Country Report for the Organisation for Economic
Cooperation and Development Symposium

"Governing for Performance in the Public Sector"

Jean-Guy Fleury
Assistant Secretary to the Cabinet
Management Priorities and Senior Personnel Secretariat
Privy Council Office

March 13-14, 2002
Berlin, Germany

Table of Contents

Introduction

Background on the Canadian Government and the Senior Public Service

Leadership Development

Performance Management Program for Deputy Ministers and the Executive Group

Challenges in Implementing the Performance Management Program

Annex A - Corporate Priorities

Annex B - Ongoing Commitments

Introduction

Excellence in leadership in the public service is essential to ensuring that the Canadian government is able to sustain and improve the quality of life for all citizens with an innovative economy and effective programs.

Public service leaders are charged with putting into action the government’s priorities aimed at improving the quality of life for Canadians. Whether it be through policies and programs focussed on innovation, skills and learning, disadvantaged groups, the environment, culture and the arts, leading edge technology, national security or a dynamic economy, public service leaders are expected to be in the forefront in the delivery of programs and services to Canadians.

Canada has a long history of a professional, non-partisan and bilingual public service with high standards of care, ethics, values and service. In the last speech from the Throne, the government reinforced the need to have a public service distinguished by excellence and equipped with the skills for a knowledge economy and society.

The government’s objective to affect positively the quality of life through the delivery of service to its citizens has meant that strengthening leadership capacity in the public service has emerged as a top priority. As a result, a number of innovative programs have been put in place focussing on leadership within the public service, such as learning and developmental programs, centrally managed staffing programs and programs to manage the performance of public service leaders.

This report focusses on the Performance Management Program for deputy ministers and executives, the most senior leaders of the Canadian public service. The program ensures that the performance of its public service leaders is in accordance with the priorities and direction of the government by linking these priorities to their annual performance agreements. It also ensures that performance is evaluated upon results and the demonstration of values, ethics and leadership competencies deemed essential for our leaders.

This report also provides a contextual overview of the Canadian public service, the deputy minister community and the executive group. More particularly the report describes the Performance Management Program, including its objectives and application, and a summary of the challenges that remain in strengthening the link between performance and leadership essential to fulfilling the government’s agenda and meeting the expectations of Canadians.

Background on the Canadian Government and the Senior Public Service

Canada is a constitutional monarchy where executive authority is vested in the Crown and exercised on the advice of the Prime Minister and his or her Cabinet. The Crown is personified by Her Majesty Queen Elizabeth and represented in Canada by the Governor General.

Canada’s ten provinces and three territories form a federation with a distribution of powers between the federal Parliament and the legislatures of the provinces. The federal Parliament is composed of the Queen, the Senate and the House of Commons. Members of Parliament are chosen in federal elections and represent one of Canada’s political parties. The party with the greatest number of seats in the House of Commons forms the government and the leader is the Prime Minister who in turn appoints a Cabinet of ministers to oversee the running of federal government departments.

Ministers are answerable to the House of Commons for their respective departments and the Cabinet as a whole is answerable to the House for policy and administration of government departments.

The Deputy Minister Community:

Each government department is led by a deputy minister. Deputy ministers have four primary roles: to provide the highest quality support, issues management and policy advice to the Minister, Prime Minister and Cabinet; to ensure effective and timely development and implementation of the department’s strategies, plans and priorities consistent with the government’s agenda and priorities; to demonstrate excellence in leadership and management of the department’s programs and human resources; and, to demonstrate excellence in corporate-wide leadership, contribution and collaboration.

Deputy ministers are the most senior officials within the Canadian public service and are career public servants. Currently there are 29 departments led by deputy ministers. Deputy Ministers are appointed by the Governor General on the advice of Cabinet. The Clerk of the Privy Council and Secretary to Cabinet, the most senior deputy minister, recommends the appointment of deputy ministers to the Prime Minister and Cabinet.

