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Final Report – November 3, 2003 Organization of American States Management Study of the Operations of the General Secretariat Part II – Detailed Observations.

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Presentation on theme: "Final Report – November 3, 2003 Organization of American States Management Study of the Operations of the General Secretariat Part II – Detailed Observations."— Presentation transcript:

1 Final Report – November 3, 2003 Organization of American States Management Study of the Operations of the General Secretariat Part II – Detailed Observations and Options November 3, 2003 Final Report

2 Final Report – November 3, 2003 Table of Contents Part I – Executive Summary Part II – Detailed Observations and Options Project Overview Overall Option Analysis Findings, Observations, and Options Organizational Structure Business Processes Human Capital Technology Part III – Appendices Appendix A: Project Timeline Appendix B: Current OAS Organizational Structure Appendix C: Member State Delegation Meetings Appendix D: Organizational Unit Meetings Appendix E: Facilitated Session Participants Appendix F: Current OAS Grade and Salary Structure and Description of United Nations Compensation System Appendix G: OAS Personnel Register (June 2003) with detailed OAS demographics Appendix H: OAS Performance Appraisal Form Appendix I: Detailed Deloitte Research Findings Related to OAS Human Capital Issues Appendix J: Series of Charts Reflecting Deloitte Analyses of OAS Human Capital Issues 2

3 Final Report – November 3, 2003 The management study is an analysis of the General Secretariat's organizational framework and personnel structure being performed by an independent organization. The objective of the study is to improve the effectiveness and control the costs of the General Secretariat. The study is being conducted on behalf of the Member States and the Permanent Council, who are the primary clients on the project. The project includes four elements: Assess the current organizational framework Analyze the current workloads, personnel structure, and processes Identify areas for reallocation of resources Identify strategies to increase effectiveness and efficiency, and enable the correct composition of staff to meet the organizational mandates in a cost- effective and efficient manner - Draft Report by September 16, 2003 (Originally November 30, 2003) - Final Report by September 30, 2003 (Originally March 1, 2004) - Presentations to the General Secretariat, the Permanent Council, and the Committee on Administrative Matters from October 2003 – May 2004 Project Overview - Scope 3

4 Final Report – November 3, 2003 Develop a clear understanding of the organizations mission, mandates, and strategic objectives. Conduct an activity-based analysis to develop a detailed understanding of current business processes, organizational structure, and resource allocations (people and expenditures). Analyze how the organization is currently using technology to enable its processes and resources. Develop an optimal "model" for processes, technology, organizational structure, and resource allocations to achieve short-term and long-term objectives. Compare the current state against the model and prepare a series of findings and options for the organization to consider with regard to: streamlining business processes leveraging technology redesigning the organizational structure to improve efficiency reallocating employees and other resources -- including outsourcing where appropriate new creative approaches to reduce/control operating costs (e.g., employee benefit costs) Project Overview - Approach 4

5 Final Report – November 3, 2003 Project Overview – Data Collection Met with 14 Member State delegations to discuss project objectives and expectations (see Appendix C for participants) Solicited information from more than 400 personnel across the General Secretariat: –Interviewed 78 senior directors, managers, and staff in 54 organizational units (see Appendix D for a list of interviewees) –Conducted 12 facilitated sessions with 72 staff and managers in the Secretariat for Management (see Appendix E for a list of attendees) –Administered an electronic survey of 250 employees in the Technical Areas and IACD –Administered an electronic survey of 54 Directors and Technical Assistants in 28 Offices in the Member States Collected and reviewed a wide range of OAS/GS materials, e.g., financial statements, budgets, policies and procedures, staff allocations, etc. Developed database of staffing information and historical financial data Collected comparative benchmark data Collected information and conducted interviews with representatives of the United Nations, PAHO, World Bank, IDB, and U.S. Government Attended various Permanent Council and CAAP meetings Attended the 2003 General Assembly Interviewed donor and permanent observer state 5

6 Final Report – November 3, 2003 Overall Option Analysis Introduction Summary of Options Option Evaluation Framework Option Dependencies Transition Management Office Change Management and Communication Strategy 6

7 Final Report – November 3, 2003 Introduction Embarking on a major organizational and operational transformation should be viewed as a journey, not a series of quick fixes. The options described in this document are not intended to be viewed independently, but rather as interrelated and building upon one another. Many of the options presented in this document may take months or even years to implement and realize benefits. This section was developed to promote an overall picture of the options and their implementation, including: A summary description of all 22 options. A high-level evaluation of all of the options with regard to cost and benefit, ease of implementation, and time to implement. A description of the potential linkages and dependencies of the options over the duration of the transition. A description of a transition management office to be used to manage and coordinate the overall transition effort. A listing of change management and communication strategy steps to assist in transitioning the organization and implementing changes. 7

8 Final Report – November 3, 2003 Summary of Options: Organizational Structure Focus AreaSub AreaOptionDescription Organizational Structure Strategic PlanningImplement Strategic Planning Framework Implement a strategic planning process to develop a strategic framework including strategic objectives and vision. The framework would enable the OAS/GS to become more focused and align resources with objectives as well as provide direction for decision-making. Overall Organizational Structure Redesign Organization Structure Design and implement an organization structure that aligns business areas performing similar functions. With the creation of a more streamlined organization, the GS could realize a reduction in duplicative activities, increased efficiencies, and better alignment with strategic objectives. Chief Operating Officer (COO) Establish Chief Operating Officer Position Institute an executive-level COO to coordinate all of the activities of the GS and report directly to the Secretary General. The COO would provide leadership and facilitate the coordination of activities and resource sharing among units within the GS and not have a formal political role. Offices of the General Secretariat in the Member States (OGSMS) Implement Regionalized OGSMS Initiate a regionalization strategy for the OGSMS that would centralize field office operations, increase effectiveness of the offices, and decrease the level of resources required to maintain OAS presence throughout the hemisphere. If a presence is required in a member state without a direct OAS presence, options can be explored for establishing a General Secretariat Office colocated with other multilateral organizations in the country. 8

9 Final Report – November 3, 2003 Summary of Options: Business Processes Focus AreaSub AreaOptionsDescription Business Processes BudgetingImplement Results- Based Budgeting Implement a results-based budgeting system to more effectively align resources with the strategic objectives and mandates of the OAS, resulting in a shift in focus from inputs and processes to results and outcomes. This process would include specific funds. Donor Relations and Administration Implement Donor Relations Function Centralize the external fundraising function to coordinate the solicitation, negotiation, administration, and reporting of specific fund projects. Centralization would decrease redundancies, increase economies of scale, and improve customer service to the donor community. Specific Fund Administration Implement Cost Management and Recovery Plan Implement a cost recovery plan for specific fund projects to recover the full direct and indirect administrative costs they generate. The current strain on Regular Fund resources to support the growing volume of specific fund projects could be managed and reduced. QuotasAdopt Formal Quota Assessment Policy Agree upon a formal quota policy based on a set of quantifiable metrics. As a result, Member State quotas could be determined more consistently. Mandate Development and Implementation Implement Strategic Mandate Framework Based on the strategic plan, adopt and implement a mandate development and implementation framework that ties mandates directly to the desired results of the OAS. Consequently, the mandate tracking process would be more accountable and quantifiable. Procure-to-PayStreamline Procure- to-Pay Process Implement procurement and payment improvements such as Procurement Cards, automatic payments, and electronic fund transfers to gain efficiencies. Doing so would allow resources to focus on more strategic initiatives such as strategic sourcing and cash management, instead of transaction processing. 9

10 Final Report – November 3, 2003 Summary of Options: Human Capital Focus AreaSub AreaOptionsDescription Human CapitalCompensationContinue to use the United Nations compensation system. While salary increases have been unexpectedly high in some years, the OAS' overall salary levels are comparable and competitive with the Washington market. As market competitiveness is a primary guiding principle for any compensation system, there is no reason to change from the UN system unless salary levels begin to exceed the local market. However, OAS should work closely with the UN to more accurately project future salary and post-adjustment increases for OAS budgeting purposes. CompensationLink staff compensation more to performance than to tenure. The current OAS compensation system tends to reward longevity more than performance. Salary increases and step increases are given to employees with little or no linkage to performance appraisal. To the extent possible within the UN system, OAS should link salary increases to staff performance. CompensationConduct an audit to ensure that OAS post classifications are consistent with the UN. While OAS has used the UN classification system for several years, there appears to be little coordination between OAS and PAHO (which also uses UN parity) with regard to the classification of comparable positions. An audit of OAS positions with PAHO will ensure that the UN classification standards are being applied appropriately. BenefitsOAS should maintain its current benefit levels, but consider options to manage future benefit costs. Overall, the OAS should strive to maintain its current benefit levels as they are consistent with the competitive market in the Washington area. However, there are a number of options noted in our report the OAS should consider to constrain future benefit costs. 10

11 Final Report – November 3, 2003 Summary of Options: Human Capital Focus AreaSub AreaOptionsDescription Human Capital (Cont.) Performance Management Improve the performance management system to use it as a tool for strategic management. Create a performance management system that (1) identifies each managers and employee's most critical job requirements, (2) links those requirements to the organization's strategic priorities, and (3) holds managers and employees accountable for meeting their requirements and objectives. The completed appraisals should be used as a key factor in evaluating staff for promotion, salary increases, reassignments, and potential disciplinary action. Unsatisfactory performers should be identified, given an opportunity to improve, and removed from the organization if they do not improve to a satisfactory level. Training and Development Implement a management training program. Effective management is a primary driver of productivity and organizational success. Many OAS/GS managers and supervisors possess the technical skills needed to perform their duties, but lack training in critical areas of project management, financial management, budgeting, and managing human resources. Training and Development Offer targeted training and development opportunities to enhance staff competencies. OAS/GS currently has very few opportunities available to staff for developmental assignments and outside training. The organization needs to create a systematic program for enhancing staff competencies, including needs assessment, in-house training, internet-based e-learning, university training, and other sources – depending on the nature of the need. Career Advancement Facilitate career advancement.Explore options to more clearly define career paths and promotion opportunities for high-performing staff. Career paths will improve the organizations ability to attract and retain its best performers. Types of Appointments The OAS should continue its current practice of using term contract appointments to meet its human capital needs. The current use of term contracts is cost effective and is serving the OAS interests well. The Organizations interests are served by using multiple appointments, including CPRs, short-term appointments, and long-term appointments. The decision to phase out Career appointments is appropriate. 11

12 Final Report – November 3, 2003 Summary of Options: Technology Focus AreaSub AreaOptionsDescription TechnologyIT OrganizationReorganize IT FunctionsRedesign the IT function to incorporate all technology-related business areas under a Director of IT. In addition, consolidate database and application support of the Oracle system to standardize processes, coordinate and streamline activities, and to focus on increased delivery and customer satisfaction. Reporting and Data Integrity Streamline Reporting and Data Integrity Implement procedures to improve the timeliness and accuracy of the Oracle reporting process. Better coordination among the stakeholders of report development as well as documented procedures for data reconciliation would improve the quality of reports as well as reduce distrust of the data. Automation and Employee Self Services Implement Automation and Employee Self Services Implement Oracle self services and other automation functions to lower costs and increase efficiencies. 12

13 Final Report – November 3, 2003 Option Evaluation Framework HighModerateLow Implementation Cost This criteria measures the financial impact associated with implementing the option. A full ball ( ) is considered expensive to implement i.e., a high financial cost, and an empty ball ( ) represents a low financial cost to the Organization. Difficulty to Implement This criteria measures the difficulty to implement the option, defined by a combination of cost, effort, and intangible factors, such as political or cultural resistance. A full ball ( ) is considered difficult to implement, and an empty ball ( ) is considered relatively easy to implement. Time to Implement This criteria measures the amount of time required to implement the option. A full ball ( ) is considered a year or longer to fully implement, and an empty ball ( ) is considered something that could be implemented relatively quickly. 13 Potential Benefit This criteria indicates the level of potential benefit the OAS could realize by implementing the option. The following option evaluation framework presents high-level ratings of different criteria that can be used for comparing the options, including:

14 Final Report – November 3, 2003 Option Evaluation FrameworkOrganizational Structure OptionImplementation Cost Difficulty to Implement Time to Implement Potential Benefit Implement Strategic Planning FrameworkHigh Redesign Organization StructureHigh Establish Chief Operating Officer PositionMedium Implement Regionalized OGSMSHigh Implementation Cost This criteria measures the financial impact associated with implementing the option. A full ball ( ) is considered expensive to implement i.e., a high financial cost, and an empty ball ( ) represents a low financial cost to the Organization. Difficulty to ImplementThis criteria measures the difficulty to implement the option, defined by a combination of cost, effort, and intangible factors, such as political or cultural resistance. A full ball ( ) is considered difficult to implement, and an empty ball ( ) is considered relatively easy to implement. Time to ImplementThis criteria measures the amount of time required to implement the option. A full ball ( ) is considered a year or longer to fully implement, and an empty ball ( ) is considered something that could be implemented relatively quickly. 14 Potential Benefit This criteria indicates the level of potential benefit the OAS could realize by implementing the option.

15 Final Report – November 3, 2003 Option Evaluation FrameworkBusiness Process OptionImplementation Cost Difficulty to Implement Time to Implement Potential Benefit Implement Results-Based BudgetingHigh Implement Donor Relations FunctionMedium Implement Cost Management and Recovery PlanMedium Adopt Formal Quota Assessment PolicyMedium Implement Strategic Mandate FrameworkHigh Streamline Procure-to-Pay ProcessMedium 15 Implementation Cost This criteria measures the financial impact associated with implementing the option. A full ball ( ) is considered expensive to implement i.e., a high financial cost, and an empty ball ( ) represents a low financial cost to the Organization. Difficulty to ImplementThis criteria measures the difficulty to implement the option, defined by a combination of cost, effort, and intangible factors, such as political or cultural resistance. A full ball ( ) is considered difficult to implement, and an empty ball ( ) is considered relatively easy to implement. Time to ImplementThis criteria measures the amount of time required to implement the option. A full ball ( ) is considered a year or longer to fully implement, and an empty ball ( ) is considered something that could be implemented relatively quickly. Potential Benefit This criteria indicates the level of potential benefit the OAS could realize by implementing the option.

16 Final Report – November 3, 2003 Option Evaluation FrameworkHuman Capital OptionImplementation Cost Difficulty to Implement Time to Implement Potential Benefit Continue to use the United Nations compensation systemMedium Link staff compensation more to performance than to tenureHigh Conduct an audit to ensure that OAS post classifications are consistent with the UN Medium Consider options related to employee benefitsMedium Improve the performance management system to use it as a tool for strategic management High Implement a management training programHigh Offer targeted training and development opportunities to enhance staff competencies High Facilitate career advancementMedium Continue current practice of using term contract appointments to meet most human capital needs. High 16 Implementation Cost This criteria measures the financial impact associated with implementing the option. A full ball ( ) is considered expensive to implement i.e., a high financial cost, and an empty ball ( ) represents a low financial cost to the Organization. Difficulty to ImplementThis criteria measures the difficulty to implement the option, defined by a combination of cost, effort, and intangible factors, such as political or cultural resistance. A full ball ( ) is considered difficult to implement, and an empty ball ( ) is considered relatively easy to implement. Time to ImplementThis criteria measures the amount of time required to implement the option. A full ball ( ) is considered a year or longer to fully implement, and an empty ball ( ) is considered something that could be implemented relatively quickly. Potential Benefit This criteria indicates the level of potential benefit the OAS could realize by implementing the option.

17 Final Report – November 3, 2003 Option Evaluation FrameworkInformation Technology OptionImplementation Cost Difficulty to Implement Time to Implement Potential Benefit Reorganize IT FunctionsHigh Streamline Reporting and Data IntegrityMedium Implement Automation and Employee Self ServicesMedium 17 Implementation Cost This criteria measures the financial impact associated with implementing the option. A full ball ( ) is considered expensive to implement i.e., a high financial cost, and an empty ball ( ) represents a low financial cost to the Organization. Difficulty to ImplementThis criteria measures the difficulty to implement the option, defined by a combination of cost, effort, and intangible factors, such as political or cultural resistance. A full ball ( ) is considered difficult to implement, and an empty ball ( ) is considered relatively easy to implement. Time to ImplementThis criteria measures the amount of time required to implement the option. A full ball ( ) is considered a year or longer to fully implement, and an empty ball ( ) is considered something that could be implemented relatively quickly. Potential Benefit This criteria indicates the level of potential benefit the OAS could realize by implementing the option.

