Donor Relations Office would consist of full time development managers who would be in charge of coordinating existing and identifying new fundraising opportunities, and developing a consistent message and point of contact with the donor community. In addition, this group would establish protocols and guidelines for proposal development and standard reporting package creation. To support the Donor Relations staff, relevant personnel within the Technical Areas would be appointed to serve as liaisons to help manage the donor relationships and solicit funds. In addition, designated staff from the Administrative and Support areas would provide support such as standard and customized report creation using the Oracle system, recruitment efforts, procurement, payroll processing, etc. A centralized Donor Relations function could also more easily coordinate fund raising efforts with other similar organizations, such as PAHO. Advantages: Disadvantages: • A coordinated donor relations function could decrease There is the potential for Technical Areas to sense a loss of redundancies, increase economies of scale, reduce autonomy in obtaining funding for their own specific competition among Units, and improve timeliness of initiatives. donor reporting. The issue of competition for donor funds could be managed by tracking and targeting potential donors in a coordinated manner. • Centralized fundraising could enable the OAS to establish more brand recognition and credibility with the donor community. • Areas that currently rely heavily on Specific Funds and dedicate a large amount of resources to soliciting and managing Specific Funds could benefit by leveraging these resources to focus on more technical and project related activities. Areas that do not currently solicit specific funds due to a lack of resources could also benefit from the services. Final Report – November 3, 2003 49 Business Processes: Implement Donor Relations Function Action Steps for Implementation Plan: 1) Define a working group of senior staff from the Technical Areas and Secretariat for Management to determine the specific size and resource needs of the Donor Relations Office. 2) Define a committee made up of personnel from the Technical Areas and the Secretariat for Management to identify and appoint appropriate staff to the new Donor Relations Office (likely areas of potential staff would be External Relations and the Units). 3) Coordinate and catalogue the current OAS-donor relationships. 4) Appoint business development managers to specific ―donor accounts‖ and establish baseline services and shared materials. 5) Develop and deliver training to personnel in the Technical Areas, Fundraising Office, and Secretariat for Management on new services and materials. 6) Establish roles and responsibilities for staff in the Technical Areas, new Donor Relations Office, Secretariat for Management, and other applicable stakeholders (e.g., Public Information, External Relations, etc.) to eliminate duplication of efforts and streamline processes 7) Follow up with donors and Technical Areas to assess the level of customer satisfaction and quality of service to determine what is working successfully and what needs to be corrected. Timeframe for Implementation Plan: Implement Donor Relations Function Establish Representative Working Group to Shape Office Appoint Staff to Fundraising Office Migrate Current Donor Relationship Appoint Business Development Managers Develop and Deliver Training to Organization Establish Roles for Affected Personnel Monitor Level of Success and Customer Satisfaction 0 3 6 9 12 15 18 21 24 27 30 Timeline (Months) Final Report – November 3, 2003 50 Business Processes: Implement Donor Relations Function Implementation Costs Direct costs associated with the coordination of the donor relations function include: Cost of restructuring organizational units to form the Donor Relations Office, including personnel relocation and facility costs. Training costs incurred for training internal GS personnel and informing the donors of changes in the donor relations process. Communication costs associated with notifying the donor community of the change in fundraising policies and guidelines. Indirect costs resulting from the coordination of the donor relations function include: Account migration and transition costs incurred due to the possible downtime resulting from the new donor relations processes. Barriers Critical Success Factors The Technical Areas may be resistant to the Donor Relations office and still rely solely on their own The staff in the Donor Relations Office, Technical Area individual fundraising efforts to secure specific funds. representatives, and the liaisons from the Secretariat for Management must establish a collaborative approach and open lines of communication for the intended coordination to be achieved. The external donor community may resist the Donor The core Technical Area liaison and the Donor Relations Relations Office due to a loss of comfort gained through representative must successfully share the donor relationship establishing relationships within the Organization’s responsibilities and maintain open lines of communication. Technical Areas. Final Report – November 3, 2003 51 Business Processes: Implement Cost Management and Recovery Plan Observationsb • As the volume of specific fund projects continues to increase, the current method for identifying and recording the management costs of administering Specific Fund projects is not sufficient. Background Issues As a general requirement set at the • As the number of Specific Fund signing of an agreement, the OAS projects increases and the cost to is obligated to provide customized the GS to administer them financial and operational reporting increases, the ability to support the to specific fund donors, based on projects with only the interest their individual requirements. received on fund balances is Currently, the interest earned on declining (see graph). specific fund deposits is allocated • It is difficult to solicit overhead and to support the administration costs administrative funds from donors, of specific fund projects, which is as they perceive project estimated to cost approximately administration to be the $2.6M per year. responsibility of the OAS. Regardless of the level of • Donors who submit intricate Graph depicts the administrative support costs for reporting specificity required by reporting requirements are not Specific Fund projects versus the interest income the donor, the OAS devotes required to provide a subsidy for from Specific Funds allocated to support project necessary resources to meet the additional time and resources administration. (Source: Secretariat for demand. provided by the OAS/GS. Management) • The GS is not structured to capture or estimate additional administrative costs required to manage Specific Fund donor projects. Final Report – November 3, 2003 52 Business Processes: Implement Cost Management and Recovery Plan Description: Design and implement a formal Cost Management and Recovery Plan to identify and recover the full direct and indirect costs associated with delivering projects. The Recovery Plan, which has been suggested previously by the Secretariat for Management, would provide a mechanism for the Organization to recover (or, if not recoverable, to assess) the costs it incurs for administrative support of specific fund projects. The cost recovery plan would implement provisions for the OAS to charge back the costs of providing standard services such as Oracle-related requests, processing of payroll, AP, AR, etc. In addition, all optional services such as specialized financial statements, budgeting, investments, and project management would have a cost associated with them. Technical Area project management would be required to assess the optional services needed and decide whether to absorb them or pass them along to the donor requesting these services. Consideration of these costs would be part of the Organization’s evaluation of the acceptance of Specific Funds. The proposed cost management and recovery plan can be considered both in tandem with the suggested coordinated Donor Relations Office as well as independently, should the OAS elect not to implement the Donor Relations Office structure. Advantages: Disadvantages: • The cost management and recovery plan would enable Specific fund donors typically have been resistant to built in the Organization to identify and cover the overhead allocations earmarked for overheard support and administration of Specific Fund projects. As a result, project administration. The common opinion of the donor the current strain on the Regular Fund to support community is that these costs should be absorbed by the specific fund projects could be identified and alleviated. receiving Organization as their financial contribution to the • By building an overhead charge into the payroll of all project. staff funded by specific funds, the overhead may be more appealing to donors due to the perception that it is a cost of doing business. The Organization stands to significantly reduce the costs incurred for specific fund project administration. The dollars generated through the cost recovery program would enable Specific Fund project administration to generate revenue and break even. Final Report – November 3, 2003 53 Business Processes: Implement Cost Management and Recovery Plan Action Steps for Implementation Plan: 1) Develop a Working Group of representatives from the Secretariat for Management, Technical Areas, and Donor Relations Office (if implemented). 2) Determine the specific list of activities that are deemed to be standard and those that are optional, as well as the specific costs associated with each optional service. 3) Finalize the cost recovery framework and educate affected personnel. 4) Develop cost recovery guidelines for all current and future Specific Fund donations to ensure consistent communication and cost allocations to donors. Clear cost criteria should be provided to potential donors, and the appropriate personnel should be given authority to reject or renegotiate agreements that do not comply. Timeframe for Implementation Plan: Implement Cost Management and Recovery Plan Establish Representative Committee Determine Standard and Optional Support Activities Finalize Framework and Educate Personnel Develop Cost Recover Guidelines for Future Transactions 0 3 6 9 12 15 18 21 24 27 30 Final Report – November 3, 2003 54 Business Processes: Implement Cost Management and Recovery Plan Implementation Costs Direct costs associated with implementing a cost management and recovery plan include: Communication costs associated with notifying the donor community of the change in fundraising policies and guidelines. Costs incurred through the development and delivery of training programs for both Technical Area and administrative area staff. Cost recovery guideline development costs associated with production, printing, distribution, etc. Indirect costs associated with implementing a cost management and recovery plan include: Costs related to the transitional period that the GS will endure as they migrate to the new cost recovery system. Barriers Critical Success Factors The donor community may resist the idea of paying an overhead contribution for administrative project activities, and, as a result, may direct their donations to other organizations who do not have such a policy. OAS Management must introduce the suggested cost management Current specific fund project agreements may be and recovery plan to the outside donor community in a manner difficult to migrate to the cost recovery program, and, as that does not give the perception that the GS does not desire to a result, may have to remain on the current structure contribute to the project in an equitable manner, which is an until the project is complete. expectation held by many donors. Current donors, who do not participate in a cost recovery model, may be resistant to entering into agreements with a cost recovery program. Final Report – November 3, 2003 55 Business Processes: Adopt Formal Quota Assessment Policy Observations: • There is not a mechanism to update the OAS quota system in a periodic and comprehensive way. As a result, quotas are largely determined by isolated negotiations among the member states. This approach has made updating quotas difficult, and as a result quotas have not changed significantly despite changes in the ―ability to pay‖ by individual members and increased demands placed on the Organization in the form of additional mandates. Background Issues The OAS quota structure was once based on the UN quota • As a result of the non-standardized quota system, it is guidelines, which took into account a country’s GDP, per difficult to determine if OAS Member States contribute capita income, and adjustments for items such as a closed based on their ability to pay. This results in certain economy. This