The Clerk of the Privy Council is also the Head of the Public Service. In this role the Clerk, serves as the principal link between the Prime Minister and the Public Service of Canada, and is responsible for the quality of expert, professional and non-partisan advice and service provided by the public service to the Prime Minister, Cabinet and to all Canadians.

Executives of the public service are the most senior managers reporting to deputy ministers. They are the directors, directors general and assistant deputy ministers. Most often, deputy ministers are chosen from this latter group.

Currently, there are approximately 3,600 executives in the public service. They and the deputy ministers are the leadership cadre of the public service.

Leadership Development

Fourteen leadership competencies have been developed that are considered essential to the roles of executives and assistant deputy ministers. These competencies guide the selection, development and evaluation of the leadership cadre.

The fourteen competencies are grouped according to five themes as follows:

• Intellectual Competencies - Cognitive capacity, Creativity

• Future Building Competencies - Visioning

• Management Competencies - Action management, Organizational awareness, Teamwork, Partnering

• Relationship Competencies - Interpersonal relations, Communication

• Personal Competencies - Stamina/Stress resistance, Ethics and Values, Personality, Behavioural flexibility, Self-confidence.

In an effort to identify and select strong leaders, a number of programs and processes have been developed.

The Accelerated Executive Development Program identifies executives at lower levels who demonstrate the potential to become assistant deputy ministers and accelerates their development and career advancement. Through a series of assignments and promotions, the leadership capabilities of individuals are broadened to ensure a group of strong leaders for future promotion into the ranks of assistant deputy ministers.

The next program in the leadership development continuum is the Assistant Deputy Minister Pre-Qualification Process. Executives are assessed on their potential to become assistant deputy ministers and, if found qualified, are managed as a corporate resource, allowing further development through a series of assignments and promotions. As mentioned before, it is from this pool that deputy ministers are most often selected.

To identify those persons with the short and long-term potential for becoming deputy ministers there is an annual review in which deputy ministers are surveyed. A committee of deputy ministers assesses the persons proposed and identifies potential future deputy ministers. When assistant deputy minister positions are staffed, the developmental needs of those identified in this process are considered and persons are assigned to positions that would assist them in further developing their competencies and prepare them for appointment as deputy ministers.

An essential element of leadership development is the provision of learning and development opportunities based on individual needs and the leadership competencies. Within the Canadian public service, a number of options are provided.

• The Canadian Centre for Management Development (CCMD) supports present and future public service leaders through learning programs and courses, events, strategic research and other leadership development activities. The focus of CCMD is meeting the needs of executives and assistant deputy ministers through a variety of informal and formal learning opportunities.

• Assignments that require the individual to stretch their abilities, take on new duties, perfect their use of both official languages, improve knowledge in a specific area essential to the direction of the government, etc. are encouraged as another means of broadening leadership competencies. Interchange assignments allow executives to work in other levels of government, academic institutions or in the private sector to acquire new perspectives and skills. International assignments are also available.

• The Leadership Network is an organization that provides services in the field of network development for leaders at all levels of the public service. These services include managing assistant deputy minister assignments, career development support, provision of leadership knowledge tools and networking initiatives aimed at building a strong community of leaders.

Underlying and supporting leadership development is the Performance Management Program. The current program, the main focus of this report, has its roots in recommendations made by an external advisory committee composed of prominent Canadians from the private, academic and labour sectors. The committee was mandated to provide advice and recommendations to the government on the development of a long-term strategy to support the leadership development needs of executives and other senior officials for the next decade, as it relates to compensation strategies, principles and issues, including rates of pay, rewards and recognition. The Advisory Committee on Senior Level Retention and Compensation has produced three reports since 1998. The general findings of the advisory committee were as follows:

• an extended pay freeze in the 1990's in response to fiscal concerns, affected the standard of living of deputy ministers and public servants as a whole and undermined their sense of importance and appreciation;

• downsizing of senior managers meant more limited job opportunities and promotions with increasing demands on the time of those who remained;

• good leaders were leaving the public service at a time when it needed to retain the best and the brightest. Low morale and uncompetitive compensation was creating a short-term risk of further departures;

• the public service was no longer able to attract the highest calibre of people because of uncompetitive compensation; and,

• current compensation systems did not encourage and reward

• outstanding performance.