18 Final Report – November 3, 2003 Option Dependencies Description: While many options can be implemented independently at any time, other options are dependent and/or linked (i.e., it would be beneficial to implement after or during the implementation of other options). The following flow chart highlights dependencies with certain options, as well as an estimate on the amount of time to implement. 0 612182432 36 42485460 Timeline (Months) Implement Donor Relations Function Redesign Organization Structure Implement Strategic Planning Framework Option Dependencies Implement Results-Based Budgeting Implement Regionalized OGSMS Establish Chief Operating Officer Position Implement Cost Management and Recovery Plan Adopt Formal Quota Assessment Policy Implement Strategic Mandate Framework Streamline Procure-to-Pay Process Reorganize IT Functions Streamline Reporting and Data Integrity Implement Automation and Employee Self Services Explore Options Related to Benefits Continue Using UN Compensation System Link Compensation to Performance Conduct Audit of UN and OAS Post Classifications Improve Performance Management System Implement Management Training Program Offer Targeted Training and Development Facilitate Career Advancement Continue Using Term Contract Appointments 18

19 Final Report – November 3, 2003 Transition Management Office (TMO) Description: To coordinate and manage the changes adopted by the OAS/GS, the Organization could create a Transition Management Office (TMO). In general, the function of this office would be to serve as a coordination mechanism for all of the projects initiated as a result of the Management Study. A typical TMO for this type of effort has three to five full-time employees dedicated to coordinating the change. Responsibilities include periodic and ad hoc communications, coordination of resources, monitoring of budgets and timelines, provision of best practices and management resource, and other general duties as assigned. The TMO should report to top management and have an indirect report to the Political Bodies, likely through the CAAP. Benefits: Implementing a TMO would allow the OAS/GS to build, maintain, and improve the project management mechanism to drive completion of multiple projects and keep them on schedule and budget. A TMO structure supports project managers and implementation teams by providing organization-wide coordination, which enables more accurate quality control measures and cohesiveness across all projects and new initiatives. A TMO would serve as a central repository for project management expertise, best practices, and knowledge. TMO TMO Lead TMO Staff (2-4 FTEs) TMO TMO Lead TMO Staff (2-4 FTEs) Secretary General/Assistant Secretary General/Other GS Executive General Secretariat Operations CAAP and Political Bodies Possible TMO Structure 19

20 Final Report – November 3, 2003 Description: Change management and communication are integral components of a successful implementation or change to an organizations structure, processes, technology, or human capital. Due to the political nature of the OAS, it is of particular importance that the changes are managed carefully to promote support and commitment and reduce stress. Change management, which is the active management of a change or transition, is a crucial component of transitional phases that increases understanding, cooperation, and acceptance by stakeholders. A communication strategy is an important component of an organizational change management process. Effective and consistent communication during a transitional period educates all stakeholders on what changes are taking place, why the change is occurring, and their consequences or outcomes. In the short term, the management study steering committee should play a role in both change management and communication in order to provide continuity and to keep the Permanent Council and CAAP engaged in the process. Critical Steps in Change Management: Demonstrate commitment to change in the Permanent Council by providing resources and direction for transition. Establish a detailed rollout plan that specifies the time, resources, and responsibilities of all those involved, and distribute throughout the Organization. Where possible, maintain existing programs or processes in parallel for a period of time to promote a seamless transition. Develop strategy and guidelines for managing the human capital effects that result from the changes to job classifications, staff location, job title, job description, etc., and suggest methods of maintaining and improving morale and motivation. Develop training and implementation guidelines and policies for adoption among business areas. Critical Steps in Communication Strategy: Establish open communication lines and a sense of dedication to work collaboratively toward a common goal between the General Secretariat and the Permanent Council. Establish a communication strategy that makes stakeholders aware of the advantages, disadvantages, and challenges they will face as a result of the proposed change. Stakeholders include Permanent Council, Staff Association, Donors, etc. Develop framework for communicating to the Organizations external customers to educate them on the effects the changes will have on their relationship with OAS. Develop and distribute newsletters during the initial stages of change implementation to demonstrate success and encourage participation of staff in the new initiative. Change Management and Communication Strategy 20

21 Final Report – November 3, 2003 Findings, Observations, and Options Organizational Structure Business Processes Human Capital Technology 21

22 Final Report – November 3, 2003 Organizational Structure Implement Strategic Planning Framework Redesign Organization Structure Establish Chief Operating Officer Position Implement Regionalized OGSMS 22

23 Final Report – November 3, 2003 Organizational Structure: Implement Strategic Planning Framework The General Secretariat (GS) does not have a single, formal, organization-wide strategic planning process that can be used to determine its goals and objectives. Although each program area within the GS is required to develop a mission and justification statement for budgeting purposes, there is no process to connect these to an overall strategic vision or to the OAS Charter. Mandates are developed independently of the GSs operations, resulting in a disconnect between the mandates and the ability to execute them. In addition, the GS operates without clear information about the priorities of the political bodies. While several documents provide strategic direction, there are differences among them in terms of timeframe and area of coverage that may make strategic objectives and priorities unclear to the organization (see table). Due to the fragmented strategic message, there is no clear organizational vision or direction known by all levels of staff. As a result, there is no prioritized set of objectives and resource allocation to corresponding priority areas. The lack of strategic planning at OAS leads to a lack of overall accountability, as it is difficult to determine the level of success a completed mandate has brought to meeting the strategic objectives of the Organization. Background Issues Document Time Frame Target AreaFocus OAS Charter- Chapter 1: Nature and Purposes1997OAS High level strategic direction for mandates OAS Charter- Chapter 2: Principles1997OAS High level strategic direction to drive focus for mandates A New Vision of the OAS1995OAS Discussion of influences of the past decade and areas of focus within major strategic areas Toward the New Millennium: The Road Traveled1999OAS Discussion of influences of the past decade and areas of focus within major strategic areas CIDI-IACD Strategic Plan 2002- 2005IACD Discussion of the strategic initiatives for the Partnership for Development outlining IACD objectives Inter-American Democratic Charter2001UPD Discussion of democracy related priorities of the Member States that drives the activities of the UPD The above table shows some of the documents that define OAS strategy and are currently referred to by the GS staff. They were developed during different timeframes and, although they overlap, they define different focuses, goals, objectives, and are not coordinated in any formal process. Observations: The General Secretariat does not have a strategic plan that provides an operational vision for the OAS Charter and mandates. Multiple bodies have input into the development of OAS strategic direction and mandates, which the General Secretariat is then tasked with implementing. Consequently, the strategic vision and mandates are not significantly coordinated, and have created a fragmented strategic message for the General Secretariat. Observations: The General Secretariat does not have a strategic plan that provides an operational vision for the OAS Charter and mandates. Multiple bodies have input into the development of OAS strategic direction and mandates, which the General Secretariat is then tasked with implementing. Consequently, the strategic vision and mandates are not significantly coordinated, and have created a fragmented strategic message for the General Secretariat. 23

24 Final Report – November 3, 2003 Description: Implement a strategic planning framework to help the General Secretariat (GS) better define what it is, what it does, and why it does it. The framework should be designed to help the organization become more focused and align resources with core competencies (core competencies are areas in which an organization has a comparative advantage or an inherent capability). In addition, the document should leverage and clarify the operational message of existing OAS strategy documents. By coordinating multiple OAS strategy documents into a focused GS strategy, a strategic plan serves as the common thread for linking the Organizations overall direction with its activities, budgeting, planning, performance measurement, and accountability. A formalized strategic planning process provides a framework to focus energy and allocate appropriate levels of resources to priority areas. Criteria that can be used in evaluating organizational areas include: Advantages: Strategic planning allows an organization to adjust its focus and resources in response to a changing environment. A strategic planning framework could serve as the driving force for all GS initiatives and help effectively support the monitoring of productivity and accountability. A strategic plan could unite the Organization and its stakeholders under a shared vision and set of values. A strategic plan would serve as a means to limit or reallocate resources from functions determined to be non- strategic. A strategic plan could provide the OAS/GS with the flexibility and information needed to respond to operational and budgetary changes. Disadvantages: The strategic planning process can be time consuming during the initial cycles as the organization adjusts and learns to operate in a more strategic manner. Charter Focus – Assessment of the extent each focus area adheres to one or more of the OAS "essential purposes" as stated in the OAS Charter. Mandate Focus – Assessment of the mandate volume currently assigned to each business area as well as over the past five years. Comparative Advantage – Assessment of the extent each area is uniquely positioned to meet its mandates and strategic objectives more effectively than other similar organizations operating in the hemisphere. Organizational Structure: Implement Strategic Planning Framework 24

25 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Define a representative team of stakeholders consisting of six to twelve members to form a committee that will participate in the formal strategic planning session (this should be done by a committee of the Permanent Council such as the Committee on Administrative and Budgetary Affairs). Members should include representatives from both the Permanent Council and the General Secretariat, such as Member State representatives, General Secretariat Directors, Staff Association representative, and other stakeholders. In addition, the Secretary General and Assistant Secretary General should also participate as either full members or, at the very least, sources for guidance. 2)Agree on the process and method to be used for developing the framework. 3)Conduct strategic planning sessions (typically over one to two weeks), to include development of: A mission and vision statement, which describes purpose, business, and values. The vision statement should provide a guideline of what the Organization will look like as a result of the strategic planning process. An analysis of the current environment and issues to be addressed by the plan. It is useful to perform a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to identify strategic situation and position Core strategies, goals, and objectives to establish an outline of the strategic plan. 4)Develop and distribute the written strategic plan for the Organization to use as a guide for decision making and resource allocation. To assist with dissemination and increase awareness, develop and distribute user friendly versions of the strategy, e.g., pocket versions, etc. 5)Educate stakeholders on the components of the strategic plan and communicate the process of how the plan will be used. 6)Monitor and occasionally revisit strategic plan throughout its lifespan, and make adjustments to account for minor changes in the operating environment and organizational priorities. 7)Periodically repeat entire strategic planning process to adjust for major changes to the environment and organizational priorities. Timeframe for Implementation Plan: 036912151821242730 Timeline (Months) Perform SWOT Analysis Establish Goals and Strategic Objectives Educate Stakeholders Develop Mission and Vision Statement Appoint Strategic Planning Committee Implement Strategic Planning Framework Develop and Distribute Strategic Plan Monitor and Adjust as Necessary Begin Process Again Organizational Structure: Implement Strategic Planning Framework 25

26 Final Report – November 3, 2003 The General Secretariat and the Permanent Council must work collaboratively on the process. This can be encouraged by establishing common goals and values for both entities early in the process, and letting the goals and values drive the process instead of individual politics and opinions. The strategic plan must be revisited and adjusted periodically to evolve with the changing environment of the Organization. It should be stressed that revisiting the strategy must be the result of a compelling change in the environment or capabilities of the organization, and not simply to reopen discussion on past decisions. The Organization must be willing to make hard decisions. Critical Success Factors Barriers Implementation Costs Without dedication and commitment to successful adoption of a strategic plan from top leadership down, it is difficult to successfully complete a strategic planning initiative. Consensus between the political bodies and the GS may be time consuming to obtain. Direct costs associated with implementing a strategic planning framework include: The cost of an outside facilitator to conduct planning sessions. Production costs of the strategic plan and supporting materials. If interpreters, translators, and other support services are required for the sessions, these costs should also be included. Indirect costs associated with implementing a strategic planning framework include: The time commitment of the strategic planning committee for the plans development. Costs that will be incurred as the organization learns to operate in a more strategically focused manner. These costs may be absorbed by the organization and offset by a reduced effort in other areas such as non-strategic management meetings and other activities that will hopefully decrease. Organizational Structure: Implement Strategic Planning Framework 26

27 Final Report – November 3, 2003 Organizational Structure: Redesign Organization Structure The General Secretariat (GS) organizational structure has evolved through the creation of new units and areas of focus over the years. While there is strong political leadership within the General Secretariat, there is limited centralized operational leadership. Technical Areas that perform similar functions operate independently, resulting in a lack of ability to coordinate and increased instances of duplicative activities. Certain activities, such as project accounting and reporting, fundraising, and website development, are performed in multiple organizational areas with limited coordination. Background There is no centralized conduit between General Secretariat operations and the General Assembly, Permanent Council, and other political bodies, resulting in a disconnect between actual and desired outcomes. The lack of cooperation and communication between autonomous program areas that perform similar or related activities results in limited sharing of knowledge and best practices. Fragmented organizational areas decrease effectiveness and ability to coordinate by limiting specialization, decreasing economies of scale, and increasing duplication of activities. Issues Functional Area:PolicyProjectSupportAdministrative Public Affairs Office of the Secretary General (including Technical Areas) Office of the Asst. Secretary General Secretariat for Legal Affairs Secretariat for Management Secretariat for IACD The table shows the major Offices and Secretariats of the GS, and some of the functions they perform. Organizational areas often perform similar functions. Areas performing the function are marked with a. Area(s) performing the function who also have primary responsibility for the function are marked with a. Observations: The Office of the Secretary General has nineteen direct reporting lines that make it difficult to provide operational direction and coordination across the Organization (see chart on following slide). The organizational structure is not aligned functionally or by customer, resulting in a fragmented structure that is difficult to coordinate and limits collaboration. Observations: The Office of the Secretary General has nineteen direct reporting lines that make it difficult to provide operational direction and coordination across the Organization (see chart on following slide). The organizational structure is not aligned functionally or by customer, resulting in a fragmented structure that is difficult to coordinate and limits collaboration. 27

28 Final Report – November 3, 2003 Organizational Structure: Current Organizational Structure 1 1 10 2 2 3 3 4 4 7 7 6 6 5 5 9 11 8 14 13 12 16 19 18 17 15 Numbers indicate the number of direct reporting lines to the Secretary General, which total nineteen. 28

29 Final Report – November 3, 2003 Descriptionu Design and implement an organizational structure that groups similar functions, increases efficiency, rationalizes overhead, and aligns the organizational units with the strategic objectives identified by the strategic planning process. The key areas addressed by the redesign options are the Technical Areas, Support Areas, and Administrative Areas. By grouping the organizational units that perform similar functions together and rolling them up to an executive office, the Organization could realize a reduction in duplicative activities as well as an increase in knowledge sharing and collaboration among the units within each organizational area and across the functional areas. While the organizational structure should reflect the results of the strategic plan, the following pages present some alternatives to illustrate different approaches the Organization could pursue: Option 1: Option 1 reorganizes the current General Secretariat structure, keeping most organizational units largely intact. Option 2: Option 2 reorganizes the current General Secretariat structure by realigning most functions into new organization units. It should be noted that these options are not mutually exclusive, and that Option 1 could be a transitional structure that evolves into Option 2 or that elements of each could be incorporated into a third hybrid option. What is critical, however, is that the new structure reflects and is aligned to the strategy of the organization. Advantages: Grouping the Support and Administrative functions together could enable the units to focus on their common customers (typically, the other parts of the General Secretariat and the Permanent Council), likely providing an overall increase in customer service. By grouping the Technical Areas and the IACD functions into larger subject matter areas, economies of scale could be gained and the Organization could present a stronger service capability to donors in the program areas. Disadvantages: As a result of a functional instead of a divisional design, Administrative and Support areas would not be closely aligned to, or experts in, supporting any one particular Technical Areas business needs. Organizational Structure: Redesign Organization Structure 29

30 Final Report – November 3, 2003 Organizational Structure: Redesign Organization Structure – Option 1 30

31 Final Report – November 3, 2003 Organizational Structure: Redesign Organization Structure – Option 2 The technical areas (including IACD) would be staffed by a combination of subject matter experts and project managers, both supported by a staff of generalists that have general skills in both policy and project execution. The structure would encourage collaboration and provide flexibility for peak and down times on projects. 31

32 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Develop committee consisting of representatives from stakeholder groups including all major areas of the General Secretariat and the political bodies. Keep the political bodies informed of potential changes that may require amendment to the OAS Charter. 2)Based on the results from the strategic planning process, identify impact on the Organization design. 3)Develop inventory of the key areas of the Organization with a description of their functions. 4)Determine the primary activities of the Organization that contribute to the provision of key outputs (e.g., Technical Areas delivering mandate-driven projects). 5)Determine the support activities that assist the primary activities as well as each other (e.g., Public Information, Protocol, Library, etc.). 6)Determine the administrative activities that assist the primary activities as well as each other (e.g., HR, Financial Services, Procurement, etc.). 7)Examine these activities and identify activity linkages, inefficiencies, and areas of improvement in relation to how well they support the Organization in achieving its strategic objectives. 8)Design and evaluate Organizational design options. 9)Develop management and personnel structure including levels of hierarchy and spans of control as well as analysis of the requirements according to job level. 10)Design and implement an Organizational structure for implementation. Pursue amendments to the OAS Charter as required. Timeframe for Implementation Plan: 036912151821242730 Timeline (Months) Determine Primary, Support, and Administrative Activities Design and Evaluate Organizational Design Options Identify Strategic Objectives impact on Organization Structure Appoint Committee of Stakeholders Reorganization of Organization Structure Identify Linkages and Inefficiencies Develop Management and Personnel Structure List and Describe Organizational Areas Implement and Train Personnel Organizational Structure: Redesign Organization Structure 32