system was abandoned in 1981. A similarity dissatisfied member states not paying in a timely manner between the two Organization’s quota policies is the and has limited the ability of the OAS to increase the consideration of the Member’s ability to pay. Regular Fund. While the minimum and maximum contributions have been • While past proposals have been based on mathematical and established at .02% and 59.47%, respectively, recent quota statistical foundations, they have been vetoed due to a lack scales for Member States have been determined through of consensus among the Member States. negotiations without the use of standardized formulas. • Due to the issues with the current quota, Member States As new members have joined the OAS, the quota ceiling and tend to prefer to contribute funds in the form of specific quota percentages have remained unchanged, while current fund donations instead of increasing quotas. Member States adjust their contributions downward with the addition of the new Member’s contribution. Timeline of Major Quota Milestones 1940 1950 1960 1970 1980 1990 2000 1948: Pan American Union 1960: Adoption of the 1981: UN Quota Scale 1990: Resolution 1071 Present: Quotas remain largely method based strictly on UN Quota Scale abandoned establishing maximum and unchanged, still determined by population minimum quotas past negotiations Final Report – November 3, 2003 56 Business Processes: Adopt Formal Quota Assessment Policy Description: Design, adopt, and implement a quota policy that periodically recalculates the quotas of Member States based on a set of agreed upon quantifiable metrics. The process should enable Member States to periodically adjust the quota ceiling based on inflation and the volume of mandates, as well as to adjust the quota scale based on the ability of Member States to pay. The OAS could be aided in this objective by utilizing the scales used by similar organization such as the UN or utilizing external organizations, such as the observer nations, to assist in determining the scales. The new quota policy should be based on logical, standardized, and mutually agreed upon methods that reflect the ability of Member States to contribute. Advantages: Disadvantages: By taking into consideration those quota resolutions Updating the process and determining a standard set of that have already been proposed as well as those of metrics will remove the flexibility that each member had in similar organizations such as the UN, the OAS is ―negotiating‖ their quota. leveraging the research, best practices, and precedents already established. The proposed quota assessment process could result in an increased level of funding from quotas as well as an overall decrease in the costs incurred for conferences, meetings, and human capital currently being dedicated toward negotiations and proposing resolutions for new quota policies. Final Report – November 3, 2003 57 Business Processes: Adopt Formal Quota Assessment Policy Action Steps for Implementation Plan: 1) Establish and nominate a Committee of Member State representatives to participate in the development of the new quota policy. 2) Appoint a working group of General Secretariat staff to provide the political decision-making Committee with accurate organizational and historical data on cost of operations and mandates. 3) Assess past outstanding quota resolutions as well as policies and guidelines from external organizations such as the UN to leverage best practices and begin to derive options for consideration. 4) Based on best practices and input from the GS working group and Member State Committee, collectively derive framework and quantifiable set of metrics to be used for determining quotas, including consideration of raising the ceiling if necessary. 5) Implement quota policy and adjust Member State quotas accordingly (if necessary). 6) Develop and distribute detailed guidelines and procedures explaining in detail the principles and foundation for the new quota structure. Timeframe for Implementation Plan: Adopt Formal Quota Assessment Policy Establish and Nominate Representative Committee from Stakeholders Appoint GS Committee to Provide Accurate Data Evaluate Past and Outstanding Quota Resolutions Develop Framework and Metrics to Determine Quota Implement Quota Policy Upon Election Distribute Guidelines 0 3 6 9 12 15 18 21 24 27 30 Timeline (Months) Final Report – November 3, 2003 58 Business Processes: Adopt Formal Quota Assessment Policy Implementation Costs Direct costs associated with the adoption of a formal quota assessment policy include: The cost of scheduling and conducting the conferences and meetings, etc., that would be required during the decision-making process. The cost of research and education of the decision committee of both the proposed resolutions of the past as well as the quota policies of similar organizations such as the UN. The cost of communicating the newly elected quota policy to the Member States. Indirect costs associated with the adoption of a formal quota assessment policy include: The cost of the human capital resources dedicated to determining the new quota structure instead of directing efforts to other areas of the organization for which they were originally assigned. Barriers Critical Success Factors If the proposed quota structure is perceived to not benefit enough Member States, the proposal might be vetoed and no progress will be made. The OAS Committee must determine and agree upon a quantifiable set of metrics that accurately determine the contribution level of each Member State. The potential that there are no formulas or quantifiable metrics that determine quotas that are satisfactory to all Member States. Final Report – November 3, 2003 59 Business Processes: Implement Strategic Mandate Framework Observations: • The number of mandates have increased considerably; however, there is not a formal acceptance, planning, or monitoring process for managing the mandates. Background Issues During the past several years, the The volume of mandates has number of mandates assigned to increased, but the number of the General Secretariat has completed mandates has declined. increased considerably. Currently there is no method for Once approved by the General prioritizing mandates. Assembly or Summit of the It is difficult to assess mandate Americas, mandates are assigned completion due to the lack of to the corresponding business area quantifiable metrics and within the GS to complete without milestones associated with the accurately quantifying the mandates. resources required to execute them. Although mandate status is monitored by the GS (specifically, DMAPPS), the tracking does not Graph shows the total number of mandates over the past provide sufficient information to five years with their completion status. As the in- prioritize or budget by mandate. process mandates increased considerably, the completed mandates have declined, leaving a backlog of mandates that creates a perception that the organization is not able to complete its mandates. Final Report – November 3, 2003 60 Business Processes: Implement Strategic Mandate Framework Description: Implement a framework for adopting, prioritizing, funding, and tracking OAS mandates in relation to the strategic objectives, Charter, and desired results identified in the proposed Strategic Planning and Results-Based Budgeting systems. The change is required to adopt and align the mandates of the OAS with its strategic objectives to deliver the desired results of those objectives and allocate resources accordingly. In addition, the mandate tracking procedures need to be improved by designating more quantifiable results and milestones to accurately measure completion and level of success. Advantages: By using a set of quantifiable metrics to assess Disadvantages: mandate completion, the proposed framework would The mandate evaluation and adoption process would be enable more accurate and outcome-focused tracking of more sophisticated and potentially time consuming since mandates. there would be more scrutiny before being acted upon by Resources would be allocated to those mandates that the General Secretariat. align with the high priority areas and strategic objectives of the OAS. Mandates would be developed and adopted in line with the core set strategic objectives of the Organization and will therefore contribute toward delivering the desired results of the OAS. Final Report – November 3, 2003 61 Business Processes: Implement Strategic Mandate Framework Action Steps for Implementation Plan: 1) Develop a working group within the Permanent Council to chair and coordinate the mandate development and implementation process (mandate prioritization will largely continue to be done by the political bodies; however, aligning resources to these mandates will be the role of the working group). This committee would work closely with representatives from Budget (DMAPSS), the Strategic Planning Committee, and staff in the GS to oversee the mandate execution process. 2) Develop methodology for evaluating proposed mandates to assess compliance with Organizational strategic objectives and desired results. This would enable the OAS to determine whether a mandate will contribute to the OAS meeting its goals and, if so, to what extent. 3) Develop framework for prioritizing mandates once they have been adopted and assigned to technical areas for completion. 4) Allocate budgetary resources according to the prioritized list of mandates that align with the strategic objectives and goals of the OAS, and based on the level of funding that will be required to complete the mandate. 5) Develop framework for tracking the completion of mandates based on quantifiable measures and tracked by the business area completing the mandate. 6) Modify the current database inventory to include metrics to measure results. In addition, identify opportunities to consolidate mandates. 7) Hold periodic evaluation sessions to assess the completion of mandates, track budgetary execution and alignment with strategic priorities, and make changes as necessary. Timeframe for Implementation Plan: Implement Strategic Mandate Framework Establish Representative Chair Committee Develop Mandate Evaluation Methodology Develop Mandate Prioritization Framework Allocate Budget Resources According to Priorities Develop Framework for Tracking Mandate Completion Modify Current Mandates Database Conduct Evaluation Sessions 0 3 6 9 12 15 18 21 24 27 30 Timeline (Months) Final Report – November 3, 2003 62 Business Processes: Implement Strategic Mandate Framework Implementation Costs Direct costs associated with implementing a strategic mandate framework include: Costs associated with making adjustments to the current mandate tracking system or adopting a new system. Costs of developing training, policies, and procedures to facilitate the organization-wide adoption of the strategic mandate framework. Indirect costs associated with implementing a strategic mandate framework include: Cost tied of the time spent implementing the new strategic mandate framework. Barriers Critical Success Factors The strategic planning process, budgeting process, and mandate Inadequate implementation of the strategic planning development and implementation process must be closely aligned process and the Results-Based Budgeting process would and coordinated with one another. greatly inhibit the ability of the Organization to change its approach to mandate management and execution. Mandates need to be more specific and the metrics used to assess mandates must be measurable and standardized. Final Report – November 3, 2003 63 Business Processes: Streamline Procure-to-Pay Process Observations: The ―Procure-to-Pay‖ process, which includes all activities associated with acquiring and paying for goods and services, has a high volume of low dollar transactions (approximately 88% of transactions are under $2,500) and also relies on checks for most disbursements (approximately 85% of payments are via check). As a result, resources must be devoted to processing low-value and paper-based transactions that could be automated. Background Issues 2002 Payment Threshold Payments <= $500 29,243 • Procure-to-Pay activities can be • In 2002, there was a high volume of low dollar > $500 and <= $2,500 19,145 divided into transactional activities purchases processed by the Procurement and > $2,500 and <= $5,000 3,377 (mechanical activities associated with Accounts Payable areas. Each of these the processing of a transaction) and transactions consume about the same amount of > $5,000 3,294 strategic activities (negotiating resources as higher dollar transactions, resulting TOTAL 55,059 contracts, managing vendors, cash in a high level-of-effort devoted to processing management, strategic sourcing, etc.). There is a high volume of low-dollar transactions. transactions (see table). Approximately 88% of all AP transactions are for The time allocation of the Accounts • There