Proceedings of the Standing Senate Committee on National Finance
Issue 4 - Evidence
OTTAWA, Wednesday, February 18, 1998
The Standing Senate Committee on National Finance met this day at 5:30 p.m. to
examine the Main Estimates laid before Parliament for the fiscal year ending
March 31, 1998 (organizational retention and compensation in the public
Senator Terry Stratton (Chairman) in the Chair.
The Chairman: Honourable senators, we must begin as the minister only has one
hour with us this afternoon.
Minister Massé, we appreciate your attendance here this afternoon to
discuss with us the issue at hand. The matter of compensation came to our
attention last October when the first report was aired on the CBC Saturday
morning program, The House. More information has become available. I know that
you have done some work on this subject.
That is the background. Perhaps you have an opening statement. Please proceed.
The Honourable Marcel Massé, P.C., President of the Treasury Board:
Honourable senators, with me today is Shirley Siegel, executive director for
the Senior Level Retention and Compensation Branch in the Treasury Board
Secretariat. She knows far more about this subject than I, and she is here in
case I am unable to answer some of your questions.
It is a pleasure for me to be here today to speak to you about the role of
Public Service executives and their compensation. To remain competitive in the
years ahead, Canada must clearly continue to rely on the exceptional leadership
and innovative spirit of the Public Service. This Public Service must, however,
continue to acquire the new skills needed and senior public servants must
continue to play a leading role in order to ensure that government programs,
policies and services are carried out effectively.
We are currently experiencing a leadership crisis in the Public Service. It is
becoming increasingly difficult to recruit and keep the senior level work force
that will be needed for the next century. The most experienced and
knowledgeable executives are now leaving the Public Service for the private
sector. Conversely, very few of the best and brightest university graduates are
contemplating careers in the Public Service.
I should like to say a few words about compensation on a more personal note.
When I joined the public service approximately 30 years ago, at that point it
was considered a calling as much as a job. It was a calling because the people
who were the officials of the senior public service were considered to be
rather exceptional role models. Becoming a public servant was considered to be a
public service, and to be part of the public service was a subject of pride.
In the last few years I have noticed that there has been a decrease in these
characteristics of public servants. There has been a decrease for quite a
number of reasons but, in particular, because comparative salaries with the
private sector have come down, because there has been more and more criticism
of the public sector, there has been in the media a constant harping about the
quality of the public service and the quality of the services they are giving.
The result is that right now it is very difficult for the public sector to
recruit the best and the brightest. The question of compensation is not the
sole issue, but it plays a large role. There is also the question of the good
name of the public service.
One thing that we would like to re-establish for the next century is rates of
pay that are more comparable to the private sector but, much more importantly,
a level of morale in the public service that resembles what I knew 30 years ago
when I started, which is a profession that is respected and seen as a calling,
a profession that is sought after by people who wish to earn perhaps a lower
salary than in the private sector but who wish to spend their life trying to
modify and improve the society in which they live.
Demographic trends point to the fact that by the year 2005, between 70 per cent
and 90 per cent of senior level executives in the Public Service will be
eligible for retirement benefits.
Like all other federal public servants, senior executives have also had their
salaries frozen for the past six years. They have also seen their workload
increase as a result of downsizing, without any accompanying increase in pay.
In February, 1997, an advisory committee was established to provide independent
advice and recommendations concerning executives, deputy ministers and other
Governor in Council appointees. The committee, whose seven members are drawn
from business, universities and unions, was chaired by Lawrence Strong,
president and CEO of Unilever Canada Limited.
Last Thursday the committee released its first report, which identifies specific
priority areas for improving the human resource management of the public
service leadership. The most pressing concerns that were identified are the
future vision of the Public Service. I have spoken to the need for cultural and
human resource renewal, and compensation.
The report recommends pay increases for the 3,500 members for the executives in
our public service. The committee's report also recognizes the potential crisis
in the quality of the public service leadership which Canada will face in the
next millennium through a staggering loss of experience and knowledge in its
executive ranks. The committee believes that the failure to act will impose a
significant cost on the country's global competitiveness and that this is the
most significant public service issue facing the government today.
The advisory committee concluded that executives in the federal Public Service
receive less total compensation than their counterparts in universities,
municipalities and hospitals and that they are compensated significantly less
than executives in the private sector.
The committee recommends that overall compensation for lower-level managers
correspond more closely to that of their counterparts in the expanded public
sector and private sector when comparable responsibilities are exercised and
that the overall compensation level of senior executives exceed the median
level in the expanded public sector.
Over the next four years <#0107> that is, from April 1998 to March 2002 --
the recommendations contained in the report will require an estimated
investment of $68 million for federal public service executives and deputy
ministers. I mention this figure because this represents 8 per cent of the
salary mass. We are looking at an increase in the Public Service in general
that will be about 2 per cent over the next four years. Our purpose was that
the increase in the salary mass for executives should be on a level with what
the bulk of the Public Service receive. This represents an average annual
increase of approximately one-tenth of 1 per cent of the government's annual
expenditures on personnel costs. This is a relatively small price to pay to
ensure that Canada retains its world-class public service leadership.