33 Final Report – November 3, 2003 A successful strategic planning process that clearly determines the strategy and objectives of the Organization must be completed to serve as a foundation organizational design decisions. All OAS stakeholders should be engaged and used to solicit feedback during the design of the organization structure. Critical Success Factors Barriers Implementation Costs An unclear migration strategy could lead to resistance and lack of understanding from staff. The reorganization could have a negative effect on employee morale, productivity, and sustained commitment to the Organization. Direct implementation costs associated with reorganizing the General Secretariat (GS) organization structure include: Costs associated with the actual implementation of the desired organization structure, which include human resource costs, information technology, etc. Costs associated with the development and delivery of training programs for personnel with new job roles and responsibilities. Costs associated with the physical reorganization such as personnel relocation, furniture moving, etc. The indirect costs associated with reorganizing the GS organization structure include: Depending on the ease of transition, the major business areas may experience a period of inefficiency. However, these costs could be recovered as the new organization gains efficiencies. Organizational Structure: Redesign Organization Structure 33

34 Final Report – November 3, 2003 Organizational Structure: Establish Chief Operating Officer Position The General Secretariat (GS) has strong political leadership in the Offices of the Secretary General and Assistant Secretary General. Both of these positions tend to focus externally on political and policy related issues, leaving limited time for internal operations of the General Secretariat. There is not a clear operational leader of the organization to interact with the Secretary General, Assistant Secretary General, and political bodies on issues of organizational resources and capability. Background Issues The Secretary General and Assistant Secretary General are focused on political issues and crises, and not day-to-day operational matters, resulting in a disconnect between the political and operational sides of the organization. Operational and management initiatives are diffused among different executives and directors. Without an operational senior-level executive, other executives often play the role on a de facto basis, although they lack the authority and resources to succeed in the position. Observations: There are multiple senior level executives focusing on the internal operations of the GS. Observations: There are multiple senior level executives focusing on the internal operations of the GS. 34

35 Final Report – November 3, 2003 Description: Institute an executive-level Chief Operating Officer (COO) position with associated staff to coordinate all of the activities of the General Secretariat and report directly to the Secretary General. The COO would provide operational focus and leadership to manage the resources of the entire organization based on overall strategic objectives. The COO should have a negotiated performance contract to achieve certain goals of the political bodies. The COO role should be insulated from undue political influence through longer terms and specific removal authority (e.g., a five-year term subject to removal by Permanent Council vote or failure to meet performance agreement). The COO should receive strategic direction and mandates from the political bodies, but be given operational and tactical flexibility in achieving those goals. The COO role could be achieved by a new position, or by a reconfiguring and refocusing the current Assistant Secretary General role (while the current Assistant Secretary General position is conferred certain operational and administrative functions, the position tends to still focus externally, and internally only in specific aspects of day-to-day operations). Advantages: A high level executive focused on operations could free up the Secretary General and Assistant Secretary General to focus on urgent policy and political functions, and give them more flexibility to spend time away from GS headquarters working on hemispheric issues and crises, and also more time to coordinate political matters within the units. A COO could encourage coordination of GS efforts and resources, and creativity in achieving the mandates of the political bodies. By insulating the COO, the GS operations could avoid excessive political and national influences that can distract operations and personnel. The first set of priorities of the COO could be the implementation of the approved initiatives of this study. Disadvantages: A COO may limit the authority and flexibility of the current executive structure that empowers individual Secretariats and Departments. A COO may distance the Secretary General and Assistant Secretary General from the day-to-day operations of the GS. Organizational Structure: Establish Chief Operating Officer Position 35

36 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Develop the institutional structure and role of a COO, including term, appointment procedures, performance agreement, reporting lines (upward and downward), and incorporate into the Charter of the General Secretariat. 2)Interview candidate(s) and appoint a COO with the background, skills, and experience to play a leadership role in the organization. The first COO should have experience in overseeing organizational transitions and should probably be external to the organization to avoid institutional history that might hinder the transition. Eventually, the COO role could be migrated into the Assistant Secretary General role, although careful consideration should be given to avoiding the politicizing of the role by electing a COO. 3)Develop and negotiate performance agreement with new COO, including goals, outcomes, outputs, and measures. The initial performance agreement should be focused on the objectives of the transition in addition to operational objectives. 4)Monitor the performance of the COO through the Permanent Council and CAAP, and provide feedback and direction balanced with flexibility and resources to achieve goals. Timeframe for Implementation Plan: 036912151821242730 Timeline (Months) Interview candidates and appoint COO Develop COO Institutional Structure Establish Chief Operating Officer Position Develop COO performance agreement Monitor COO performance Organizational Structure: Establish Chief Operating Officer Position 36

37 Final Report – November 3, 2003 Strike an appropriate balance between operational flexibility and political direction and oversight. Define this balance clearly in the beginning of a COO term and adhere to the terms. Carefully define the COO position description, qualifications, and appointment process to encourage selecting the appropriate candidate. Critical Success Factors Barriers Implementation Costs A lack of authority and resources to effectively perform the role of COO. Undue political influence on the operational role of the COO. Direct implementation costs associated with establishing a COO include: Salary cost of the COO and an immediate staff (one to two FTEs). Indirect costs associated with establishing a COO include: Cost of institutionalizing the role of COO (likely time of the Permanent Council, CAAP, Director of Legal Services, and Secretariat of Legal Affairs). Lack of clarity around the role of the COO. Organizational Structure: Establish Chief Operating Officer Position 37

38 Final Report – November 3, 2003 Organizational Structure: Implement Regionalized OGSMS Background Although one of the stated purposes of the OGSMS is to provide technical support in the field for General Secretariat projects, utilization of OGSMS resources is sporadic and technical support capacity may not be fully realized. Currently, the OGSMS purpose and capabilities are not widely understood and the perception of them throughout the technical areas at GS Headquarters varies. Currently, there are no metrics used to determine the level of success each OGSMS achieves in helping the OAS meet its strategic objectives. As a result of longer terms for OGSMS personnel, the perception is that over time they lose momentum or become linked more to the socio-political culture in the host country than the OAS mission. Issues The three primary purposes of the OGSMS are to: Represent the GS in Member States. Serve as a liaison between OAS HQ and Member States. Provide technical project support and execution. In 2002, the budgets of the 28 OGSMS consumed 7.8% of the Regular Fund budget for an average of $212,000 per office, approximately 80% of which is for human capital expenses. There is no detailed framework outlining the intended interaction between the OGSMS and General Secretariat HQ operations. Personnel turnover at the OGSMS is limited. Technical areas tend to interact with OGSMS frequentlybut not on a day-to-day basis and generally find interaction useful (see graphs). Graph shows the frequency of interaction with OGSMS of surveyed technical area staff based on the 74 employees who responded to this question. Over 50% of respondents interact with OGSMS on at least a monthly basis, although less than 10% interact daily. Graph shows the perception of OGSMS usefulness of surveyed technical area staff based on the 72 employees who responded to this question. Over 70% of respondents consider the Offices either Useful or Very Useful, while only 3% consider them Not Useful. Observations: While the Offices of the General Secretariat in the Member States (OGSMS) are generally considered useful by the GS HQ operations, they are used inconsistently, have varying levels of capability, and represent a major commitment of resources. Observations: While the Offices of the General Secretariat in the Member States (OGSMS) are generally considered useful by the GS HQ operations, they are used inconsistently, have varying levels of capability, and represent a major commitment of resources. 38

39 Final Report – November 3, 2003 Description: Implement a regionalization strategy for the OGSMS to operate in a more centralized fashion in the major OAS geographic regions. By implementing a regionalization strategy, the OAS could reduce the operating budget of the OGSMS while still meeting their intended objectives. The proposed structure would establish regional offices throughout the major regions of the hemisphere including the Caribbean, Central America, and South America. All OAS field operations and supervision would be headquartered in these regional offices. Under this structure, the regional offices could be rotated on a periodic basis (e.g., a five-year cycle), which would allow all Member States within each region the possibility of hosting an OGSMS regional office. The Offices should receive clear direction on the Organizations expectations of them, and have their performance evaluated against these expectations. In addition, to maintain a healthy rotation of directors, provisions could be included for term limits of office directors concurrent with the rotation of offices. If a presence is required in a member state without a direct OAS presence, options can be explored for establishing a General Secretariat Office collocated with other multilateral organizations in the country. Advantages: Regionalization would allow the OAS to maintain a presence in the major regions of the Hemisphere and retain the relationships and cultural understanding developed throughout the years of maintaining OGSMS in individual Member States. Consolidation of the OGSMS would increase the levels of utilization and sharing of staff and overhead costs. Implementing a rotation plan for Office Directors would lead to a fresh cycling of leadership within the OGSMS. Regionalizing the OGSMS would decrease the volume of staff and resources required to operate in the field, thereby reducing costs. By implementing a cyclical rotation of OGSMS within each region, all Member States could benefit from hosting the OAS regional office within their borders. Disadvantages: Due to the large span of control within the regionalized offices, the effectiveness of hands-on project support would require more travel and resource costs. Due to the fact that the OGSMS represent the face of the OAS in the Member States, regionalization would decrease the on-site presence of the OAS in countries without offices. The cost of relocating the OGSMS as part of the rotation throughout the region will have to be absorbed every rotation, and this may also hinder staff continuity in the offices. Organizational Structure: Implement Regionalized OGSMS 39

40 Final Report – November 3, 2003 Approved Posts$4,436 Travel$8 Documents$7 Equipment and Supplies$237 Building Mgt/Maintenance$607 Performance Contracts$18 Other Costs$32 TOTAL$5,345 2002 Regular Fund Executed (USD 000s) for 28 Office Structure Estimated Future Costs (USD 000s) for 6 Regional Office Structure Approved Posts$1,451 Travel$240 Documents$7 Equipment and Supplies$200 Building Mgt/Maintenance$450 Performance Contracts$18 Other Costs$32 TOTAL$2,398 Assumptions Costs are for ongoing operations and do not include transition/implementation or rotation costs. Staff level would decrease from 110 to 36 (6 per office). Straight per-person averages used to determine future personnel costs. Travel costs would increase due to requirement for more travel throughout region. Assumption is $10,000 in travel per professional employee (4 professional employees per office x 6 offices x $10,000 in travel) Equipment and Supplies would decrease due to decreased requirements in fewer offices. Building Management and Maintenance would decrease due to lower volume of office space to rent and maintain and potential increase in in-kind contributions because of high profile of hosting an office. Assumptions Costs are for ongoing operations and do not include transition/implementation or rotation costs. Staff level would decrease from 110 to 36 (6 per office). Straight per-person averages used to determine future personnel costs. Travel costs would increase due to requirement for more travel throughout region. Assumption is $10,000 in travel per professional employee (4 professional employees per office x 6 offices x $10,000 in travel) Equipment and Supplies would decrease due to decreased requirements in fewer offices. Building Management and Maintenance would decrease due to lower volume of office space to rent and maintain and potential increase in in-kind contributions because of high profile of hosting an office. Organizational Structure: Implement Regionalized OGSMS 40

41 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Develop a working group for the regionalization of the OGSMS consisting of stakeholders from current OGSMS, General Secretariat, and Permanent Council. 2)Analyze the current OGSMS structure to determine the strengths and weaknesses of each office and identify aspects of the structure that should be carried forward to the regionalized environment. In addition, do a detailed cost analysis of current structure to establish baseline for future comparison and to develop a business case for regionalization. 3)Develop formalized regional OGSMS framework, guidelines, performance measures, and plan of action that outline the structure, intended function, term characteristics, location and rotation of each office, and communication strategies between the OGSMS and Headquarters. Develop business case to sell the idea within the Organization and to other stakeholders. 4)Create regionalized offices as a result of lottery or other agreed upon approach to determine location and staff. 5)Establish a memorandum of agreement with other organizations to receive services when needed. 6)Monitor the use and performance of the offices to maximize their effectiveness in their role. Also, communicate the services of the offices to the rest of the OAS to increase understanding of their usefulness. Timeframe for Implementation Plan: 0369 12151821242730 Timeline (Months) Develop OGSMS Regional Framework (structure, performance measures, staff, etc.) Identify Strengths and Weaknesses of Current OGSMS Develop Working Group Implement Regionalized OGSMS Create Regionalized OGSMS Based on Lottery Monitor Operations and Make Changes as Necessary Organizational Structure: Implement Regionalized OGSMS 41 Establish Memorandum of Agreement

42 Final Report – November 3, 2003 It is important not to group too many countries with active current OGSMS operations together into one regional office in an effort to balance workload throughout the regional offices. Effective transition and operation guidelines must be established and understood by all parties. Critical Success Factors Barriers Implementation Costs The difficulty of cycling the location and directors within each OGSMS as well as the expenses associated with it every five years may cause a burden on the OAS, especially during the first few iterations. The loss of staff that would result from the closing of several OGSMS may lead to resistance among certain stakeholders. Direct implementation costs associated with regionalization of the OGSMS include: Cost of phasing out current offices such as travel, moving, liquidation, severance, etc. Cost of establishing the new offices throughout each region every five years, such as travel, leases, establishing office infrastructure, human resource activity, etc. These costs may be reduced by seeking in kind contributions from host countries, who stand to benefit by having the regional offices located in their countries. Costs associated with developing policies and procedures for utilization of the regional offices and interaction between the OGSMS and GS HQ staff. Indirect costs associated with regionalization of the OGSMS include: The time spent supporting the working group establishing the offices. Organizational Structure: Implement Regionalized OGSMS 42

43 Final Report – November 3, 2003 Business Processes Implement Results-Based Budgeting Implement Donor Relations Function Implement Cost Management and Recovery Plan Adopt Formal Quota Assessment Policy Implement Strategic Mandate Framework Streamline Procure-to-Pay Process 43

44 Final Report – November 3, 2003 Business Processes: Implement Results-Based Budgeting The current operating budget, which has been declining in real terms for the past several years, is determined using a resource- based budget process. As a result, resource allocations are based on staff level within each unit and historical data as opposed to strategic priorities and desired results. Background There is little correlation between resource allocation and organizational objectives, strategic priorities, and mandates. As a result of the increased mandates combined with a flat Regular Fund budget, there has been an increasing reliance on specific funding, which is not part of the current budget process (see graph). As a result of the increased demand on administrative and support activities funded by the Regular Fund, as well as the blending of Specific and Regular Funds across the organization, it is difficult to determine budget allocations and controls, as well as accurate tracking of resource expenditures across the Organization. Issues Graph shows the trend in Regular Fund versus Specific Fund contributions over the past six years. While total funding has been increasing, the Regular Funding has declined. Observations: Specific funds are not part of the formal organization-wide budgeting process, yet total close to half of the total operating budget. Budgeting is focused on the consumption of resources, and not the outputs and objectives of the organization. Observations: Specific funds are not part of the formal organization-wide budgeting process, yet total close to half of the total operating budget. Budgeting is focused on the consumption of resources, and not the outputs and objectives of the organization. 44

45 Final Report – November 3, 2003 Description: Implement a Results-Based Budgeting system (also known as Performance-Based Budgeting) to more effectively allocate resources according to the desired outcomes and strategic objectives of the OAS. A Results-Based Budgeting (RBB) system is a method that shifts accountability from a focus on inputs, processes, and projects to one on results, outcomes, and performance. The system requires an organization to concentrate on the relationship between objectives, results, and resources, thereby encouraging a focus on operational performance. A Results-Based Budget would allow the OAS to identify its desired outputs along with the business areas responsible for those outputs in accordance with a strategic plan. Resource allocation would be shifted toward aligning costs with strategic initiatives. In the case of areas that respond to mandates, results and outcomes could be defined by desired mandate results and outcomes, allowing resources to be better coordinated to meet the objectives of the mandates of the GS (as well as providing an understanding of when resources cannot achieve the desired results of a mandate). Advantages: A shift from the current budgetary focus on inputs to one that aligns the resources and activities of the Organization toward obtaining the desired results would allow the OAS to more efficiently meet strategic objectives. A RBB would increase the level of accountability of business managers in meeting the Organizations objectives within budgetary constraints. A RBB would assist the OAS in implementing better fiscal control mechanisms, thus eliminating the policy of extending resources to program areas who over execute their budgets. Implementation of evaluation mechanisms allows for the assessment of program merit, determination of resource allocation, and activities performed by OAS. Implementation of performance plans helps prioritize activities and resources according to the desired results of the Organization, improving the ability to meet objectives with limited resources. Disadvantages: Expressing objectives in quantifiable terms is difficult for certain program areas that do not have easily measurable results. Implementing RBB requires a larger time investment on the part of program managers and directors in formulating performance plans and training. Business Processes: Implement Results-Based Budgeting 45

