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Audits and Evaluations

Audit of Innovation Management

Findings and Recommendations

Governance

Criteria: An effective governance structure is established to manage innovation.

Finding: A governance structure for the management of innovation projects was formally adopted. Its effectiveness could be improved with the use of a challenge function supported by a formal mechanism to report and monitor progress.

Our assessment of the governance structure was based on the Office of the Comptroller General’s (OCG) Core Management Controls and the expectation that the following elements would be in place:

  • Decision-making bodies providing direction and oversight;
  • An effective accountability framework with clear roles and responsibilities;
  • Regular reporting on achievement of deliverables; and,
  • Evidence of a challenge function being exercised.

The Business and Integration Strategy (BIS) office provided project management support and on-going monitoring of all MII projects to ensure coordination and oversight. The responsibility for developing MIIs and delivering results was delegated to the Director General (DG) project leads within different sectors of the organization. At the Management Board (MB) meeting of December 13, 2010, the BIS presented a governance structure for the MIIs entitled The Way Forward. The main features of this governance included the following:

  • The MB is responsible for oversight and decision-making and will monitor MIIs using the Quarterly Corporate Dashboard;
  • The Assistant Deputy Ministers’ Committee is responsible for decision-making (delegated by MB) and horizontal issues (raised by the Director General Committee on Business and Integration Strategy (DGBIS)); and,
  • The DGBIS Committee is responsible for reviewing and validating deliverables, incorporating enabling functions and identifying issues for escalation.

One of the first steps taken by the BIS office was to ensure that each MII had a project charter in place. The charters established an accountability framework as the roles and responsibilities of project members and committees were clearly spelled out. Based on a review of the charters, the overall project accountability was generally shared between the project sponsor, usually at the ADM level, and the project lead at the DG level. Project-specific working groups and steering committees were also established for most MIIs. The individual MII committees served to break down the MII outcome in activities and concrete deliverables.

The charters were not prepared with the same level of care since there was limited time between the announcement of the MIIs and the development of the charters.  This resulted in obtaining preliminary-level information for resource estimates and summary-level risk assessments. Furthermore, the charters did not serve the intended purpose as they were rarely revisited for updates or for monitoring purposes.

With regard to the MB responsibilities, the meeting records showed that a number of deliverables were presented, discussed and approved. They ranged from intermediary deliverables such as discussion papers, strategy proposals and policy framework, to final deliverables such as the whole-of-society model.

The MB used the Quarterly Corporate Dashboard as the official tool to report on MIIs. Every quarter, project leads reported on the status of the MIIs they were responsible for. The Dashboard provided high-level information on achievement of deliverables.

Finally, the governance structure also included oversight through the regular or extended versions of the ADM management team meetings, and the Departmental Audit Committee was also kept abreast of progress on the MIIs.

Challenge Function and Reporting

As set in the charters, the DGBIS had to ensure horizontal integration, dependencies, issue management, risk management, resource allocation and project implementation.

To follow MII progress, a departmental reporting instrument was created in SharePoint: the MII Report Centre. Its purpose was to provide a platform for updating and sharing deliverables. A review of the content of the MII Report Centre indicated that a number of deliverables were posted on the site. However, the extent of the information available on the MII Report Centre depended on due diligence of the project team and certain MII sites contained more information than others.

A review of the DGBIS meeting records of decisions showed that the project leads made regular presentations on the status of their MII. The records also demonstrated that discussions took place and suggestions were made on the recommended course of action. However, interviews confirmed that presentations and discussions took place with limited challenge performed over the MIIs.

No formal reporting instrument was in place to allow the DGBIS to actively challenge and monitor related issues. An appropriate reporting instrument would provide management with better information for decision-making.

Recommendation 1:
A rigorous reporting mechanism should be developed to support active monitoring and challenge role.

Rigorous Approach

Criteria: The organization has a formal and rigorous approach, including risk management, to manage innovation activities. It has implemented control measures to identify significant issues that could hinder the successful implementation of innovation management practices.

Finding: A rigorous structure for change management, project management and risk management was not available to support the implementation of the MIIs. However, individual project management structures were established for most MIIs and this provided a level of monitoring that enabled the achievement of a number of the innovation project deliverables.

Our assessment to determine if the organization has implemented a rigorous approach and appropriate control measures was based on the expectation that elements of project management, change management and risk management were in place.

Change Management

In February 2010, the LAC Organizational Change Management Framework came into effect. It was developed by the BIS office. In June 2011, the responsibility for change management was transferred to the Human Resources (HR) division. The purpose of the framework was to ensure that change at LAC would be undertaken in a strategic, planned and consistent manner using project management techniques and practices.  During the conduct phase, we noted that most interviewees were not aware of this framework nor did they know who was responsible for the change management function.

In May 2010, LAC conducted an assessment4 on change, for which it received a level two rating, stating that some elements of change management were being applied in isolated projects. The assessment identified areas requiring improvement in order to build a change management capability at LAC:

  • The current vision is not clearly understood and the strategy to achieve it has not been clearly defined;
  • LAC has a history of promising more and delivering less with respect to change programs;
  • Communication improvements are required (transparency, frequency, clarity);
  • The meaningful engagement of employees toward change is lacking at all levels;
  • Organization-wide consistency and collaboration is lacking; and,
  • Modern tools for employees to work with are lacking.

At the time of the audit, limited progress was made to address the results of the survey. In addition, LAC still had three actions left to address under the Management Accountability Framework specifically related to change management.

MII 5 was created to develop and implement a workforce strategy and an engagement strategy for employees (including change management). At the time of the audit, there was no progress toward the development of the engagement strategy for employees, since the HR Directorate concentrated its efforts on developing the competencies needed in a modernized LAC.