The committee recommends that the new salary structure be implemented on April
1, 1998, but it also recommends that the new "at risk" compensation
package be phased in gradually between now and the year 2001.
The report emphasizes the importance of revitalizing the public service culture
and of focusing on renewal and preparations for the next century. This ties in
with other federal Public Service renewal initiatives such as modernizing the
role of the comptroller, the Boisclair report and the La Relève
Reviewing leadership in the public sector is a key component of the program
launched five years ago to modernize Canada's Public Service.
I have given a summary of the report and the reasons why the recommendations
therein are important, especially at this time. It will be a pleasure to answer
Senator Bolduc: It is not every day that we have the President of the Treasury
Board appear before us, so I wish to ask a few questions about your field of
In the last four years, you have made a program review for the whole government.
I do not know how many programs you have looked at, but I suspect that, except
for a few statutory ones, you have looked at most of the government carefully.
Could you give us the data concerning the number of programs that have been
abolished or profoundly modified, or new programs that have been implemented
and the impact of those three major changes on the budget itself in terms of
money and also in terms of human resources?
Mr. Massé: It is difficult to give you a mathematical figure for the
programs that have been abolished or reformed. In most cases, we have asked
each department to clarify their objectives in terms of results. That is to
say, what they are there for and how much money they are spending on
implementing each objective.
In a number of cases, they have taken existing programs and reshaped them.
Instead of having three, four or five programs -- and, in one case, instead of
having 216 programs to implement one objective -- they have given more
responsibility to their executives and placed their people into one group with
a certain amount of money. They have made the objectives for that program much
clearer. The result has been the abolition of 216 programs and the creation of
four major programs with clear objectives where the definitions of the tasks of
the employees are much wider.
A number of these program renewal initiatives are continuing through 1998-99.
What has been done and what is still being done is a rethinking in each
department of the purposes of the department; that is, why they are there and
includes a clean-up and a concentration on core activities. This has led to a
thinning out in terms of both expenditures and people.
In terms of expenditures, the total program spending in 1993-94 was about $120.6
billion. This year, our forecast is that the total expenditures will be about
$103.4 or $103.5 billion for the year.
In terms of actual dollars, this is a considerable decrease in the size of
government. We calculate that by the end of program review, the total
government sector will have been reduced by about 20 per cent. It may be 19 or
21 per cent, but that is the approximate size.
In terms of the reduction of manpower in the Public Service the downsizing at
present is set at approximately 39,000. When you look at the figures that
Treasury Board sets out in terms of the number of people employed in the public
sector, that figure will have fallen from about 230,000 to approximately
195,000. That is a considerable decrease. This is the first time in 50 years
that there has been a decrease of that type.
Our aim was to reform government and we were quite right to put the accent on
program review. In reforming government, we tried to get the people who knew
best about each department, namely, the people employed there, to re-think
their role in terms of results and then to concentrate their resources in order
to be able to implement their objectives better.
Senator Bolduc: We have the impression that some ministries have been affected
in a major way. For example, the Ministry of Transport has undergone a major
overhaul. Certain things have been privatized and NAVCAN has become a
quasi-departmental corporation. Most of the ports are being administered by
municipalities, and the airports are also being managed by municipal
In some departments, such as Indian Affairs and Northern Development, we do not
see much change, although the aboriginals are asking for many changes. I have
the feeling that change has happened at a different rate in different
ministries. What is your explanation for that? Is it because there was, within
the Ministry of Transport, for example, a royal commission which said that
things must change?
Mr. Massé: You are quite right that change has differed greatly between
departments. In the Ministry of Transport, the basic idea of the reform was
that the competition between modes of transport -- railways, roads and air --
had become so prevalent in the economy that maintenance of the old monopolies
by the public sector was no longer justified. In fact, although railways are in
some aspects still a monopoly, they essentially do not have the monopoly of
transport and they have many substitutes that create competition. Therefore, it
is not the role of the public sector any longer to control railways. Hence, we
privatized Canadian National.
In terms of airports, because there are now a significant amount of airports
remarkably close together, and because links between these airports -- Seattle,
Vancouver, Calgary and Edmonton, for example -- can be done easily, we
concluded that these facilities could be run much better by the stakeholders
who could run them according to local needs and as a means of economic
development. That meant that in the Ministry of Transport we concentrated the
public sector activities on the issues of safety and security, and laws and
regulations. You determine what the common interest is and how it should be
applied, and then you set out the laws that rule the way in which the private
sector will implement, according to demand and market, the various instruments
of transport in the country and the various modes of transport.
We had a seven-year plan based on the total redefinition of the role of the
public sector in the field of transport and we are continuing to implement it.