is a high volume of recurring transactions less than $2,500. Payable Department is focused on (similar transactions with the same vendor). transactional activities more than These transactions are not automated or Payment Methods Payments strategic activities, likely due to the consolidated and cause an increase in the high volume of transactions Check 46,727 workload of the AP function. processed. • Processing the common cost payments through Clearing 5,191 • There is a high volume of ―common AP increases the processing workload of the EFT 2,636 cost‖ payments, which are overhead function. type allocations that are treated like • The volume of checks being processed far Wire 505 traditional payments. exceeds the number of wire transfers and EFTs, Total 55,059 which traditionally are more efficient forms of There is a high volume (approximately 85%) of payment (see table). disbursements made via check. Final Report – November 3, 2003 64 Business Processes: Streamline Procure-to-Pay Process Description: Modify several key procurement and payment processes within the Procurement and Accounts Payable areas to minimize processing time and improve efficiencies. These modifications include: • Use of Procurement Cards for low-dollar transactions – purchases made under a certain dollar level can be executed using a purchase card, which would be paid similar to a credit card bill with a single invoice for multiple transactions. • Automated payment for recurring transactions – For expenses incurred on a regular periodic basis, implement periodic billing or payment schedules to eliminate individual processing of invoices. • To the extent possible, migrate vendor disbursements to EFT – In order to reduce the level of check processing, transition applicable disbursements to electronic funds transfer (EFT), especially for recurring purchases at the same vendor. Advantages: Disadvantages: By implementing the three options, the AP function Certain vendors may not have the technical capability to could free resources to focus efforts on more strategic receive payments via EFT, thus mandating invoice payment initiatives such as cash management. by check or change of vendor. Purchase cards could decrease the volume of Upfront time and effort is required to set up vendors for transactions processed by the AP group as well as EFT payments. streamline the purchasing process for low value transactions by the Procurement group. In addition, Procurement cards may require additional training of Purchase Cards can provide flexibility in making program staff who would be executing transactions. purchases in the OGSMS By establishing automatic payments for recurring transactions, the volume and processing time involved with repetitive invoices could be reduced. In addition to reducing the amount of time spent in paper check processing, EFT’s require less touch points, less paper, and are less expensive to execute. The suggested improvements could be implemented relatively quickly to reduce workload. Final Report – November 3, 2003 65 Business Processes: Streamline Procure-to-Pay Process Action Steps for Implementation Plan: 1) Review accounts payable transactions to identify specific opportunities to improve the process. • Recurring transaction at the same vendor—Approach vendors about periodic billing and/or automatic payment • Determine the number of transactions that could be placed on a purchase card, i.e., the transactions below a certain micropurchase threshold ($2,500 is typical), and where they are occurring, i.e., what areas are making the purchases. • Identify internal transactions that could be automated in the general ledger, e.g., common cost payments. 2) Develop a plan of action for implementing process changes and enablers, and develop baseline and goal performance measures to monitor progress. 3) Implement changes and enablers, e.g., the purchase card and automated transactions. (Note: purchase card implementation will require training and guideline development to improve controls and reduce risk of fraud and abuse.) 4) Monitor spend on an ongoing basis to continually improve the process and reduce or automate transactions and increase time spent on more strategic activities. Timeframe for Implementation Plan: Streamline Procure-to-Pay Process Review Accounts Payable Transactions Develop a Plan of Action Implement Changes and Enablers Monitor Spend on an Ongoing Basis to Continually Improve the Process 0 3 6 9 12 15 18 21 24 27 30 Timeline (Months) Final Report – November 3, 2003 66 Business Processes: Streamline Procure-to-Pay Process Implementation Costs Direct costs associated with streamlining procure-to-pay processes include: Direct costs will vary depending on the specific improvement; however, generally these improvements are relatively inexpensive to implement and result in quick and quantifiable benefits. There is also the potential for generating revenue through purchase card rebates (many offer rebates for quick payment of invoices). Indirect costs associated with streamlining procure-to-pay processes include: Training and change management will be required for certain changes. Updating of procurement and payment policy may be required for certain improvements, e.g., purchase card. Barriers Critical Success Factors Encourage cooperation and communication between procurement Reluctance of procurement and accounts payable and accounts payable to encourage an end-to-end view of the personnel to assume new strategic roles and activities as procure-to-pay process. the transaction workload declines. Use freed resources to perform more strategic roles, such as vendor management, cash management, strategic sourcing, etc. Final Report – November 3, 2003 67 Human Capital • Overview of OAS’ Current Human Capital Policies and Practices • Overview of OAS Staff Demographics • Human Capital Practices at Leading Organizations • The Major Questions that Drove Our Analysis • Our Methodology • Our Observations about Human Capital Practices at OAS • Human Capital Appendices: F. Current OAS Grade and Salary Structure Description of United Nations Compensation System G. OAS Personnel Register (June 2003) with detailed OAS demographics H. OAS Performance Appraisal Form I. Detailed Deloitte Research Findings Related to OAS Human Capital Issues J. Series of Charts Reflecting Analyses of OAS Human Capital Issues Final Report – November 3, 2003 68 Overview of OAS’ Current Human Capital Policies and Practices Following is a brief overview of the OAS’ current Human Capital policies and practices. A more detailed description is incorporated in the OAS Staff Rules (available from DHRS) and in the appendices that appear at the end of the report. GOVERNING LAWS AND REGULATIONS As is the case with other multilateral organizations, OAS is exempt from the laws of the host country and the other Member States. Accordingly, the OAS Charter, directives from the General Assembly, and directives from the Secretary General provide the foundation for the organization’s Human Capital policies and practices. Human Capital policies are captured in the OAS Staff Rules and in policy instructions published periodically by the Secretariat for Management. The Staff Rules and other instructions are available in DHRS. NATURE OF APPOINTMENTS The General Secretariat consists of approximately 650 employees who support a wide range of programs and administrative operations approved by the Member States. At present, 538 are funded by the Regular Fund and about 112 are funded by Specific Funds. Staff are employed under several different types of appointments. • Trust – Certain posts are reserved for trust appointments, which are filled by appointment of the Secretary General for an indefinite period. Either a career or non-career employee may fill a trust appointment. These appointments end when the Secretary General leaves office or terminates the appointment. • Career Service – Career status is independent of the post, and members can only be separated for cause. This category is currently being phased-out and replaced with ―Continuous Contracts‖. Final Report – November 3, 2003 69 Overview of OAS’ Current Human Capital Policies and Practices • Fixed-Term Contracts – Employment under this category is for a fixed term. There are two subcategories of fixed term contracts: • Short-Term Contracts (Series A) – Maximum length of contract, or series of contracts, is three years unless funded with specific funds. • Long-Term Contracts (Series B) – Can be issued for up to five years. Individuals must compete for appointment to a long-term contract. The following is a profile of OAS staff by type of appointment. Type Length % of Average Average Average U.S. Non-U.S. Male Female Total Of of Staff Age Years of Salary Nationals Nationals Appointment Appointment Service Long-Term 1-5 Years 42% 42.7 6.2 $58,538 110 165 125 150 275 Contract Career Residual 33% 55.6 24.2 $73,247 85 131 100 116 216 Short-Term < 3 Years 14% 35.6 1.9 $50,520 31 57 42 46 88 Contract Trust / Indefinite 9% 49.1 5.4 $99,277 17 42 40 19 59 Non-Career Trust / Indefinite 2% 60.2 27.6 $124,000 2 9 9 2 11 Career Totals 100% 46.8 11.9 Average 245 404 316 333 649 $67,542 Figures are as of May 31, 2003 and do not include individuals appointed to Local Professional, Associate, or Temporary Support positions. U.S. Nationals = U.S. Citizens and Permanent Residents in the U.S. Non-U.S. Nationals = A-2, G-4, and G-1 visa holders, expatriates outside the U.S., and local staff in member countries Final Report – November 3, 2003 70 Overview of OAS’ Current Human Capital Policies and Practices Other categories: In addition to employing staff who are appointed to the above categories, the OAS employs individuals in other categories of employment that are designed to fulfill a variety of short term or specialized needs. Individuals in the following categories are not entitled to the rights and benefits provided to staff in the categories listed above. Local Professionals – Specialists who are recruited locally to work at the duty station where they are recruited. Local Professionals are subject to the labor laws of the country where they provide services. Associate Staff Member – Temporarily appointed to perform specific administrative, scientific, support, or other functions through agreements with other institutions. Temporary Support Personnel – Contracted locally to provide support services to temporary projects. Independent Contractors (CPRs): Individuals are also hired under Performance Contracts to serve as contractors or independent consultants to the OAS. CPRs are not staff members or employees of the General Secretariat. The Performance Contract does not create an employment relationship between the General Secretariat and a person. CPRs do not receive the benefits provided to staff members of the organization. There are two broad categories contracts. Task Based – Contracted to complete a defined task within a defined time frame (for example, installing an upgrade to the Oracle system). Task-based contracts are typically less than 11 consecutive months in duration. Individual – Contracted to perform staff type work on a short-term basis (for example, performing year- end maintenance on the Oracle system). These contracts are typically less than six consecutive months in duration. Final Report – November 3, 2003 71 Overview of OAS’ Current Human Capital Policies and Practices CPR Rules -- The most recent rules governing the use of CPRs are contained in Executive Order 01-4, Performance Contracts Rules, issued in May, 2001. A procedure is in place for hiring CPRs, with checks and balances built in to control the process. These checks and balances include a performance contract which identifies CPR candidates that have family relationships that conflict with the rules; the requirement that a department head sign a requisition indicating that funds are available prior to hiring a CPR, a resume review by the procurement department; and a DHRS review of any requests to issue time based contracts for periods that exceed six consecutive months in duration. Further, contracts over $50,000 require review by the legal department, and contracts over $70,000 must go out for competition. A copy of Executive Order 01-4 is attached at APPENDIX K, as is a copy of a blank performance contract. Use of CPRs -- The organization uses a substantial number of CPR’s to provide a wide range of services. In 2002, 1188 purchase orders for CPRs were processed at a total cost of $14,698,405. 21% of this cost was paid by regular funds, and the remaining 79% was paid by specific and other funds. For the period between January and September of 2003 the organization issued 935 purchase orders for CPRs at a total cost of $12,348,032. 