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THE CANADIAN
SPECIAL OPERATING AGENCIES’ INITIATIVE
by
Daniel Maltais
A Dissertation Presented to the
FACULTY OF THE SCHOOL OF PUBLIC ADMINISTRATION
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PUBLIC ADMINISTRATION
May 1996
Copyright 1995 Daniel Maltais
UMI Number: 9621718
UMI Microform 9621718
Copyright 1996, by UMI Company. AH rights reserved.
This microform edition is protected against unauthorized
copying under Title 17, United States Code.
UMI
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UNIVERSITY OF SOUTHERN CALIFORNIA
SCHOOL OF PUBLIC ADMINISTRATION
UNIVERSITY PARK
LOS ANGELES, CALIFORNIA 90089
‘ This dissertation, written B y
................. D anie1 #M a lta is .................................
under tfie direction o f f t ‘ Dissertation
Committee, and approved B y a d its mem-
B e r s , has B ee n presented to and accepted By
the faculty o f the SchooC o f ‘ P u B C i c
Administration, in partial jidfUCment o f
requirements c f the degree c f
D O C T O R OF
PUBLIC ADM IN ISTRATIO N
DISSERTATION COMMITTEE
Cfiairpersort
DEDICATION
To my parents and the other members of my family
who in many different ways supported me in this enterprise
and
to all those
who face the difficult challenge
of making public administration a more effective enterprise.
ACKNOWLEDGEMENTS
This dissertation is the occasion to formally thank those without whom
my doctoral studies would have remained a dream or an incomplete
undertaking.
My first thanks go to Pierre De Celles, Director General of l’Ecole
nationale d’administration publique who agreed to financially support this
enterprise.
The encouragement by Dr. Gerald Caiden who agreed to direct the
present work was also much appreciated. In moments of doubts (and there were
more than I originally expected), Dr. Caiden was always there to provide
needed assistance.
Thanks to Dr. Alexis Hailey, not only a member of the dissertation
committee but, above all, a friend who contributed in so many ways to my
intellectual development.
My thanks extend to Dr. Joseph Wholey, also a member of my
dissertation committee who, despite its numerous tasks, always found the time
to answer my questions and make sound comments.
Since this dissertation refers to a Canadian experiment, my wish was to
have on my committee a distinguished scholar committed to the study of the
Canadian federal administration. Dr. Donald Savoie is one of the few who meet
this requirement. I am honored and grateful that he agreed to act as a member
of my dissertation committee.
My last thanks go to the faculty of USC, the staff of the Washington
Public Affairs Center, and all my doctoral colleagues who did so much to make
me feel at ease in their environment.
TABLE OF CONTENTS
DEDICATION....................................................................................................... ii
ACKNOWLEDGEMENTS ................................................................................ iii
LIST OF TABLES ............................................................................................... viii
LIST OF FIGURES............................................................................................... x
ABSTRACT .......................................................................................................... xii
LIST OF ACRONYMS ...................................................................................... xv
INTRODUCTION.................................................................................................. 1
Chapter
I. AN INTRODUCTION TO THE CANADIAN SPECIAL
OPERATING AGENCIES’ IN IT IA T IV E........................................ 4
The Origin of the SOA Initiative................................................. 4
A Description of SOAs’ Main F eatures...................................... 9
The SOA Initiative and Other Canadian Attempts to Reform
the Federal Public S e rv ic e ....................................................... 17
The Assessment of the SOA Initiative By the Auditor
General of C anada..................................................................... 23
The Missing SOA Model ............................................................ 34
II. THE SOA INITIATIVE AS AN ATTEMPT TO CHANGE THE
CULTURE OF THE CANADIAN PUBLIC SERVICE IN
SELECTED AGENCIES ..................................................................... 38
The Various Organizational Dimensions Addressed By
the SOA Initiative ..................................................................... 39
"Organizational Culture" as an Integrative Concept.................. 45
The Dynamics of Cultural C hange.............................................. 52
Three Propositions and One General Question to Guide
The Present Inquiry .................................................................. 57
The SOA Initiative and Some Basic Public Administration
Issu es............................................................................................ 59
v
III. THE RESEARCH DESIGN TO DEVELOP AN
SOA M O D E L ........................................................ 64
The Generation of a Model Grounded in the