In the end, that will mean a decrease in resources from approximately 28,000 in
the Ministry of Transport to 5,000 or 6,000.
The Ministry of Indian Affairs and Northern Development is very different. We
have rethought the purpose of the department and come to the conclusion that
the ultimate purpose in the field of Indian Affairs is to give aboriginal
people control of the programs that serve them. Therefore, in Manitoba, we are
trying to slowly give the administration of all these programs to the aboriginal
However, the situation evolves differently in the various sectors and across the
country. Some groups are ready to take the responsibilities; others are not. If
we try to proceed too quickly, we may put in danger the very reforms we are
trying to implement. In my view, this is the type of reform in which you must
change mind-sets, attitudes and behaviours, and those take longer to change than
it took to privatize CN.
We want to move. We know that there is a long-term objective, but we cannot move
as quickly in the Ministry of Indian Affairs and Northern Development as in the
Ministry of Transport.
Senator Bolduc: That program review brought about also what I would call an
effort in program evaluation. Approximately six years ago, this committee spent
a whole year analyzing program evaluation in government and found that it had
to be significantly improved.
Are you satisfied with the progress in the methodology of the program
evaluation? We have always said here that it is good that the government and
managers have their own program evaluators in-house, but we also think that it
would be good to have program evaluation done outside of the ministry. It may
be done by Treasury Board by comparison with the analyses done by the
ministries, but it would be fine to have independent program evaluations once
in a while. I know that in our cabinet system it is not usually the rule to do
that, but perhaps we could ask the Auditor General or others to look at program
evaluation from outside.
I do not say that in terms of partisan politics. Do you not think that there
should be leadership from the Treasury Board to have program evaluation done
for the President of the Treasury Board, for example, by outside people so that
the managers in the various departments would experience a little competition
Mr. Massé: The answer is probably yes. There have been considerable
changes and improvements in the evaluation itself and our methods of evaluating
federal programs, but there is still much improvement which must come. In the
private sector, this is an area in which a tremendous amount of improvement is
taking place at present.
One reason that we are presently implementing what we call performance by
results is that in order to evaluate properly you must be able to have
objectives that you can measure in terms of discrete and concrete results.
Traditionally, programs were defined in such general terms that you could always
say that you had met your objectives. However, when you define them by results
and try to quantify your results, not only does performance become a more
measurable concept, but you can even base the salaries of your executives on
results, which has not been done before in the public sector.
We are introducing performance by result, which means that even Parliament will
be able to look at exactly what you mean and know if there has been progress,
which was not common in the past with the evaluation methods we had.
Also, in Treasury Board itself, we have introduced what we call a business plan
and a business plan review. Every year we review about one-third of the
departments, which all have a three-year business plan. In a number of cases,
we do use outside consultants.
For instance, in Treasury Board we looked at the efficiency of the work-creating
programs. We are familiar with work clubs which claim that 78 per cent of the
people who come to them find a job within 18 months, et cetera. What we do not
know is what would have happened otherwise, how long they keep their jobs and
what kind of jobs they are getting. We are now trying to obtain information on
how efficient government programs really are and whether it is worth spending
our money on them. That is really the purpose of evaluation.
We use this information to monitor departments regularly over their three-year
cycle. At the same time, we give departments incentives to introduce this
performance by result. In fact, this year, for the first time, every department
will produce its results-based performance reports by the fall. We will then be
able to know exactly what they have promised to do and be able to evaluate if
they are using their money properly in order to get the results.
Senator Bolduc: I asked that question because you have a proposition to base the
salary on performance, to have performance evaluations and pay accordingly. If
the program evaluation is not done well, though, the performance evaluation
becomes difficult and we do not know how to pay them except to give them a
You said in a speech a few months ago that there will be no more large cuts in
government, that the finances of the government are good and that we will no
longer have a deficit. Do you not think that a ministry like Public Works could
be subjected to the same type of approach as was taken with the Department of
Transportation? You have a tendency to group professional people in one
department. This is an old and traditional way of doing things, and I am
sceptical about it.
Another example would be the laboratories. Many ministries have laboratories. We
have the impression that the initiative for the work in the laboratories comes
from the researchers themselves and not from a command or a demand made by the
deputy minister so that he could put them into competition with outside
laboratories. These could be fields of inquiry in the management of the
government. I should like to have your views about that.
Mr. Massé: Obviously you have a great deal of interest in these matters.
We are keeping these two cases under review.
When I said that there would be no more big cuts in government, that was a
macro-economic observation meaning that in terms of the study we had done of
government and its size in Canadian society, given the needs and the values and
attitudes of people, there did not seem to be any more need to reduce the size
of the public sector, in particular of the federal government, as a block of
expenditures within the economic life of the nation.