23% of the cost was paid by regular funds, and the remaining 77% percent was paid by specific and other funds. Chart II at APPENDIX J shows the number of CPRs requested by funding source. The majority of CPRs are hired to work on specific projects and to perform specific functions on a short term basis. It does appear, however, that approximately 30% (our best estimate) of CPRs may be performing staff work that would normally be assigned to term contract or career staff if staffing levels permitted. Final Report – November 3, 2003 72 Overview of OAS’ Current Human Capital Policies and Practices CPR Management -- The organization appears to be making progress towards better managing the CPR hiring process. In addition to the controls mentioned above, a new training program was recently rolled out to educate managers on the policies and procedures for hiring CPRs. The Oracle system has helped expedite request processing and broadened reporting capabilities. Despite this progress, there is still some resistance to following the guidelines. Primary responsibility for managing and monitoring the CPR program resides with the Office of Procurement. Final Report – November 3, 2003 73 Overview of OAS’ Current Human Capital Policies and Practices COMPENSATION In 1995, the OAS adopted the United Nations (UN) ―common system‖ of salary administration, which is used by UN agencies around the globe. The OAS grade and salary structure and post classification standards are identical to the UN. The OAS also updates its salary structures in sequence with the UN. A description of the compensation system is attached in APPENDIX F. OAS has two grade and salary structures: one for Professionals/Directors and one for General Service employees. Copies of the current structures are included in APPENDIX F. Following is a brief description. Professionals/Directors • 5 grade levels for Professionals, each with 10 -15 steps, depending on the grade. • 2 grade levels for Directors, with 9 and 6 steps respectively. • 2 salary levels for each grade -- one for staff with dependents and one for staff without dependents. (dependents structure is slightly higher). • The salary structure is identical across all geographical boundaries. • A post adjustment, which reflects cost of living differences between duty stations, supplements the salary structure to promote equilibrium in purchasing power across all duty stations. General Services • 7 grades with 13 steps in each grade. • Salary ranges vary for each geographic area. • No post adjustment added to basic salary. • Structure is updated annually by local UN offices in each country, based upon a survey of the local market. A profile of the OAS staff by salary structure is provided on the following page. Final Report – November 3, 2003 74 Overview of OAS’ Current Human Capital Policies and Practices Salary Number Number Percent Average Number Number Structure of of of Salary of of Grades Employees Workforce Males Females Director 2 36 6% $122,764 26 10 Professional 5 349 54% $80,897 192 157 General Services 7 259 40% $39,405 93 166 Profile of staff by salary structure Data as of May 31, 2003 Average salary includes basic pay, post adjustment, and applicable allowances Figures do not include the Secretary General, Assistant Secretary General, and 3 Executive Secretary positions. These positions are not slotted into the salary structure. TAXATION As employees of a multilateral organization, most OAS staff are exempt from taxation in both the U.S. and their country of nationality. Those staff who are subject to taxation -- such as Mexico, Barbados, and the U.S. -- receive a reimbursement of their taxes from the host country through OAS. This tax reimbursement costs OAS nothing: funds for the reimbursements are provided by the State Department of the Member State where the employee’s post is located. BENEFITS OAS offers a comprehensive collection of benefits to its employees. The benefits provided to employees is determined by their appointment type. The following page provides an illustration of the benefits available to employees by type of appointment. Final Report – November 3, 2003 75 Overview of OAS’ Current Human Capital Policies and Practices a. Benefits will be one half of those that correspond to fixed contracts of the same duration. g. Six months of continuous services carries with it right to annual leave. b. Benefits granted to staff members in grades P1 and above who fulfill the requirements of the Rule - Away h. Applicable only if the staff member has been recruited internationally for a period longer than two years and from Headquarters. if it is expected that the staff member will continue in service with the General Secretariat for at least six c. Benefits granted to staff in grades G1 through G7 who meet the requirements of the Staff Rules. months after returning home. i. Benefit acquired after completion of one year of service. d. Benefits granted to staff members in Grades P1 and above and those in any grade who have been recruited j. Contracts of one year or more or short-term contracts with one year of continuous service. internationally if on board before April,1 2003. Mandatory for those on board after April 1, 2003. k. Benefits granted to staff members in grades P1 and above and those in any grade who have been recruited e. Benefits granted to staff members in grades P1 and above who fulfill the requirements of the Rule. internationally if on board before April 1, 2003. f. Occurs when transportation of personal effects has been granted away from headquarters. l. Benefits granted to staff members in grades P1 and above and those in any grade who have been recruited before April 1, 2002. m. Limited to persons who were on board by December 31, 1970. Source: OAS Department of Human Resource Services Final Report – November 3, 2003 76 Overview of OAS Staff Demographics Following is a brief overview of OAS Staff demographics by Nationality, Gender, and Location: BY NATIONALITY: A detailed listing of OAS staff by nationality is included in the Personnel Register in APPENDIX G. The organization is highly diverse, with staff representing all of the Member States and several other countries. The Member States with the greatest number of nationals at OAS (as of March 31, 2003) are listed below: U.S. 124 Venezuela 23 Brazil 17 Peru 50 Chile 18 El Salvador 15 Columbia 46 Ecuador 18 Mexico 13 Uruguay 34 Guatemala 18 Trinidad & Tobago 13 Argentina 25 Bolivia 17 Canada 12 BY GENDER: MALE: 316 (49%) FEMALE: 333 ( 51%) BY LOCATION: U.S. (Washington): 582 Other Member States: 77 (typically one professional and two general service staff per country). Final Report – November 3, 2003 77 Human Capital Practices at Leading Organizations Research shows that leading (high-performing) organizations recognize that high-quality executives, managers, staff, and contractors are critical assets who contribute directly to the organization’s success. Accordingly, they design their human capital practices to focus on attracting the best talent possible and then aligning that talent with the organization’s strategic objectives. Following are eight human capital practices these organizations use that are most relevant to OAS. 1. The organization’s mission, objectives, and priorities are clear and permeate the organization. Leading organizations have clearly defined missions, objectives, and priorities that are understood by managers and staff (and contractors) across the organization. These overall objectives and priorities cascade down to department goals and priorities, to unit goals and priorities, and ultimately to each manager’s and employee’s individual goals and priorities. If done correctly, each employee understands exactly how his/her job aligns with and contributes to the organization’s overall objectives – and success. There is also constant communication – from the top down, across departments, and from the bottom up – to ensure that important information is flowing to the right people at the right time. 2. Human capital practices are designed to support the organization’s mission and strategic objectives. Human capital practices with regard to organizational analysis, needs assessment, workforce planning, sourcing (staff or contractors), recruitment, compensation, benefits, types of appointments, performance management, training and development, and employee relations are all designed to ensure that the organization has the right people with the right skills at the right time and at the right cost to achieve its objectives. Final Report – November 3, 2003 78 Human Capital Practices at Leading Organizations 3. Compensation and benefits are competitive with the market. Leading organizations constantly survey the market to ensure that their compensation and benefit levels are comparable to their most likely competitors for talent. Those competitors are typically other organizations in the same locale that need talent with the same kinds of education, skills, and competencies they need. Once an organization understands the market, it then decides whether to set its compensation levels to match, lead, or lag its competitors. This decision is typically made based on the organization’s financial situation and how important it is to be able to recruit and retain high-quality talent. Leading organizations also actively monitor their compensation and benefits programs and look for innovative ways to constrain costs without sacrificing their competitive position. 4. Compensation is tied to performance. Leading organizations set specific objectives for managers and employees (tied to the organization’s overall objectives) and then link salary increases to their success in achieving those objectives. Compensation is a reward for superior performance and a motivator for future performance – not an entitlement for longevity. These systems can significantly improve productivity, but require a considerable investment by both managers and employees to establish specific objectives and to measure performance in a valid manner. 5. Identifying and developing the organization’s future leaders is a top priority. Leading organizations are proactive in identifying and grooming future leaders. Formal succession plans serve as blueprints that guide training and assignments for managers who are expected to rise to high levels within the organization. Such plans also aid in the transfer and retention of institutional knowledge that is often lost with departing employees. Final Report – November 3, 2003 79 Human Capital Practices at Leading Organizations 6. Improving staff competencies is an integral part of the culture. Leading organizations dedicate considerable resources to maintaining, updating, and broadening staff competencies (knowledge, skills, abilities). These organizations usually have clearly defined competency requirements for each position, a process to assess the staff’s current competency levels, and a wide range of training and development programs that include in-house programs, e-learning, university careers, and development assignments. 7. Technology and knowledge management are used to leverage talent. Leading organizations make a significant investment in technology and knowledge management systems to make their people more productive and efficient. These investments typically take the form of networked PCs available to every staff member, e-mail, integrated HR and Financial management systems (ERPs), special knowledge- capture systems (such as shared drives and on-line libraries), employee self-service HR processes, and manager self-service for budget, HR, and financial management processes. 8. Performance management is a critical function. Leading organizations view performance management not as a perfunctory duty but as a crucial tool for driving strategic objectives and priorities through the organization. As noted earlier, the organization’s overall strategic objectives and priorities cascade down to each department and unit and, ultimately, into the performance plans for each manager and staff member. Every individual in the organization understands how his/her job ties to the organization’s overall objectives and why his/her performance is important to achieving those objectives. Managers and staff are trained to analyze roles, set objectives and priorities, monitor progress, and evaluate success. Staff are given continuous feedback and are encouraged to succeed. Those who are not performing well are counseled and given an opportunity to improve. If they don’t improve, they are released from the organization. Managers and staff recognize that poor performers damage the effectiveness of the entire unit. Final Report – November 3, 2003 80 The Major Questions that Drove our Analysis Based on our discussions with the Member States, we focused our analysis of OAS’ Human Capital practices around six basic questions: 1. Are OAS’ current Human Capital programs and practices aligned with the organization’s mission and strategic objectives? 2. How do OAS’ compensation and benefit levels compare with similar organizations? 3. Are the current compensation and benefits systems serving the best interest of the organization with respect to recruitment, retention, and budgetary constraints? 