SOA Initiative............................................................................. 66
The Procedure To Uncover a Model Grounded in the
SOA Initiative............................................................................. 72
An Appreciation of the Research Model Adopted
in the Course of the Present Inquiry ...................................... 84
IV. THE CASE OF A STERILE SOA CONVERSION: TRAINING
AND DEVELOPMENT CANADA (T D C )...................................... 92
TDC’s Charter and Business P la n s.............................................. 92
TDC’s Three Business Plans ....................................................... 106
TDC’s Performance A ssessm ent................................................. 116
TDC’s Conversion to an SOA: Its Interpretation
By TDC’s Managers and Em ployees...................................... 122
The Emergence of a Model Grounded in the
Conversion of TDC To An SOA ........................................... 135
Conclusion: The Latest Developments Regarding TDC .... 142
V. THE CASE OF A FERTILE SOA CONVERSION: THE
CANADIAN INTELLECTUAL PROPERTY OFFICE (CIPO) . . 144
An Overview of Canadian Intellectual Property Agency .... 146
Converting CIPO To An SOA: The Official
Documentation .............................................................................. 150
The Conversion of CIPO To An SOA: Its Interpretation
By CIPO’s Managers and Employees...................................... 170
The Emergence of a Model Grounded in CIPO’s
Experience With the SOA Status ........................................... 183
VI. THE CASE OF A NEGLIGIBLE SOA CONVERSION: THE
CANADIAN CONSERVATION INSTITUTE (CCI) .................... 189
An Overview of CCI and the Official Documentation
Pertaining to Its Conversion To An SOA ............................. 192
The Conversion of CCI To An SOA: Its Interpretation
By CCI’s Managers and Employees ......................................... 209
The Emergence of a Model Grounded in CCI’s Experience
With the SOA Status..................................................................... 217
vi
VII. THE SOA MODEL EMERGING FROM A CROSS-ANALYSIS
OF TDC, CIPO, AND CCI ...................................................................220
A Comparison of the Three Models Grounded in the
Conversion of TDC, CIPO and CCI To S O A s ..................... 221
Refining the Model Emerging From the Comparison
Among the Three Agencies.......................................................... 228
Integrating the Accountability Dimension With
the SOA M o d el..............................................................................244
The Impact of the SOA Status on Organizational Climate . . . 249
Conclusion: The Substantive Model and Four Related
Propositions................................................................................... 251
VIII. LEARNING FROM THE SOA MODEL ............................................. 254
Substantive Lessons To Guide the SOA Practice ..................... 254
Methodological Lessons and the SOA Model As a
Starting Point For Future R esearch............................................ 262
Theoretical Lessons To Guide Future T heorizing........................ 270
CONCLUSION ....................................................................................................... 282
SELECTED BIBLIOGRAPHY..............................................................................285
APPENDIXES
A. Conclusions From "Special Operating Agencies: Taking
Stock," Final Report, May 1994 ....................................................... 294
B. Interview G uidelines............................................................................ 298
LIST OF TABLES
1. A Profile of Canadian S O A s.................................................................... 13
2. Summary of Part Two of the Auditor General’s Report on the
SOA Initiative................................................................................... 27
3. Culture Changes Sought By the SOA Initiative.................................... 51
4. Mechanisms to Reinforce or Change Organizational Cultures ... . 57
5. List of Authorities Requested By Training and Development
Canada and Granted by the Treasury Board or by the
Public Service Comm ission............................................................ 100
6. Training and Development Canada’s Business Plans:
A Comparative Overview of their C on ten ts................................ 107
7. TDC’s Financial Results and Forecasts.................................................. I l l
8. TDC: Number of Courses and Participants From 1988
Through 1994 ................................................................................... 119
9. TDC: Training Programs—Statement of O perations............................ 121
10. Conceptual Categories and Properties Crystallizing the
Statements Made by TDC’s Managers and S t a f f ....................... 123
11. The Five Categories Derived From the Study of TDC ...................... 136
12. The Relative Importance of CIPO’s Product L in es............................... 148
13. CIPO’s Pro Forma Financial Statements................................................ 159
