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 Program Review: Not An Option
This article was published in Focus. The Executive Magazine On Canada's Public Service. Focus is published by Multidirect Communications Inc. and the article was published in their Volume 4 Issue 1 on February/March 1995.

Prepared By Dr. Mir F. Ali

Perhaps a "Program Review" should be defined simply as a government initiative to radically cut jobs in the public sector. This may not be consistent with the government definition of Program Review as a review of all federal government programs in order to bring about the best, most effective and cost efficient way of delivering programs and services that are appropriate for the federal government to be delivering. Yet, with cuts already announced in the 1994 budget, the government has targeted the elimination of more than 25,000 jobs from its payroll over the next four years. They include about 14,000 at Transport Canada, 1,200 at Fisheries and Oceans, 600 at the Public Service Commission, 8,400 at National Defence, and 1,000 to 1,500 jobs but the cabinet committee overseeing the review said it wanted further cuts and this is going to reduce the departmental budget from $1.1 billion to $460 million.

In order to understand the need for Program Review, we must take a look at the financial situation the country is in:
  • Canadian debt in the hands of foreigners is approaching 40 percent which is proportionally higher than most other nations in the world and it makes us quite vulnerable to external pressures. The federal and provincial debt already reached to $748 billion not to mention the $650 billion in future liabilities of the Canada and Quebec Pension Plans;
  • The federal debt stands at $548 billion or about 73 percent Gross Domestic Product (GDP). The interest on that debt, at about $44 billion, now consumes 36 percent of every tax dollar;
  • Estimated spending on social programs is somewhere between $180 and $200 billion a year, or from 25 to 27 percent of GDP, depending on how "social" spending is determined.;
  • Canada's credit rating is at risk which means that future financing could cost the federal government a lot more money. A one-percent hike in interest rates on $1 billion of borrowing, for example, works out to $10 million more per year in interest payments;
  • Statistics Canada recorded in early 1994, an overall drop of 2,500 employees, to 555,759 which includes all public servants in the federal government, the Armed Forces, the RCMP, and Crown Corporations. This represents less than 5 percent and for every department that's been cut, such as Defence, Indian Northern Affairs, and Transport, there have been jumps in others. Collecting the GST, for instance, added 6,000 jobs.
  • When comparing Canada with other G-7 countries, the USA may have spent the most on health are as a share of GDP, but in terms of public spending on health, Canada tops the list even ahead of Sweden. Canada also spends more than any other country on public education. Some countries spend more than Canada on social security in general, but for unemployment benefits alone no country is even close. Canada spends as much as 3 to 4 percent of GDP, more than twice as much as the nearest rival;
  • Only countries like France, Italy and Germany spend more on social security simply because a large proportion of their population is over 65, and drawing pensions. But in the decades to come that will change. The number of elderly is forecast to grow more quickly in Canada than in any other developed country; and
  • Canada plays an important role in the world, which is considered to be way out proportion to its economic size. Canada belongs to about 70 international organizations and 11 multilateral funds/banks, with a reputation for paying its dues on time. Canada contributes over $2 billion annually to these organizations for international development assistance.

Mark Drake, president of Canadian Exporting Association, noted in a recent article that as Canadians consider their responsibilities abroad, we must try to get rid of those things which weigh us down. These include international barriers, layers of duplication in the bureaucracy, an unfocused social system, the disincentive of over taxation, and the attitude that whatever happens the government will bail us out.

The fact of the matter is that Canada, like any other country, ran out of options and excuses a long time ago. Senior managers with responsibilities to make crucial decisions are either pretending that the situation is not that bad or waiting for their retirements. Unfortunately there are no real success stories in the federal community which could be used as a "showcase for renewal". The Public Service 2000 initiative was a major disappointment and all other related initiatives had a limited success. The only positive thing is that people are finally realizing that something must be done to survive. The real challenge is WHAT and HOW. Needless to say, these questions are critical to the survival of any organization. The Program Review asks departments to review and assess their activities and programs against the following guidelines:

  • Public Interest Test: Do the program areas or activity continue to serve a public interest?
  • Role of Government Test: Is there a legitimate and necessary role for government in this program area or activity?
  • Federalism Test: Is the current role of the federal government appropriate, or is the program a candidate for realignment with the provinces?
  • Partnership Test: What activities or programs should or could be transferred in whole or in part to the private/voluntary sector?
  • Efficiency Test: If the program or activity continues, how could its efficiency be improved?
  • Affordability Test: Is the resultant package of programs and activities affordable within the fiscal constraints? If not, what programs or activities would be abandoned?
  • It is obvious that a significant amount of effort has been invested in the process to develop and design these guidelines. They define what is needed to be done. The following observations indicate how these guidelines are adopted to conduct program reviews:
    1. The suggested sequence of tests is confusing and the logic for not conducting the affordability test earlier is incomprehensible. After going through extensive and painful review to satisfy all five tests, you could end up with nothing and therefore it could be perceived to be a worthless exercise;
    2. The real problem with the program review is the way it is conducted in each department. Conducting an extensive review of the programs within a short period of time was indeed a challenge and unfortunately majority of departments were not ready for this challenge. As a result, they ended up interviewing the stakeholders for two to three hours, putting them through with all six tests, and collecting information which could represent nothing but subjective opinions.

    The advantage of this approach is that every department met the deadlines and the disadvantage is that the validity and accuracy of the submitted action plans are questionable. Government departments and agencies were in an unfair situation in a sense that there was more than one so called renewal initiative being conducted a the same time and the chances are that none of these initiatives had a common methodology or focus.

    Unfortunately not too many departments or agencies have an up-to-date well defined business model and information model, reflecting their mission, objectives, goals, business functions, business processes, business activities and their information needs to perform these activities. This could have helped them to determine:

    • The effectiveness - whether they are doing the right things; and
    • The efficiency - whether they are doing the things right.

    It is also not fair to expect people to come up with logical answers to penetrating issues within such a short notice, especially when they are operating in an environment where they are working "vertically" with no direction, no standards, no feedback, no communication, or no way of knowing how all these activities within each function are supporting their mandate.

    The question is how can these difficulties be overcome? How can an organization be in the position to conduct a program review realistically and come up with an action plan which will provide some options and associated risks? How can it be assured that the proposed action will not have a negative impact on the level of quality of service the organization is mandated fro?

    The answer to these questions is for a systematic rather than political review of the programs. In order to conduct a systematic review, the department has to be convinced that there is a genuine need for conducting the review; persuaded that there is a potential for real benefits; and committed that there is support for contributing to the process. The attitude towards work has to be changed and "horizontal" thinking must be practiced to appreciate the overall impact on the organization. Departments must be ready to accept the fact that as a result of this review, the way of doing business will be changed radically. Let me share with you, our experience in this area:

    We have extensive experience dealing with related issues and as a company we have been very successful in assisting our clients. However, we have always had a problem when clients ask us "How many people can we get rid of?" This question is asked over and over again and our clients often want an answer to this question even before we start the project. Our answer has always been simple and straightforward - we don't know. It is extremely difficult if not impossible to predict how many positions can be eliminated as a result of this exercise without going through the process. Also, the focus of the methodology we follow is the process not the people.

    Of course, there has to be a significant reduction in manpower because one of the objectives of the project is to identify potential ways of improving services by redesigning business processes to eliminate duplication, redundancy, and inhibitors, and by utilizing information technology capabilities to capture, store, protect, and present the quality of information. Until then we wouldn't know the skill requirements for performing the newly designed processes and services. Therefore, it is premature to anticipate any manpower reduction. We also know that some of the crown corporations and government departments got rid of people without going through the process to determine several other factors. As a result, they ended up either hiring the same people as consultants and paying them three times more or adding them to our already over burdened social systems.

    As a part of the process we categorize all business processes into critical, core, and value-added, determine the cost of these processes; and define critical success factors, inhibitors, and performance measurements. We come up with a net saving and propose an ideal functional structure for supporting desired services and make sure that each business process has at least one service delivery responsibility with at least one client in order to justify its existence. We view service in the connotation of "Virtual Service", assuming that any proposed functional structure is a journey not a destination. this allows the organization to take advantage of the dynamics associated with the proposed functional structure and form an organization which will not only deal with current issues but also be able to develop virtual services, anticipating the future needs of clients. The ideal virtual service is one that is produced instantaneously and customized in response to client demand.

    There are two critical factors for our success: one is the modeling tool, Business Design Facility (BDF) and the other is the technique which we have developed based on the Blueprint for Renewing Government Services Using Information Technology.

    Perhaps there is still hope that departments and agencies will see the need for re-visiting their plans. Otherwise we could all end up saying that the operation was successful but the patient died.

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