4. How do OAS’ Human Capital programs compare with leading practices in the areas of performance management, pay-for-performance, competencies, staff development, diversity, and other areas? 5. What options should OAS consider to improve the efficiency and effectiveness of its Human Capital policies and programs? 6. What steps can the OAS take to constrain future salary and benefits increases? Final Report – November 3, 2003 81 Our Observations About Human Capital Practices at OAS Question 1 - Are OAS’ current Human Capital programs and practices aligned with the organization’s mission and strategic objectives? 1. No – primarily because OAS’ mission, strategic objectives, and priorities are not clearly understood by managers and employees across the organization. Consequently, there is little foundation for the development of human resource programs that are strategic rather than simply tactical, such as competency analysis, workforce planning, incentive compensation, selective outsourcing, and change management. 2. However, the OAS does have some useful HR programs that meet most day-to-day needs of the organization. These include recruiting support, compensation and benefits administration, dispute resolution, job evaluation and classification, and a number of other services. Many of these programs are well documented and have matured over the course of several years, which has enhanced their effectiveness in supporting the operational needs of the organization. 3. Human Capital practices will need to transition from ―tactical‖ to ―strategic‖ if the organization is to succeed in any major transformation effort. If the OAS implements a strategic planning process, the organization’s Human Capital programs will need to be reviewed and revised to support the organization’s short-term and long-term strategic objectives. The Department of Human Resource Services will also need to play a key role in developing communications and change management plans to drive the changes throughout the organization. Final Report – November 3, 2003 82 Our Observations About Human Capital Practices at OAS Question 2 - How do OAS’ compensation and benefit levels compare with similar organizations? 1. OAS’ compensation and benefit levels are reasonable – neither too high nor too low – when compared with similar employers in the Washington, D.C. area, including PAHO, the IDB, the World Bank, the U.S. Government, and the private sector. The benchmark analysis we conducted with other organizations indicates that OAS salary and benefit levels are in the middle of the group – lower than some and higher than others. The average salary for OAS staff is approximately $67,500 and the average total compensation (salary, benefits, and allowances) is about $88,500. These averages are consistent with other professional organizations in the Washington area. OAS’ benefit load for pension, health, life, and disability insurance is about 23%, and its benefit load including allowances is approximately 31%. These benefit numbers are also comparable to other professional organizations. We believe OAS’ current position in the middle of the market is appropriate to remain competitive for the types of skills OAS needs, and to manage staff costs. A detailed analysis of OAS compensation and benefit expenditures is included in APPENDIX J. 2. OAS’ annual salary structure adjustments have been reasonably consistent with the benchmark group. Chart III in APPENDIX J shows that over the course of the last five years (1999 – 2003), salary scale increases (including post allowance) for OAS and PAHO professional staff have averaged 4.91%. This is approximately 1.25% higher than the other benchmark organizations: World Bank, IDB, the U.S. Government, and the private sector. This difference is not significant, however, given the fact that OAS does not offer incentive compensation (bonuses) as do the other benchmark organizations. The increase to the OAS General Service structure averaged .85% below the benchmark group. Final Report – November 3, 2003 83 Our Observations About Human Capital Practices at OAS 3. The types of benefits offered by the OAS are also very comparable to similar organizations. All of the benchmark organizations offer a full range of high quality benefits to their employees. The type of benefits offered by the OAS is very similar to the group, and OAS appears to be managing benefit costs very effectively. • OAS provides a high quality benefits plan for its employees. OAS offers high quality medical, dental, life, and disability insurance to its employees, as well as a defined benefit retirement plan. The coverage provided by these plans are fairly similar across the benchmark group, as are employee contributions to participate in the benefits. Chart IX in APPENDIX J outlines the major OAS benefits. • OAS’ costs for benefits are lower than industry averages. At an average cost of $5,205 per employee, OAS’ medical and prescription costs are lower than local and national average costs. The OAS has managed to avoid the trend of double-digit increases in medical costs over the past two years. During this period its costs have increased by 3% and 5% respectively. Comparative benefits cost data is illustrated in Charts X, XI, and XII in APPENDIX J. • OAS’ expatriate benefits are competitive when compared with similar organizations. The OAS provides a variety of benefits for expatriates who are given certain appointments. These benefits are comparable to those offered by similar organizations. A summary of expatriate benefits is included in Chart XIII in APPENDIX J. Final Report – November 3, 2003 84 Our Observations About Human Capital Practices at OAS Question 3 - Are the current compensation and benefits systems serving the best interest of the organization with respect to recruitment, retention, and budgetary constraints? 1. The OAS compensation and benefit programs are serving the organization’s interests. As discussed earlier, OAS’ salaries and benefits are reasonable in comparison with the benchmark group and the average cost per employee for both salary and benefits are comparable to other employers in the Washington area. Further, DHRS reports that the organization is not encountering difficulties recruiting and retaining employees in any area. At 8.1%, OAS’ turnover is comparable to the average of the benchmark group. An illustration of turnover across the benchmark group is provided in Chart XX in APPENDIX J. The only major area of concern we identified is the difficulty OAS has had in recent years projecting the size of the annual UN pay structure and post adjustment. We recommend that OAS work much more closely with the UN in the future to more accurately project the increase for budgeting purposes. 2. The use of term contracts is also serving the organization’s interests. Salary and benefit data indicate that term contractors are cost-effective for the OAS in terms of average salary and benefit costs compared to career employees. Further, we were told by the vast majority of managers we interviewed that there is no significant difference in performance or work quality between contract staff and career staff. Accordingly, the decision to phase out the career staff was a good one. We believe OAS should continue to use contract staff to the maximum extent possible, relying on long-term staff only where continuity and corporate memory are critical. Final Report – November 3, 2003 85 Our Observations About Human Capital Practices at OAS Question 4 - How do OAS’ Human Capital programs compare with leading practices in the areas of performance management, pay-for-performance, competencies, staff development, diversity, and other areas? 1. Performance management is a strategically important management tool in leading organizations, yet in the OAS performance management appears to be a low management priority. The OAS has a policy and procedures regarding employee performance management; however a substantial number of employees do not receive performance feedback. In 2003, only 35% of eligible employees received an appraisal by the appraisal deadline, in 2002 only 43%, and in 2001 only 68%. There are three major distinctions in how employee performance is managed at the OAS and at high-performing organizations. These distinctions may likely contribute to the low priority exhibited by the OAS: 1. High-performing organizations hold managers accountable for conducting performance appraisals, and discipline them for non-compliance; the OAS does not. 2. High-performing organizations administer pay increases based upon the results of the performance appraisal; OAS staff members receive a step increase even if an appraisal has not been conducted. 3. High-performing organizations train managers and supervisors on how to conduct performance appraisals; the OAS does not. 2. The link between pay and performance is clear at leading organizations; however, it is very obscure at the OAS. Linking pay and performance is a standard practice at leading organizations. As illustrated in Chart IV in APPENDIX J, all of the organizations in our benchmark group have a merit based pay system that tie pay increases to employee performance. On the other hand, OAS’ pay system fails to create a discernable link between pay and performance. As noted above, employees receive a pay increase even in the absence of receiving a performance evaluation. The current pay system may actually provide an incentive for poor performers to stay with the organization. Final Report – November 3, 2003 86 Our Observations About Human Capital Practices at OAS 3. Leading organizations identify competencies that drive organizational performance and weave these into their recruiting, employee development, and performance management programs. ―Competencies‖ are the specific knowledge, skills, abilities, and behaviors an employee needs to be successful in his/her job. The OAS has identified some competencies that are used in the hiring and the evaluation process. This is a step in the right direction, but it is difficult to trace a core set of competencies from the hiring through the evaluation and advancement processes. Further, the absence of a clear mission and strategy makes it difficult for the organization to develop competencies that can be correlated to organizational results. 4. Staff development is a strategic human capital practice in leading organizations, yet the OAS does not commit sufficient financial resources to develop the staff. Leading organizations recognize that a link exists between the investment in employee development and organizational results. Consequently, they provide employees with defined career paths, specialized training opportunities, and ongoing consultation on career development. The OAS, on the other hand, provides few resources to aid with career development. Career paths are not defined, performance feedback is sparsely provided, and less than $90 per person is allocated to the budget for training purposes. 5. Leading organizations value and actively promote diversity in their workforce, as does the OAS. The OAS has a very diverse workforce, with a large percentage of females and individuals from a wide range of cultures. No bias is evident in its recruiting, compensation, and promotion practices. The proportion of females in almost all categories of employment has risen steadily over the past few years, and two resolutions have been passed to increase the promotion of women into senior management roles. A breakdown of staff at OAS by gender appears in the Personnel Register included in APPENDIX G. Final Report – November 3, 2003 87 Our Observations About Human Capital Practices at OAS Questions 5 - What options should OAS consider to improve the efficiency and effectiveness of its Human Capital policies and programs? Question 6 - What steps can OAS take to constrain future salary and benefit increases? Because Questions 5 and 6 are closely related, we have combined them in one section. Following is a summary of the options OAS should consider to improve its Human Capital practices and to constrain costs for the future. A detailed discussion of each option appears on the pages the follow. Summary of Options: 1. Improve the performance management system to use it as a tool for strategic management 2. Link compensation increases for managers and employees more closely to performance 3. Implement a management training program 4. Review potential cost-saving options for employee benefits 5. Offer targeted training and development opportunities to enhance staff’s competencies 6. Facilitate career advancement 7. Conduct an audit to ensure that OAS post classifications are consistent with the UN Final Report – November 3, 2003 88 Option 1: Improve the Performance Management System to Use It as a Tool for Strategic Management Description: One of the most effective ways for any organization to improve productivity is to effectively manage employee performance. The OAS has a performance appraisal system in place, but it is not routinely and consistently applied throughout the organization. Employees at all levels should receive guidance on standards of performance and timely and constructive feedback. Also, pay practices should be linked to the performance management program. Supervisors should be held accountable for delivering timely and constructive appraisals, and training should be provided to managers, supervisors, and employees in the appraisal process. Potential Advantages: Potential Disadvantages: Clearly links each employee’s performance goals to Effective performance management requires a commitment the OAS’ overall strategic objectives. of time by executives, managers, supervisors, and staff. Institutionalizes a culture that values employee effort and contribution towards the achievement of The current performance management system will probably organizational goals. need to be redesigned to be more strategic than tactical. Creates a platform for career development. Training for all executives, managers, supervisors, and staff will require time and expense. Contributes to the development of critical people management skills for supervisors. Final Report – November 3, 2003 89 Option 1: Improve the Performance Management System to Use It as a Tool for Strategic Management Action Steps for Implementation Plan: 1) Create a committee of DHRS, managers, staff, and the Staff Association to review the current performance management system and develop a plan to make it more effective and to link each employee to the OAS’ overall objectives and priorities. 