14. CIPO’s Volumes of Products and Services .......................................... 163
viii
15. CIPO Cash Revenues ("R") and Direct Expenditures ("E")
By Product Line ............................................................................. 164
16. Categories and Properties Crystallizing the Statements
Made by CIPO’s Managers and S ta ff........................................... 173
17. Flexibilities Granted to the Canadian Conservation In s titu te 197
18. CCI’s O bjectives.......................................................................................... 200
19. Levels of Services Provided by CCI to Canadian and
Foreign C lie n ts ................................................................................... 201
20. CCI’s Financial Statements (1992-93 and 1993-94) ........................... 207
21. Categories and Properties Summarizing the Statements Made
By CCI’s Managers and Staff .......................................................... 210
22. The Different Impact of the SOA Conversion on TDC, CIPO
and CCI ...............................................................................................220
23. Characteristics of the Three SOAs’ Environments and
Internal O perations..............................................................................230
24. A Characterization of the Environments of TDC, CIPO and CCI . . 233
25. A Comparison of TDC, CIPO and CCI in the Forms of
Standardization ................................................................................... 237
26. Accountability Measures Applied by the Three A gencies................... 246
27. The Internal Climate in TDC, CIPO and CCI As Perceived
By the A u th o r...................................................................................... 250
28. The Application of Beckhard and Harris’ Steps by TDC, CIPO
and CCI ...............................................................................................278
ix
LIST OF FIGURES
1. Four Organizational Dimensions.......................................................... 40
2. Cultural L e v e ls ....................................................................................... 47
3. Contrasting the Two Perspectives on Theory-Building .................. 67
4. The Seven Steps of the Research Procedure...................................... 75
5. Interpretivism as the Paradigm -hat Characterizes the
Research Design Used in the Present In q u iry .......................... 85
6. The Relationship Between Ideographic and Nomothetic
Approaches ................................................................................... 87
7. Planned versus Existing Accountability Relationships Between
the Chief Operating Officer of TDC and Officials of
the P S C ........................................................................................... 104
8. Suggested Relationships Between Five Categories and the
Sterile Impact of the SOA Status on T D C ................................ 137
9. Suggested Relationships Between Three Categories and the
Fertile Impact of the SOA Status on CIPO ............................. 186
10. CCI’s Four Divisions and Formal Accountability Relationship
to Heritage C anada........................................................................ 195
11. Suggested Relationship Between One Category and the Negligible
Impact of the SOA Status on C C I .............................................. 218
12. The Three Models Grounded in the Conversion of TDC, CIPO
and CCI To S O A s ................................................................................ 222
13. The Basic Factors Making the SOA Conversion E ffe c tiv e 228
x
14. The Relationships Between an Organization’s Core, Support
and Control A ctivities.................................................................. 234
15. A Revised Model of the Conditions and Factors Making the
SOA Status Effective.................................................................... 243
16. The SOAs’ Accountability Measures Integrated With the
Basic M o d e l................................................................................... 245
17. The Model Emerging From the Analysis of the Conversion
of Three Canadian Government Organizations To Special
Operating Agencies....................................................................... 252
18. An Illustration of How An Interrupted Time Series Design
Could Apply to S O A s .................................................................. 269
xi
ABSTRACT
Since 1990, the Canadian Government converted fifteen governmental
units to Special Operating Agencies (SOAs). These agencies were granted
"flexibilities" by the Treasury Board and their host department to pursue agreed-
upon objectives and improve their performance. Although the initiative has
been in existence for almost six years, no model has been proposed to guide the
effective conversion of an agency to an SOA.
This dissertation develops such a model. It identifies the conditions
that must exist at the time of the conversion and the factors that contribute to
making the SOA conversion a successful operation.
