Royal Commission on Workers' Compensation

C h a p t e r 8V o l u m e I I

OrganizationalCapacity

ContentsMandate, Mission, Goals and Strategies ............................................... 5

Management and Employee Surveys ................................................... 12

Management Scan (360 degree) .......................................................... 12Employee Survey .................................................................................. 14

Labour Relations ..................................................................................... 18

Accountability for Human Resources Performance ............................. 19

Responsibility of the Governing Body (Panel of Administrators)....... 21Responsibility of the President and Chief Executive Officer .............. 23

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V O L U M E I I

R o y a l C o m m i s s i o n o n W o r k e r s� C o m p e n s a t i o n i n B r i t i s h C o l u m b i a , F i n a l R e p o r t

[Chapter 8]

Organizational Capacity

Mandate, Mission, Goals and StrategiesHuman Resources Division�s mandate is:

to assist the WCB to manage its human resources. Our client ismanagement. Our primary customers are line managers and em-ployees. We also provide service to others, including the Com-pensation Employees� Union, retired employees and externalagencies and individuals.

According to the division�s 1998 Business Plan:

The primary drivers for the products and services provided bythe division are the strategies of the line divisions who are ourprimary customers, but Compensation Employees� Union strate-gies and responses also generate a large amount of volume-drivenactivity. The pace of change has prioritized the delivery of theDivisions services as follows:- Facilitation of the �people� aspects of technological, process and cul-

tural change;- The coordination and administration of corporate learning and man-

agement training programs required to accomplish line strategies andobjectives;

- The development of key corporate human resources programs andpolicy�including but not limited to performance management, attend-ance awareness, succession and career planning, and salary pro-grams�which support corporate objectives;

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O R G A N I Z A T I O N A L C A P A C I T Y

R o y a l C o m m i s s i o n o n W o r k e r s� C o m p e n s a t i o n i n B r i t i s h C o l u m b i a

VOLUME II: CHAPTER 8

- Advice and recommendations to line departments and divisions in allaspects of HR management and corporate HR policy to transfer exper-tise and to assist in the achievement of corporate consistency; and

- Communication of corporate objectives, outcomes and activities to man-agement, employees and employee representatives.

The division also provides direct administrative support to the line divisions inrecruitment, grievance handling, job evaluation, salary and benefits administra-tion, and payroll processing.

A review of the board�s Annual Reports, Human Resources Division�s BusinessPlans and other internal documents indicates that some of the goals of the divi-sion are to:

� create an environment in which employees are motivated and commit-ted to realizing their potential and the board�s goals and in which theboard�s relationship with the Compensation Employees� Union is basedupon mutual respect and understanding;

� to operate effectively in a decentralized human resources model andto deliver human resources products and services on a board-widebasis;

� to coordinate and monitor all WCB training activities and be responsi-ble for training which has impacts across the WCB, (e.g., employeeorientation training, management training, organization culture relatedtraining); and

� to improve the work environment by 50% by the Year 2003.

Also included in the vision of the board for the Year 2000 is the desire for theWorkers� Compensation Board to be �acknowledged as providing a positive workenvironment.� The mission statement, developed in 1996 to define the humanresources support role, can still be found in the board�s 1998 Business Plan:

to provide our customers with valued and effective HR products,services and leadership that ensures the success of the WCB strat-egies.

Prior to 1993, the administration of human resources, with the exception of train-ing, was centralized. In 1994, the board reorganized and implemented a decen-tralized service delivery model under the current vice president of Rehabilitationand Compensation Services Divisions in which human resources became theresponsibility of line managers while corporate human resources personnel de-livered specialized services on board-wide issues. These issues include compen-sation, benefits, and labour relations.

7F I N A L R E P O R T

MANDATE, MISSION, GOALS AND

STRATEGIES

In the 1995 Business Plan, the division positioned itself to:

Provide direct support to line management who are responsibleand accountable for their human resource management decisions.

The division recognized that certain aspects of the work environment challengedthe adoption of this position�the most significant being line management ca-pacity�which would need consistent direction and support because of a �lackof general management skills.�

In its 1996 Business Plan, the division described the Strategic Plan as an oppor-tunity to play a leadership role in communicating and facilitating change in theorganization. However, the division also acknowledged certain weaknesses andthreats to its ability in meeting its goals, including:

� relationship of distrust between WCB and the CEU and difficulty reach-ing satisfactory closure in labour relations matters;

� lack of policies, procedures and consistency in the administration ofhuman resources issues;

� a lack of necessary focused resources because of the time commit-ment required to handle core administrative activities;

� lack of training and development internally and throughout the rest ofthe organization;

� differing views of management and the union on the meaning of con-sultation;

� pace of change;� inadequate resources to meet both core responsibilities and strategic

initiatives; and� expectations on the part of line management and the senior executive

that cultural change will happen quickly.

