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Treasury Board of Canada Secretariat
Internal Audit of Strategic Plan Development Process
October 28, 2004
TBS Internal Audit and Evaluation Division
Ernst & Young, LLP
3.1 Strategic Planning Criteria
3.2 Strategic Planning Process at TBS
3.3 Planning to Plan
3.4 Mandate, Mission and Vision
3.5 Environmental Assessment
3.6 Results and Measures
3.7 Review and Adoption of Strategic Plan
3.8 Conclusion
Annex A - Strategic Planning Criteria Sources
Annex C – Strategic Planning Framework
In today's environment of rapid change, Treasury Board Secretariat's (TBS) ability to think strategically, to develop effective strategies to cope with changed circumstances and to develop management capability to adopt and implement strategies is critical to meeting the organization's mandate. The TBS Internal Audit and Evaluation Committee requested this audit to provide Secretariat management with an independent assessment of the TBS strategic planning process and to identify areas for improvement.
TBS Strategic Planning
The TBS strategic planning process was formally put into place in June 2002, with responsibility given to the TBS Strategic Policy and Planning Directorate. In July 2002, a Strategic Planning Network (the Planning Network) was re-constituted, comprising representatives from all TBS business lines, branches and sectors. The Strategic Policy and Planning Directorate with support from business line leaders and the Planning Network developed TBS's Strategic Planning and Results Framework in 2003 and led Executive Committee retreats to discuss TBS's strategic planning information and priorities. The data gathering phase of this audit was completed prior to the major organizational change at TBS in December 2003.
Audit Objectives and Scope
The overall objectives for the strategic planning audit were to assess whether the processes for preparation, development and implementation of the TBS strategic plan are effective including:
Significant Findings
The strategic planning process that was followed met certain elements of the leading practice criteria for strategic planning. These are described in sections 3.2 to 3.7. Also in these sections is a description of the variances from leading practices criteria that were identified during the audit.
A significant finding was that the TBS strategic planning process did not produce a formal strategic plan. Based on an analysis of leading criteria, the following key elements expected to be part of a strategic plan were not present:
The results of the strategic planning process did not provide adequate direction for TBS to drive operational planning, resource allocation, results setting or development of implementation strategies.
Recommendations
We have described in section 4, a recommended approach to strategic planning that addresses the areas for improvement identified in this report. This approach will leverage progress made over the last two years including the establishment of the TBS strategic planning process and the Planning Network. Our approach recommends developing an approved strategic plan and undertaking an annual corporate planning process, which revisits the strategic plan and feeds into the other planning activities within TBS.
The strategic plan would be developed every three years, cover a 3 – 5 year period and be consistent with the leading practice strategic planning criteria. Some of the information for the strategic plan has already been compiled as part of the previous strategic planning exercises. The missing strategic planning elements identified in the report should be incorporated into that plan.
Also proposed is a corporate planning process that would be conducted each year. This represents a hybrid planning process incorporating elements of strategic planning within the annual planning cycle at TBS. This approach has been taken to integrate with other planning requirements and activities at TBS and to help TBS cope with the frequently changing environment.
A detailed description of the proposed corporate planning process is provided in section 4.2.
Management Response
The management response to this audit can be found on page 26. Since the audit proposed a new structure, management has chosen to craft an overall reply rather than to address each observation and recommendation individually.
In today's environment of rapid change, Treasury Board Secretariat's (TBS) ability to think strategically, to develop effective strategies to cope with changed circumstances and to develop management capability to adopt and implement strategies is critical to meeting the organization's mandate. The TBS Internal Audit and Evaluation Committee requested the audit to provide Secretariat management an independent assessment of the TBS strategic planning process and to identify areas for improvement.
The Treasury Board is the Cabinet committee that is responsible for the overall management of the federal government's resources. It is chaired by the President of the Treasury Board and includes the Minister of Finance and other ministers appointed by the Governor in Council. The Treasury Board Secretariat ("TBS" or the "Secretariat") is the department that supports the Treasury Board. The Secretary, who reports to the President of the Treasury Board, heads it.