Although I cannot promise what ministers of finance will do in the future, we
have now reduced spending from about 16 or 17 per cent of gross domestic
product for the federal government to the low of 11.8 per cent of GDP. We have
reduced enough, given the levels of taxation and competition with other
countries in the world. Clearly, we should not reduce the size of the government
sector any further. The Reform Party differs in their views of this, but this
is the right size for me.
That does not mean that all the parts are the right size. A number of reforms
may occur at different rates. You have mentioned a comparison between Transport
and Indian Affairs, which is a good example. Transport will continue to shed a
number of its previous activities and remain with a core responsibility; it
will take a while for Indian Affairs. The Ministry of Indian Affairs and
Northern Development may have to grow before it becomes smaller. At present,
there are responsibilities in that field with which we may not have entirely
dealt.We may not yet be in a position where we can give aboriginals the
function of dealing with their programs and eventually achieve a method of
paying for it through their own means. These are reforms for the future.
In terms of Public Works, I will not comment any more about that. There are many
areas of improvement.
Senator Lavoie-Roux: I agree.
Senator Bolduc: You closed the academy in St-Jean. That hurt at the time, and it
still hurts me, because it was recruiting French-speaking young officers for
the armed forces. Do you have any recent statistics about how the army succeeds
in recruiting francophones? If not, perhaps someone could provide that
Mr. Massé: I will obtain that information for you. The last time I asked
about that was one and a half years ago, however I will provide up-to-date
Senator Kinsella: What is your sense of the optimum size of the public service
of Canada as we near the end of this millennium? Do you think we are roughly
Mr. Massé: This is a tricky question. At present, we define the public
service under Treasury Board as being 195,000 people. I could probably say a
number in that range would make sense for the next few years, except that, in
reform of the government, we are trying to determine the correct structure for a
department like National Revenue or the passport office compared to Finance or
A number of countries around the world have tried methods to keep the so-called
public service as a core public service, and they create structures that are
not departments. We call them alternative service delivery agencies. They
differ amongst themselves and have a different relationship with parliament and
ministers and have different levels of freedom in terms of how they exercise
their responsibilities. At the extreme, some may be commercialized but not
privatized. That means that they operate according to commercial means but they
still have some objectives and responsibilities given to them by the public
sector, usually in the case of monopolies or oligopolies. Others will be
The distinction between the public and the private sector is slowly becoming
grey. The easy answer to your question is: The public service will remain
between 180,000 and 200,000.
The actual question is that diversification in the means by which the public
sector gives its services to the public must continue so that each alternative
service delivery agency is better adapted to the type of service it gives.
Senator Kinsella: That is understandable. The culture of the public service, or
the core public service that is really in the business of public service --
that is, the service of government -- may be providing the oversight of the
delivery of services or activities that may indeed be delivered by the private
Do you think it is time for us to revisit that issue of the culture of public
service to distinguish it from the culture of the marketplace?
I noticed in Mr. Strong's study, which we examined in preparation for your
visit, that he uses terminology of wanting to compare a public servant's
remuneration to that found in the private marketplace. Do you share my value
judgment that public service is what the term implies? It is a different
activity, it is serving the public. The public service may be in competition
with the private sector to get the new graduates from universities. All these
other questions, it seems, hinge on how we respond to the basic question of
Is public service just that, or have we allowed it to be overtaken in the past
10 years with an over-emphasis of comparison with the private sector?
Mr. Massé: The public servants, in terms of their responsibilities, are
very different in many cases from the private sector. You have been in the
public service, too.
The role of senior public servants is much more difficult because they serve
many masters and are also not only guided by the bottom line. I do not suggest
that all businessmen are guided only by the bottom line, but that is their main
consideration. They do not stay in their jobs for very long if they are not
guided by the bottom line.
In the public service, questions arise about the saleability of the policies put
together by civil servants. They face questions about attitudes created in the
public by programs which are put into place, for example, human resource
programs, which can create dependency. After a number of years, we recognized
that we were creating a trade that was socially negative. Therefore, we had to
reform our own programs, not because they were not giving the services required,
but because they were structured to create a dependency, a trait which should
not have been created by the public service sector.
That understanding of societal issues, that responsibility for thinking ahead
and structuring programs in a way which positively affects social behaviour,
that is an aspect of the public service which is not seen to the same extent in
the private service.
At the same time, many required skills for the public sector, such as those of
computer analysts, are exactly the same skills as those required in the private
sector. When we recruit those people who must apply identical skills, we should
apply market criteria to determine how to reward those people for the work that
However, once you get into the EX categories, which are the subject of the
Strong report, aspects arise more often which specifically relate to the public
sector. In other words, they involve an understanding of society and its way of
evolving. They imply a certain view of history and a certain view of governance
which is not a private sector view. Different skills are required. Those people
must have a desire to modify their society in a certain way. That same
requirement applies to politicians in most cases, and I have a positive view of
politicians. I do think of senators as politicians.