Since 1996, the division has worked to develop a labour relations strategy, im-prove the board�s health and safety performance, and build human resourcesprograms. The division has also sponsored several organizational developmentinitiatives, such as a Management Scan and Staff Surveys. As a result of aninternal customer survey in 1998, Human Resources Division identified it�s twogreatest weaknesses as:

� the level of corporate management training programs available from the divi-sion (or the divisional training functions); and,

� the involvement of the division in the process of change management.

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In a written response to questions posed by the commission, Human ResourcesDivision stated that the board does not have a formal human resources planningmodel used across all divisions. Instead, divisional managers are responsible foridentifying and planning their human resource requirements based on a reviewof past experiences/trends, and both current and anticipated needs. Human Re-sources Division personnel provide information and support for this process asrequired. Line management�s forecasts are then used to prioritize human re-sources staffing activities and to initiate appropriate actions, ensuring that staffis in place to meet service needs.

Human Resources Division gave Prevention Division�s review and forecast ofoccupational safety officer staffing needs over the next five years as an exampleof �line division planning.� Through this process, Human Resources Division iden-tified potential staffing gaps due to retirement and normal attrition. They thenprioritized recruitment activity for this group and initiated a recruitment plan toaddress this concern. Prevention Division is responsible for implementing theplan.

However, the lack of a corporate human resources planning model contributesto inconsistent service delivery. This was noted in comments to the commissionby some managers who were frustrated with the lack of information and plan-ning. Typically, these managers do not know how the division prioritizes its re-cruitment �queues� and why it takes so long to get staff.

The lack of a board-wide human resources planning model also contributes to asense of �crisis management� which, according to interviews with personnel,permeates the board. Interviewees highlighted a number of examples of theneed for proper human resource planning. For example:

� Directors and untrained staff often cover claims adjudication and vocationalrehabilitation desks during vacation periods. Some desks may go uncovered,critically affecting payments to injured workers and the development andimplementation of return-to-work plans.

� Employer Service Representatives are unable to answer telephone queriesfrom employers because staff shortages and gaps in training have resultedin backlogs in processing requests.

� The number of managers in some areas involved in strategic projects meansthat supervision and ongoing feedback to line staff may be inadequate.

In 1996, the division proposed to develop a new Human Resources InformationSystem, but it was unable to demonstrate the internal rate of return (35%) re-quired by the board for capital systems projects. The standard has still not beenmet. In a written response (September 1998) to questions from the commis-sion, the division confirmed:



STRATEGIES

The current human resource management system is unable toprovide the information required to effectively support the man-agement of the board in making timely business decisions. Muchof the information which would support the strategic initiatives isnot available.

In a decentralized human resources model, such as that used by the Workers�Compensation Board, it is important that each division has adequate human,financial and informational resources to carry out planning responsibilities. As-signing, or temporarily seconding, human resources personnel to a particularprogram area may not be sufficient to meet ongoing planning and developmentneeds.

Like other public sector organizations, the board needs specific human resourcesstrategies that consistently and fairly address the issues raised by a changingworkforce, both internal and external to the board. An added challenge for theboard is that it is in the midst of redesigning its key decision-making roles. Inad-equate human resources information and the current lack of a formal humanresources planning model raises serious questions about whether the board isprepared to face these changes.

The new Knowledge, Skills and Abilities (KSA) process implemented by the divi-sion in 1995 is a starting point for compiling an inventory of competencies in keyfunctions. However, the board does not have information on the adequacy ofthe skill base of its current personnel. Nor has the KSA process been imple-mented for managers, many of whom have incomplete or non-existent job de-scriptions. In addition, the commission has found that performance appraisalsare not completed consistently, accurately, or for all levels or groups of employ-ees. There does not appear to be data that would assist in assessing the ad-equacy and effectiveness of existing human resources, or in planning recruit-ment, training and development initiatives. This means that the board is unableto identify the competencies and the related human resources strategies neededto meet current and future requirements.

There are some notable exceptions, such as the Information Services Division(ISD), which commits to �continuous professional development and leadershipin technological intervention, based on the philosophy of continuous improve-ment and to understand that people make technology work.� Recognizing theavailability of skilled personnel as a critical success factor, the division has adedicated �Resource Planning Specialist� to plan for its human resource needs.Other ISD strategies include:

� specialized recruitment initiatives (e.g., job fairs, extended 30 day-postings,an employee referral program);

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� a formalized mentoring program, performance reviews, and �just-in-time train-ing� to develop and monitor the required skills; and

� the development of individual training plans, including records of course at-tendance (cost and duration) and mechanisms to share training activities withstaff via trip reports and e-mail summaries.

The lack of human resources information at almost every other level of the boardis exacerbated by a high level of turnover among managers and the fact thatrelatively few are recruited from the board�s bargaining unit. This practice seemsto result in mistrust in the knowledge, skills and abilities these �insurance peo-ple� or �generic managers� bring to their positions.