The TBS operates in a constantly evolving public policy environment. Decisions concerning resource allocations or service delivery must take into consideration a wide range of different factors both internal and external to government. The Treasury Board, through TBS, works with departments and agencies to meet government commitments.
The TBS strategic planning process was formally put into place in June 2002, with responsibility given to the TBS Strategic Policy and Planning Directorate. In July 2002 a Strategic Planning Network (the Planning Network) was re-constituted, comprising representatives from all TBS business lines, branches and sectors. The Strategic Policy and Planning Directorate with support from business line leaders and the Network developed TBS's Strategic Planning and Results Framework in 2003 and led Executive Committee retreats to discuss TBS's strategic planning information and priorities.
The overall objectives for the strategic planning audit were to assess whether the processes for preparation, development and implementation of the TBS strategic plan are effective including:
The audit scope was structured into two phases.
2003-04 Audit Plan - Phase 1. Preparation and Development of the TBS Strategic Plan
Phase 1 is included in TBS's Internal Audit Plan for 2003-04 and is the scope of this report. It focuses on preparation and development of the TBS strategic plan including assessment against the following leading practices criteria:
Note: The data gathering phase of this audit was completed prior to the major organizational change at TBS in December 2003.
Phase 2 To Be Determined: Implementation of TBS Strategic Plan
Phase 2 has not yet been scheduled due to the TBS reorganization of December 2003. The effectiveness of the implementation of the strategic plan will be evaluated against leading practices criteria include the following:
The timing of the audit will need to be considered in light of the findings and recommendations of the current audit.
The approach taken to conduct the audit included the following steps:
Based on the above steps, practical recommendations were developed to guide the TBS strategic planning process.
The audit team conducted external research of strategic planning leading practices and developed the audit approach to meet TBS requirements. Strategic planning leading practices criteria were reviewed and approved by the Internal Audit and Evaluation Committee.
The audit team interviewed key members of the Strategic Policy and Planning Directorate and the TBS Planning Network and gained an understanding of the process and issues facing TBS in conducting strategic planning.
Interviews were also conducted with the Secretary, Business Line Leaders and Assistant Secretaries to discuss major issues facing the strategic planning process, effective practices and areas for improvement. Interviewees are listed in Annex B.
A document review was conducted including the following material:
The Internal Audit findings and recommendations are presented in the following two sections:
Section 3 – Audit findings: including leading practices (used as the audit criteria), an overview of the TBS strategic planning process for 2002-03 and 2003-04, activities performed by TBS that are consistent with leading practices and areas for improvement.
Section 4 – Recommendations.
In section 3.1 we set out leading practices for strategic planning to be used as criteria for assessing TBS strategic plan development efforts. We have also provided a brief summary of the strategic planning process at TBS during 2002-03 and 2003-04.
We find the TBS strategic planning process meets certain elements of leading practices. However, we have identified several areas where improvements would enhance the strategic planning process. Specific details on the effective practices and areas for improvement are identified in Sections 3.3 through to Section 3.7. Our overall recommendations are presented in Section 4.0.
The following process flow summarizes the major process components of a strategic planning process.[2]
Following are definitions of the Strategic Planning Criteria[3] aligned with the process flow:
The following sections report findings for strategic planning criteria 1- 7 included in the scope of this audit.
The TBS strategic planning process has been primarily a bottom-up exercise led by the TBS Strategic Policy and Planning Directorate for fiscal years 2002-03 and 2003-04. The Secretary and the business line leaders provided some direction on key priorities. Outputs from the process were distributed and discussed at the TBS Executive Committee retreats and more broadly distributed at the TBS Town hall events. The key process activities are illustrated in Figure 1[4] below.
Participants in the TBS strategic planning process included:
Process documentation was facilitated by the use of data gathering templates.
Final deliverables from the process included the Strategic Planning and Results Framework and linkages to other TBS planning and reporting activities including business line plans and the Report on Plans and Priorities (RPP).
Audit findings in the following sections highlight effective activities performed by TBS and areas for improvement from the current process.