Project Management

The Strategic Planning, Infrastructure and Operations Branch (SPIOB) was responsible for project management in May 2011 (previously under BIS). An important principle of project management is to ensure that an appropriate capacity for managing projects exists and is aligned with the risk and complexity of the projects. LAC does not currently have a policy on project management or instruments required to support its managers responsible to deliver on their MII projects. The SPIOB conducted a benchmarking exercise on project management in the summer of 2011 to identify best practices in place in federal institutions.

The modernization exercise undertaken by LAC was ambitious because it included 12 distinct innovation initiatives. There were also several horizontal issues and interdependencies between projects which made it difficult for most projects to progress independently. We observed that some staff were affiliated with several MIIs and it became difficult to set individual priorities and allocate time to the most urgent or deserving project. In addition, some projects that were initiated had to be delayed because pre-requisite work from another dependent MII was not completed. Although a Gantt chart was developed for the MIIs, there was no evidence that it was used to help prioritize and sequence MIIs in a logical manner.

The MIIs did not receive any new financial or human resource allocations. It was understood that they were to be completed within each sector’s allocated budget. The resource estimates included in the charters were made of portions of budgets, and the allocated full-time equivalents came from a number of organizational units. Careful planning and tracking of project costs is another important aspect of project management. At a Finance Committee meeting in December 2010, it was recommended to create project codes to keep track of salaries and operations and maintenance expenses related to the MIIs. However, this was not successfully implemented as the project leads were unable to tract expenditures to the required level of details. This situation made it difficult to keep track of expenditures and conduct a variance analysis.

Another requirement of project management is that clear outputs and outcomes be defined at the outset of the project. This aspect varied from project to project based on the nature and complexity of the expected outcome. In some cases the availability of intermediary outputs (such as research papers, frameworks, models, pilot tests) with associated timelines ensured that progress could be demonstrated even if the ultimate outcome was not yet defined or achieved. Interviews with project leads as well as a review of MII documentation confirmed that a number of deliverables were achieved.

An effective change management infrastructure and project management capability will reinforce the ability to meet MII project objectives.

Risk Management

The project charter template provided to project leads for completion included a project risk management section. While the inclusion of the risk management section was seen as a good practice, the evidence demonstrated that the analysis that went into the process was generally superficial. A review of the charters demonstrated that, in many cases, the template was not fully completed, with elements such as probability and impact not addressed. In other cases, there were no mitigating measures proposed for risks with an overall high rating or the mitigating measures proposed were not always aligned with the assessed level of risk. For example these risks: “Resistance to workforce and engagement changes” and “Inadequate capacity to deliver” were assessed as low in some cases and given inadequate mitigating measures. Interviews confirmed that limited efforts went into developing the risk section.

One of the important requirements of the departmental Handbook on Integrated Risk Management for Managers is the need to monitor the effectiveness of mitigating strategies. Interviews confirmed that the risk-management section of the project charters was not revisited for most MIIs and there was no evidence that any monitoring or follow-up was conducted to either review the original assessment or evaluate the effectiveness of the measures in place.

An environment with an appropriate risk-management framework will provide management with a solid and up-to-date understanding of the internal and external factors that may expose their modernization objectives to risk.

Recommendation 2:
An infrastructure and capacity for change management and project management, aligned with LAC ’s needs, should be developed to support project managers and to demonstrate sound stewardship in project delivery at LAC.


Recommendation 3:
The risk-management process for innovation initiatives should be reviewed regularly and documented appropriately to ensure that significant risks are considered, monitored and mitigated with appropriate measures.

Approach well communicated

Criteria: The approach to innovation management is well communicated, understood and implemented by management.

Finding: Communication on the modernization Initiatives was issued by senior management on a regular basis. Although the common direction of modernization was known to staff, the implications were not well understood. This had an impact on the degree of engagement staff had towards the Modernization initiative. Managers were unable to ensure continuous communication and engagement of staff with respect to modernization.

Our assessment was based on the OCG Core Management Controls and the expectation that internal communication elements would be in place to better engage staff in the modernization exercise. 

A number of departmental communication tools were used during the MII development period to communicate information to employees. “Speak Easy” sessions were held  and several emails were issued by LAC senior management (Assistant Deputy Ministers and Deputy Head) on a variety of modernization topics during the period of the audit. These communication initiatives provided staff with updates on MII projects and opportunities to express their views and concerns. However, evidence showed that these measures had moderate success.

In addition, two surveys were conducted. The first, directed to LAC employees, took place in May 2010, in the early stages of the modernization exercise. Its purpose was to assess the departmental capability to handle change management. The second survey, sent to archivists, followed in March 2011, when the MIIs were underway. The results of both surveys demonstrated that employees were aware of the organization’s common direction but did not understand it, felt disengaged from the change process and required improvements in communication.

Interviews confirmed that modernization has been a top-down exercise whereby initiatives were determined with limited consultation with mid-level managers. Communications could be improved through a more extensive and regular internal consultation process among all levels of LAC ’s various sectors and corporate functions, including Strategic Research. Such consultation would foster creative thinking and encourage openness to new concepts. Modernization will only be accomplished by breaking down the functional silos and looking at the LAC ’s mandate as a continuum where each sector has a role to play in achieving the objective.

Employee engagement, consultation and communication during a major organizational change are also the responsibility of managers. During the interviews, managers admitted falling short in this regard. Employees who were part of the MII project committees had an opportunity to express their views and participate in the decision-making process. However, another portion of the staff remained unengaged.

Recommendation 4:
Implement a strategy for managers and executives to support continuous communication and engagement of staff with respect to modernization.


4 Prosci Change Management Maturity Model

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