The actual and acknowledged competencies managers bring to their positionaffect the quantity and quality of support they can provide staff, as well as howeffectively they monitor performance and provide quality assurance. Staff havecomplained that some of the new managers are not accessible or lack sufficienttechnical knowledge. Other interviewees suggest that their experience withmanagers is variable (�sometimes you get lucky and get a good one, but mostoften calling a manager can be a waste of time.�).

While more training for managers is often identified as a the solution to theseproblems, training is an inadequate substitute for the absence of a formal hu-man resources plan which would ensure not only ongoing training but also in-formed, equitable and consistent recruitment practices. In addition, such a planwould end what the commission has been told is a common practice of �identi-fying��without competitions�external candidates for positions.

Human Resources Division has already identified formal human resources plan-ning as a priority and claims that it is in the process of developing corporatestrategies and resources to support implementation of a formal board-wide plan-ning model. However, as of the fall of this year, the commission has seen noindication that any activities beyond a statement of intent have taken place.

Therefore, the commission recommends that:

203. the Workers� Compensation Board implement a corpo-rate human resources planning model.

There does appear to be renewed interest in human resources managementand internal capacity at the board. Some examples are the Corporate TrainingStrategy and various initiatives in the new collective agreement (e.g., joint coun-cil on training and development, and the employment systems review). How-



STRATEGIES

ever, it is still not clear to the commission that the board�s current overall ap-proach to human resources management is appropriate. While the president/CEO has advised the commission that he intends to slow down the transforma-tion strategy, the responsibility for strategic human resources is still with linedivisions�in essence, reaffirming Human Resources Division�s supporting role.

The strengths of this decentralized model include the use of specialist corpo-rate personnel and the flexibility it provides line management in accommodat-ing diverse program needs. While it is unclear that these positive aspects are infact real�as noted above, line managers have expressed frustration with thelack of information and planning support�its weaknesses undoubtedly include:

� a duplication of effort and resources in some areas;

� a lack of corporate consistency, resulting from differences in the philosophyand resources of the various divisions; and

� inadequate cross-functional strategic coordination and planning.

These weaknesses provide a direct challenge to the division�s ability to reachits goals, a challenge recognized in numerous submissions to the commission.For example, the BC Federation of Labour urged the commission to recom-mend that the board prepare a policy on training of board staff and to focus onincreased competency in all areas, including the need for curriculum, as well asboth initial and continuing education.

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Management and Employee SurveysHuman Resources Division has implemented a number of initiatives to supportthe board�s Strategic Plan. These began in November 1996 with a ManagementScan, known as a 360 degree survey, designed to measure how managers feltabout their jobs. This was followed in November 1997 by an Employee Survey.

MANAGEMENT SCAN (360 DEGREE)

The Management Scan, conducted by an external consulting group, used a five-point rating scale to determine how managers felt about their jobs, as well as ascale rating each survey item in terms of �Better,� �Same,� or �Worse� than ayear earlier. The following charts outline those items receiving the highest andlowest scores.

Management Scan (1996)

Mean Standard % Better % Same % WorseScore Deviation

HIGHEST SCORESMy job is challenging. 4.6 .66 56% 37% 7%I generally support the directionsof our strategic plan. 4.2 .79 61% 31% 8%I feel like I am accomplishingsomething important at theWorkers� Compensation Board. 4.0 .93 39% 48% 13%My work has a positive impacton corporate results. 4.0 .91 41% 50% 9%I enjoy my job. 3.9 1.1 40% 34% 26%I am trusted to take responsibility for achieving results. 3.9 .96 28% 54% 18%


LOWEST SCORESI can find the time to step awayfrom my own tasks and managemy area of responsibility. 2.5 1.1 10% 46% 44%I receive meaningful personalrecognition for my contributionsand extra effort. 2.6 1.3 15% 48% 37%I have sufficient resourcesto do my job. 2.6 1.3 12% 44% 44%My workload is generallyreasonable. 2.7 1.3 13% 40% 47%Managers at WCB generallysupport each other. 2.8 1.0 15% 64% 21%I am usually consulted aboutdecisions that will affect my job. 2.9 1.2 13% 57% 30%


MANAGEMENT AND EMPLOYEE

SURVEYS


I am well informed about changesand events taking place in theWorkers� Compensation Board. 3.0 1.2 25% 52% 23%There are opportunities for me tolearn and develop my skills at theWorkers� Compensation Board. 3.5 1.2 20% 59% 21%I can realistically achieve the workgoals I have been assigned. 3.1 1.2 13% 49% 38%I would recommend the WCB toother people as a good place towork. 3.5 1.1 25% 62% 13%

These scores indicate the need for considerable improvement. Even in the high-est-scoring items, the combined percentages of �Same� and �Worse� were, inmost cases, over 60%.

Managers were given the opportunity to offer comments. The following exam-ples were edited by the consultants to protect confidentiality:

� Most managers are so overworked and under-resourced that they donot have time to build a team or to give considered thought to theirdecision making. In many respects, this organization runs in spite ofit�s management.