To develop this model, this dissertation compares the impact the SOA
status has had on three Canadian agencies and contrasts the factors that played
in each case. The investigation suggests that one agency successfully capitalized
on its new status to bring about organizational changes (a case of fertile SOA
conversion) while, in a second case, the SOA failed to activate the necessary
changes (a case of sterile SOA conversion). In the third case, the SOA
conversion produced very marginal changes (a case of negligible SOA
conversion).
The data used to build this model came from the examination of the
agencies’ charters (which specify the flexibilities and the accountability
measures), of their business plans (which detail the agencies’ objectives and
strategies), and from the analysis of exchanges with managers and staff who
directly experienced the conversion.
Assuming that the SOA conversion should help an agency to better
adapt to its environment, to enhance its accountability, and to create enthusiasm
and confidence regarding its future on the part of its staff, the model suggests
that four conditions and four factors support the effective conversion to an SOA.
The four conditions are: (1) the perception that the environment of a
given agency calls for internal changes, (2) that these changes principally
concern the agency’s support and control activities (and marginally affect the
agency’s core activities), (3) that the flexibilities granted will make these
changes possible and (4) that the agency’s performance is subject to a minimal
degree of quantification.
The four factors are: (1) the granting of significant flexibilities, (2) the
introduction of practical measures to enhance the agency’s accountability,
(3) strong and explicit support by host department’s top authorities and
(4) strong leadership on the part of managers in charge of the SOA.
The dissertation concludes with a number of research propositions to
confirm, refute or refine the SOA model and to verify the cost-effectiveness of
the reform as well a its lasting effects.
xiv
LIST OF ACRONYMS
AGC: The Auditor General of Canada
CCI: The Canadian Conservation Office
CEO: Chief Executive Officer
CIPO: The Canadian Intellectual Property Office
COO: Chief Operating Officer
HC: The Department of Heritage Canada
IC: The Department of Industry Canada
LTC: Language Training Canada (a division of PSC)
MCCI: The Ministry of Corporate and Consumers Affairs
PSC: The Public Service Commission
SOA: Special Operating Agency
TBS: The Treasury Board Secretariat
TDC: Training and Development Canada (a division of the PSC)
INTRODUCTION
This dissertation attempts to uncover the theory underlying the initiative
conducted in the 1990s by the Canadian government to transform fifteen
administrative units into Special Operating Agencies (SOAs). Inspired by the
British experience with "Executive Agencies" (Jenkins & Gray, 1993), Canadian
SOAs were designed as a means of improving public performance at the
operational level. The transformation of "bureaus," or parts of departments into
SOAs, was to allow them to function with enhanced administrative flexibility in
order to produce pre-determined results regarding the delivery of services while
respecting agreed-upon accountability rules and Canadian Public Service values.
Chapter 1 outlines the main features of the SOA Initiative and the main
elements found in the first assessment made of the initiative by the Auditor
General of Canada. It also presents the argument in favor of the development
of a model to guide the future development of the initiative or similar
undertakings.
Chapter 2 briefly reviews the various dimensions most commonly
covered by organizational change. The concept of "organizational culture" is
presented as the basic concept to capture these various dimensions and as a
1
construct to guide the inquiry. Accordingly, the present investigation sees the
SOA Initiative as an attempt to transform the bureaucratic culture of selected
agencies into a new management culture. Such cultural transformation will
depend on the introduction of formal changes coming with the SOA status and
on changes regarding the organizational values shared by people working in
SOAs. It is through the exploration of these two types of changes and of their
interrelations that the study seeks to uncover a model depicting the factors that
support the effective conversion of governmental organizations to SOAs.
Chapter 3 describes the methodology used to explore the SOA Initiative
and to build a model of successful implementation grounded in three SOAs.
The first section discusses the main differences in perspectives between inquiries
that seek to verify and test pre-defmed theories, and inquiries, like the present
one, which seek to build a model grounded in the reality o f SOAs. The
grounded theory methodology is then developed on the basis of Barney G.
Glaser and Anselm L. Strauss’ work (1967). The last section discusses the
choice of the research design by putting it in a larger theoretical context.