46 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Define a budget transformation committee coordinated by DMAPSS (or successor organization) consisting of representatives from all program areas of the General Secretariat as well as the Permanent Council. Due to the close relationship between the strategic planning process and budgeting, the same committee that was nominated to participate in the strategic planning process could be used for budgeting. 2)Based on strategic plans, develop specific performance measures to be used in measuring how well objectives are being met. In the case of mandates, develop mandate outcomes and define the activities required to achieve them, and base measures on these activities. 3)Work with HR to incorporate measures into professional development and performance measurement process. 4)Implement Results-Based Budgeting system to link objectives to performance measures. 5)Establish accountability framework to assess the success of achieving the desired objectives. 6)CAAP to work with budgeting function to monitor progress and assist business areas in implementation, as well as serve as the governing body over the budget to which program managers are accountable. Timeframe for Implementation Plan: 0 369 12151821242730 Timeline (Months) Incorporate Performance Measures into Professional Development Process Develop Specific Performance Measures Establish Budget Transformation Committee Implement Results-Based Budgeting Implement RBB and Link Objectives to Measures CAAP to Monitor Progress Establish Accountability Framework Business Processes: Implement Results-Based Budgeting 46

47 Final Report – November 3, 2003 Current OAS culture focused primarily on resources, not results. Create a Strategic Planning framework that clearly identifies OAS organization objectives and links performance metrics to objectives. The OAS must achieve Organization-wide adoption and adherence to a strategic planning framework to lay the foundation for the mapping of resources according to desired results. The Organization must determine and implement key performance measurements to ensure accurate assessment of success and guarantee that resources are properly aligned. Critical Success Factors Barriers Implementation Costs Lack of clearly identified strategic objectives to link with activities and operations. Difficulty determining appropriate performance measurements. Direct costs associated with implementation of a Results-Based Budgeting system include: If new budget software is required, the software implementation costs. The development and delivery costs of training courses to educate personnel of the principles of the system as well as timelines, responsibilities, and how to operate the new software system. Indirect costs associated with implementation of a Results-Based Budgeting system include: The cost of operating both the current Resource-Based Budgeting system and the Results-Based Budgeting system in parallel until the Organization fully adopts the Results-Based Budgeting system. The cost of the time spent by the committee and stakeholders designing, agreeing upon, and supporting the implementation of the new budgeting system. Business Processes: Implement Results-Based Budgeting 47

48 Final Report – November 3, 2003 Business Processes: Implement Donor Relations Function As a result of the effective decrease in the Regular Fund budget and the increase in mandates during recent years, the OAS has relied more heavily on specific funds to supplement project activities. All core fundraising initiatives are the responsibility of individual areas, which develop their own relationships with donors, negotiate agreements, solicit funds, provide customized project reporting, etc. According to survey results from a sample of Technical Area personnel, staff are spending approximately 10% of their time supporting the aforementioned activities. Background Due to the fact that all fundraising initiatives are handled independently of one another, there is little coordination of donor relations resources and redundant tasks being performed by personnel throughout the Organization. The fragmented fundraising environment leads to competition for the same donor dollars. Uncoordinated and unorganized appeals to donors undermine the professional reputation and credibility of the organization, and ultimately reduce the ability to forge strategic alliances and engage in co-financing with donors. Issues Observations: The dollar amount and number of Specific Funds in the organization has continued to grow; however, there is no formal coordination of the activities associated with raising and managing these funds. Observations: The dollar amount and number of Specific Funds in the organization has continued to grow; however, there is no formal coordination of the activities associated with raising and managing these funds. 48

49 Final Report – November 3, 2003 Description: Implement a donor relations function to coordinate activities relating to the solicitation, negotiation, administration, and reporting of Specific Fund projects throughout the OAS. The proposed Donor Relations Office would consist of full time development managers who would be in charge of coordinating existing and identifying new fundraising opportunities, and developing a consistent message and point of contact with the donor community. In addition, this group would establish protocols and guidelines for proposal development and standard reporting package creation. To support the Donor Relations staff, relevant personnel within the Technical Areas would be appointed to serve as liaisons to help manage the donor relationships and solicit funds. In addition, designated staff from the Administrative and Support areas would provide support such as standard and customized report creation using the Oracle system, recruitment efforts, procurement, payroll processing, etc. A centralized Donor Relations function could also more easily coordinate fund raising efforts with other similar organizations, such as PAHO. Advantages: A coordinated donor relations function could decrease redundancies, increase economies of scale, reduce competition among Units, and improve timeliness of donor reporting. The issue of competition for donor funds could be managed by tracking and targeting potential donors in a coordinated manner. Centralized fundraising could enable the OAS to establish more brand recognition and credibility with the donor community. Areas that currently rely heavily on Specific Funds and dedicate a large amount of resources to soliciting and managing Specific Funds could benefit by leveraging these resources to focus on more technical and project related activities. Areas that do not currently solicit specific funds due to a lack of resources could also benefit from the services. Disadvantages: There is the potential for Technical Areas to sense a loss of autonomy in obtaining funding for their own specific initiatives. Business Processes: Implement Donor Relations Function 49

50 Final Report – November 3, 2003 Timeframe for Implementation Plan: Action Steps for Implementation Plan: 1)Define a working group of senior staff from the Technical Areas and Secretariat for Management to determine the specific size and resource needs of the Donor Relations Office. 2)Define a committee made up of personnel from the Technical Areas and the Secretariat for Management to identify and appoint appropriate staff to the new Donor Relations Office (likely areas of potential staff would be External Relations and the Units). 3)Coordinate and catalogue the current OAS-donor relationships. 4)Appoint business development managers to specific donor accounts and establish baseline services and shared materials. 5)Develop and deliver training to personnel in the Technical Areas, Fundraising Office, and Secretariat for Management on new services and materials. 6)Establish roles and responsibilities for staff in the Technical Areas, new Donor Relations Office, Secretariat for Management, and other applicable stakeholders (e.g., Public Information, External Relations, etc.) to eliminate duplication of efforts and streamline processes 7)Follow up with donors and Technical Areas to assess the level of customer satisfaction and quality of service to determine what is working successfully and what needs to be corrected. Business Processes: Implement Donor Relations Function 50 Migrate Current Donor Relationship Appoint Business Development Managers Appoint Staff to Fundraising Office Establish Representative Working Group to Shape Office Implement Donor Relations Function Develop and Deliver Training to Organization Monitor Level of Success and Customer Satisfaction Establish Roles for Affected Personnel 0 369 12151821242730 Timeline (Months)

51 Final Report – November 3, 2003 The Technical Areas may be resistant to the Donor Relations office and still rely solely on their own individual fundraising efforts to secure specific funds. Critical Success Factors Barriers Implementation Costs The external donor community may resist the Donor Relations Office due to a loss of comfort gained through establishing relationships within the Organizations Technical Areas. The staff in the Donor Relations Office, Technical Area representatives, and the liaisons from the Secretariat for Management must establish a collaborative approach and open lines of communication for the intended coordination to be achieved. The core Technical Area liaison and the Donor Relations representative must successfully share the donor relationship responsibilities and maintain open lines of communication. Direct costs associated with the coordination of the donor relations function include: Cost of restructuring organizational units to form the Donor Relations Office, including personnel relocation and facility costs. Training costs incurred for training internal GS personnel and informing the donors of changes in the donor relations process. Communication costs associated with notifying the donor community of the change in fundraising policies and guidelines. Indirect costs resulting from the coordination of the donor relations function include: Account migration and transition costs incurred due to the possible downtime resulting from the new donor relations processes. Business Processes: Implement Donor Relations Function 51

52 Final Report – November 3, 2003 Business Processes: Implement Cost Management and Recovery Plan As a general requirement set at the signing of an agreement, the OAS is obligated to provide customized financial and operational reporting to specific fund donors, based on their individual requirements. Currently, the interest earned on specific fund deposits is allocated to support the administration costs of specific fund projects, which is estimated to cost approximately $2.6M per year. Regardless of the level of reporting specificity required by the donor, the OAS devotes necessary resources to meet the demand. Background As the number of Specific Fund projects increases and the cost to the GS to administer them increases, the ability to support the projects with only the interest received on fund balances is declining (see graph). It is difficult to solicit overhead and administrative funds from donors, as they perceive project administration to be the responsibility of the OAS. Donors who submit intricate reporting requirements are not required to provide a subsidy for additional time and resources provided by the OAS/GS. The GS is not structured to capture or estimate additional administrative costs required to manage Specific Fund donor projects. Issues Observationsb As the volume of specific fund projects continues to increase, the current method for identifying and recording the management costs of administering Specific Fund projects is not sufficient. Observationsb As the volume of specific fund projects continues to increase, the current method for identifying and recording the management costs of administering Specific Fund projects is not sufficient. Graph depicts the administrative support costs for Specific Fund projects versus the interest income from Specific Funds allocated to support project administration. (Source: Secretariat for Management) 52

53 Final Report – November 3, 2003 Description: Design and implement a formal Cost Management and Recovery Plan to identify and recover the full direct and indirect costs associated with delivering projects. The Recovery Plan, which has been suggested previously by the Secretariat for Management, would provide a mechanism for the Organization to recover (or, if not recoverable, to assess) the costs it incurs for administrative support of specific fund projects. The cost recovery plan would implement provisions for the OAS to charge back the costs of providing standard services such as Oracle-related requests, processing of payroll, AP, AR, etc. In addition, all optional services such as specialized financial statements, budgeting, investments, and project management would have a cost associated with them. Technical Area project management would be required to assess the optional services needed and decide whether to absorb them or pass them along to the donor requesting these services. Consideration of these costs would be part of the Organizations evaluation of the acceptance of Specific Funds. The proposed cost management and recovery plan can be considered both in tandem with the suggested coordinated Donor Relations Office as well as independently, should the OAS elect not to implement the Donor Relations Office structure. Advantages: The cost management and recovery plan would enable the Organization to identify and cover the administration of Specific Fund projects. As a result, the current strain on the Regular Fund to support specific fund projects could be identified and alleviated. By building an overhead charge into the payroll of all staff funded by specific funds, the overhead may be more appealing to donors due to the perception that it is a cost of doing business. The Organization stands to significantly reduce the costs incurred for specific fund project administration. The dollars generated through the cost recovery program would enable Specific Fund project administration to generate revenue and break even. Disadvantages: Specific fund donors typically have been resistant to built in overhead allocations earmarked for overheard support and project administration. The common opinion of the donor community is that these costs should be absorbed by the receiving Organization as their financial contribution to the project. 53 Business Processes: Implement Cost Management and Recovery Plan

54 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Develop a Working Group of representatives from the Secretariat for Management, Technical Areas, and Donor Relations Office (if implemented). 2)Determine the specific list of activities that are deemed to be standard and those that are optional, as well as the specific costs associated with each optional service. 3)Finalize the cost recovery framework and educate affected personnel. 4)Develop cost recovery guidelines for all current and future Specific Fund donations to ensure consistent communication and cost allocations to donors. Clear cost criteria should be provided to potential donors, and the appropriate personnel should be given authority to reject or renegotiate agreements that do not comply. Timeframe for Implementation Plan: 54 Finalize Framework and Educate Personnel Determine Standard and Optional Support Activities Establish Representative Committee Implement Cost Management and Recovery Plan Develop Cost Recover Guidelines for Future Transactions 0 369 12151821242730 Business Processes: Implement Cost Management and Recovery Plan

55 Final Report – November 3, 2003 The donor community may resist the idea of paying an overhead contribution for administrative project activities, and, as a result, may direct their donations to other organizations who do not have such a policy. Critical Success Factors Barriers Implementation Costs Current specific fund project agreements may be difficult to migrate to the cost recovery program, and, as a result, may have to remain on the current structure until the project is complete. OAS Management must introduce the suggested cost management and recovery plan to the outside donor community in a manner that does not give the perception that the GS does not desire to contribute to the project in an equitable manner, which is an expectation held by many donors. Current donors, who do not participate in a cost recovery model, may be resistant to entering into agreements with a cost recovery program. Direct costs associated with implementing a cost management and recovery plan include: Communication costs associated with notifying the donor community of the change in fundraising policies and guidelines. Costs incurred through the development and delivery of training programs for both Technical Area and administrative area staff. Cost recovery guideline development costs associated with production, printing, distribution, etc. Indirect costs associated with implementing a cost management and recovery plan include: Costs related to the transitional period that the GS will endure as they migrate to the new cost recovery system. 55 Business Processes: Implement Cost Management and Recovery Plan

56 Final Report – November 3, 2003 Business Processes: Adopt Formal Quota Assessment Policy The OAS quota structure was once based on the UN quota guidelines, which took into account a countrys GDP, per capita income, and adjustments for items such as a closed economy. This system was abandoned in 1981. A similarity between the two Organizations quota policies is the consideration of the Members ability to pay. While the minimum and maximum contributions have been established at.02% and 59.47%, respectively, recent quota scales for Member States have been determined through negotiations without the use of standardized formulas. As new members have joined the OAS, the quota ceiling and quota percentages have remained unchanged, while current Member States adjust their contributions downward with the addition of the new Members contribution. Background As a result of the non-standardized quota system, it is difficult to determine if OAS Member States contribute based on their ability to pay. This results in certain dissatisfied member states not paying in a timely manner and has limited the ability of the OAS to increase the Regular Fund. While past proposals have been based on mathematical and statistical foundations, they have been vetoed due to a lack of consensus among the Member States. Due to the issues with the current quota, Member States tend to prefer to contribute funds in the form of specific fund donations instead of increasing quotas. Issues Observations: There is not a mechanism to update the OAS quota system in a periodic and comprehensive way. As a result, quotas are largely determined by isolated negotiations among the member states. This approach has made updating quotas difficult, and as a result quotas have not changed significantly despite changes in the ability to pay by individual members and increased demands placed on the Organization in the form of additional mandates. Observations: There is not a mechanism to update the OAS quota system in a periodic and comprehensive way. As a result, quotas are largely determined by isolated negotiations among the member states. This approach has made updating quotas difficult, and as a result quotas have not changed significantly despite changes in the ability to pay by individual members and increased demands placed on the Organization in the form of additional mandates. 1940 1950 19602000197019801990 1948: Pan American Union method based strictly on population 1960: Adoption of the UN Quota Scale 1981: UN Quota Scale abandoned 1990: Resolution 1071 establishing maximum and minimum quotas Present: Quotas remain largely unchanged, still determined by past negotiations Timeline of Major Quota Milestones 56

57 Final Report – November 3, 2003 Description: Design, adopt, and implement a quota policy that periodically recalculates the quotas of Member States based on a set of agreed upon quantifiable metrics. The process should enable Member States to periodically adjust the quota ceiling based on inflation and the volume of mandates, as well as to adjust the quota scale based on the ability of Member States to pay. The OAS could be aided in this objective by utilizing the scales used by similar organization such as the UN or utilizing external organizations, such as the observer nations, to assist in determining the scales. The new quota policy should be based on logical, standardized, and mutually agreed upon methods that reflect the ability of Member States to contribute. Advantages: By taking into consideration those quota resolutions that have already been proposed as well as those of similar organizations such as the UN, the OAS is leveraging the research, best practices, and precedents already established. The proposed quota assessment process could result in an increased level of funding from quotas as well as an overall decrease in the costs incurred for conferences, meetings, and human capital currently being dedicated toward negotiations and proposing resolutions for new quota policies. Disadvantages: Updating the process and determining a standard set of metrics will remove the flexibility that each member had in negotiating their quota. Business Processes: Adopt Formal Quota Assessment Policy 57