� Every manager is burned out by the amount of change. The end re-sult of all the change is unclear.

� Generally, managers at WCB are treated as a �disposable commod-ity.�

� There is no protection for management in terms of job, regardless ofmerit, seniority and contribution to WCB.

� This is a big reason for morale problems�inequity among managers�pay for doing the same kind of work.

� I haven�t had a performance appraisal in three years�no feedback�yet I give all of my 23 employees one every year.

� Senior management does not have, nor does not share, a career de-velopment plan for managers.

� Turnover rate at the VP and CEO level are detrimental to long rangeplanning.

According to the consultants:

Overall WCB management employees see their own jobs as chal-lenging and as making a positive difference to WCB results. Mostgenerally support the direction of the WCB strategic plan. Man-agement employees were fairly positive about the degree to

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which they enjoyed their jobs. However, a number did not feel aspositively about their jobs as they did in the past.

As they reiterated in later verbal comments, WCB managementemployees find it difficult to find time to actually manage theirarea. Too much time, they say, must be devoted to tasks. Thistrend is getting worse.

Many managers do not feel recognized for their work. Neither dothey feel sufficiently consulted about the decisions that affectthem. Managers, they report, continue to offer little support toeach other.

They do not feel they have the resources they need to do theirjobs. The workload is seen as becoming increasingly unreason-able.

Notwithstanding the value of �customer surveys,� including this type of man-agement scan, senior executive committee minutes from May 1998 indicate somequestion over the performance measurement value of the survey instrumentratings:

The 360 instrument ratings and question composition were dis-cussed and analyzed. It was pointed out that the instrument is areality check on behavior rather than a measurement of perform-ance.

EMPLOYEE SURVEY

In September 1997, the board initiated its first Employee Survey (conducted bythe same consultants). Like the Management Scan, the results were not encour-aging. According to the consulting group:

The majority of board employees do not fully understand and support the direc-tion of the WCB, are not well informed about the changes, and are not consultedabout the decisions that affect them.

Samples of the questions and the scores (1 = low, 5 = high) are presented in thefollowing table:



SURVEYS

Employee Survey

WCB HR/ Corp. Computer Prevent. Rehab. FinanceAverage Planning Services (248) (209) (232)(1655) (86) (362)*

HIGHEST SCORESMy job is challenging. 4.02 s 3.85 4.37 3.97 3.84I would be happy to bestill working for the WCBin three years. 3.95 4.31 3.82 4.21 s 3.91I�m glad I took my job andwould take it again. 3.93 4.22 3.64 4.30 s 3.87I am trusted to takeresponsibility for achievingresults. 3.92 4.12 s 4.14 4.00 sI enjoy my job. 3.89 4.02 s 4.29 3.83 3.80

WCB HR/ Corp. Computer Prevent. Rehab. FinanceAverage Planning Services (248) (209) (232)(1655) (86) (362)*

LOWEST SCORESThe WCB executive havea clear vision for the future. 2.66 2.81 s 2.65 s 2.63I am well informed aboutchanges and events takingplace in the WCB. 2.63 2.93 s 2.79 2.48 2.52I am usually consulted aboutdecisions that will affectmy job. 2.49 s 2.11 2.58 2.41 2.71I receive meaningfulpersonal recognition formy contributions andextra efforts. 2.45 2.67 2.04 2.63 2.39 2.44I have a clear picture ofwhere my division isheaded. 2.39 2.64 2.21 2.69 2.12 2.41* Lower Mainland onlys item was not in highest/lowest 5 scores for division

A sample of the comments made in the survey offers further insight into em-ployee�s responses:

� Management- Frequent changes in management are disrupting and disconcert-

ing.- Managers should be sufficiently trained before taking their posts.- Management should take advantage of the talents, knowledge, and

decision making skills of employees.

� Change- There is too much change happening all at once.

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� WCB Direction- There does not appear to be a clear vision or clear leadership carry-

ing the WCB forward.- The direction is constantly changing�much of this is driven by poli-

tics.- The executive have a clear idea of where the WCB is headed, but is

keeping that information from employees.

� Job Security- Many employees worry about their job futures and fear being moved,

being put on the surplus list, and losing their jobs altogether.

� Workload- Manager support and training needed to meet the new demands are

lacking.- Unmanageable workloads are affecting service.

� Advancement- Too many people are hired from the outside.

� Senior Management- They are out of touch with employee concerns and their work de-

mands.

One of the key influences on organizational culture (and, consequently, a majordriver in the creation of morale problems) is an organization�s internal communi-cation. In order to improve the board�s work environment, the consultant�s madetwo recommendations that spoke directly to communications and could havebeen acted on �in a reasonable time frame with good effect:�

1. Employees need more day-to-day involvement in considering plansand their consequences to them personally through greater systemicinvolvement and personal communication.