2) Focus performance appraisal on competencies and measuring results. 3) Develop a process to train all managers, supervisors, and employees on the process. 4) Make timely and effective performance management a critical requirement for all managers and supervisors. 5) Use performance appraisals as a primary factor in decisions regarding compensation, extending appointments, advancement, and retention (removal). 6) Monitor the process the first year and provide remedial assistance to managers and employees having difficulty. Timeframe for Implementation Plan: Improve Performance Management System Create committee Focus performance appraisals on competencies (on-going) Develop a process for training all staff Make timely and effective performance management a requirement Use the performance appraisal in compensation and advancement decisions (on-going) Monitor the process (on-going) 0 1 2 3 4 5 6 7 8 9 10 Timeline (Months) Final Report – November 3, 2003 90 Option 1: Improve the Performance Management System to Use It as a Tool for Strategic Management Associated Costs There is little direct cost associated with this option. It will take some time to develop a supervisory training program, but this can be done in house at minimal expense. Developing a new performance management process could involve outside consultants. Potential Barriers Critical Success Factors Management resistance to following the policy. • Visible management support. • Effective training. Failure to penalize supervisors who do not follow the policy. Final Report – November 3, 2003 91 Option 2: Link Compensation Increases for Managers and Employees More Closely to Performance Description: The OAS currently administers pay increases with little linkage to employee job performance. While the Staff Rules require administering increases by considering performance, the rule is routinely ignored. Consequently, the current pay practices have little impact on motivation and productivity. Therefore, the first option offered to the OAS is simply to enforce Staff Rule 103.4, and grant step increases only when ―performance and conduct have been satisfactory in accordance with the corresponding annual performance evaluation.‖ This is a major step forward in leveraging human capital to increase productivity and efficiency, and is a practice used by leading organizations and the benchmark group. Potential Advantages: Potential Disadvantages: Employee motivation to work hard and contribute to Employees who do not receive an evaluation would be the goals of the organization will improve. unfairly denied a pay increase. Employees and supervisors will place a greater value on the performance management and compensation An investment in training will be necessary to assist systems. supervisors in conducting performance appraisals. The organization will increase the return on its investment in human capital. Marginal and poor performers will leave the organization, which will create promotion opportunities for better performing employees. As marginal and poor performers leave the organization, opportunities are created to bring new talent into the organization. Managers will take a more active role in managing performance and the development of their staff. Final Report – November 3, 2003 92 Option 2: Link Compensation Increases for Managers and Employees More Closely to Performance Action Steps for Implementation Plan: 1) Develop a policy that ties managerial compensation, in part, to compliance with Staff Rules 103.4, Step Increases, and 105.9, Work Performance Evaluation. 2) Develop a managerial training program on performance management and pay administration. 3) Deliver training program. 4) Monitor results during the annual evaluation cycle. Timeframe for Implementation Plan: Link Pay with Performance Develop policy that ties pay increases to the completion of performance appraisals Develop managerial training program Conduct training Monitor results during 2004 performance evaluation cycle 0 3 6 9 12 15 18 21 24 27 30 Timeline (Months) Final Report – November 3, 2003 93 Option 2: Link Compensation Increases for Managers and Employees More Closely to Performance Associated Costs The primary cost for this option will consist of expenses incurred for designing and delivering the training program. The lowest cost alternative is to have the training developed by OAS staff and delivered on-site at the OAS. If adequate resources are not available a consultant may be used to design and deliver the training. Additional costs include managers’ salaries while attending the training, and the cost of materials provided as part of the training. Potential Barriers Critical Success Factors Supervisors who are unwilling to honestly evaluate • Clear communication with employees about the link between their staff. performance, organizational results, and employee compensation. • Educating employees on what constitutes acceptable performance. • Visibly supportive leadership and management that is willing to take action if supervisors do not comply with policy. Leadership that is unwilling to enforce the rules and discipline supervisors who disregard policy. • Effective and timely supervisory training on conducting performance appraisals and pay administration. • Ongoing support and coaching for managers tasked with evaluating performance and administering pay. • Lack of money or inadequate resources available for training purposes. Final Report – November 3, 2003 94 Option 3: Implement a Management Training Program Description: Effective management is a primary driver of productivity and organizational success. Our research indicated that while most OAS managers and supervisors have the technical skills needed for their jobs, few have been trained (or are adept) in effective project management, financial management, budgeting, and managing human resources. Managers want this training and staff agree that it is needed. Course content may include instruction on effective leadership skills, communication skills, project management, budgeting and financial management, staff retention, appraising employee performance, and time management. The organization should require completion of the training as a prerequisite to being promoted into a managerial or supervisory position. Potential Advantages: Potential Disadvantages: Can have a direct impact on improving organizational Some of the current managers may not possess the aptitude performance. to acquire supervisory skills, prompting hard decisions on what to do with them. Can be a cost effective way to develop competent managers and supervisors. Some managers may feel that the training initiative is Training can be custom tailored to the specific needs indicative of the organization placing blame on them for its of the organization. problems. Training will lead to greater productivity and increase A comprehensive training program taxes precious time on staff morale and retention. managers who already have a busy schedule. Can be an effective management recruitment and retention tool. Money is required to develop the training programs. Allows the future leadership of the organization to network and build relationships with each other. Final Report – November 3, 2003 95 Option 3: Implement a Management Training Program Action Steps for Implementation Plan: 1) Announce to managers that a new training initiative is being developed. 2) Identify target audience for the training. 3) Identify the competencies needed to be an effective manager at the OAS. 4) Conduct a needs assessment to identify gaps between required and existing competencies 5) Create training programs that develop and strengthen these competencies. 6) Schedule and deliver training programs. 7) Assess results. Timeframe for Implementation Plan: Implement Management Training Program Announce development of training initiative Identify target audience for training Identify essential competencies Conduct a needs assessment Develop training programs (ongoing) Deliver training and assess results (ongoing) 0 1 2 3 4 5 6 7 8 9 10 Timeline (Months) Final Report – November 3, 2003 96 Option 3: Implement a Management Training Program Associated Costs The primary cost associated with this option is tied to the development of the training program. This is a specialized task and may require the assistance of outside consultants or a training vendor. There will also be a cost for training materials and a facility to conduct the training. Indirect costs include labor costs for the time that individuals spend in the classroom. Potential Barriers Critical Success Factors Lack of internal expertise in assessing training needs • Proper identification of competencies that translate into effective and developing training curriculum. management. • Visible support for the program from senior management. • Integration of this program with the organizations performance Lack of support from management in identifying evaluation program. needs and evaluating program design. • Professionally designed and facilitated training programs. Lack of interest from top management in supporting program goals and objectives. Final Report – November 3, 2003 97 Option 4: Review Potential Cost-Saving Options For Employee Benefits Description: A wide range of options are available for constraining future increases to benefit costs. These options are outlined on the following page. NOTE: A glossary of terms used on the following page is located at the end of APPENDIX J. Final Report – November 3, 2003 98 Option 4: Review Potential Cost-Saving Options For Employee Benefits Strategy Potential Savings/(Costs) Considerations (Advantages/Disadvantages /Implementation) Implement a Consumer Driven Estimated savings of approximately Timing for bidding, negative impact to employees, major Healthcare plan 8-10% of medical premium or communications needs $385,000-$481,000 annually. This would be a significant departure from the traditional managed care plan. Introduce a 3 tier prescription drug Estimated savings of approximately Negative impact to employees, communications needs plan going from $10/$12 for Retail 5-7% of medical premium or This benefit would be less rich than the peers, however a 3- and Mail Order to $10/$20/$30 $240,000-$337,000 annually. tier benefit is the industry trend. Retail $20/$30/$60 Mail Order Increase deductibles from $0/$100 Estimated savings of approximately Negative impact to employees, communications needs to $250/$500 6-8% of medical premium or This benefit would remain competitive with the peers. $289,000-$385,000 annually. Increase coinsurance levels from Estimated savings of approximately Negative impact to employees, communications needs 100/80 to 90/70 2-4% of medical premium or This benefit would remain competitive with the peers. $96,000-$192,000 annually. Increase employee contributions Varies Negative impact to employees, communications needs This benefit may be less rich than the peers. Market plans Varies Timing for bidding, employee disruption Offer a Lifecycle Account Estimated cost of approximately Employee relations tool to balance ―takeaways‖; some $350,000, assuming a $500/year administrative requirements contribution to the account. Final Report – November 3, 2003 99 Option 5: Offer Targeted Training and Development Opportunities to Enhance Staff Competencies Description: OAS should consider establishing a comprehensive training and development plan for the organization that 1) identifies where staff competencies are weakest, and 2) creates a series of training initiatives to improve those areas most needed. Initiatives may include in-house training, e-learning, university courses, self-study, and development assignments – depending on the nature of the need and the availability of funds. Potential Advantages: Potential Disadvantages: Maximizes the productivity of individuals who are Staff who are not eligible for training may feel that the most critical to the success of the organization. organization does not value them. Serves as a tool to retain the organization’s most critical employees. Serves as a reward for employees who perform the most critical tasks for the organization. Increases the likelihood that the most critical jobs in the organization will stay filled. Provides an incentive for employees to work hard and grow into one of these positions. Final Report – November 3, 2003 100 Option 5: Offer Targeted Training and Development Opportunities to Enhance Staff Competencies Action Steps for Implementation Plan: 1) Identify posts that have a major impact on the success of the organization. 