In response to these findings, the Advisory Committee made a number of recommendations. Notably for deputy ministers and executives, the committee recommended compensation distinct from that of unionized employees to recognize their very different responsibilities and to reward achievement of specific objectives. It recommended compensation where the job rate, the fixed component, was paid for fully satisfactory performance and a variable component of compensation called ‘pay at risk’ which was tied to the achievement of individual and corporate objectives.

The government accepted these recommendations. The Performance Management Program for deputy ministers and executives has been developed to support the variable component of compensation and to ensure that individual and corporate objectives are aligned with the government’s objectives and the competencies of public service leaders.

The Performance Management Program for deputy ministers and executives has the following objectives:

• to encourage excellent performance by recognizing and rewarding the achievement of results that are linked to business plans and government objectives and the demonstration of leadership competencies, values and ethics; and

• to provide a framework within which a consistent and equitable approach to performance assessment can be applied.

To achieve a cohesive framework for the government’s agenda and ensure it becomes an integral part of the performance of the senior ranks of the public service, corporate priorities are developed and issued annually by the Clerk of the Privy Council in the Clerk’s role as Head of the Public Service. These priorities reflect key areas where public service-wide results are needed during the upcoming fiscal year (April 1 to March 31) based on the government’s agenda and the needs of the public service. (Annex A provides the corporate priorities for 2002-2003.)

The corporate priorities provide a framework for the development of performance agreements for deputy ministers. The priorities are subsequently reflected downwards within departments and are taken into account in the development of performance agreements of executives given their role in supporting deputy ministers and the government in the achievement of results.

Each deputy minister has a written performance agreement for each performance review cycle, which is a mutual understanding between the deputy minister and the Clerk of the Privy Council. Executives have an agreement between themselves and their supervisor. The agreement is comprised of:

• ongoing commitments that do not normally change from year to year and are linked to business plans and core accountabilities, such as financial and human resources management, policy development and program delivery;

• key commitments which are priority areas of focus in the performance cycle that are linked to government objectives. They are challenging (‘stretching’) but achievable with effort. They are also results-oriented, measurable and achievable through the individual’s own influence and control. Approximately three key commitments are normally identified; and,

• performance measures are observations or data that determine and define if and how well the commitments are met, including the demonstration of leadership competencies, values and ethics.

Changes may be made to the performance agreement at any point during the performance cycle year should unforseen or unusual circumstances arise.

Generic ongoing commitments are developed centrally for the use of deputy ministers in preparing their ongoing commitments. (See Appendix B for the generic ongoing commitments for 2002-2003.)

At the end of the review cycle, performance is evaluated against the achievement of commitments in the performance agreement. In addition to the evaluation of performance against these specific commitments, the corporate contribution to the public service is also assessed. Either as champion of a particular issue or as a member of one of several corporate committees for the entire public service, deputy ministers ensure that specific issues are communicated and taken into consideration in overall public service program and service delivery.

It is expected that the demonstration of leadership competencies also be taken into account during the performance assessment. However, it is not expected that all 14 competencies be evaluated. A leadership competency could be a commitment in itself, a specific performance measure for a commitment or an underlying expectation linked to how all commitments are to be achieved.

Using the performance measures, a rating is determined as follows:

• Did Not Meet: did not achieve the expectations set out in the performance agreement;

• Succeeded: has succeeded in achieving the expectations set out in the performance agreement (expectations are high at the Deputy Minister level and to ‘succeed’ is to display a high level of excellence); and,

• Surpassed: has gone beyond the expectations set out in the performance agreement, in areas of significance (it is important to retain the ‘surpassed’ category for performance beyond the norm and use it as a motivator).