2. Increased recognition �should be of the day-to-day variety ... personal,job-relevant, and social ... though it may be supplemented by (more)formal means.�

In responding to the results of the Employee Survey, the then board president,and the vice president of Human Resources Division, acknowledged that manyemployees were unclear of their division�s and the Workers� CompensationBoard�s future direction. According to the vice president:



SURVEYS

These results concern us, and it is our goal to address employ-ee�s lack of certainty in the WCB�s future and perceived lack ofappreciation. Much of this work will begin at the divisional level.

Before 1997 comes to a close, each division of the board willanalyze its divisional employee survey results. Meetings will beconducted to discuss these divisional results with all staff and tobegin developing active plans to improve our work climate.

According to interviewed staff, although the results of the survey were madeavailable, the information was shared and acted on in an inconsistent manner.It is also unclear to interviewees what changes, if any, have resulted from thesurvey. Human resources personnel allocated responsibility to the line divisionsfor sharing the information, but have not provided further support since theresults were released.

Strategy #5 in the 1998 Corporate Business Plan (Core Values and Competen-cies) was created to �develop and cascade a leadership model and philosophybased on agreed to core values and competencies.� Activities related to Hu-man Resources Division�s strategy include:

� improving the results of the Management Scan by developing a new man-agement performance review system;

� implementing a new management training program;

� conducting further surveys of management and staff;

� revising both the management job evaluation plan and salary administrationpractices;

� implementing a career succession planning program; and

� completing the roll-out of a new Safety, Health and Security Program.

The division has demonstrated some progress in implementing a number ofthese initiatives, but could benefit from more ongoing follow-up and evalua-tion. As with other board divisions, the unintended secondary impacts associ-ated with these strategies need to be closely monitored.


204. the board of governors of the Workers� CompensationBoard monitor and evaluate the effectiveness and relevanceof human resources programs and initiatives.

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Labour RelationsLabour relations provide another barometer of the effectiveness of human re-sources initiatives.

During the board�s 1996 strategic planning process, the environment of mistrustbetween management and union was identified as a significant weakness. Toaddress this issue and to support the implementation of the Strategic Plan, Hu-man Resources Division established a Labour Relations Strategy. This is consist-ent with the corporate goal of creating an environment in which �the board�srelationship with the Compensation Employees� Union is based upon mutualrespect and understanding.�

A key element of the labour relations strategy was the establishment of corpo-rate and divisional Technological Change Committees. These committees ap-pear to have been a useful forum for discussing and resolving issues related toimplementing the Strategic Plan. Board personnel interviewed by the commis-sion credited these committees with identifying issues and fostering a moreconsistent interpretation of the collective agreement.

Implementing the Labour Relations Strategy, which included providing labourrelations training to line managers, seems to have had a positive effect (the com-mission did not specifically evaluate the outcomes of the strategy). For example,Compensation Employees� Union�s 1997 Annual Report acknowledges a sharpdecline in grievances and the positive effect of arbitration. The board�s Key Per-formance Indicators reports also point out that grievances are down significantly.Other information provided to the commission suggests that the cost of settlinggrievances is also decreasing.

Number of Grievances (1995-1998)

1995 1996 1997 1998estGrievances (filed) 255 224 102 130Grievances per FTE 0.12 0.11 0.05 0.06Grievances (settled) 165 82 69 19(source: June 1998 KPI)

This and other information compiled by the commission suggests that therehave been significant improvements in this area.

It should be noted, however, that of the grievances filed, 66% involve the recruit-ment and selection process�a human resources activity.


ACCOUNTABILITY FOR HUMAN

RESOURCES PERFORMANCE

Accountability for Human ResourcesPerformanceSection 82 of the Workers Compensation Act authorizes the board�s gov-erningbody to change the structure, programs and reporting within the board.

82. The governors shall approve and superintend the policiesand direction of the board, � [including](b)(i) establish and give direction to committees �

The current Executive Committee of the Administration (the Senior ExecutiveCommittee, or SEC) consists of the president and CEO, an executive assistant,the divisional vice presidents and invited guests (this structure is a holdoverfrom the General Manager structure put in place in the 1980s). Over the years,the number of members on the committee has varied, from a high of seven in1993 to the current four members. It was not until 1992 that the head of theboard�s Human Resources became a divisional vice president.

In July 1993, after the termination of the board�s first president and CEO, theboard of governors recognized the need for a number of structural changes atthe senior executive level to:

� further advance integration into the WCB of the governance structurethat became effective June 3, 1991;

� more clearly define the role of the president/CEO and senior execu-tive;

� foster greater team building and confidence between the governorsand senior executive; and

� maintain the values of openness, accountability, public consultationand community involvement in policy and other high level decisionmaking.