58 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Establish and nominate a Committee of Member State representatives to participate in the development of the new quota policy. 2)Appoint a working group of General Secretariat staff to provide the political decision-making Committee with accurate organizational and historical data on cost of operations and mandates. 3)Assess past outstanding quota resolutions as well as policies and guidelines from external organizations such as the UN to leverage best practices and begin to derive options for consideration. 4)Based on best practices and input from the GS working group and Member State Committee, collectively derive framework and quantifiable set of metrics to be used for determining quotas, including consideration of raising the ceiling if necessary. 5)Implement quota policy and adjust Member State quotas accordingly (if necessary). 6)Develop and distribute detailed guidelines and procedures explaining in detail the principles and foundation for the new quota structure. Timeframe for Implementation Plan: 036912151821242730 Timeline (Months) Evaluate Past and Outstanding Quota Resolutions Develop Framework and Metrics to Determine Quota Appoint GS Committee to Provide Accurate Data Establish and Nominate Representative Committee from Stakeholders Adopt Formal Quota Assessment Policy Implement Quota Policy Upon Election Distribute Guidelines Business Processes: Adopt Formal Quota Assessment Policy 58

59 Final Report – November 3, 2003 If the proposed quota structure is perceived to not benefit enough Member States, the proposal might be vetoed and no progress will be made. The OAS Committee must determine and agree upon a quantifiable set of metrics that accurately determine the contribution level of each Member State. Critical Success Factors Barriers Implementation Costs The potential that there are no formulas or quantifiable metrics that determine quotas that are satisfactory to all Member States. Direct costs associated with the adoption of a formal quota assessment policy include: The cost of scheduling and conducting the conferences and meetings, etc., that would be required during the decision-making process. The cost of research and education of the decision committee of both the proposed resolutions of the past as well as the quota policies of similar organizations such as the UN. The cost of communicating the newly elected quota policy to the Member States. Indirect costs associated with the adoption of a formal quota assessment policy include: The cost of the human capital resources dedicated to determining the new quota structure instead of directing efforts to other areas of the organization for which they were originally assigned. Business Processes: Adopt Formal Quota Assessment Policy 59

60 Final Report – November 3, 2003 Business Processes: Implement Strategic Mandate Framework During the past several years, the number of mandates assigned to the General Secretariat has increased considerably. Once approved by the General Assembly or Summit of the Americas, mandates are assigned to the corresponding business area within the GS to complete without accurately quantifying the resources required to execute them. Although mandate status is monitored by the GS (specifically, DMAPPS), the tracking does not provide sufficient information to prioritize or budget by mandate. Background The volume of mandates has increased, but the number of completed mandates has declined. Currently there is no method for prioritizing mandates. It is difficult to assess mandate completion due to the lack of quantifiable metrics and milestones associated with the mandates. Issues Graph shows the total number of mandates over the past five years with their completion status. As the in- process mandates increased considerably, the completed mandates have declined, leaving a backlog of mandates that creates a perception that the organization is not able to complete its mandates. Observations: The number of mandates have increased considerably; however, there is not a formal acceptance, planning, or monitoring process for managing the mandates. Observations: The number of mandates have increased considerably; however, there is not a formal acceptance, planning, or monitoring process for managing the mandates. 60

61 Final Report – November 3, 2003 Description: Implement a framework for adopting, prioritizing, funding, and tracking OAS mandates in relation to the strategic objectives, Charter, and desired results identified in the proposed Strategic Planning and Results-Based Budgeting systems. The change is required to adopt and align the mandates of the OAS with its strategic objectives to deliver the desired results of those objectives and allocate resources accordingly. In addition, the mandate tracking procedures need to be improved by designating more quantifiable results and milestones to accurately measure completion and level of success. Advantages: By using a set of quantifiable metrics to assess mandate completion, the proposed framework would enable more accurate and outcome-focused tracking of mandates. Resources would be allocated to those mandates that align with the high priority areas and strategic objectives of the OAS. Mandates would be developed and adopted in line with the core set strategic objectives of the Organization and will therefore contribute toward delivering the desired results of the OAS. Disadvantages: The mandate evaluation and adoption process would be more sophisticated and potentially time consuming since there would be more scrutiny before being acted upon by the General Secretariat. Business Processes: Implement Strategic Mandate Framework 61

62 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Develop a working group within the Permanent Council to chair and coordinate the mandate development and implementation process (mandate prioritization will largely continue to be done by the political bodies; however, aligning resources to these mandates will be the role of the working group). This committee would work closely with representatives from Budget (DMAPSS), the Strategic Planning Committee, and staff in the GS to oversee the mandate execution process. 2)Develop methodology for evaluating proposed mandates to assess compliance with Organizational strategic objectives and desired results. This would enable the OAS to determine whether a mandate will contribute to the OAS meeting its goals and, if so, to what extent. 3)Develop framework for prioritizing mandates once they have been adopted and assigned to technical areas for completion. 4)Allocate budgetary resources according to the prioritized list of mandates that align with the strategic objectives and goals of the OAS, and based on the level of funding that will be required to complete the mandate. 5)Develop framework for tracking the completion of mandates based on quantifiable measures and tracked by the business area completing the mandate. 6)Modify the current database inventory to include metrics to measure results. In addition, identify opportunities to consolidate mandates. 7)Hold periodic evaluation sessions to assess the completion of mandates, track budgetary execution and alignment with strategic priorities, and make changes as necessary. Timeframe for Implementation Plan: Timeline (Months) Business Processes: Implement Strategic Mandate Framework 62 0 369 12151821242730 Develop Mandate Prioritization Framework Allocate Budget Resources According to Priorities Develop Mandate Evaluation Methodology Establish Representative Chair Committee Implement Strategic Mandate Framework Develop Framework for Tracking Mandate Completion Conduct Evaluation Sessions Modify Current Mandates Database

63 Final Report – November 3, 2003 The strategic planning process, budgeting process, and mandate development and implementation process must be closely aligned and coordinated with one another. Mandates need to be more specific and the metrics used to assess mandates must be measurable and standardized. Critical Success Factors Barriers Implementation Costs Inadequate implementation of the strategic planning process and the Results-Based Budgeting process would greatly inhibit the ability of the Organization to change its approach to mandate management and execution. Direct costs associated with implementing a strategic mandate framework include: Costs associated with making adjustments to the current mandate tracking system or adopting a new system. Costs of developing training, policies, and procedures to facilitate the organization-wide adoption of the strategic mandate framework. Indirect costs associated with implementing a strategic mandate framework include: Cost tied of the time spent implementing the new strategic mandate framework. Business Processes: Implement Strategic Mandate Framework 63

64 Final Report – November 3, 2003 Business Processes: Streamline Procure-to-Pay Process Background Issues Procure-to-Pay activities can be divided into transactional activities (mechanical activities associated with the processing of a transaction) and strategic activities (negotiating contracts, managing vendors, cash management, strategic sourcing, etc.). The time allocation of the Accounts Payable Department is focused on transactional activities more than strategic activities, likely due to the high volume of transactions processed. There is a high volume of common cost payments, which are overhead type allocations that are treated like traditional payments. 2002 Payment ThresholdPayments <= $50029,243 > $500 and <= $2,50019,145 > $2,500 and <= $5,0003,377 > $5,0003,294 TOTAL55,059 In 2002, there was a high volume of low dollar purchases processed by the Procurement and Accounts Payable areas. Each of these transactions consume about the same amount of resources as higher dollar transactions, resulting in a high level-of-effort devoted to processing transactions (see table). There is a high volume of recurring transactions (similar transactions with the same vendor). These transactions are not automated or consolidated and cause an increase in the workload of the AP function. Processing the common cost payments through AP increases the processing workload of the function. The volume of checks being processed far exceeds the number of wire transfers and EFTs, which traditionally are more efficient forms of payment (see table). Payment MethodsPayments Check46,727 Clearing5,191 EFT2,636 Wire505 Total55,059 There is a high volume of low-dollar transactions. Approximately 88% of all AP transactions are for less than $2,500. There is a high volume (approximately 85%) of disbursements made via check. Observations: The Procure-to-Pay process, which includes all activities associated with acquiring and paying for goods and services, has a high volume of low dollar transactions (approximately 88% of transactions are under $2,500) and also relies on checks for most disbursements (approximately 85% of payments are via check). As a result, resources must be devoted to processing low-value and paper-based transactions that could be automated. Observations: The Procure-to-Pay process, which includes all activities associated with acquiring and paying for goods and services, has a high volume of low dollar transactions (approximately 88% of transactions are under $2,500) and also relies on checks for most disbursements (approximately 85% of payments are via check). As a result, resources must be devoted to processing low-value and paper-based transactions that could be automated. 64

65 Final Report – November 3, 2003 Description: Modify several key procurement and payment processes within the Procurement and Accounts Payable areas to minimize processing time and improve efficiencies. These modifications include: Advantages: By implementing the three options, the AP function could free resources to focus efforts on more strategic initiatives such as cash management. Purchase cards could decrease the volume of transactions processed by the AP group as well as streamline the purchasing process for low value transactions by the Procurement group. In addition, Purchase Cards can provide flexibility in making purchases in the OGSMS By establishing automatic payments for recurring transactions, the volume and processing time involved with repetitive invoices could be reduced. In addition to reducing the amount of time spent in paper check processing, EFTs require less touch points, less paper, and are less expensive to execute. The suggested improvements could be implemented relatively quickly to reduce workload. Disadvantages: Certain vendors may not have the technical capability to receive payments via EFT, thus mandating invoice payment by check or change of vendor. Upfront time and effort is required to set up vendors for EFT payments. Procurement cards may require additional training of program staff who would be executing transactions. Use of Procurement Cards for low-dollar transactions – purchases made under a certain dollar level can be executed using a purchase card, which would be paid similar to a credit card bill with a single invoice for multiple transactions. Automated payment for recurring transactions – For expenses incurred on a regular periodic basis, implement periodic billing or payment schedules to eliminate individual processing of invoices. To the extent possible, migrate vendor disbursements to EFT – In order to reduce the level of check processing, transition applicable disbursements to electronic funds transfer (EFT), especially for recurring purchases at the same vendor. Business Processes: Streamline Procure-to-Pay Process 65

66 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Review accounts payable transactions to identify specific opportunities to improve the process. Recurring transaction at the same vendorApproach vendors about periodic billing and/or automatic payment Determine the number of transactions that could be placed on a purchase card, i.e., the transactions below a certain micropurchase threshold ($2,500 is typical), and where they are occurring, i.e., what areas are making the purchases. Identify internal transactions that could be automated in the general ledger, e.g., common cost payments. 2)Develop a plan of action for implementing process changes and enablers, and develop baseline and goal performance measures to monitor progress. 3)Implement changes and enablers, e.g., the purchase card and automated transactions. (Note: purchase card implementation will require training and guideline development to improve controls and reduce risk of fraud and abuse.) 4)Monitor spend on an ongoing basis to continually improve the process and reduce or automate transactions and increase time spent on more strategic activities. Timeframe for Implementation Plan: 036912151821242730 Timeline (Months) Implement Changes and Enablers Develop a Plan of Action Review Accounts Payable Transactions Streamline Procure-to-Pay Process Monitor Spend on an Ongoing Basis to Continually Improve the Process Business Processes: Streamline Procure-to-Pay Process 66

67 Final Report – November 3, 2003 Encourage cooperation and communication between procurement and accounts payable to encourage an end-to-end view of the procure-to-pay process. Use freed resources to perform more strategic roles, such as vendor management, cash management, strategic sourcing, etc. Critical Success Factors Barriers Implementation Costs Reluctance of procurement and accounts payable personnel to assume new strategic roles and activities as the transaction workload declines. Direct costs associated with streamlining procure-to-pay processes include: Direct costs will vary depending on the specific improvement; however, generally these improvements are relatively inexpensive to implement and result in quick and quantifiable benefits. There is also the potential for generating revenue through purchase card rebates (many offer rebates for quick payment of invoices). Indirect costs associated with streamlining procure-to-pay processes include: Training and change management will be required for certain changes. Updating of procurement and payment policy may be required for certain improvements, e.g., purchase card. Business Processes: Streamline Procure-to-Pay Process 67

68 Final Report – November 3, 2003 Overview of OAS Current Human Capital Policies and Practices Overview of OAS Staff Demographics Human Capital Practices at Leading Organizations The Major Questions that Drove Our Analysis Our Methodology Our Observations about Human Capital Practices at OAS Human Capital Appendices: F. Current OAS Grade and Salary Structure Description of United Nations Compensation System G. OAS Personnel Register (June 2003) with detailed OAS demographics H. OAS Performance Appraisal Form I. Detailed Deloitte Research Findings Related to OAS Human Capital Issues J. Series of Charts Reflecting Analyses of OAS Human Capital Issues 68 Human Capital

69 Final Report – November 3, 2003 Overview of OAS Current Human Capital Policies and Practices Following is a brief overview of the OAS current Human Capital policies and practices. A more detailed description is incorporated in the OAS Staff Rules (available from DHRS) and in the appendices that appear at the end of the report. GOVERNING LAWS AND REGULATIONS As is the case with other multilateral organizations, OAS is exempt from the laws of the host country and the other Member States. Accordingly, the OAS Charter, directives from the General Assembly, and directives from the Secretary General provide the foundation for the organizations Human Capital policies and practices. Human Capital policies are captured in the OAS Staff Rules and in policy instructions published periodically by the Secretariat for Management. The Staff Rules and other instructions are available in DHRS. NATURE OF APPOINTMENTS The General Secretariat consists of approximately 650 employees who support a wide range of programs and administrative operations approved by the Member States. At present, 538 are funded by the Regular Fund and about 112 are funded by Specific Funds. Staff are employed under several different types of appointments. 69 Trust – Certain posts are reserved for trust appointments, which are filled by appointment of the Secretary General for an indefinite period. Either a career or non-career employee may fill a trust appointment. These appointments end when the Secretary General leaves office or terminates the appointment. Career Service – Career status is independent of the post, and members can only be separated for cause. This category is currently being phased-out and replaced with Continuous Contracts.

70 Final Report – November 3, 2003 Overview of OAS Current Human Capital Policies and Practices Fixed-Term Contracts – Employment under this category is for a fixed term. There are two subcategories of fixed term contracts: Short-Term Contracts (Series A) – Maximum length of contract, or series of contracts, is three years unless funded with specific funds. Long-Term Contracts (Series B) – Can be issued for up to five years. Individuals must compete for appointment to a long-term contract. The following is a profile of OAS staff by type of appointment. 70 Type Of Appointment Length of Appointment % of Staff Average Age Average Years of Service Average Salary U.S. Nationals Non-U.S. Nationals MaleFemaleTotal Long-Term Contract 1-5 Years42%42.76.2$58,538110165125150275 CareerResidual33%55.624.2$73,24785131100116216 Short-Term Contract < 3 Years14%35.61.9$50,5203157424688 Trust / Non-Career Indefinite9%49.15.4$99,2771742401959 Trust / Career Indefinite2%60.227.6$124,000299211 Totals100%46.811.9Average $67,542 245404316333649 Figures are as of May 31, 2003 and do not include individuals appointed to Local Professional, Associate, or Temporary Support positions. U.S. Nationals = U.S. Citizens and Permanent Residents in the U.S. Non-U.S. Nationals = A-2, G-4, and G-1 visa holders, expatriates outside the U.S., and local staff in member countries

71 Final Report – November 3, 2003 Overview of OAS Current Human Capital Policies and Practices Other categories: In addition to employing staff who are appointed to the above categories, the OAS employs individuals in other categories of employment that are designed to fulfill a variety of short term or specialized needs. Individuals in the following categories are not entitled to the rights and benefits provided to staff in the categories listed above. Local Professionals – Specialists who are recruited locally to work at the duty station where they are recruited. Local Professionals are subject to the labor laws of the country where they provide services. Associate Staff Member – Temporarily appointed to perform specific administrative, scientific, support, or other functions through agreements with other institutions. Temporary Support Personnel – Contracted locally to provide support services to temporary projects. Independent Contractors (CPRs): Individuals are also hired under Performance Contracts to serve as contractors or independent consultants to the OAS. CPRs are not staff members or employees of the General Secretariat. The Performance Contract does not create an employment relationship between the General Secretariat and a person. CPRs do not receive the benefits provided to staff members of the organization. There are two broad categories contracts. Task Based – Contracted to complete a defined task within a defined time frame (for example, installing an upgrade to the Oracle system). Task-based contracts are typically less than 11 consecutive months in duration. Individual – Contracted to perform staff type work on a short-term basis (for example, performing year- end maintenance on the Oracle system). These contracts are typically less than six consecutive months in duration. 71