For these positions, market criteria may not fully apply. The Strong report
talks about a considerable difference, sometimes up to 50 per cent, between the
top civil servants and the CEOs of large enterprises. I am ready to accept
that. Job satisfaction is not created only by money. Your job satisfaction as a
top civil servant comes from the fact that you feel you are participating in
change in your society.
Senator Kinsella: Do you think there might be some merit in questioning the
dichotomy which is in place between the management cadre, that is the EX
categories, and either the professional or technical categories? Is there some
merit in our revisiting the categorizing of our public servants into "a
management cadre" of the EX group, and "others"?
You have all of the collective agreement processes which must apply. Perhaps my
question is not sufficiently tested by reality. I do wonder whether, in
building the public service of the 21st century, we should revisit the
categorization of public servants.
Mr. Massé: The answer is, yes, in a way. We are trying to introduce the
universal classification which would permit us to grade people better than in
the present classifications.
I understand the purpose of your question. There are a number of categories,
economists, for instance, or lawyers, where you can use the private sector
criteria in order to define the function and pay the salary. Sometimes these
highly specialized people may be paid more than the executive category. I have
no problem with that because the market criteria will give you the comparison
criteria and the value of their services as set by society through the
By the way, program managers, the PM class, is six or seven categories below EX
class. Program managers play a management role which is very close to the
management role that you see in private sector enterprises. There, also, you
can compare the responsibilities they have, how many people they supervise, the
budgets which they administer, and you can set criteria for rewards which are
very similar to the private sector.
It is at the EX level that a different type of judgment on decisions and
programs is exercised. As you go up in the EX category, more and more, the
recommendations and advice that you give must reflect a wider view of society,
rather than the specific skills that you have which can be compared to the
There is a fundamental difference between most of the categories before the EX
level and the EX level itself. Only at the EX level do you have these special
demands on people that require different types of understanding and
responsibilities and a different type of reward.
The Strong group makes that basic distinction. You will remember that they say
the difference between the private sector and the EX is about 4 per cent and
that the two should be almost equal and leave it at that.
Mr. Strong and his group recommend a different treatment of people as you go up.
That is justified because the nature of the work changes at that level.
Senator Forest: You mentioned, for example, the privatization of CN. I happened
to be on the board when it was privatized and I was on the board until I came
to the Senate. During that time, we saw tremendous downsizing in the number of
employees, from approximately 32,000 down to 22,000. It is now below that
level. The bottom line is great, but how far can we go without that being
counter-productive in terms of staff morale and safety?
As I read through these reports, I saw a real concern about the morale of our
people in the public service. Not only have their salaries been frozen, but
they are also doing double duty, in a sense, because so many have been let go.
When we see how many of our brightest and best are leaving, I wonder if we have
gone too far. We have met our targets, but have we gone so far that it will cost
us more to rebuild our public service than if had we done a little less
cutting? That is my concern.
Mr. Massé: These are always difficult judgments. No one has the absolute
truth in this field.
In terms of CN, the decisions taken seem to be justified by the market if you
look at the results. My feeling is that what has happened is probably about
In terms of the general decrease in the public service, in some areas there is
no doubt that the reforms may have gone too far and will have to be brought
back to a better level. This will vary from department to department. In other
areas and departments we have not yet gone far enough. In other words,
depending on the group of people you find in a department -- and these are
pretty coherent groups of thousands of civil servants who have developed a
certain way of looking at their department -- it takes longer for the changes
to happen. In some areas, we still must go further than we have. There are
areas where the changes have shown us that we must operate differently and
perhaps have different numbers of people.
I have no desire to abolish jobs for the pleasure of abolishing jobs. This is
not my purpose. The purpose of cost recovery was not to get additional money
that would permit us to continue with the same activities. What has happened in
transport with the shipowners is that once they were charged costs, they came
to us and they said that if they were to be charged for navigational aids, they
wanted to be able to tell us how many they needed and of what quality. In fact,
one company exporting iron ore throughout the world needed ice breakers to help
them on the St. Lawrence River during the month of January. They told me that
if they had to pay for it, they did not need 30 days without ice. They bunched
their ships together, shipped the whole thing in three days, and paid one-tenth
what it would have cost for the ice breakers. Things are not that simple, but
that is a good example.
In terms of navigation aids, they told us, "You can now use a satellite
technology that means at the extreme you could eliminate all your navigational
aids and have a very different price for us." We formed groups of
stakeholders, together with civil servants, who now discuss not only what the
Coast Guard does, but the technology it uses and what kind of service it gives.
We are now beginning to reduce costs immeasurably, giving the benefits to those
who would have paid the costs. Finally, we have a much better way of
determining what service is to be rendered. Is a Chevrolet or a Cadillac
necessary? What technology is to be used? What rate of change in the technology
should take place, and who is responsible for part of the costs?
In these areas, we will end up with a Coast Guard that is much smaller, but we
could not have done it without the reform itself.