The proposal outlined the following list of issues that exemplified the need forchange:

� the need for more efficient and effective use of administrative re-sources;

� demonstrated prevention success;� outcome-oriented, effective and evaluated Medical and Vocational re-

habilitation;� increased service levels in adjudication;� improvements in assessment policy;� implementation of new legislation expanding coverage;� implementation of new and revised health and safety regulations;� Freedom of Information and Protection of Privacy legislation;

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� public review of survivor benefits;� an action plan to become and remain fully funded;� ongoing safety and health regulation review;� updated occupational disease policy;� revised average earnings policy;� comprehensive review of pension awards and policy;� improved policy development and public consultation; and� renewed human resources and labour relations policies, activities and

relationships.

The proposal further stated that:

The present organizational structure and selected collegial styleof management requires that all these issues be discussed at theExecutive Committee level. This has resulted in a bottleneck ,,,the current situation is fraught with a tension that is unhealthy forthe organization � potentially demoralizing for dedicated seniormanagement seeking to make positive change and employeessearching for the welcomed positive change.

Among the specific problems identified with the structure of the executive com-mittee were the following:

� While the Executive Committee operates on a collegial basis, there isan imbalance in accountability, capacity and authority amongst its mem-bers.

� The present structure places all business areas on an equal footing.� The intended and proper boundary between the Governors and man-

agement and operational administration is excessively blurred and con-fusing to WCB employees and the community.

In evaluating structural options, the governors concluded that �while no seniormanagement structure may be ideal, the optimal structure should balance theneed for more critical evaluation and planned change with the ideal of seniorexecutive/management empowerment.� With two exceptions, they proposedand implemented the current structure. The two exceptions are:

� the establishment of Policy and Regulation Development Bureau, now report-ing to the governing body but formerly under the vice president Human Re-sources Corporate Planning; and

� the merging of Rehabilitation and Compensation Services Division into onedivision.




According to the proposal:

The SEC, including the President/CEO, would be responsible toensure uniform treatment of common issues across the Boardsuch as application of the management philosophy, managementdevelopment and succession and labour relations approaches.It would be responsible for establishing inter divisional linkagesin both service delivery and resource utilization and allocation. Afirst priority would be to define and articulate for others its rolesand responsibilities.

While the current administration has made progress in advancing a manage-ment philosophy, further work is required. The governors acknowledged that intheir new structure the position of president and CEO would be slightly dimin-ished, but hoped that the structure would �signal to internal audiences thatparadigm rather than incremental change is the objective � with a more fo-cused structure that provides the Governors, WCB employees and the commu-nity with a more responsive senior executive.�

RESPONSIBILITY OF THE GOVERNING BODY (PANEL OFADMINISTRATORS)

While performance issues relating to human resources are primarily the con-cern of administration (e.g., the president and CEO and vice presidents), it isthe governing body of the board that assures the continuity of corporate lead-ership, the integration of divisional strategies, and maintenance of internal ac-countability. These responsibilities are defined in Section 82 of the WorkersCompensation Act, and also refined in the panel of administrators� Human Re-sources and Compensation Committee�s Terms of Reference. According topolicy, membership in the committee consists of three panel members, includ-ing the chair, the president and CEO. In practice, the vice president of HumanResources Division is also a member.

The purpose of this committee is to allow the panel to examine significantissues related to human resources and employee compensation, and to assistin ensuring that:

� human resources management and employee compensation policies:- are consistent with the goals of the organization and the practices

of other comparable crown agencies; and- meet the test of public scrutiny; and

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� the Panel has the information necessary to make appropriate decisionswith respect to human resources management and employee com-pensation issues including ensuring that the proper analysis has beendone before human resources management and compensation issuesare forwarded to the Panel for approval.

The committee is also responsible for:

� reviewing Human Resources Division�s annual Business Plan;� reviewing compensation plans, salary increases and benefit plan struc-

tures for management and exempt employees, including making rec-ommendations to the Panel for its approval;

� reviewing the total compensation proposals for each member of theexecutive management;

� reviewing the criteria and the signing authority under which exceptionto policy may be made with respect to an individual employee�s cover-age under the terms of the Workers� Compensation Board�s Superan-nuation Plan, or any other employee benefit plan;

� reviewing all policies and guidelines pertaining to the payment or reim-bursement of expenses to executive management, exempt supportstaff, and, to the extent that such expenses are not granted under aCollective Agreement, bargaining unit employees. (Policies includeitems such as business travel, expense reimbursement, relocation as-sistance and executive vehicles);

� reviewing the organizational structure of the board on a periodic basis;� establishing annual performance agreements with directly reporting

employees (this currently includes the president and CEO, chief ap-peal commissioner, director general of the Policy Bureau, and the reg-istrar of the Medical Review Panel);

� reviewing annually the board�s training and development plan;� reviewing annually the president�s succession plans for executive man-

agement;� reviewing all appointments at the senior executive level before they

are made;� reviewing the mandate within which the board negotiates an agree-

ment with bargaining unit staff; and� receiving regular reports on progress during negotiations.