72 Final Report – November 3, 2003 Overview of OAS Current Human Capital Policies and Practices CPR Rules -- The most recent rules governing the use of CPRs are contained in Executive Order 01-4, Performance Contracts Rules, issued in May, 2001. A procedure is in place for hiring CPRs, with checks and balances built in to control the process. These checks and balances include a performance contract which identifies CPR candidates that have family relationships that conflict with the rules; the requirement that a department head sign a requisition indicating that funds are available prior to hiring a CPR, a resume review by the procurement department; and a DHRS review of any requests to issue time based contracts for periods that exceed six consecutive months in duration. Further, contracts over $50,000 require review by the legal department, and contracts over $70,000 must go out for competition. A copy of Executive Order 01-4 is attached at APPENDIX K, as is a copy of a blank performance contract. Use of CPRs -- The organization uses a substantial number of CPRs to provide a wide range of services. In 2002, 1188 purchase orders for CPRs were processed at a total cost of $14,698,405. 21% of this cost was paid by regular funds, and the remaining 79% was paid by specific and other funds. For the period between January and September of 2003 the organization issued 935 purchase orders for CPRs at a total cost of $12,348,032. 23% of the cost was paid by regular funds, and the remaining 77% percent was paid by specific and other funds. Chart II at APPENDIX J shows the number of CPRs requested by funding source. The majority of CPRs are hired to work on specific projects and to perform specific functions on a short term basis. It does appear, however, that approximately 30% (our best estimate) of CPRs may be performing staff work that would normally be assigned to term contract or career staff if staffing levels permitted. 72

73 Final Report – November 3, 2003 Overview of OAS Current Human Capital Policies and Practices CPR Management -- The organization appears to be making progress towards better managing the CPR hiring process. In addition to the controls mentioned above, a new training program was recently rolled out to educate managers on the policies and procedures for hiring CPRs. The Oracle system has helped expedite request processing and broadened reporting capabilities. Despite this progress, there is still some resistance to following the guidelines. Primary responsibility for managing and monitoring the CPR program resides with the Office of Procurement. 73

74 Final Report – November 3, 2003 Overview of OAS Current Human Capital Policies and Practices Professionals/Directors 5 grade levels for Professionals, each with 10 -15 steps, depending on the grade. 2 grade levels for Directors, with 9 and 6 steps respectively. 2 salary levels for each grade -- one for staff with dependents and one for staff without dependents. (dependents structure is slightly higher). The salary structure is identical across all geographical boundaries. A post adjustment, which reflects cost of living differences between duty stations, supplements the salary structure to promote equilibrium in purchasing power across all duty stations. General Services 7 grades with 13 steps in each grade. Salary ranges vary for each geographic area. No post adjustment added to basic salary. Structure is updated annually by local UN offices in each country, based upon a survey of the local market. A profile of the OAS staff by salary structure is provided on the following page. 74 COMPENSATION In 1995, the OAS adopted the United Nations (UN) common system of salary administration, which is used by UN agencies around the globe. The OAS grade and salary structure and post classification standards are identical to the UN. The OAS also updates its salary structures in sequence with the UN. A description of the compensation system is attached in APPENDIX F. OAS has two grade and salary structures: one for Professionals/Directors and one for General Service employees. Copies of the current structures are included in APPENDIX F. Following is a brief description.

75 Final Report – November 3, 2003 Overview of OAS Current Human Capital Policies and Practices TAXATION As employees of a multilateral organization, most OAS staff are exempt from taxation in both the U.S. and their country of nationality. Those staff who are subject to taxation -- such as Mexico, Barbados, and the U.S. -- receive a reimbursement of their taxes from the host country through OAS. This tax reimbursement costs OAS nothing: funds for the reimbursements are provided by the State Department of the Member State where the employees post is located. BENEFITS OAS offers a comprehensive collection of benefits to its employees. The benefits provided to employees is determined by their appointment type. The following page provides an illustration of the benefits available to employees by type of appointment. Salary Structure Number of Grades Number of Employees Percent of Workforce Average Salary Number of Males Number of Females Director2366%$122,7642610 Professional534954%$80,897192157 General Services725940%$39,40593166 Profile of staff by salary structure Data as of May 31, 2003 Average salary includes basic pay, post adjustment, and applicable allowances Figures do not include the Secretary General, Assistant Secretary General, and 3 Executive Secretary positions. These positions are not slotted into the salary structure. 75

76 Final Report – November 3, 2003 a. Benefits will be one half of those that correspond to fixed contracts of the same duration. b. Benefits granted to staff members in grades P1 and above who fulfill the requirements of the Rule - Away from Headquarters. c. Benefits granted to staff in grades G1 through G7 who meet the requirements of the Staff Rules. d. Benefits granted to staff members in Grades P1 and above and those in any grade who have been recruited internationally if on board before April,1 2003. Mandatory for those on board after April 1, 2003. e. Benefits granted to staff members in grades P1 and above who fulfill the requirements of the Rule. f. Occurs when transportation of personal effects has been granted away from headquarters. g.Six months of continuous services carries with it right to annual leave. h. Applicable only if the staff member has been recruited internationally for a period longer than two years and if it is expected that the staff member will continue in service with the General Secretariat for at least six months after returning home. i. Benefit acquired after completion of one year of service. j.Contracts of one year or more or short-term contracts with one year of continuous service. k.Benefits granted to staff members in grades P1 and above and those in any grade who have been recruited internationally if on board before April 1, 2003. l.Benefits granted to staff members in grades P1 and above and those in any grade who have been recruited before April 1, 2002. m.Limited to persons who were on board by December 31, 1970. Source: OAS Department of Human Resource Services Overview of OAS Current Human Capital Policies and Practices 76

77 Final Report – November 3, 2003 Overview of OAS Staff Demographics Following is a brief overview of OAS Staff demographics by Nationality, Gender, and Location: BY NATIONALITY: A detailed listing of OAS staff by nationality is included in the Personnel Register in APPENDIX G. The organization is highly diverse, with staff representing all of the Member States and several other countries. The Member States with the greatest number of nationals at OAS (as of March 31, 2003) are listed below: U.S. 124Venezuela 23Brazil 17 Peru 50Chile 18El Salvador 15 Columbia 46Ecuador 18Mexico 13 Uruguay 34Guatemala 18Trinidad & Tobago 13 Argentina 25Bolivia 17Canada 12 BY GENDER: MALE: 316 (49%) FEMALE: 333 ( 51%) BY LOCATION: U.S. (Washington): 582 Other Member States: 77 (typically one professional and two general service staff per country). 77

78 Final Report – November 3, 2003 Human Capital Practices at Leading Organizations 1.The organizations mission, objectives, and priorities are clear and permeate the organization. Leading organizations have clearly defined missions, objectives, and priorities that are understood by managers and staff (and contractors) across the organization. These overall objectives and priorities cascade down to department goals and priorities, to unit goals and priorities, and ultimately to each managers and employees individual goals and priorities. If done correctly, each employee understands exactly how his/her job aligns with and contributes to the organizations overall objectives – and success. There is also constant communication – from the top down, across departments, and from the bottom up – to ensure that important information is flowing to the right people at the right time. 2.Human capital practices are designed to support the organizations mission and strategic objectives. Human capital practices with regard to organizational analysis, needs assessment, workforce planning, sourcing (staff or contractors), recruitment, compensation, benefits, types of appointments, performance management, training and development, and employee relations are all designed to ensure that the organization has the right people with the right skills at the right time and at the right cost to achieve its objectives. Research shows that leading (high-performing) organizations recognize that high-quality executives, managers, staff, and contractors are critical assets who contribute directly to the organizations success. Accordingly, they design their human capital practices to focus on attracting the best talent possible and then aligning that talent with the organizations strategic objectives. Following are eight human capital practices these organizations use that are most relevant to OAS. 78

79 Final Report – November 3, 2003 Human Capital Practices at Leading Organizations 3.Compensation and benefits are competitive with the market. Leading organizations constantly survey the market to ensure that their compensation and benefit levels are comparable to their most likely competitors for talent. Those competitors are typically other organizations in the same locale that need talent with the same kinds of education, skills, and competencies they need. Once an organization understands the market, it then decides whether to set its compensation levels to match, lead, or lag its competitors. This decision is typically made based on the organizations financial situation and how important it is to be able to recruit and retain high-quality talent. Leading organizations also actively monitor their compensation and benefits programs and look for innovative ways to constrain costs without sacrificing their competitive position. 4.Compensation is tied to performance. Leading organizations set specific objectives for managers and employees (tied to the organizations overall objectives) and then link salary increases to their success in achieving those objectives. Compensation is a reward for superior performance and a motivator for future performance – not an entitlement for longevity. These systems can significantly improve productivity, but require a considerable investment by both managers and employees to establish specific objectives and to measure performance in a valid manner. 5.Identifying and developing the organizations future leaders is a top priority. Leading organizations are proactive in identifying and grooming future leaders. Formal succession plans serve as blueprints that guide training and assignments for managers who are expected to rise to high levels within the organization. Such plans also aid in the transfer and retention of institutional knowledge that is often lost with departing employees. 79

80 Final Report – November 3, 2003 Human Capital Practices at Leading Organizations 6.Improving staff competencies is an integral part of the culture. Leading organizations dedicate considerable resources to maintaining, updating, and broadening staff competencies (knowledge, skills, abilities). These organizations usually have clearly defined competency requirements for each position, a process to assess the staffs current competency levels, and a wide range of training and development programs that include in-house programs, e-learning, university careers, and development assignments. 7.Technology and knowledge management are used to leverage talent. Leading organizations make a significant investment in technology and knowledge management systems to make their people more productive and efficient. These investments typically take the form of networked PCs available to every staff member, e-mail, integrated HR and Financial management systems (ERPs), special knowledge- capture systems (such as shared drives and on-line libraries), employee self-service HR processes, and manager self-service for budget, HR, and financial management processes. 8.Performance management is a critical function. Leading organizations view performance management not as a perfunctory duty but as a crucial tool for driving strategic objectives and priorities through the organization. As noted earlier, the organizations overall strategic objectives and priorities cascade down to each department and unit and, ultimately, into the performance plans for each manager and staff member. Every individual in the organization understands how his/her job ties to the organizations overall objectives and why his/her performance is important to achieving those objectives. Managers and staff are trained to analyze roles, set objectives and priorities, monitor progress, and evaluate success. Staff are given continuous feedback and are encouraged to succeed. Those who are not performing well are counseled and given an opportunity to improve. If they dont improve, they are released from the organization. Managers and staff recognize that poor performers damage the effectiveness of the entire unit. 80

81 Final Report – November 3, 2003 The Major Questions that Drove our Analysis Based on our discussions with the Member States, we focused our analysis of OAS Human Capital practices around six basic questions: 1.Are OAS current Human Capital programs and practices aligned with the organizations mission and strategic objectives? 2.How do OAS compensation and benefit levels compare with similar organizations? 3.Are the current compensation and benefits systems serving the best interest of the organization with respect to recruitment, retention, and budgetary constraints? 4.How do OAS Human Capital programs compare with leading practices in the areas of performance management, pay-for-performance, competencies, staff development, diversity, and other areas? 5.What options should OAS consider to improve the efficiency and effectiveness of its Human Capital policies and programs? 6.What steps can the OAS take to constrain future salary and benefits increases? 81

82 Final Report – November 3, 2003 Question 1 - Are OAS current Human Capital programs and practices aligned with the organizations mission and strategic objectives? 1.No – primarily because OAS mission, strategic objectives, and priorities are not clearly understood by managers and employees across the organization. Consequently, there is little foundation for the development of human resource programs that are strategic rather than simply tactical, such as competency analysis, workforce planning, incentive compensation, selective outsourcing, and change management. 2.However, the OAS does have some useful HR programs that meet most day-to-day needs of the organization. These include recruiting support, compensation and benefits administration, dispute resolution, job evaluation and classification, and a number of other services. Many of these programs are well documented and have matured over the course of several years, which has enhanced their effectiveness in supporting the operational needs of the organization. 3.Human Capital practices will need to transition from tactical to strategic if the organization is to succeed in any major transformation effort. If the OAS implements a strategic planning process, the organizations Human Capital programs will need to be reviewed and revised to support the organizations short-term and long-term strategic objectives. The Department of Human Resource Services will also need to play a key role in developing communications and change management plans to drive the changes throughout the organization. Our Observations About Human Capital Practices at OAS 82

83 Final Report – November 3, 2003 Our Observations About Human Capital Practices at OAS Question 2 - How do OAS compensation and benefit levels compare with similar organizations? 1.OAS compensation and benefit levels are reasonable – neither too high nor too low – when compared with similar employers in the Washington, D.C. area, including PAHO, the IDB, the World Bank, the U.S. Government, and the private sector. The benchmark analysis we conducted with other organizations indicates that OAS salary and benefit levels are in the middle of the group – lower than some and higher than others. The average salary for OAS staff is approximately $67,500 and the average total compensation (salary, benefits, and allowances) is about $88,500. These averages are consistent with other professional organizations in the Washington area. OAS benefit load for pension, health, life, and disability insurance is about 23%, and its benefit load including allowances is approximately 31%. These benefit numbers are also comparable to other professional organizations. We believe OAS current position in the middle of the market is appropriate to remain competitive for the types of skills OAS needs, and to manage staff costs. A detailed analysis of OAS compensation and benefit expenditures is included in APPENDIX J. 2.OAS annual salary structure adjustments have been reasonably consistent with the benchmark group. Chart III in APPENDIX J shows that over the course of the last five years (1999 – 2003), salary scale increases (including post allowance) for OAS and PAHO professional staff have averaged 4.91%. This is approximately 1.25% higher than the other benchmark organizations: World Bank, IDB, the U.S. Government, and the private sector. This difference is not significant, however, given the fact that OAS does not offer incentive compensation (bonuses) as do the other benchmark organizations. The increase to the OAS General Service structure averaged.85% below the benchmark group. 83

84 Final Report – November 3, 2003 Our Observations About Human Capital Practices at OAS 3.The types of benefits offered by the OAS are also very comparable to similar organizations. All of the benchmark organizations offer a full range of high quality benefits to their employees. The type of benefits offered by the OAS is very similar to the group, and OAS appears to be managing benefit costs very effectively. OAS provides a high quality benefits plan for its employees. OAS offers high quality medical, dental, life, and disability insurance to its employees, as well as a defined benefit retirement plan. The coverage provided by these plans are fairly similar across the benchmark group, as are employee contributions to participate in the benefits. Chart IX in APPENDIX J outlines the major OAS benefits. OAS costs for benefits are lower than industry averages. At an average cost of $5,205 per employee, OAS medical and prescription costs are lower than local and national average costs. The OAS has managed to avoid the trend of double-digit increases in medical costs over the past two years. During this period its costs have increased by 3% and 5% respectively. Comparative benefits cost data is illustrated in Charts X, XI, and XII in APPENDIX J. OAS expatriate benefits are competitive when compared with similar organizations. The OAS provides a variety of benefits for expatriates who are given certain appointments. These benefits are comparable to those offered by similar organizations. A summary of expatriate benefits is included in Chart XIII in APPENDIX J. 84

85 Final Report – November 3, 2003 Question 3 - Are the current compensation and benefits systems serving the best interest of the organization with respect to recruitment, retention, and budgetary constraints? 1.The OAS compensation and benefit programs are serving the organizations interests. As discussed earlier, OAS salaries and benefits are reasonable in comparison with the benchmark group and the average cost per employee for both salary and benefits are comparable to other employers in the Washington area. Further, DHRS reports that the organization is not encountering difficulties recruiting and retaining employees in any area. At 8.1%, OAS turnover is comparable to the average of the benchmark group. An illustration of turnover across the benchmark group is provided in Chart XX in APPENDIX J. The only major area of concern we identified is the difficulty OAS has had in recent years projecting the size of the annual UN pay structure and post adjustment. We recommend that OAS work much more closely with the UN in the future to more accurately project the increase for budgeting purposes. 2. The use of term contracts is also serving the organizations interests. Salary and benefit data indicate that term contractors are cost-effective for the OAS in terms of average salary and benefit costs compared to career employees. Further, we were told by the vast majority of managers we interviewed that there is no significant difference in performance or work quality between contract staff and career staff. Accordingly, the decision to phase out the career staff was a good one. We believe OAS should continue to use contract staff to the maximum extent possible, relying on long-term staff only where continuity and corporate memory are critical. Our Observations About Human Capital Practices at OAS 85