Leading practices research indicates that conduct of preparation work is essential prior to beginning the planning process. Key requirements include:
We have observed effective practices at TBS to support the Planning to Plan activities. These are summarized as follows:
The Treasury Board Secretariat ("TBS") established a Strategic Policy and Planning Directorate operating under the guidance of an Assistant Secretary.
A Strategic Planning Network was established with members from across all business lines in TBS. The network defined its mandate as:
The Planning Network prepared information, such as the templates for the risk profiles, to be used in the strategic planning process.
Internal key stakeholders were identified and represented in the Planning Network.
We have observed the following areas for improvement to support effective Planning to Plan activities.
Roles of the key stakeholders not clearly defined
The link between the roles of the Strategic Policy and Planning Directorate and the senior executives' strategic planning activities was not clear. Although strategic priorities have been communicated from the top, these have not been clearly adopted in the planning effort and documentation produced by the planning team. It should be noted that for 2003 – 2004 the priorities were communicated late in the process at the October ExCo retreat.
Not all key external stakeholders were identified or consulted as part of the environmental scan and strategic planning process.
Key elements of strategic planning process were not clear
Key elements of the strategic planning process were not clear to many of those involved in the strategic planning effort. There was no common understanding of:
The output from the strategic planning process was not well defined. Strategic planning process templates were not designed and discussed with business line leaders in advance of planning efforts. Senior managers viewed it as more of a "form filling" exercise completed at the middle management level representing a detailed tactical analysis of current activities.
Strategic planning not well integrated with other TBS planning activities
Although common data was used for the TBS RPP and business plan, there is not always a clear link between the strategic planning process and the other related planning processes in the organization:
Role and functions of Planning Network not effective
The Planning Network was not used to its maximum potential:
Leading practices research indicates that each organization is influenced by constitutional and/or legislative mandates. An organization's mission provides its raison d'être. Key requirements include:
We have observed that the mandate and vision were adopted from applicable legislation, Results for Canadians and other government pronouncements.
We have observed areas for improvement to support effective Mandate, Mission and Vision activities. These are summarized as follows:
Lack of clear vision and stakeholder analysis
The strategic planning process was not effective in driving a consistent and clear vision:
There is no evidence in the documentation that a structured external stakeholder analysis was conducted.
TBS Strategic planning does not support a changing environment
Strategic planning and direction setting does not appear to plan for flexibility and uncertainty although the TBS environment is very dynamic and subject to change.
Some examples of TBS' changing environment are:
Leading practices research indicates that external and internal assessments identify factors that influence an organization and should be considered as part of the strategic planning process. An effective environmental assessment should have the following elements:
We have observed the following effective practices at TBS to support the Environmental Assessment activities.
External scan activities were conducted:
A risk assessment component was included in the second scan.
Information related to the environmental scan was put into context by business lines in conducting the strategic planning process.
The Environmental Scan was included as background material for strategic planning participants (Planning Network, Business Line Leaders, ExCo).
We have observed the following areas for improvement to support effective Environmental Assessment activities.
Environmental scanning not effectively incorporated into strategic planning
Environmental scan activities were not well structured and cohesive:
Lack of TBS-wide integration and analysis
The internal assessment lacked cross-business line analysis:
Leading practices research indicates that strategicoutcomes are end points or public benefits that are important to the stakeholders and for which a level of success can be determined. Key requirements for effective results and measures include:
We have observed effective practices at TBS to support Results and Measures activities. These are summarized as follows:
We have observed the following areas for improvement to support effective Results and Measures activities.
Output from strategic planning does not drive towards TBS-wide measurable outcomes
The strategic outcomes and results are not quantifiable:
Leading practices research indicates that part of the organization's adoption of the plan should include formal approval by senior management and the board (if one exists). Key requirements for effective review and adoption include:
We have observed effective practices at TBS to support the Review and Adoption of Strategic Plan activities. These are summarized as follows:
We have observed the following areas for improvement to support effective Review and Adoption of Strategic Plan activities.