Senator Forest: There have been press reports of the large increase that has
been recommended for the upper echelons of the public service. We know that in
order to keep good people, we must pay those kinds of costs; that is the demand
of the market place.
At the lower level, what is the comparison between the people in the public
service and their counterparts in the private sector? Is there that much of a
Mr. Massé: In most areas, it is very close to market rates.
By the way, when I received the report and saw the increases recommended for
senior civil servants, I asked exactly that question. I even repeated it today
to my officials. I asked them to give me the data to justify a statement that
in the bulk of the public service below the EX level, the rates being paid to
our various categories of workers under collective bargaining is at or close to
the market rate. I was assured -- and I have looked at some of the data, but
they will get the rest of the data -- that we pay rates that are either at or
higher than the market rates in a great majority of categories.
Senator Lavoie-Roux: Can you tell me what psychological effect this has had on
staff who have moved on to other sectors of activity? Have they received any
Before Christmas, I was returning on the bus to Montreal and someone recounted
to me a rather demoralizing tale about people who have been affected by job
Mr. Massé: Every individual reacts to change differently. Let me tell you
about something positive that happened in my riding. Several months ago, on St.
Joseph Boulevard, I encountered a former public servant who crossed the street
to talk to me. I was on my way to the shopping center. This is what he said to
me: "Mr. Massé, I lost my job because if you". I was sorry to
hear him say that, although I was not exactly expecting any compliments either.
However, he also said this to me: "Losing my job was the best thing that
ever happened to me.
I was intrigued. He proceeded to tell me his story: "I was a former EX-1
with the Department of Natural Resources. I was more or less satisfied with my
job and I had decided to stick it out until retirement. I am 53 years old and I
took advantage of the early retirement program. I have always enjoyed
automobiles. One day, as I was walking along St. Joseph Boulevard where many car
dealerships are located, I stopped in at four places, and asked if they needed
a salesman. The first three dealerships said no, but the fourth decided to hire
me on commission. I have been working there for four months and I have never
been happier in my life. I enjoy my work. What with my pension and my earnings
as a salesman, I make more money than I did before."
This is one specific example. It springs to mind because it is a positive
experience and it happened to someone in my riding. We have to remember that
the vast majority, over 85 per cent, of those who left did so voluntarily under
a government program. This means that they benefited either from early
retirement, or received a cash out equivalent to anywhere from 12 to 18 months
of salary. Some quite simply spent their cash outs and found themselves without
a job. Some of these people are no doubt bitter about what happened to them.
The vast majority found work elsewhere, and invested the money they received.
They managed to find a job for which they were qualified.
The government was concerned about minimizing the number of problems that people
encounter when they are forced to change jobs.
Each department has on staff psychologists who have helped employees a great
deal. Generally speaking, in terms of personnel management, departments have
shown a remarkable amount of compassion.
Relatively few negative stories have been reported by the local newspapers and
media, even though over 10,000 people in the region lost their jobs. This is
evidence that the transition has gone very smoothly.
Of course, some employees did encounter personal problems. We have tried to
minimize the number of such cases.
Senator Lavoie-Roux: My seat mate on the bus from Ottawa to Montreal was a
psychologist. I forget what her exact title was, but that is for the best,
because you could perhaps identify her. She was quite concerned about the
number of people experiencing problems adapting to their new situation. I
understand that support services were available to them. However, these services
will no doubt disappear because there will be no further work force reductions.
Mr. Massé: There will always be re-adjustments in the public service,
even if there are no further work force reductions. The downsizing process is
just about over. Some minor adjustments remain to be made in 1998-1999.
However, as I mentioned, I do not anticipate having to resort to anything like
a program review in the next few years.
Senator Lavoie-Roux: Those employees who leave seem to be happy. However, if we
worry too much about handling the people who are leaving with kid gloves, this
is going to cost us money in other ways.
The Chairman: You have now been here for one hour.
Mr. Massé: The time has passed quickly.
The Chairman: Yes. May we prevail upon Ms Siegel to remain here for some
questions? Thank you for attending here this afternoon, Mr. Massé.
Mr. Massé: Thank you.
The Chairman: On page 7 of the advisory committee's first report, the last
sentence said, in so many words -- and Senator Bolduc pointed this out -- that
since several human resource initiatives have fallen well short of expectation,
it is critical that current efforts be translated collectively into tangible
results. I suppose that means, in other words, an implementation plan.
I wish to go back to the focus group study done by the Public Management
Research Centre. Senators Forest and Lavoie-Roux referred to the issues that
are difficult to deal with. For example, on page 13 of the Public Management
Research Centre focus group report on leadership, it states:
Executives expressed disappointment in the lack of leadership in current senior
management positions. It was felt that senior managers lacked vision, vigor,
passion, and, specifically, decision-making abilities. In today's changing
environment, it was viewed as imperative to have individuals leading the Public
Service who have the ability and commitment to inspire and communicate a vision
to their staff.