2) Identify the knowledge, skills, and abilities (KSA’s) needed to perform well in the post. 3) Identify the current incumbents in the posts and the individuals who are anticipated to grow into the posts. 4) Identify gaps between the KSA’s of the incumbents and other individuals and those required in the posts. 5) Develop training programs that will bridge the gaps between existing KSA’s and those needed for the critical posts. 6) Create career development and training programs for individuals expected to grow into the posts. 7) Facilitate training for individuals currently serving in the posts. 8) Monitor results of training and adjust accordingly. Timeframe for Implementation Plan: Offer Targeted Training and Development Identify critical posts Identify KSA’s required for the posts Rollout training for current Identify current and future occupants of the posts incumbents Gap analysis Develop training curriculum Create career development plans 0 2 4 6 8 10 12 14 16 18 20 Timeline (Weeks) Final Report – November 3, 2003 101 Option 5: Offer Targeted Training and Development Opportunities to Enhance Staff Competencies Associated Costs Primary costs include 1) DHRS time to conduct a training needs assessment and to develop a training plan, 2) staff time to participate in the training, and 3) training delivery expenses. Potential Barriers Critical Success Factors Failure to correctly identify critical posts in the • Proper identification of the skills required for the organization’s organization. most critical jobs. • Training recipients and their managers must see value in the training. Resistance to training by people targeted as prospects • Opportunities to apply the skills acquired in the training must be for the training program. present in the job. Lack of managerial support for the investment in the training program. Final Report – November 3, 2003 102 Option 6: Facilitate Career Advancement Description: At the present time there are no defined career paths and few promotional opportunities for OAS employees. Defined career paths are useful for replacement planning purposes and are the foundation for employee training and development plans. Career paths and promotional opportunities help to attract and retain motivated and career-minded individuals to the organization. A complete review of job titles and career paths would be highly beneficial to OAS. A method for classifying jobs into fewer titles is needed, as is a policy that facilitates growth opportunities based upon job performance. Formal career planning tools should be developed and integrated into the new hire orientation and performance management process, and skills inventories and succession plans should be developed and maintained. Potential Advantages: Potential Disadvantages: Can be an excellent recruitment and retention tool. Time for DHRS and managers to review the organization and develop career paths (where possible). Employee commitment and motivation are increased. Reduces the period of time that a newly created or Employee expectations may be unreasonably elevated vacated post is unfilled. when, in fact, advancement opportunities at OAS will always be limited due to the size and nature of the A pool of highly qualified candidates is readily organization. available to fill vacant posts. Training and development plans are easier to create and are much more cost effective. If done correctly, much of the responsibility for career development can be placed upon the employee. Final Report – November 3, 2003 103 Option 6: Facilitate Career Advancement Action Steps for Implementation Plan: 1) Review organization and map career paths, where possible. 2) Develop career planning tools (skills inventories, modified performance appraisal, new hire orientation, training programs). 3) Train managers on how to assist employees with career development. 4) Train employees on how to manage their career development. Timeframe for Implementation Plan: Facilitate Career Advancement Conduct a job audit and create job families Map career paths throughout the organization Develop career planning tools Train managers and supervisors Train employees 0 1 2 3 4 5 6 7 8 9 10 Timeline (Months) Final Report – November 3, 2003 104 Option 6: Facilitate Career Advancement Associated Costs As with most of our other human capital options, labor will represent the primary cost to implement this option. A substantial amount of time will be needed to inventory and categorize positions, create and implement career development tools, and train managers and employees. Potential Barriers Critical Success Factors Project participants lack expertise in developing job • Examples of success – e.g., promotions, can be observed by families and career paths. employees. • Managers and supervisors actively encourage employees to use career development tools. Inadequate or overly-complicated career planning • Career development becomes part of the organizations culture. tools result in employees not using them. • Career development is integrated with other human capital programs, e.g., training, recruiting, and performance management. Career planning is undervalued by employees and/or supervisors. Final Report – November 3, 2003 105 Option 7: Conduct an Audit to Ensure that OAS Post Classifications are Consistent with the UN Description: Even though the UN and the OAS use the same job classification standards, there is little coordination to ensure that the standards are applied consistently across the two organizations. OAS should conduct a benchmark audit with PAHO to jointly review a cross section of jobs within the two organizations. Particular emphasis should be placed on determining how points are assigned to posts during the classification process and how posts are assigned to grades. Posts that are similar in both organizations should be identified and used as benchmarks for comparison every year or two. Potential Advantages: Potential Disadvantages: Confirms that the OAS is applying the UN Could be costly to the OAS if it is discovered that the OAS classification system appropriately. is classifying posts lower than the UN for the same post. Helps to maintain parity with the UN. This can be a time consuming task and will require some Increases the confidence of all OAS stakeholders that financial resources to complete. parity is important to the organization, which will have a positive impact on employee morale. Final Report – November 3, 2003 106 Option 7: Conduct an Audit to Ensure that OAS Post Classifications are Consistent with the UN Action Steps for Implementation Plan: 1) Develop goals, objectives, and methodology for post classification audit. 2) Form an audit team that consists of the post classifiers from the OAS and PAHO, and a third party consultancy that will manage the audit. 3) Obtain position descriptions from the two organizations. Some of the descriptions should be for posts that exist in both organizations. 4) Conduct the audit. 5) Develop interim audit report and share with post classifiers in both organizations. 6) Conduct further analyses based on feedback from classifiers. 7) Develop final report for post classifiers in both organizations and management in the OAS. 8) Develop plan for implementing any changes as a result of the audit. Timeframe for Implementation Plan: Audit OAS and UN Post Classifications Develop audit goals, objectives, and methodology Form audit team Obtain post descriptions Conduct the audit Develop interim report Conduct additional audit Develop final report Implement changes 0 2 4 6 8 10 12 14 16 18 20 Timeline (Weeks) Final Report – November 3, 2003 107 Option 7: Conduct an Audit to Ensure That OAS Post Classifications are Consistent with the UN Associated Costs Improved objectivity during the audit will be achieved if a consulting firm is retained to conduct the initial audit. Thus, the primary cost for an audit of this nature will be for consulting fees. However, additional costs will be incurred if positions are reclassified as a result of the audit. This cost could be substantial if a large number of positions are reclassified to a higher grade. If the OAS and PAHO identify benchmark positions and agree to collaborate on future parity reviews, the reviews can be conducted by OAS and PAHO staff members, and the cost for the audit will be negligible. Potential Barriers Critical Success Factors Lack of available documentation, such as post • Consultancy managing the project is very knowledgeable about descriptions, that is needed to conduct the audit. point factoring methods of job classification. • Job descriptions and other related information are easy to obtain. • Job classifiers in both organizations are accessible. Failure of either organization to dedicate the time and • OAS management and political body are committed to resources required to conduct the audit. maintaining pay parity, and supporting the reclassification of posts (up or down) where merited. Lack of money available to conduct the audit or to reclassify posts that are graded low compared to similar posts at the UN. Final Report – November 3, 2003 108 Technology • Reorganize IT Functions • Streamline Reporting and Data Integrity • Implement Automation and Employee Self Services Final Report – November 3, 2003 109 Technology: Reorganize IT Functions Observations: • IT functions, including networking/security, support, and Oracle administration, are located in several different areas within the Secretariat of Management, including the Department of IT and Facility Services, DMAPPS, and the Department of Financial Services. • There is no clear ―owner‖ of the Oracle system who coordinates patches, protocols, updates, and other system-related functions. Background Issues Currently, supervision of technology functions within Lack of centralized leadership leads to the GS is located in several areas: inefficiencies, task redundancy, lack of strategy, and Oracle – supported by two areas: DMAPSS and inconsistent communication with end users. DFS. Decisions regarding resource allocation and system IT – hardware, networking, infrastructure, etc., are upgrades (such as patches) are currently being made managed separately in an organizational unit in the database administration function without within Facilities Management. significant interaction with the applications There is no position charged with overall responsibility function. and ownership for the management of information technology. End user requests related to Oracle often pass through several areas supporting the Oracle system. Final Report – November 3, 2003 110 Technology: Reorganize IT Functions Description: Redesign the IT function to incorporate all technology-related functions together under the leadership and coordination of a Director of Information Technology. In addition, implement a consolidated leadership structure around the Oracle system by aligning all Oracle support units to gain efficiencies and increase collaboration. The activities of the Oracle functional areas would be closely coordinated with the Financial Reporting and Policy Division of Financial Services to support financial statement and Specific Fund custom report production and certification. The General IT Services Division would consist of the technology related areas of the current Department of Technology and Facility Services. Advantages: Disadvantages: Placing the database and applications functions in one The creation of the IT Department would add an additional Department would enable the support and layer of management within the Organization. maintenance of the Oracle system to be streamlined, as well as establishing a single line of responsibility