86 Final Report – November 3, 2003 Question 4 - How do OAS Human Capital programs compare with leading practices in the areas of performance management, pay-for-performance, competencies, staff development, diversity, and other areas? 1.Performance management is a strategically important management tool in leading organizations, yet in the OAS performance management appears to be a low management priority. The OAS has a policy and procedures regarding employee performance management; however a substantial number of employees do not receive performance feedback. In 2003, only 35% of eligible employees received an appraisal by the appraisal deadline, in 2002 only 43%, and in 2001 only 68%. There are three major distinctions in how employee performance is managed at the OAS and at high-performing organizations. These distinctions may likely contribute to the low priority exhibited by the OAS: 1.High-performing organizations hold managers accountable for conducting performance appraisals, and discipline them for non-compliance; the OAS does not. 2.High-performing organizations administer pay increases based upon the results of the performance appraisal; OAS staff members receive a step increase even if an appraisal has not been conducted. 3.High-performing organizations train managers and supervisors on how to conduct performance appraisals; the OAS does not. 2.The link between pay and performance is clear at leading organizations; however, it is very obscure at the OAS. Linking pay and performance is a standard practice at leading organizations. As illustrated in Chart IV in APPENDIX J, all of the organizations in our benchmark group have a merit based pay system that tie pay increases to employee performance. On the other hand, OAS pay system fails to create a discernable link between pay and performance. As noted above, employees receive a pay increase even in the absence of receiving a performance evaluation. The current pay system may actually provide an incentive for poor performers to stay with the organization. Our Observations About Human Capital Practices at OAS 86

87 Final Report – November 3, 2003 3.Leading organizations identify competencies that drive organizational performance and weave these into their recruiting, employee development, and performance management programs. Competencies are the specific knowledge, skills, abilities, and behaviors an employee needs to be successful in his/her job. The OAS has identified some competencies that are used in the hiring and the evaluation process. This is a step in the right direction, but it is difficult to trace a core set of competencies from the hiring through the evaluation and advancement processes. Further, the absence of a clear mission and strategy makes it difficult for the organization to develop competencies that can be correlated to organizational results. 4.Staff development is a strategic human capital practice in leading organizations, yet the OAS does not commit sufficient financial resources to develop the staff. Leading organizations recognize that a link exists between the investment in employee development and organizational results. Consequently, they provide employees with defined career paths, specialized training opportunities, and ongoing consultation on career development. The OAS, on the other hand, provides few resources to aid with career development. Career paths are not defined, performance feedback is sparsely provided, and less than $90 per person is allocated to the budget for training purposes. 5.Leading organizations value and actively promote diversity in their workforce, as does the OAS. The OAS has a very diverse workforce, with a large percentage of females and individuals from a wide range of cultures. No bias is evident in its recruiting, compensation, and promotion practices. The proportion of females in almost all categories of employment has risen steadily over the past few years, and two resolutions have been passed to increase the promotion of women into senior management roles. A breakdown of staff at OAS by gender appears in the Personnel Register included in APPENDIX G. Our Observations About Human Capital Practices at OAS 87

88 Final Report – November 3, 2003 Our Observations About Human Capital Practices at OAS Questions 5 - What options should OAS consider to improve the efficiency and effectiveness of its Human Capital policies and programs? Question 6 - What steps can OAS take to constrain future salary and benefit increases? Because Questions 5 and 6 are closely related, we have combined them in one section. Following is a summary of the options OAS should consider to improve its Human Capital practices and to constrain costs for the future. A detailed discussion of each option appears on the pages the follow. Summary of Options: 1. Improve the performance management system to use it as a tool for strategic management 2. Link compensation increases for managers and employees more closely to performance 3. Implement a management training program 4. Review potential cost-saving options for employee benefits 5. Offer targeted training and development opportunities to enhance staffs competencies 6. Facilitate career advancement 7. Conduct an audit to ensure that OAS post classifications are consistent with the UN 88

89 Final Report – November 3, 2003 Description: One of the most effective ways for any organization to improve productivity is to effectively manage employee performance. The OAS has a performance appraisal system in place, but it is not routinely and consistently applied throughout the organization. Employees at all levels should receive guidance on standards of performance and timely and constructive feedback. Also, pay practices should be linked to the performance management program. Supervisors should be held accountable for delivering timely and constructive appraisals, and training should be provided to managers, supervisors, and employees in the appraisal process. Potential Advantages: Clearly links each employees performance goals to the OAS overall strategic objectives. Institutionalizes a culture that values employee effort and contribution towards the achievement of organizational goals. Creates a platform for career development. Contributes to the development of critical people management skills for supervisors. Potential Disadvantages: Effective performance management requires a commitment of time by executives, managers, supervisors, and staff. The current performance management system will probably need to be redesigned to be more strategic than tactical. Training for all executives, managers, supervisors, and staff will require time and expense. Option 1: Improve the Performance Management System to Use It as a Tool for Strategic Management It as a Tool for Strategic Management 89

90 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Create a committee of DHRS, managers, staff, and the Staff Association to review the current performance management system and develop a plan to make it more effective and to link each employee to the OAS overall objectives and priorities. 2)Focus performance appraisal on competencies and measuring results. 3)Develop a process to train all managers, supervisors, and employees on the process. 4)Make timely and effective performance management a critical requirement for all managers and supervisors. 5)Use performance appraisals as a primary factor in decisions regarding compensation, extending appointments, advancement, and retention (removal). 6)Monitor the process the first year and provide remedial assistance to managers and employees having difficulty. Timeframe for Implementation Plan: 012345678910 Timeline (Months) Focus performance appraisals on competencies (on-going) Create committee Improve Performance Management System Develop a process for training all staff Use the performance appraisal in compensation and advancement decisions (on-going) Option 1: Improve the Performance Management System to Use It as a Tool for Strategic Management It as a Tool for Strategic Management Monitor the process (on-going) 90 Make timely and effective performance management a requirement

91 Final Report – November 3, 2003 Management resistance to following the policy. Visible management support. Effective training. Critical Success FactorsPotential Barriers Failure to penalize supervisors who do not follow the policy. Associated Costs There is little direct cost associated with this option. It will take some time to develop a supervisory training program, but this can be done in house at minimal expense. Developing a new performance management process could involve outside consultants. Option 1: Improve the Performance Management System to Use It as a Tool for Strategic Management It as a Tool for Strategic Management 91

92 Final Report – November 3, 2003 Option 2: Link Compensation Increases for Managers and Employees More Closely to Performance Employees More Closely to Performance Description: The OAS currently administers pay increases with little linkage to employee job performance. While the Staff Rules require administering increases by considering performance, the rule is routinely ignored. Consequently, the current pay practices have little impact on motivation and productivity. Therefore, the first option offered to the OAS is simply to enforce Staff Rule 103.4, and grant step increases only when performance and conduct have been satisfactory in accordance with the corresponding annual performance evaluation. This is a major step forward in leveraging human capital to increase productivity and efficiency, and is a practice used by leading organizations and the benchmark group. Potential Advantages: Employee motivation to work hard and contribute to the goals of the organization will improve. Employees and supervisors will place a greater value on the performance management and compensation systems. The organization will increase the return on its investment in human capital. Marginal and poor performers will leave the organization, which will create promotion opportunities for better performing employees. As marginal and poor performers leave the organization, opportunities are created to bring new talent into the organization. Managers will take a more active role in managing performance and the development of their staff. Potential Disadvantages: Employees who do not receive an evaluation would be unfairly denied a pay increase. An investment in training will be necessary to assist supervisors in conducting performance appraisals. 92

93 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Develop a policy that ties managerial compensation, in part, to compliance with Staff Rules 103.4, Step Increases, and 105.9, Work Performance Evaluation. 2)Develop a managerial training program on performance management and pay administration. 3)Deliver training program. 4)Monitor results during the annual evaluation cycle. Timeframe for Implementation Plan: 036912151821242730 Timeline (Months) Develop managerial training program Develop policy that ties pay increases to the completion of performance appraisals Link Pay with Performance Conduct training Monitor results during 2004 performance evaluation cycle Option 2: Link Compensation Increases for Managers and Employees More Closely to Performance Employees More Closely to Performance 93

94 Final Report – November 3, 2003 Supervisors who are unwilling to honestly evaluate their staff. Clear communication with employees about the link between performance, organizational results, and employee compensation. Educating employees on what constitutes acceptable performance. Visibly supportive leadership and management that is willing to take action if supervisors do not comply with policy. Effective and timely supervisory training on conducting performance appraisals and pay administration. Ongoing support and coaching for managers tasked with evaluating performance and administering pay. Critical Success FactorsPotential Barriers Associated Costs Lack of money or inadequate resources available for training purposes. Leadership that is unwilling to enforce the rules and discipline supervisors who disregard policy. The primary cost for this option will consist of expenses incurred for designing and delivering the training program. The lowest cost alternative is to have the training developed by OAS staff and delivered on-site at the OAS. If adequate resources are not available a consultant may be used to design and deliver the training. Additional costs include managers salaries while attending the training, and the cost of materials provided as part of the training. Option 2: Link Compensation Increases for Managers and Employees More Closely to Performance Employees More Closely to Performance 94

95 Final Report – November 3, 2003 Description: Effective management is a primary driver of productivity and organizational success. Our research indicated that while most OAS managers and supervisors have the technical skills needed for their jobs, few have been trained (or are adept) in effective project management, financial management, budgeting, and managing human resources. Managers want this training and staff agree that it is needed. Course content may include instruction on effective leadership skills, communication skills, project management, budgeting and financial management, staff retention, appraising employee performance, and time management. The organization should require completion of the training as a prerequisite to being promoted into a managerial or supervisory position. Potential Advantages: Can have a direct impact on improving organizational performance. Can be a cost effective way to develop competent managers and supervisors. Training can be custom tailored to the specific needs of the organization. Training will lead to greater productivity and increase staff morale and retention. Can be an effective management recruitment and retention tool. Allows the future leadership of the organization to network and build relationships with each other. Potential Disadvantages: Some of the current managers may not possess the aptitude to acquire supervisory skills, prompting hard decisions on what to do with them. Some managers may feel that the training initiative is indicative of the organization placing blame on them for its problems. A comprehensive training program taxes precious time on managers who already have a busy schedule. Money is required to develop the training programs. Option 3: Implement a Management Training Program 95

96 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Announce to managers that a new training initiative is being developed. 2)Identify target audience for the training. 3)Identify the competencies needed to be an effective manager at the OAS. 4)Conduct a needs assessment to identify gaps between required and existing competencies 5)Create training programs that develop and strengthen these competencies. 6)Schedule and deliver training programs. 7)Assess results. Timeframe for Implementation Plan: 012345678910 Timeline (Months) Identify target audience for training Implement Management Training Program Conduct a needs assessment Develop training programs (ongoing) Announce development of training initiative Identify essential competencies Deliver training and assess results (ongoing) Option 3: Implement a Management Training Program 96

97 Final Report – November 3, 2003 Lack of internal expertise in assessing training needs and developing training curriculum. Proper identification of competencies that translate into effective management. Visible support for the program from senior management. Integration of this program with the organizations performance evaluation program. Professionally designed and facilitated training programs. Critical Success FactorsPotential Barriers Lack of support from management in identifying needs and evaluating program design. Lack of interest from top management in supporting program goals and objectives. Associated Costs The primary cost associated with this option is tied to the development of the training program. This is a specialized task and may require the assistance of outside consultants or a training vendor. There will also be a cost for training materials and a facility to conduct the training. Indirect costs include labor costs for the time that individuals spend in the classroom. Option 3: Implement a Management Training Program 97

98 Final Report – November 3, 2003 Description: A wide range of options are available for constraining future increases to benefit costs. These options are outlined on the following page. NOTE: A glossary of terms used on the following page is located at the end of APPENDIX J. Option 4: Review Potential Cost-Saving Options For Employee Benefits Benefits 98

99 Final Report – November 3, 2003 StrategyPotential Savings/(Costs)Considerations (Advantages/Disadvantages /Implementation) Implement a Consumer Driven Healthcare plan Estimated savings of approximately 8-10% of medical premium or $385,000-$481,000 annually. Timing for bidding, negative impact to employees, major communications needs This would be a significant departure from the traditional managed care plan. Introduce a 3 tier prescription drug plan going from $10/$12 for Retail and Mail Order to $10/$20/$30 Retail $20/$30/$60 Mail Order Estimated savings of approximately 5-7% of medical premium or $240,000-$337,000 annually. Negative impact to employees, communications needs This benefit would be less rich than the peers, however a 3- tier benefit is the industry trend. Increase deductibles from $0/$100 to $250/$500 Estimated savings of approximately 6-8% of medical premium or $289,000-$385,000 annually. Negative impact to employees, communications needs This benefit would remain competitive with the peers. Increase coinsurance levels from 100/80 to 90/70 Estimated savings of approximately 2-4% of medical premium or $96,000-$192,000 annually. Negative impact to employees, communications needs This benefit would remain competitive with the peers. Increase employee contributionsVariesNegative impact to employees, communications needs This benefit may be less rich than the peers. Market plansVariesTiming for bidding, employee disruption Offer a Lifecycle AccountEstimated cost of approximately $350,000, assuming a $500/year contribution to the account. Employee relations tool to balance takeaways; some administrative requirements Option 4: Review Potential Cost-Saving Options For Employee Benefits Benefits 99

100 Final Report – November 3, 2003 Description: OAS should consider establishing a comprehensive training and development plan for the organization that 1) identifies where staff competencies are weakest, and 2) creates a series of training initiatives to improve those areas most needed. Initiatives may include in-house training, e-learning, university courses, self-study, and development assignments – depending on the nature of the need and the availability of funds. Potential Advantages: Maximizes the productivity of individuals who are most critical to the success of the organization. Serves as a tool to retain the organizations most critical employees. Serves as a reward for employees who perform the most critical tasks for the organization. Increases the likelihood that the most critical jobs in the organization will stay filled. Provides an incentive for employees to work hard and grow into one of these positions. Potential Disadvantages: Staff who are not eligible for training may feel that the organization does not value them. Option 5: Offer Targeted Training and Development Opportunities to Enhance Staff Competencies Opportunities to Enhance Staff Competencies 100

101 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Identify posts that have a major impact on the success of the organization. 2)Identify the knowledge, skills, and abilities (KSAs) needed to perform well in the post. 3)Identify the current incumbents in the posts and the individuals who are anticipated to grow into the posts. 4)Identify gaps between the KSAs of the incumbents and other individuals and those required in the posts. 5)Develop training programs that will bridge the gaps between existing KSAs and those needed for the critical posts. 6)Create career development and training programs for individuals expected to grow into the posts. 7)Facilitate training for individuals currently serving in the posts. 8)Monitor results of training and adjust accordingly. Timeframe for Implementation Plan: 02468101214161820 Timeline (Weeks) Identify current and future occupants of the posts Identify KSAs required for the posts Identify critical posts Offer Targeted Training and Development Gap analysis Develop training curriculum Create career development plans Rollout training for current incumbents Option 5: Offer Targeted Training and Development Opportunities to Enhance Staff Competencies Opportunities to Enhance Staff Competencies 101

102 Final Report – November 3, 2003 Failure to correctly identify critical posts in the organization. Proper identification of the skills required for the organizations most critical jobs. Training recipients and their managers must see value in the training. Opportunities to apply the skills acquired in the training must be present in the job. Critical Success FactorsPotential Barriers Associated Costs Resistance to training by people targeted as prospects for the training program. Primary costs include 1) DHRS time to conduct a training needs assessment and to develop a training plan, 2) staff time to participate in the training, and 3) training delivery expenses. Lack of managerial support for the investment in the training program. Option 5: Offer Targeted Training and Development Opportunities to Enhance Staff Competencies Opportunities to Enhance Staff Competencies 102

103 Final Report – November 3, 2003 Description: At the present time there are no defined career paths and few promotional opportunities for OAS employees. Defined career paths are useful for replacement planning purposes and are the foundation for employee training and development plans. Career paths and promotional opportunities help to attract and retain motivated and career-minded individuals to the organization. A complete review of job titles and career paths would be highly beneficial to OAS. A method for classifying jobs into fewer titles is needed, as is a policy that facilitates growth opportunities based upon job performance. Formal career planning tools should be developed and integrated into the new hire orientation and performance management process, and skills inventories and succession plans should be developed and maintained. Potential Advantages: Can be an excellent recruitment and retention tool. Employee commitment and motivation are increased. Reduces the period of time that a newly created or vacated post is unfilled. A pool of highly qualified candidates is readily available to fill vacant posts. Training and development plans are easier to create and are much more cost effective. If done correctly, much of the responsibility for career development can be placed upon the employee. Potential Disadvantages: Time for DHRS and managers to review the organization and develop career paths (where possible). Employee expectations may be unreasonably elevated when, in fact, advancement opportunities at OAS will always be limited due to the size and nature of the organization. Option 6: Facilitate Career Advancement 103

