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ARCHIVED - The Financial Administration Act: Responding to Non-compliance - Meeting the Expectations of Canadians

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2. Managing in the Public Service

"Good management" is not just the application of a series of rules and legal instruments, and "mismanagement" cannot be simply defined as a failure to apply management rules. There is no single instrument to guide public service managers: the rules and principles by which they must operate are scattered in a variety of statutes, regulations authorized by those statutes, and, as described above, numerous policies and directives applicable to the internal administration of government.

Good public sector management requires sound judgment that is well grounded in ethics, values, and principles and a desire to uphold the rule of law and pursue the public interest. Rules, whether regulations, policies, guidelines, or directives, should be understood and respected. Respect for the rules does not preclude changing them to enhance program delivery or creating new ones that respect fundamental values. The environment in which public service employees manage is in constant evolution. Drivers of change include a more complex policy environment, program review and its ensuing effects on specialist communities supporting managers, along with additional layers of rules dealing with specific issues. Public service employees, particularly at senior levels, are often caught in organizational paradoxes amplified by the nature of the institution: It is characterized by frequent change in policy directives and the need to constantly reconcile a broad range of interests and values. At the same time, technology has raised expectations for faster decision making and increased transparency, while access to information legislation has, in turn, fuelled a demand for more information, delivered faster.

This review was primarily conducted with financial management as a focus. Much of the analysis and many of the conclusions apply to the broader scope of management responsibilities, notably to those related to human resources and information, where the same high standard of ethical behaviour is expected to be applied.

2.1 What is mismanagement?

Dictionaries define "mismanagement" as doing something badly, improperly, wrongly, carelessly, incompetently, or inefficiently. Mismanagement could conceivably cover a range of actions from a simple mistake in performing an administrative task to a deliberate transgression of relevant laws and related policies. In some cases, it could involve criminal behaviour such as theft, fraud, breach of trust, and conspiracy. A continuum is illustrated below.

Figure 1. Range of Mismanagement Actions

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Figure 1. Range of Mismanagement Actions

Given the scope of the issues covered here, no single all-encompassing definition of "mismanagement" is adequate. For example, both the discussions on criminal sanctions and disciplinary regimes require more precise views. On the other hand, discussion of approaches to promote compliance can accommodate a broader definition. For these reasons, the review has not attempted to arrive at a precise definition. This review has adopted, as a working concept of mismanagement, those situations where a public service employee fails to follow the rules set by the framework of management instruments created by the FAA.

2.2 Better rule making: Overhaul of the management
policy suite

It is intuitive that increased knowledge of management rules does, in turn, increase compliance. As noted at the outset, there are hundreds of Treasury Board instruments imposing specific responsibilities and accountabilities. Confusion arises because management policies lack coherence, speak to varying levels within government, or use slightly different language. They can at times present a "siloed" approach to problem resolution rather than a holistic one.

The Secretariat and the Public Service Human Resources Management Agency of Canada are working to streamline and simplify the Treasury Board management policy suite. This is also an objective of the Public Service Modernization Act directed, in part, at making the staffing process more efficient.

Managing in the government will never be simple. The Treasury Board's policy review effort is striving for a coherent view of the rules for managers. The goal is to make policies part of an overhauled global guidance system for public service employees—a system that will make management rules come to life for managers and practitioners—improving coherence and easing compliance, while contributing to an environment where employees willingly and systematically pursue compliance.

2.3 The special duties and obligations of public service employees

Public service employees have special responsibilities. By virtue of holding a public service position, employees and office holders are entrusted with a series of special obligations that differ from those found in private sector employment relationships. This results in specific duties and commitments for these employees.

The constitutional conventions relating to the role of the Public Service within the cabinet‑parliamentary system stress the value of a non‑partisan, professional, and permanent public service appointed and operated on the basis of merit and competence. This public service is intended to provide intelligent and objective policy advice to ministers and deliver programs in an efficient and impartial manner.

In 1985, the Supreme Court of Canada noted that the fundamental task of the federal Public Service is to administer and implement policy, saying:

In order to do this well, the public service must employ people with certain important characteristics. Knowledge is one, fairness another, integrity a third. […] The tradition [surrounding our public service] emphasizes the characteristics of impartiality, neutrality, fairness and integrity.[2]

The 1996 Tait report, A Strong Foundation: Report of the Task Force on Public Service Values and Ethics, set out some of the factors underlying the trust placed in public service employees:

Every day, in myriad ways, public servants make decisions and take actions that affect the lives and interests of Canadians: they handle private and confidential information, provide help and service, manage and account for public funds, answer calls from people at risk. Because public servants hold such a significant public trust, ethical values must necessarily have a heightened importance for them.

A public organization does not and cannot enjoy the "flexibilities" of private sector organizations. It will always have to meet higher standards of transparency and due process in order to allay any fears of favouritism, whether internal or external, in performing its duties under its position of trust and in its use of public funds.