I should like to hear your views on how you are addressing that issue and how
you can measure that. This is not something that will be a short-term measure,
but, in implementing the plan, how will you deal with this issue?
Ms Shirley Siegel, Executive Director, Senior Level Retention and Compensation
Branch, Treasury Board Secretariat: The issue of leadership is a critical one.
The focus group reports that you looked at are views of specific individuals
based on their own experience.
The Chairman: I understand that. Nevertheless, all of us around this table have
heard about that specific issue, by hearsay for the most part. However, when
you read it, it becomes something of concern.
Ms Siegel: This is something that gripped the committee because of the number
and quality of people who have left the public service already, for whatever
reason, and gone to various sectors of the economy. That need gripped them.
That is why this first report, focuses on what they thought were the highest
priority issues, namely, renewal in the public service, the need for clear
vision and leadership to set that vision, and the need for appropriate
compensation. You must be able to retain not only the quality of leadership
that is important to every one of us as executives, but also be able to attract
In the report, they tried to present a strategy for dealing with that issue of
keeping that leadership group which all of us would say is important for the
future. That is why they emphasize those three elements.
The Chairman: The compensation factor offers only short-term satisfaction. Once
they have had that for a few years, that may not be enough. This ties to page
15, dealing with espousing risk-taking through risk-averse structures and
processes. While the system wants the senior levels to take risks, when they do
and fail, they are sent to Coventry. That would appear to be a problem.
Again I ask the question: If you want a new senior level bureaucracy and you
want them to take risks and, as a result of taking risk they fail, how will you
get past that fear?
Part of the problem is they will not take risks, they will not gamble, they will
be very conservative and you end up with a stifled group.
Ms Siegel: In part, that is what the committee was getting at when they asked
that a large part of the compensation be based on a variable, at-risk portion.
They were concerned that in establishing an at-risk portion of compensation
that you have measurable, tangible objectives that could be used and then you
are reinforced, through compensation, for having achieved those. You get, in
some cases, what you reward. What they saw was a need for a new performance
management culture and establishment of a clear and better relationship between
senior managers and the people who manage them, and then setting in place a
compensation program that reinforces that and measures true results and
compensates people appropriately.
Part of that section of compensation was designed to get at some of those issues
and to reinforce those kinds of behaviours.
The Chairman: Would risk-taking be encouraged?
Ms Siegel: If that is what is required in a particular job, yes. It is based on
setting objectives that are appropriate to the business of the department.
The Chairman: Are those objectives mutually agreed to?
Ms Siegel: The plan has not been fully developed, but that is the idea, that
they would be mutually agreed to between the supervisor and the executive, as
it were, in this case. There would be tangible results that are looked at and
that you would be compensated accordingly when the plan is fully developed.
What was important to the committee as well is that you put trading in place so
that you change the culture. Training is not a panacea for everything, but you
invest considerably in terms of training people, in terms of how to assess
results and how to set targets, so that you have a greater chance of success.
The Chairman: The minister alluded to the fact that when the senior levels of
employees are removed by retirement in the coming years, and I quote from page
15 under "Youth":
...there will barely be a skeleton of dedicated employees left to lead the
Public Service in the next century. In addition, it was noted that the federal
government, in its efforts to reduce public spending, has failed to balance the
need to downsize against the need to supply the organization with new blood.
That is the youngsters coming in. How are you looking at that challenge?
Ms Siegel: Again, I do not wish to emphasize compensation too much. However, the
ability to attract new blood is partly a function of the ability to compensate
people for skills which are desired. Compensation is part of it. What they saw
is a critical erosion or a potential erosion in the next number of years. When
the committee saw those numbers -- and I can still see their faces when they
looked at those figures and saw the demographic picture -- and they were very
struck by that. They said you need to be able to attract and retain a quality
leadership and part of that is compensation. There are many other things, there
is setting the vision so people have a sense of where the organization is
going. In large part, it is compensating them so you can attract and keep them
The Chairman: I also believe there is a huge challenge in changing the attitudes
of the youngsters. When they look at coming to the public service it is held in
low esteem and the biggest challenge. It is a challenge to raise that esteem in
the public's eye to attract those people because higher salaries are possible
in the private sector from Hewlett-Packard, for instance, or one of the other
desirable companies to work for, whereas the public service is not held in that
same level of esteem. That is my concern.
Ms Siegel: That is why they do not only address compensation, they address
public service renewal, they address the issue of vision. That is important.
When younger people wish to join the public service they need to see what a
career in the public service means and where we are going. That whole issue
around the vision is important. As I say, compensation is only one aspect but it
is a critical aspect because we know who we are competing with.
The Chairman: I am assuming Mr. Strong's committee will meet and submit a report
in each subsequent year?