104 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Review organization and map career paths, where possible. 2)Develop career planning tools (skills inventories, modified performance appraisal, new hire orientation, training programs). 3)Train managers on how to assist employees with career development. 4)Train employees on how to manage their career development. Timeframe for Implementation Plan: 012345678910 Timeline (Months) Conduct a job audit and create job families Facilitate Career Advancement Map career paths throughout the organization Develop career planning tools Train managers and supervisors Train employees Option 6: Facilitate Career Advancement 104

105 Final Report – November 3, 2003 Project participants lack expertise in developing job families and career paths. Examples of success – e.g., promotions, can be observed by employees. Managers and supervisors actively encourage employees to use career development tools. Career development becomes part of the organizations culture. Career development is integrated with other human capital programs, e.g., training, recruiting, and performance management. Critical Success FactorsPotential Barriers Inadequate or overly-complicated career planning tools result in employees not using them. Career planning is undervalued by employees and/or supervisors. Associated Costs As with most of our other human capital options, labor will represent the primary cost to implement this option. A substantial amount of time will be needed to inventory and categorize positions, create and implement career development tools, and train managers and employees. Option 6: Facilitate Career Advancement 105

106 Final Report – November 3, 2003 Description: Even though the UN and the OAS use the same job classification standards, there is little coordination to ensure that the standards are applied consistently across the two organizations. OAS should conduct a benchmark audit with PAHO to jointly review a cross section of jobs within the two organizations. Particular emphasis should be placed on determining how points are assigned to posts during the classification process and how posts are assigned to grades. Posts that are similar in both organizations should be identified and used as benchmarks for comparison every year or two. Potential Advantages: Confirms that the OAS is applying the UN classification system appropriately. Helps to maintain parity with the UN. Increases the confidence of all OAS stakeholders that parity is important to the organization, which will have a positive impact on employee morale. Potential Disadvantages: Could be costly to the OAS if it is discovered that the OAS is classifying posts lower than the UN for the same post. This can be a time consuming task and will require some financial resources to complete. Option 7: Conduct an Audit to Ensure that OAS Post Classifications are Consistent with the UN Classifications are Consistent with the UN 106

107 Final Report – November 3, 2003 Action Steps for Implementation Plan: 1)Develop goals, objectives, and methodology for post classification audit. 2)Form an audit team that consists of the post classifiers from the OAS and PAHO, and a third party consultancy that will manage the audit. 3)Obtain position descriptions from the two organizations. Some of the descriptions should be for posts that exist in both organizations. 4)Conduct the audit. 5)Develop interim audit report and share with post classifiers in both organizations. 6)Conduct further analyses based on feedback from classifiers. 7)Develop final report for post classifiers in both organizations and management in the OAS. 8)Develop plan for implementing any changes as a result of the audit. Timeframe for Implementation Plan: 02468101214161820 Timeline (Weeks) Obtain post descriptions Form audit team Develop audit goals, objectives, and methodology Audit OAS and UN Post Classifications Conduct the audit Develop interim report Conduct additional audit Develop final report Implement changes Option 7: Conduct an Audit to Ensure that OAS Post Classifications are Consistent with the UN Classifications are Consistent with the UN 107

108 Final Report – November 3, 2003 Lack of available documentation, such as post descriptions, that is needed to conduct the audit. Consultancy managing the project is very knowledgeable about point factoring methods of job classification. Job descriptions and other related information are easy to obtain. Job classifiers in both organizations are accessible. OAS management and political body are committed to maintaining pay parity, and supporting the reclassification of posts (up or down) where merited. Critical Success FactorsPotential Barriers Lack of money available to conduct the audit or to reclassify posts that are graded low compared to similar posts at the UN. Failure of either organization to dedicate the time and resources required to conduct the audit. Associated Costs Improved objectivity during the audit will be achieved if a consulting firm is retained to conduct the initial audit. Thus, the primary cost for an audit of this nature will be for consulting fees. However, additional costs will be incurred if positions are reclassified as a result of the audit. This cost could be substantial if a large number of positions are reclassified to a higher grade. If the OAS and PAHO identify benchmark positions and agree to collaborate on future parity reviews, the reviews can be conducted by OAS and PAHO staff members, and the cost for the audit will be negligible. Option 7: Conduct an Audit to Ensure That OAS Post Classifications are Consistent with the UN Classifications are Consistent with the UN 108

109 Final Report – November 3, 2003 Technology Reorganize IT Functions Streamline Reporting and Data Integrity Implement Automation and Employee Self Services 109

110 Final Report – November 3, 2003 Technology: Reorganize IT Functions Currently, supervision of technology functions within the GS is located in several areas: Oracle – supported by two areas: DMAPSS and DFS. IT – hardware, networking, infrastructure, etc., are managed separately in an organizational unit within Facilities Management. There is no position charged with overall responsibility and ownership for the management of information technology. End user requests related to Oracle often pass through several areas supporting the Oracle system. Background Lack of centralized leadership leads to inefficiencies, task redundancy, lack of strategy, and inconsistent communication with end users. Decisions regarding resource allocation and system upgrades (such as patches) are currently being made in the database administration function without significant interaction with the applications function. Issues Observations: IT functions, including networking/security, support, and Oracle administration, are located in several different areas within the Secretariat of Management, including the Department of IT and Facility Services, DMAPPS, and the Department of Financial Services. There is no clear owner of the Oracle system who coordinates patches, protocols, updates, and other system-related functions. Observations: IT functions, including networking/security, support, and Oracle administration, are located in several different areas within the Secretariat of Management, including the Department of IT and Facility Services, DMAPPS, and the Department of Financial Services. There is no clear owner of the Oracle system who coordinates patches, protocols, updates, and other system-related functions. 110

111 Final Report – November 3, 2003 Technology: Reorganize IT Functions Description: Redesign the IT function to incorporate all technology-related functions together under the leadership and coordination of a Director of Information Technology. In addition, implement a consolidated leadership structure around the Oracle system by aligning all Oracle support units to gain efficiencies and increase collaboration. The activities of the Oracle functional areas would be closely coordinated with the Financial Reporting and Policy Division of Financial Services to support financial statement and Specific Fund custom report production and certification. The General IT Services Division would consist of the technology related areas of the current Department of Technology and Facility Services. Advantages: Placing the database and applications functions in one Department would enable the support and maintenance of the Oracle system to be streamlined, as well as establishing a single line of responsibility for Oracle. All IT and systems requests could be filtered through a single area and assigned to the appropriate group (Oracle or IT Services) that would manage resource allocation and prioritization of IT initiatives. Disadvantages: The creation of the IT Department would add an additional layer of management within the Organization. 111

112 Final Report – November 3, 2003 Technology: Reorganize IT Functions Current IT Structure All IT support functions are provided from three different Departments within the Secretariat for Management. Department of Financial Services provides Oracle reporting and transaction services. DMAPPS owns the Oracle application, providing DBA and application services in two different organizational units. Non-Oracle IT functions are provided in the Department of Technology and Facility Services. These function include networking, security, and general IT support services. 112

113 Final Report – November 3, 2003 Technology: Reorganize IT Functions Potential IT Structure Information Technology services consolidated under one area tasked with all IT functions, including Oracle and general IT functions. The IT Services Department would reside in the Secretariat for Management or its successor organization. The Oracle System Services area would consist of the Database Applications Administration and Security group and the Applications Analysis Development and Support group from DMAPSS. In addition, the Operations group from the Department of Financial Services is included. The technology related areas within the current Department of Technology and Facility Services would be grouped under the Information Technology Department in the General IT Services Area. The remaining facility related areas would be transitioned to the Conferences and Meetings Department. 113

114 Final Report – November 3, 2003 Technology: Reorganize IT Functions Action Steps for Implementation Plan: 1)As part of the overall organizational restructure, shift appropriate functions within DMAPPS, Financial Services, and Technology and Facility Services under one organizational unit headed by a Director of Information Technology who would need to be recruited and selected. 2)Develop protocols, roles, and responsibilities for the new IT Department, including protocols for patches, specific position descriptions, and lines of reporting. 3)Train personnel for new roles, if necessary (most roles will simply be shiftedthere should not be a significant shift in skill sets required). Timeframe for Implementation Plan: 036912151821242730 Develop Protocols and Roles and Responsibilities Shift Functions into New Structure and Recruit Director Reorganization of IT Functions Train Personnel (if necessary) 114 Timeline (Months)

115 Final Report – November 3, 2003 Technology: Reorganize IT Functions Involve all parts of the IT operation in the transition and make clear the reorganization goals and the expectations of the staff. Obtain feedback from IT and other affected staff and modify plans as necessary to engage them in the process. Critical Success Factors Barriers Implementation Costs The reorganization could have a short term negative impact on morale and productivity. Direct costs associated with the reorganization of the IT functions include: Training costs associated with any changes in roles and responsibilities for specific personnel. The HR and facilities management costs related to organizational change, including the recruitment and hiring of a Director. Indirect costs associate with the reorganization of the IT functions include: The transition associated with an organization change relating to the shifting of resources and training of staff as well as a possible period of downtime and inefficiency as staff ascend the learning curve of the new structure. 115

116 Final Report – November 3, 2003 Technology: Streamline Reporting and Data Integrity There are few procedures in place for requirements gathering, authorization, and distribution of new Oracle reports. Each new donor, grant, or award typically has unique reporting requirements that require customized financial reporting. There is little coordination among the areas involved in project management and report generation. Personnel tend to maintain shadow accounting systems to track project data due to a perception that the data presented in the Oracle system is not accurate or timely. There is currently no formalized process for notifying end users of data certification schedules. Background As a result of early issues with the system, the current version of Oracle is not universally trusted and utilized by the OAS user community. The lack of coordination in the development of Oracle reports leads to untimely reporting and perceived inaccuracies by the technical area personnel requesting the report. Report requirement gathering tends to be done in a reactive fashion during the course of the project lifecycle. A commonly held perception throughout the Organization is that the reports produced by the Oracle system contain inaccurate data. Issues Observations: In recent years, reporting issues have caused concerns and raised questions about the flexibility of the Oracle system and the integrity of its data. In addition, many integrity issues can be attributed to the periodic module updates, which are not formally communicated to the users of the system. However, during the past several months, many of these issues have been identified for resolution and the process seems to be stabilizing. Observations: In recent years, reporting issues have caused concerns and raised questions about the flexibility of the Oracle system and the integrity of its data. In addition, many integrity issues can be attributed to the periodic module updates, which are not formally communicated to the users of the system. However, during the past several months, many of these issues have been identified for resolution and the process seems to be stabilizing. 116

117 Final Report – November 3, 2003 Technology: Streamline Reporting and Data Integrity Description: Implement procedures to streamline the reporting process and encourage adherence to reporting requirements by implementing improvements in the following areas: Advantages: Reporting requirements would be solidified and agreed to earlier in the project lifecycle, resulting in a proactive approach to report development. Acceptance and trust of the Oracle system would be improved as a result of the understanding of the data discrepancies between modules. Disadvantages: Reporting data cannot always be obtained real time due to the updates that must occur in the system. There will be a learning curve associated with the use of the new protocols and procedures. When a grant is established, coordinate the requirements gathering and report design activities of the key areas involved in reporting (Technical Areas, Operations, and FRPD). Document and communicate the timing of data flow between modules to dispel the perception of inaccurate data. Initiate a marketing campaign to sell the value of the system to the user community in order to rebuild its reputation and regain the confidence and trust of end users. Establish and deliver consistent and clear message to the end user community on how the system should be used and who the key contacts are for various requests (e.g., reporting requirements, issue resolution, grant creation, etc.). Implement a formal and scheduled data certification process and establish communication policies to announce to end users when the data is certified. Design and implement training programs for the technical area staff on the proper use of the system. 117

118 Final Report – November 3, 2003 Technology: Streamline Reporting and Data Integrity Action Steps for Implementation Plan: 1)Develop a communications plan and protocols for new reporting procedures and other system information. 2)Implement communications plan and protocols. 3)Develop pre-defined common business areas within Oracle Discoverer to enhance ad hoc reporting capabilities. 4)Train end users and other related staff on new protocols and procedures for handling reporting and data reconciliation. Timeframe for Implementation Plan: 036912151821242730 Implement Communications Plan and Protocols Develop Communications Plan and Protocols Streamline Reporting and Data Integrity Train End Users 118 Develop Pre-Defined Common Business Areas

119 Final Report – November 3, 2003 Technology: Streamline Reporting and Data Integrity Modify internal or vendor specific training to educate end users and report writers on specific report creation routines to increase understanding. Critical Success Factors Barriers Implementation Costs The lack of upfront understanding of the definition of database tables and information. Direct costs associated with streamlining the reporting and data integrity procedures include: The costs involved in training and educating stakeholders of the new policies on reporting requirements and structure as well as the data validation and reconciliation protocol. The costs of creating pre-defined common business areas using the Oracles Discoverer tool to improve ad hoc reporting. Indirect costs associated with streamlining the reporting and data integrity procedures include: None 119

120 Final Report – November 3, 2003 Technology: Implement Automation and Employee Self Services Currently, personnel submit requests to Oracle support areas for all updates to the Oracle system. The requests are then manually processed and entered into the systems. All expenses for common costs are handled by Accounts Payable and are processed manually using internal transfers. Background The manual data entry of system change requests consumes time and resources and increases the risk of data entry errors. The current methods for processing common cost payments require manual data entry, again consuming time and resources and increasing the risk of data entry errors. Issues Observations: There are applications and functions within Oracle that are not currently used; however, if implemented, they could increase productivity. These included automating certain transactions and utilizing Employee Self Service for certain functions, e.g., personal profiles, travel requests, benefits, expenses, and other HR-related requests. Observations: There are applications and functions within Oracle that are not currently used; however, if implemented, they could increase productivity. These included automating certain transactions and utilizing Employee Self Service for certain functions, e.g., personal profiles, travel requests, benefits, expenses, and other HR-related requests. 120

121 Final Report – November 3, 2003 Technology: Implement Automation and Employee Self Services Description: Implement employee self service and automation where applicable within the Oracle system to streamline processes and reduce costs. Areas to address include: Advantages: Self service functions would allow for a reduction in process time as well as a reduction of resources required to make updates to Oracle data. Self services come standard within the Oracle environment and are relatively easy to implement and maintain. Reducing the amount of internal transfers for common cost payments as well as establishing automatic payments would decrease the level of processing resources consumed as well as increase the accuracy of payments. Disadvantages: There may be some costs associated with the implementation of the Employee Self Service and automation. Employee Self Service would decrease the amount of human interaction for certain functions, potentially requiring a cultural shift and training. Activate and customize self service functions within Oracle 11i that are currently available in the standard package. Streamline common cost payments by eliminating the internal transfers between the organizational areas and AP as well as establish automated payment schedules with the General Ledger. 121

122 Final Report – November 3, 2003 Technology: Implement Automation and Employee Self Services Action Steps for Implementation Plan: 1)Conduct detailed assessment of current system configuration and processes to identify areas for automation, such as activating the Employee Self Service functionality and automatically processing common costs directly in the General Ledger module. 2)Develop plans for implementation of improvements, including milestones, resources required, impact on other areas, etc. 3)Define an Oracle Workflow based approval framework for handling changes and updates to employee personal information. 4)Implement improvements according to plans. 5)Monitor improvements to ensure that they are being used and are resulting in productivity gains. Timeframe for Implementation Plan: 036912151821242730 Develop Implementation Plans Conduct Detailed Assessment of Current Configuration Implement Automation and Employee Self Services Implement Improvements Monitor Improvements Define Oracle Workflow 122

123 Final Report – November 3, 2003 Technology: Implement Automation and Employee Self Services To ensure a smooth transition to Employee Self Service, perform appropriate change management and training. Critical Success Factors Barriers Implementation Costs The cultural change of shifting away from in-person human contact to Employee Self Service may discourage personnel from using the application. Direct costs associated with implementing automation and Employee Self Services include: Some implementation costs may be required to develop employee self service applications. Training and change management might be required for certain changes. Indirect costs associated with implementing automation and Employee Self Services include: The amount of time spent transitioning staff from the current practice of manual updates to automated self services updates. 123


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