New agenda items added in 1998 for the committee include the review of theboard�s new gainsharing and equity plans.




There are a number of challenges to the committee carrying out these respon-sibilities. These range from the quality of information provided to the panel ofadministrators to the fact that:

� the part-time nature of panel appointments, and the high turnover rates un-dermines the stability and certainty of leadership which are essential to ef-fective governance;

� the board appears to face a number of challenges in recruiting executives;

� there are no comprehensive training and development plans for the panel toreview;

� the president�s succession planning process for senior executive may haveonly been initiated in 1998; and

� there are no Terms of Reference for senior executive committee or the divi-sional vice presidents; therefore, it is difficult to establish upon what criteriaexecutive performance is monitored.

RESPONSIBILITY OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER

Section 82(a)(i) of the Workers Compensation Act authorizes the governing bodyof the board to select and define the functions of the president. Currently, thepresident is accountable to the panel of administrators for planning, organizing,directing and controlling the overall operation of the board in accordance withestablished policies, standards, and objectives. The following excerpts fromthe Terms of Reference for the president and CEO (found in the panel of admin-istrators� Policy and Procedures Manual) outline the position�s specific humanresource responsibilities. These are to:

� develop an organizational structure that is in keeping with the values and thestrategic directions of the organization;

� effectively, lead, organize and manage staff and develop an effective func-tioning executive team;

� set benchmarks to measure vice presidents� performance;

� consult with the Panel of Administrators relative to decisions on the selec-tion, promotion, use and retention of executive staff;

� develop and maintain an annual board approved plan for the developmentand succession of senior management; and,

� lead the re-engineering and culture change of the organization with the ob-jective of delivering services that are aligned to customer and stakeholderexpectations.

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Clearly, the president and CEO sets the executive agenda and leadership phi-losophy. In so doing, the president is responsible for establishing human re-sources strategy and ensuring that divisional management aligns with corporatestrategy. The president�s leadership of the executive governs internal account-ability.

In this sense, the president�s most important administrative committee is thesenior executive committee. As noted above, the senior executive committeedoes not have Terms of Reference. Nor does it have any procedural by-laws. Itmeets monthly to discuss a variety of strategic and administrative issues thatare raised through the line divisions, review proposals and forward recommen-dations to the panel. The current president and CEO has extensive experiencewith, and knowledge of, the senior executive committee from his years on thecommittee as vice president, Prevention Division.

According to interviews conducted by the commission, and a review of meetingminutes, the members of senior executive committee rarely vote on divisionalproposals, relying instead on a consensus model for decision-making (the onlyexample the commission found of a vice president vetoing initiatives was withrespect to acquiring lands or buildings). In fact, current senior executive commit-tee members have suggested in interviews with the commission that they haveworked very hard to build a strong team and present a coherent strategy andthat they see their role as supporting each other; only in rare cases do individualvice presidents express strong reservations with respect to another division�sstrategic initiatives.

However, despite this team rhetoric, individual interviews with the vice presi-dents, managers and staff revealed significant differences in leadership styleand management philosophy�including the approach to public consultation,change management, research, project management and human resources�among senior executive committee members. (It should be noted that althoughthe commission reviewed an extensive amount of material pertaining to the sen-ior executive committee, it is unaware of any evaluation of senior executive com-mittee�s work. While the review of senior executive committee�s minutes sug-gests that performance measurement may be applied to the activity of the vicepresidents, further information (e.g., performance agreements, personnel files)has not been reviewed by the commission. For information on the relationship ofthe president and CEO to the governing body of the board, see Volume One:Governance and Accountability.

While the roots of current management structure may extend back to changesin the early part of this decade, the board�s 1996 Strategic Plan provides a goodexample of the problems inherent in the structure. The Plan, developed by sen-




ior executive committee and approved by the panel of administrators, downplaysthe role of human resources in the board�s overall transformation strategy. In arecord of decision, the panel resolved, upon the committee�s recommendation,to downgrade �from official strategic and project status to ongoing manage-ment practice and responsibility� the human resources projects identified inearlier versions of the Plan.

As a result, the final version of the Plan, which rolled up human resources is-sues under the heading �Administrative Effectiveness,� no longer containedthe following specific projects (these projects are listed in the Appendix to theRecord of Decisions taken at the panel�s meeting�March 14, 1996):

Communicate to and involve staff and restructure manage-ment decision-makingIn order for the various strategic initiatives to succeed, there needsto be wide support among management and staff. A commit-ment will be made to communicate to and involve people in de-velopment and evolution of the strategies. Formal business plan-ning prioritizing is required of all departments. All significant de-cisions require business case analysis and documentation. Re-turn on investment criteria are applied to all major decisions in-volving risk.

Establish management and employee support guidelines.Management and employees expect to have:� clear leadership and regular and open communication;� clear and achievable performance expectations;� relevant and timely feedback, reward and recognition;� satisfaction from the work environment.