The expectations placed on public service employees are highlighted:

[…] wherever we find ourselves in the public service, and at whatever levels, we enjoy the deep privileges of public service—the opportunity to serve and help our country—and the obligations of leadership and initiative that go with them. We do not have to, and should not, wait for signals from others before undertaking the great tasks of public service leadership: exercising imagination, creativity and vigilance for the public good and caring for the people entrusted to our charge.[3]

The Supreme Court of Canada took a similar view in a 1996 decision:

Protecting the integrity of government is crucial to the proper functioning of a democratic system. […] Preserving the appearance of integrity, and the fact that the government is fairly dispensing justice, are, in this context, as important as the fact that the government possesses actual integrity and dispenses actual justice. […] given the heavy trust and responsibility taken on by the holding of a public office or employ, it is appropriate that government officials are correspondingly held to codes of conduct which, for an ordinary person, would be quite severe.[4]

Clearly, in acting on behalf of their ministers, public service employees, and particularly those in the senior ranks of the Public Service, are burdened with a set of responsibilities that is unique and very different from those of their private sector counterparts. These responsibilities are accompanied by a set of rules, the breach of which would not necessarily attract any reaction in the private sector but may well constitute "mismanagement" in the public sector.

2.4 Public service culture and values

Historically, the Public Service of Canada has evolved into an organization grounded in solid ethical principles and sound values. The public service values, as set out in the Tait report, provide a strong framework to guide managers and employees. Furthermore, a number of current initiatives reinforce a values-based public service culture. For example, the government "whistle‑blower" bill (protecting public service employees who disclose wrongdoings) introduced in 2004 highlights values and proposes a Charter of Values of Public Service.

In December 2003, the responsibility for public service values and ethics was given to the Public Service Human Resources Management Agency of Canada. Among the Agency's priorities was creating widespread awareness, understanding, and application of public service values and ethics, including obligations under the Values and Ethics Code for the Public Service as well as supporting departments and agencies in meeting their commitments by establishing performance indicators, providing a "roadmap" for assessing and improving values and ethics results, and implementing measurement and evaluation strategies, including surveys.

An evolving public service needs to maintain and reinforce a strong ethical compass, but balance is critical. A management approach exclusively based on values and principles would not only be impractical but also unfair to public service employees. The renewal of the management policy suite will provide a set of clear directions within which public service employees will be able to work, while being inspired and guided by their values and sense of ethics.

As noted by Peter Aucoin, a professional public service can articulate and communicate what its values are and can govern itself accordingly. This is not achieved only by getting the right legislative framework in place or by having the right attitudes:

[…] Rather, it is dependent, first and foremost, upon both the individual and collective willingness to exercise professional judgment, that is to take action when managers or staff do not behave in ways that accord with public service values and ethics and to reward those who do.[5]

2.5 Consequences and implications of non-compliance and mismanagement

In general, unresolved issues of non-compliance and mismanagement weaken the public's trust in government as a protector of the public interest. (Even when such cases are not made public, mismanagement that results in a loss or waste of resources reduces the government's capacity to do its job). Neither the various reports of the Auditor General of Canada nor anecdotal evidence of cases of mismanagement point to an insufficiency of rules. The evidence points instead to a periodic or occasional lack of compliance—by officials and departments—with some of the rules.

In extreme cases, non-compliance can erode the reputation of the Public Service. Canadians rightly expect managers and public service employees follow the rules. Their confidence when dealing with the Public Service may be adversely affected if non-compliance were ever to be seen as widespread. Even the government's reputation might suffer if it was perceived that widespread or serious non-compliance was left unchecked. In the last few years, in fact, there has been evidence of a growing public perception of declining ethics and professionalism in governments.

In these extreme circumstances, instances of non-compliance can undermine the government's role as a lawmaker and regulator. Canadians who obey the law—the vast majority—do so because they view the legal authorities they deal with as having a legitimate right to set and enforce certain behaviours that are in the public interest. A governing institution that appears to be unable to put its own house in order may well run into issues of credibility.

2.6 Key conclusions of the review of non-compliance in the context of the FAA

Essentially the FAA itself does most of what is needed to set a legal framework for public sector management.

At the time this exercise was initiated, a number of critical issues had been identified for review:

  • Whether the government has the right instruments to conduct investigations into questions of mismanagement. If not, this would hamper the government's ability to address these situations. The review also identified a number of enhancements to the current regime.
  • Once mismanagement is established and disciplinary and administrative responses are warranted, whether the right sanctions existed and managers were able to use them, giving also specific attention to some employees in particular situations (executives, former employees, public office holders, Crown corporation office holders, employees of Crown corporations). The review concluded that the existing regime possesses the basics. For the most part, the government needs to build its capacity to use them as well as to better promote and recognize management excellence in the senior cadre of the Public Service.
  • When the situations of mismanagement are serious, whether criminal sanctions are used and if not, why. The review confirmed that the FAA's criminal provisions have practically never been used but that similar offences found in the Criminal Code are used occasionally to prosecute public service employees for actions related to their functions, normally in relation to instances of theft, fraud, or corruption.
  • Finally, where the mismanagement led to the loss of funds, whether the government's procedures for recovering those funds are adequate. The review found that the systems and processes in place were complete, albeit somewhat complex. It concluded that enhancements could be made to facilitate their application.

The review also examined related areas that were identified as important, including the creation of a compliance framework.