There are several steps in the finalization of the performance rating. At the end of the performance review cycle, each deputy minister completes a self-evaluation assessing achievements against the commitments in the performance agreement. The Clerk of the Privy Council seeks input on the performance of deputy ministers from a variety of sources, including ministers, the Committee of Senior Officials composed of deputy minister colleagues, the Treasury Board Secretariat which conducts departmental assessments and also from senior management of the Privy Council Office.

Recommended performance ratings and related compensation for deputy ministers are submitted to the Governor in Council for final approval, through the Clerk of the Privy Council.

With the successful achievement of on-going commitments, deputy ministers normally progress at 5% per year through the salary range to reach the job rate (maximum) in approximately three years. ‘At risk pay’ is provided as a lump sum, is re-earned each year, and is based on achievement of key commitments. The ongoing commitments must be successfully met in order to be eligible for at risk pay. There are four pay levels for deputy ministers. Deputy ministers at the first level can earn up to 15% as a lump sum payment depending on performance, while those at the second and third levels can earn up to 20% and those at the fourth level can earn up to 25%.

The program for executives functions in a similar fashion, with their priorities flowing from the priorities of their deputy ministers. However, the program is managed within each department with broad program direction from the Treasury Board Secretariat.

Through the evaluation of performance, deputy ministers are able to identify leadership strengths and weaknesses among the executives. They can also recommend development through a number of learning or development programs where individuals are given broader work experience and training.

The diagram on the following page provides a summary of the Performance Management Program and the relationship with learning and development.

Performance Management Program Summary

Challenges in Implementing the Performance Management Program

During the initial implementation of the Performance Management Program, a number of concerns were identified which served to further refine the program. Among the lessons learned following the initial cycle of performance reviews were the following:

• corporate priorities were too broad for the deputy ministers to easily link them to their own concrete objectives;

• the quality and nature of ongoing commitments identified by deputy ministers varied greatly from one to another making comparisons difficult;

• the degree of challenge represented by the key commitments established by deputy ministers also varied from one to another; and,

• the notice periods for the preparation of the evaluations and performance agreements were too short.

As a result, the Performance Management Program was modified to take into account these concerns and the following changes were introduced:

• the corporate priorities were limited to a few key areas where public service-wide results were needed. This has helped focus the performance agreement as a management tool to direct change;

• common ongoing commitments that were viewed as core to the deputy minister role were developed in order to articulate how success would be measured in terms of both the results expected and the leadership competencies, values and ethics that were to be demonstrated. This has helped ensure consistency in expectations; and

• the process was streamlined in terms of time frames and reporting requirements.

A number of challenges remain in the administration of the Performance Management Program.

First, more work is required to develop performance indicators that are measurable in the public service environment and within the control of the individual. In the public service there are a number of factors which influence the ability of deputy ministers and executives to deliver upon their commitments. Some of these factors, such as the political agenda and public opinion, are generally outside the control of the individual in the public service. Continued study of the impact of these outside factors when evaluating performance is essential to establish indicators that are measurable and achievable for our leaders if performance management is to remain as a motivating tool.

Second, it is important to further explore how leadership competencies among the senior ranks are evaluated and subsequently developed. Currently the program is results-based, focussing primarily on tangible products and services as the basis for evaluation of performance. It is difficult to identify personal objectives for deputy ministers and executives and to evaluate their personal growth in the context of assessing overall performance. Additional work is required to explore methods of evaluating the personal skills and attributes of effective leaders.

Finally, it is necessary to ensure that the Performance Management Program is constantly reviewed to ensure it continues to support and reward excellence in leadership. This includes ensuring that evaluation of performance continues to include the identification of leadership strengths and weaknesses, with supportive development programs. It also means ensuring that there is a clear difference maintained between the performance ratings. Those who attain a surpassed rating should demonstrate truly obvious and excellent leadership beyond the norm. Continued attention to the leadership dimension of the Performance Management Program will support the development and maintenance of the strong leadership that is essential to the success of the public service in meeting the needs of Canadians.