No formal adoption or approval of strategic plan
There is not a clear indication of a formally approved TBS Strategic Plan that communicates the vision, risks, priorities, strategies, plans and resources for TBS as a whole for the upcoming 3 - 5 year period. The TBS RPP and business plan were not considered strategic documents by most interviewees.
Executive Committee Retreats not effective in developing the strategic plan
The October 2003 ExCo retreat received mixed feedback with respect to strategic planning and priority setting:
Other findings
We were told that the planning approach within the Chief Information Officer Branch, while not linked to an overall TBS strategic plan, was well integrated within the Branch and that the strategic objectives flowed through business plans and operational plans and was supported by financial and other reporting systems. Since this was beyond the scope of the audit, we did not validate this information but senior management may want to look more closely to see if this would be a suitable model for the entire Secretariat.
The strategic planning process was consistent in many ways with the leading practice criteria for strategic planning. Some areas where the process was not consistent with leading practices have also been identified in the previous sections.
Based on an analysis of the leading practice criteria, the TBS strategic planning process did not result in the production of a formal strategic plan. Key elements expected to be part of a strategic plan are not present, such as:
The results of the strategic planning process do not provide adequate direction for TBS to drive operational planning, resource allocation, results setting or development of implementation strategies.
We have described in this section, a recommended revised approach to strategic planning that addresses the areas for improvement identified in the previous sections. This approach will leverage progress made over the last two years including the establishment of the TBS strategic planning process and the Strategic Planning Network. We have also taken into account the unique environment at TBS. Our approach recommends periodically developing an approved strategic plan (possibly every three years) and undertaking an annual corporate planning process, which revisits the strategic plan and feeds into the other planning activities within TBS.
As indicated in the previous section, based on the leading practice criteria, the strategic planning process did not result in a strategic plan for TBS. We recommend that, every three years, TBS develop a strategic plan covering a 3 – 5 year period consistent with the leading practice strategic planning criteria.
A strategic plan is a formal written document that sets forth the organization's mission, vision, values and objectives and how the organization will achieve these. It summarizes the environmental and resource assumptions underlying the strategic choices and identifies the risks associated with the choices. Annex C provides a summary of the type of information typically included in a strategic plan. Some of this information has already been compiled as part of the previous strategic planning exercises. The missing strategic planning elements identified in the previous section, should be incorporated into the plan, specifically:
The strategic plan would help provide TBS with direction to address the following:
This strategic plan would help TBS to remain focused on its long-term strategic priorities in light of frequently changing shorter-term priorities.
This proposed corporate planning process would be conducted each year, the effort towards certain activities, such as environmental scanning and priority setting being driven by organizational or external factors affecting TBS. This represents a hybrid planning process incorporating elements of strategic planning within the annual planning cycle at TBS. This approach has been taken to integrate with the other planning requirements and activities at TBS, and to help TBS cope with the frequently changing environment.
The next section describes a proposed future state process that will adopt leading practices criteria for strategic planning and provide practical recommendations for integration with other TBS planning processes as follows:
Organization Enablers – Involvement of key stakeholders within TBS;
Process Enablers – Timing, sequencing and effectiveness of activities and outputs; and
Communication Enablers - Approve, adopt and communicate the TBS corporate plan.
Recommendations have been developed to address these areas and are depicted firstly in Figure 2 with a description of the proposed annual TBS corporate planning process. The report then further discusses the process, organizational, and communication enablers for the proposed corporate planning process.
A brief description of the proposed TBS corporate planning process flow follows:
Key to successful corporate planning is senior management's direction setting and involvement of key TBS stakeholders in the process.
Executive Planning Committee - The formal establishment of anexecutive planning committee led by the Secretary would have overall responsibility and ownership of the corporate plan for TBS. Corporate planning would start with the committee's top-down direction. The committee would comprise the Secretary, business line leaders and key members of Strategic Policy and Communications, as well as the Corporate Services Branch. There must be a clear distinction between the roles and responsibilities of Strategic Policy and Communications Branch and the proposed Executive Planning Committee.
TB President - As part of the organization's adoption of the plan, it should be formally approved by the President of the Treasury Board.