for Oracle. All IT and systems requests could be filtered through a single area and assigned to the appropriate group (Oracle or IT Services) that would manage resource allocation and prioritization of IT initiatives. Final Report – November 3, 2003 111 Technology: Reorganize IT Functions Current IT Structure All IT support functions are provided from three different Departments within the Secretariat for Management. Department of Financial Services DMAPPS ―owns‖ the Oracle Non-Oracle IT functions are provides Oracle reporting and application, providing DBA and provided in the Department of transaction services. application services in two different Technology and Facility Services. organizational units. These function include networking, security, and general IT support services. Final Report – November 3, 2003 112 Technology: Reorganize IT Functions Potential IT Structure Information Technology services consolidated under one area tasked with all IT functions, including Oracle and general IT functions. The IT Services Department would reside in the Secretariat for Management or its successor organization. The Oracle System Services area would consist of the The technology related areas within the current Department Database Applications Administration and Security group of Technology and Facility Services would be grouped and the Applications Analysis Development and Support under the Information Technology Department in the group from DMAPSS. In addition, the Operations group General IT Services Area. The remaining facility related from the Department of Financial Services is included. areas would be transitioned to the Conferences and Meetings Department. Final Report – November 3, 2003 113 Technology: Reorganize IT Functions Action Steps for Implementation Plan: 1) As part of the overall organizational restructure, shift appropriate functions within DMAPPS, Financial Services, and Technology and Facility Services under one organizational unit headed by a Director of Information Technology who would need to be recruited and selected. 2) Develop protocols, roles, and responsibilities for the new IT Department, including protocols for patches, specific position descriptions, and lines of reporting. 3) Train personnel for new roles, if necessary (most roles will simply be shifted—there should not be a significant shift in skill sets required). Timeframe for Implementation Plan: Reorganization of IT Functions Shift Functions into New Structure and Recruit Director Develop Protocols and Roles and Responsibilities Train Personnel (if necessary) 0 3 6 9 12 15 18 21 24 27 30 Timeline (Months) Final Report – November 3, 2003 114 Technology: Reorganize IT Functions Implementation Costs Direct costs associated with the reorganization of the IT functions include: Training costs associated with any changes in roles and responsibilities for specific personnel. The HR and facilities management costs related to organizational change, including the recruitment and hiring of a Director. Indirect costs associate with the reorganization of the IT functions include: The transition associated with an organization change relating to the shifting of resources and training of staff as well as a possible period of downtime and inefficiency as staff ascend the learning curve of the new structure. Barriers Critical Success Factors Involve all parts of the IT operation in the transition and make The reorganization could have a short term negative clear the reorganization goals and the expectations of the staff. impact on morale and productivity. Obtain feedback from IT and other affected staff and modify plans as necessary to engage them in the process. Final Report – November 3, 2003 115 Technology: Streamline Reporting and Data Integrity Observations: In recent years, reporting issues have caused concerns and raised questions about the flexibility of the Oracle system and the integrity of its data. In addition, many integrity issues can be attributed to the periodic module updates, which are not formally communicated to the users of the system. However, during the past several months, many of these issues have been identified for resolution and the process seems to be stabilizing. Background Issues There are few procedures in place for requirements As a result of early issues with the system, the gathering, authorization, and distribution of new Oracle current version of Oracle is not universally trusted reports. and utilized by the OAS user community. Each new donor, grant, or award typically has unique The lack of coordination in the development of reporting requirements that require customized financial Oracle reports leads to untimely reporting and reporting. perceived inaccuracies by the technical area There is little coordination among the areas involved in personnel requesting the report. project management and report generation. Report requirement gathering tends to be done in a Personnel tend to maintain ―shadow‖ accounting reactive fashion during the course of the project systems to track project data due to a perception that the lifecycle. data presented in the Oracle system is not accurate or A commonly held perception throughout the timely. Organization is that the reports produced by the There is currently no formalized process for notifying Oracle system contain inaccurate data. end users of data certification schedules. Final Report – November 3, 2003 116 Technology: Streamline Reporting and Data Integrity Description: Implement procedures to streamline the reporting process and encourage adherence to reporting requirements by implementing improvements in the following areas: • When a grant is established, coordinate the requirements gathering and report design activities of the key areas involved in reporting (Technical Areas, Operations, and FRPD). • Document and communicate the timing of data flow between modules to dispel the perception of inaccurate data. • Initiate a marketing campaign to sell the value of the system to the user community in order to rebuild its reputation and regain the confidence and trust of end users. • Establish and deliver consistent and clear message to the end user community on how the system should be used and who the key contacts are for various requests (e.g., reporting requirements, issue resolution, grant creation, etc.). • Implement a formal and scheduled data certification process and establish communication policies to announce to end users when the data is certified. • Design and implement training programs for the technical area staff on the proper use of the system. Advantages: Disadvantages: Reporting requirements would be solidified and Reporting data cannot always be obtained real time due to agreed to earlier in the project lifecycle, resulting in a the updates that must occur in the system. proactive approach to report development. Acceptance and trust of the Oracle system would be There will be a learning curve associated with the use of improved as a result of the understanding of the data the new protocols and procedures. discrepancies between modules. Final Report – November 3, 2003 117 Technology: Streamline Reporting and Data Integrity Action Steps for Implementation Plan: 1) Develop a communications plan and protocols for new reporting procedures and other system information. 2) Implement communications plan and protocols. 3) Develop pre-defined common business areas within Oracle Discoverer to enhance ad hoc reporting capabilities. 4) Train end users and other related staff on new protocols and procedures for handling reporting and data reconciliation. Timeframe for Implementation Plan: Streamline Reporting and Data Integrity Develop Communications Plan and Protocols Implement Communications Plan and Protocols Develop Pre-Defined Common Business Areas Train End Users 0 3 6 9 12 15 18 21 24 27 30 Final Report – November 3, 2003 118 Technology: Streamline Reporting and Data Integrity Implementation Costs Direct costs associated with streamlining the reporting and data integrity procedures include: The costs involved in training and educating stakeholders of the new policies on reporting requirements and structure as well as the data validation and reconciliation protocol. The costs of creating pre-defined common business areas using the Oracle’s Discoverer tool to improve ad hoc reporting. Indirect costs associated with streamlining the reporting and data integrity procedures include: None Barriers Critical Success Factors The lack of upfront understanding of the definition of Modify internal or vendor specific training to educate end users database tables and information. and report writers on specific report creation routines to increase understanding. Final Report – November 3, 2003 119 Technology: Implement Automation and Employee Self Services Observations: • There are applications and functions within Oracle that are not currently used; however, if implemented, they could increase productivity. These included automating certain transactions and utilizing Employee Self Service for certain functions, e.g., personal profiles, travel requests, benefits, expenses, and other HR-related requests. Background Issues Currently, personnel submit requests to Oracle support areas for The manual data entry of system change requests all updates to the Oracle system. The requests are then consumes time and resources and increases the risk of manually processed and entered into the systems. data entry errors. All expenses for common costs are handled by Accounts The current methods for processing common cost Payable and are processed manually using internal transfers. payments require manual data entry, again consuming time and resources and increasing the risk of data entry errors. Final Report – November 3, 2003 120 Technology: Implement Automation and Employee Self Services Description: Implement employee self service and automation where applicable within the Oracle system to streamline processes and reduce costs. Areas to address include: • Activate and customize self service functions within Oracle 11i that are currently available in the standard package. • Streamline common cost payments by eliminating the internal transfers between the organizational areas and AP as well as establish automated payment schedules with the General Ledger. Advantages: Disadvantages: Self service functions would allow for a reduction in There may be some costs associated with the process time as well as a reduction of resources implementation of the Employee Self Service and required to make updates to Oracle data. Self services automation. come standard within the Oracle environment and are Employee Self Service would decrease the amount of relatively easy to implement and maintain. human interaction for certain functions, potentially Reducing the amount of internal transfers for common requiring a cultural shift and training. cost payments as well as establishing automatic payments would decrease the level of processing resources consumed as well as increase the accuracy of payments. Final Report – November 3, 2003 121 Technology: Implement Automation and Employee Self Services Action Steps for Implementation Plan: 1) Conduct detailed assessment of current system configuration and processes to identify areas for automation, such as activating the Employee Self Service functionality and automatically processing common costs directly in the General Ledger module. 2) Develop plans for implementation of improvements, including milestones, resources required, impact on other areas, etc. 3) Define an ―Oracle Workflow‖ based approval framework for handling changes and updates to employee personal information. 4) Implement improvements according to plans. 5) Monitor improvements to ensure that they are being used and are resulting in productivity gains. Timeframe for Implementation Plan: Implement Automation and Employee Self Services Conduct Detailed Assessment of Current Configuration Develop Implementation Plans Define Oracle Workflow Implement Improvements Monitor Improvements 0 3 6 9 12 15 18 21 24 27 30 Final Report – November 3, 2003 122 Technology: Implement Automation and Employee Self Services Implementation Costs Direct costs associated with implementing automation and Employee Self Services include: Some implementation costs may be required to develop employee self service applications. Training and change management might be required for certain changes. Indirect costs associated with implementing automation and Employee Self Services include: The amount of time spent transitioning staff from the current practice of manual updates to automated self services updates. Barriers Critical Success Factors The cultural change of shifting away from in-person To ensure a smooth transition to Employee Self Service, perform human contact to Employee Self Service may appropriate change management and training. discourage personnel from using the application. Final Report – November 3, 2003 123