Evolve the management culture.The responsibility for evolving the culture of the organization willbe focused in the management team. Each manager will be ex-pected to coach and support the growth of a culture which isresults focused, service driven, market oriented, cost effectiveand prudent. The use of cross-functional teams to evolve andimplement strategic initiatives will develop more effective strat-egy and an improved sense of team.

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Re-deploy staff to priority strategies and retrain staffThe new strategies will require substantial resources from theorganization.� The WCB will invest in the productive capability ofits workforce through identification of the training and re-trainingneeds of the organization. Succession planning and leadershipreadiness will be established.

Assess training and development needsIn order to meet the requirements of the strategy a knowledge-able, skilled and capable management team is required. Trainingneeds will be assessed and delivery programs designed oradopted.

The drafts of the 1998 document, Advancing the Plan: A Review and Restate-ment of the WCB Strategic Plan, reviewed by the commission, acknowledge theneed to transform the board from a group of divisional silos to integrated serv-ices. However, the board restates that it is relying on change occurring because�it makes good business sense� and that it will be �simply part of day-to-dayprogram management.�

As of early November 1998, the plan still does not recognize the essential role ofhuman resources in implementing the board�s strategies and in resolving theservice and leadership challenges it faces. It does not address how human re-sources will be supported through clear management objectives, realistic work-loads and job descriptions. Nor does it describe adequate supervision and per-formance monitoring, relevant and effective training and development opportu-nities, or improved internal communication and involvement. Comprehensivecorporate human resource strategies are still missing.

Improved performance, the keystone of the board�s �transformation,� is depend-ent, in large part, on organizational capacity. Organizational capacity is, in turn,largely dependent on the quality of human resources management. However, ina system where internal accountability for human resources is diffuse, the vicepresident and the division appear to be largely reactive, responding to the activi-ties and decisions of divisional vice presidents with clearer mandates and linesof authority.

When questioned by the commission about the pressures the board�s transfor-mation strategy has on human resources and internal capacity, the current vicepresident acknowledged that, although the senior executive team were awareof these pressures, they have not decided to change their approach.




Based on our research, interviews and presentations by board members, thecommission is of the view that the current management structure is not condu-cive to an integrated organizational model; it sustains, rather than removes, thetraditionally entrenched divisional �silos� that have plagued corporate planningfor decades. These silos are further supported by the absence of formal Termsof Reference for the senior executive committee.

The president affects corporate internal accountability by organizing and man-aging the executive team, and leading the re-engineering and culture change ofthe organization. These responsibilities are difficult to carry out in the absenceof Terms of Reference for both the senior executive committee and divisionalvice presidents.

Given senior executive committee�s apparent diversity of opinion and approach,its lack of Terms of Reference and procedural by-laws, and the diffusion ofresponsibility for corporate human resources throughout the organization, it isunlikely the board will achieve many of its stated human resource goals.

Terms of Reference, if properly drafted, could go a long way toward balancingdecision-making authority on the senior executive committee. While the presi-dent guides the executive, the current assignment of responsibility to divisionalmanagement makes it difficult for the board to implement a more corporate,integrated approach�one that tempers the initiatives and ambitions of eachdivision with an appreciation of the organization�s most valuable resource, itsemployees.

The following recommendation is based on the Canadian Comprehensive Au-diting Foundation�s (CCAF) principles set out in In Search of Effective Govern-ance (1994):


205. the board of governors of the Workers� CompensationBoard develop Terms of Reference for the senior executivecommittee to promote an administration that:

a) understands its purpose and whose interests it repre-sents;

b) is comprised of people with the necessary knowledge,abilities and commitment to fulfill their responsibilities;

c) understands the objectives and strategies of the organiza-tion it administers;

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d) understands what constitutes reasonable information forgood administration and once informed, is prepared to actto ensure that the organization�s objectives are met andthat performance is satisfactory; and

e) fulfills their accountability obligations to the governingbody by reporting on their effectiveness;

206. the Terms of Reference for the senior executive commit-tee define:

a) the responsibilities, roles and duties of the president andvice presidents;

b) the operational management structure;

c) management systems and practices required for effectiveadministration; and

d) performance reporting; and that

207. the board of governors of the Workers� CompensationBoard:

a) annually review and report on the extent to which:

i) human resources management and employee compen-sation policies are consistent with the goals of the organi-zation and the practices of other comparable Crown Agen-cies; and

ii) human resources management and employee compen-sation meet the test of public scrutiny; and

including information on the data used to develop the reportand the methodology used in its analysis of i) and ii) above;

b) establish annual performance agreements with all directlyreporting employees;

c) annually review and report on the board�s training anddevelopment plan;

d) annually review and report on the president�s successionplans for executive management; and

e) review all appointments at the senior executive levelbefore they are made.

Royal Commission on Workers' Compensation

Documents

Transcript of Royal Commission on Workers' Compensation