Strategic Policy and Communications Branch – Strategic Policy and Communications Branch would have overall responsibility to oversee the effort of the planning process. They would work closely with senior executives to ensure that the organization's commitment to the corporate planning processes is well communicated to all staff. This group would be responsible to ensure key decision makers are actively involved in the preparation and planning stages leading up to the planning process.
TBS Executive Committee (ExCo) – Periodic ExCo meetings have been effective approaches for communicating the direction and priorities of TBS. In support of the planning process, ExCo would be proactively involved in the process to develop a corporate plan that would combine a top-down and a bottom-up approach. ExCo would provide the forum to discuss, direct and decide on TBS‑wide issue and strategies. Formal sessions would be conducted quarterly (minimally) as the plan is developed and finalized.
Corporate Planning Network – The planning network as it operated in 2003 should be discontinued. A new Corporate Planning Network would be given increased authority to make decisions on behalf of the organization and also act as a collaborative body to develop and challenge strategies from a TBS‑wide perspective. The network would be actively supporting the business line leaders in the conduct of internal and external scans and in conducting bottom-up planning, in-line with priorities established by the executive planning committee.
Key External Stakeholders - TBS should formally identify its key external stakeholders and establish an effective process for obtaining their input into environmental scans and risk assessments. Stakeholders may include Treasury Board ministers, the Privy Council Office, the Minister of Finance and deputy heads from key departments. The approved plan would be communicated to this stakeholder group.
TBS Staff – Select TBS staff would be involved in the bottom-up corporate planning process, supporting business line leaders. The outcome of the planning process should be distributed and broadly communicated to all TBS staff through multiple communication channels.
We have illustrated in Figure 2 recommendations for process modifications to the current TBS planning processes. These changes will address issues identified during the conduct of our audit. Process highlights include:
The Corporate Plan needs to be well defined, distributed and understood by TBS staff and key external stakeholders. Ongoing communication is important as the corporate planning process is conducted. Following are brief descriptions of the key communication enablers, depicted in Figure 2:
Corporate Planning Documentation – The Corporate Plan would be the TBS organizational wide planning document that sets the priorities, vision and strategies to support the TBS mandate. The plan would be distributed to all employees. It would provide the linkage of mandate, vision and strategies to meet targeted outcomes. Timing of results and resource allocations would be clear from this planning document.
Town Hall Meeting - The Strategic Planning and Results Framework was previously distributed to all employees through a TBS Town Hall, which took place in April 2003. Future Town Hall meetings would provide a forum for presenting an overview of the Corporate Plan and progress against the plan.
Linkages with other TBS Planning and Reporting processes – Alignment of output from the corporate planning process and other planning processes needs to be well defined and communicated. Redundant processing and divergence of strategies may result if these are not well-understood and communicated within TBS.
Other Communication Approaches – Formalizedfeedback mechanisms with external stakeholders through environmental scanning is critical for ongoing planning and analysis. Given the dynamic environment and changing priorities experienced in recent years, TBS ongoing planning and reporting against priorities is a critical internal activity for the planning process at TBS.
Other Communication Approaches – Formalizedfeedback mechanisms with external stakeholders through environmental scanning is critical for ongoing planning and analysis. Given the dynamic environment and changing priorities experienced in recent years, TBS ongoing planning and reporting against priorities is a critical internal activity for the planning process at TBS.
The senior management of Treasury Board Secretariat agree on the need to improve its strategic planning process. The Secretariat must remain focused on its long-term strategic priorities and at the same time have the capacity to cope with unplanned short-term demands in a frequently changing environment.
The Secretariat agrees with the recommendation to develop a new approach that includes developing, for approval, a strategic plan every three years that sets direction for annual corporate planning and feeds forward results to other planning activities like the annual departmental report on plans and priorities.
On December 12, 2003, the government refocused the mandate of the Secretariat and on June 8 the Secretary restructured the Secretariat in order to deliver on this new mandate. As a result, planning for 2004-05 is off cycle. Transition to the 2005-06 cycle will require a simplified and streamlined approach to bring clarity to priorities, plans and resources and allow time to develop the appropriate internal TBS planning infrastructure.