Ms Siegel: Yes. They have identified subsequent work in this report and their
mandate is for three years, so they are here for the long haul. They are very
committed and have devoted an inordinate amount of time to this exercise and
anticipate being there for the three-year mandate to continue their work.
Senator Kinsella: On page 26 of the report they give a number of reasons for the
managers leaving the public service. I wish to focus our attention on that
particular phenomenon of the loss of the management cadre to the public
service. My question is this: How much of the loss of the EX category or the
upper SM categories do you think would have been due to the attractive severance
package that was made available? Was there any measure made of that?
The reason I ask the question is that, as the minister mentioned and as we know
from experience, a large number from the management category who did leave,
left Friday afternoon and on Monday morning they were a consultant. The
minister alluded to the person he met in the shopping centre. They had a
severance package and they were able to use that.
To what extent are we losing people? Part of the concern is that we are not able
to retain our better managers.
Ms Siegel: For the large part, the cuts, or the people who have left, have been
based on the program review reductions and the shifts in terms of structure of
organization. Many people have left because of those reasons. When departments
looked at what changes they needed to make because of program review, certain
programs were affected and those people were also affected.
I would not argue that some good people left because they had other
opportunities and they could take advantage of the departure packages. However,
it is not only that. Compensation is just one thing. There are many good people
who are still in the public service. Compensation is only one factor; it is not
necessarily a determining factor. People were impacted by program review cuts
and parts of organizations do not exist any more and those people who were in
those organizations had the opportunity to take advantage of those packages
which facilitated their transition to other things. There are the happy stories
and there are also stories of people who were not as happy.
Senator Kinsella: I have spoken to many former colleagues in the public service
and they said they lost the people they did not wish to lose. People they did
not want to see go took the buy-outs.
Turning to another issue which you have alluded to, there are things other than
compensation. What role does the Canadian Centre for Management Development
play nowadays? How important is that centre to the management group as
something to say, "Well, gee, we have an institution like that and that is
important?" What is it doing?
Ms Siegel: They have a large number of courses which are mandatory for
executives in terms of entry into the group. They still play a key role in
terms of development of executives. They have a number of innovative sessions
with private sector leaders, they bring in speakers on a variety of timely
subjects. They have a key role now.
Development and learning, those are concerns which have been raised by
executives. It is something which must be addressed. It is not only one agency
that can serve the needs. CCMD has a key role, departments have a key role in
terms of fostering development and paving the way for executives to take
courses and to experience other assignments, be it in other jurisdictions or the
private sector. There is much that goes into that. CCMD has a key role.
Senator Kinsella: Do you know when the CCMD was last evaluated?
Ms Siegel: I cannot speak to that at all.
Senator Kinsella: The Ottawa Citizen, in an article on February 13, 1998, makes
the statement that the package -- and this is referring to the package for the
senior managers' compensation -- is expected to increase the $260 million
salary bill for its 3,300 executives by 8 per cent over the next four years.
Are we talking about 3,300 executives?
Ms Siegel: Yes, approximately 3,200.
Senator Kinsella: The present package would cost $260 million?
Ms Siegel: The investment, in terms of what the Strong report puts forward, is
an additional $68 million.
Senator Kinsella: That is over four years?
Ms Siegel: Yes.
Senator Kinsella: That is about $18 million a year?
Ms Siegel: It is $17 million.
Senator Kinsella: That is about the budget for the Canadian Centre for
Senator Ferretti-Barth: I would like to know if the La Relève program
introduced by the Clerk of the Privy Council, Mrs. Bourgon, is still in place
and what kind of results have been achieved? You talk about those who have
left. Has this program been helpful in terms of recruiting new public servants?
Ms Siegel: That program has been important. It is a key initiative. It has
resulted in a significant emphasis on human resource planning and all the
issues we are talking about. It is still ongoing. It is a critical priority.
In the report, Mr. Strong and his committee have recommended that you integrate
the whole gamut of initiatives -- that is, the compensation and all the things
that have been proposed -- with the priorities of La Relève. Everything
is being moved forward with a certain rhythm and integration. It is very much
alive. La Relève does not only deal with executives, it is for the
renewal of the entire public service. There are many important initiatives that
have resulted from La Relève and will continue such as issues around
pride and recognition and improving the sense of pride and recognition.
Senator Ferretti-Barth: The advisory committee was very critical of this
program. That is why I am asking you today if it is still in place. If so, have
the results been positive? Will the program be used again in the future?
Ms Siegel: The La Relève initiative is not an initiative which has a
start and a finish. It has ongoing renewal. This is part of it. There are many
departmental and central agency initiatives which support that. There are
ongoing task forces and committees which are coming up with new ideas on how to
renew the Public Service. It is very much alive. However, it must come together
in one integrated package.
The advisory committee report speaks to an overlap with La Relève or how
they can be seen to clarify their mandate, but it is an important part which
fits well with the renewal and the revitalization under La Relève. I
still find it exciting. Much has been done and much more must be done.