Throughout the remainder of 2004-2005, the TBS Executive Committee will clarify its needs and expectations for a strategic planning function and put in place an internal management and planning cycle that is streamlined, integrated, forward-looking and comprehensive. Given the circumstances in which the Secretariat must operate, it must be responsive yet cannot be too cumbersome or process-oriented.
Efforts will also be made to ensure that the results of bottom-up planning processes already established across the Secretariat marry up with the new process for setting strategic priorities for the organization
Critical to the success of the Secretariat's strategic planning efforts will be the establishment of a Management Resources and Results System (MRRS), which sets out
The 2004-05 internal management and planning cycle will be set up in time to deliver on the information requirements of the Management Resources and Results Structure (MRRS) government – wide timetable. Once completed, this structure will provide a baseline from which to launch a complete strategic planning cycle for the 2005-06.
Although the audit does not touch on the issue of the resources, TBS will also review resources currently dedicated to planning in light of its recent reorganization to ensure that an appropriate planning infrastructure and governance mechanisms are in place to do effective planning.
In addition, TBS will benchmark its approach to other organizations similar in size, mandate and operating environment (e.g., Treasury Boards of Ontario and BC, OMB in the US) to identify "best practice" that is meaningful and useful and consistent with the recommendations of this audit report.
To develop the strategic planning criteria we reviewed several sources including the following:
As a result of this review, we adopted the strategic planning model presented in the Missouri Strategic Planning Model and Guidelines since it most closely resembled the environment at TBS. Elements from the other sources were also incorporated into the final criteria.
Provided below is a list of Treasury Board Secretariat employees that we interviewed as part of our audit.
Jean-Claude Dumesnil, Executive Director |
Strategic Policy and Planning Directorate |
Jean Tourigny, Senior Project Manager |
Business Planning, Human Resource Management Office |
Karen Munro, Business Planning Officer |
Business Planning, Human Resource Management Office |
Sue Greenfield, Business Planning Officer |
Human Resource Management Office |
John Johnston, Senior Director |
Strategic Planning and Integration, Comptrollership Branch |
Judy Cosby, Senior Analyst |
Expenditure and Management Strategies Sector |
Steve Silcox, Director |
Corporate Planning and Resource Management Corporate Services |
Tiffany Caron, Senior Planning Officer |
Corporate Planning and Resource Management Corporate Services |
Ruth Dantzer, Associate Secretary |
Business Line Leader Stewardship |
Jim Lahey, Associate Secretary |
Business Line Leader Human Resource Management |
Michelle d'Auray, Chief Information Officer |
Business Line Leader Service Improvement |
Jim Judd, Secretary and Comptroller General of Canada |
Treasury Board of Canada |
Glynnis French, Assistant Secretary |
Human Resource Management Office |
Marie Lemieux, Director |
Strategic and Business Planning Chief Information Officer Branch |
Bill Austin, Assistant Secretary |
Social and Cultural Sector |
Monique Lebel-Ducharme, Senior Director |
Communications and Public Relations Chief Information Officer Branch |
A Strategic Plan is a document that records the decisions the organization has made with respect to its future strategy. The plan should also contain the rationales, analyses and background information supporting those decisions. A good strategic planning process is one that facilitates the creation of a superior strategy and ensures that the appropriate information is contained in the plan. The types of information typically included in a strategic plan are:
Vision, Mission and Values
Objectives(related to the mission, vision and values)
Tombstone information:
Risk Analysis
Drivers for change:
Strategies
[1] See Annex A for a description of the development of the strategic planning criteria.
[2] Diagram developed based on Missouri Strategic Planning Model and Guidelines, March 2002
[3] See Annex A for a description of the development of the strategic planning criteria.
[4] Source: TBS Planning Cycle for 2003-04 Drafted May 2003
[5] Source: 20 Questions Directors Should Ask about Strategy, Canadian Institute of Chartered Accountants, © 2003