Chapters 4. 5 and 6 describe and analyze the data collected in each of
the three selected SOAs. The data essentially come from two sources: (1) the
official documentation provided on each case (charters, business plans and
annual reports) and (2) a series of individual and group interviews conducted in
each one. This data is interpreted so that critical factors and relationships can
2
be identified and contributed to the building of a model regarding the effective
activation of the SOA concept.
Chapter 7 develops the SOA model from a cross-analysis of three case
studies analyzed in Chapters 4, S and 6.
Chapter 8 draws lessons deriving from the inquiry and explores the
future research opportunities to confirm, refute or refine the SOA model.
3
CHAPTER I
AN INTRODUCTION TO THE CANADIAN SPECIAL OPERATING
AGENCIES’ INITIATIVE
This chapter traces the origin of the SOA Initiative, presents its main
features and relates it to other initiatives taken by the Canadian government to
improve its administration. The first assessment of the SOA Initiative made by
the Auditor General of Canada is also discussed. The chapter ends with the
suggestion that what is missing regarding this initiative is a model which would
isolate the principal factors supporting its effective implementation and guide its
further development.
The Origin of the SOA Initiative
On December 15, 1989, Robert Rend de Cotret, the then-minister in
charge of the Treasury Board,1 officially announced the creation of the first five
SOAs. Among various measures to cut federal spending, the minister
announced the development of:
•Formally, the Treasury Board, composed of six ministers and supported by
a large secretariat (about 700 employees), represents the federal government as
the employer of all public servants. Its mandate is to control the expenses made
by the various departments and agencies and to provide them with
administrative support.
4
. . . special businesslike agencies within the Public
Service for business-type operations that supply goods
and services, such as passports, internal telephone
systems and the printing of Hansard. . . . These agencies
will have multi-year business plans, and Treasury Board
will approve any special flexibility necessary to achieve
agreed-upon business targets. The agencies will remain
within government departments under Ministers, and
will continue to be answerable to senior management and
Ministers. Their business goals will be very clear and in
some cases they will compete with the private sector for
the opportunity to supply services to government
(Treasury Board of Canada, News Release, December
15, 1989, pp. 2 and 4).
It is difficult to specify exactly why the decision to create SOAs was
made. Although most informants seemed to agree that the initiative was
inspired by the British Executive Agencies, the decision process that led to the
launching of the SOA Initiative suggests that it was not very well planned. As
for knowing who was the originator of the concept, the information gathered is
not conclusive. Said one officer from the Treasury Board:
During a trip to London in 1988, I was given
information about "executive agencies" that the British
government was about to create. I came back with this
information and shared it with my boss who asked me to
look at the concept and see how it could apply to the
Canadian federal service. In collaboration with a few
other people, I worked out the concept during the
following months. By the early fall of 1989, the newly
re-elected Conservative government in Ottawa wished to
launch some measures to reform the Canadian Civil
Service. Among the propositions made and retained
were Public Service 2000 and the creation of Special
Operating Agencies. The SOA concept was not quite
ready but the timing was there. So the Treasury Board
decided to go on, to present the initiative as an
5
experiment and to start with the conversion of five
existing organizations into SOAs (discussion with an
official of the Treasury Board Secretariat in November
1994).
A former chief executive of one of these first five SOAs received the
announcement with no surprise.
The idea of converting our organization into something
like a Crown corporation or something else was an idea
we discussed for some time before 1989. In international
gatherings with people responsible for the management of
similar organizations, we realized that alternative
structures were experienced in many countries. We then
started to think about the sort of transformation that
would best fit our organization. Some years later, we
got interested in the British "executive agency" concept.
We had information from our British counterpart who
expected to be converted into an executive agency. In
1989, rumors circulated concerning the possible
privatization of our organization. It would have been a
drastic change for which many questions remained
unanswered: would the government sell the operation to
the private sector or would it sell the operation to its
employees? What kind of relationship would exist
between this new privatized organization and the
government, its main client? Although we did not
oppose privatization as a possible alternative, we thought
that to be converted into an agency such as those created
in Great Britain was a valid alternative that could prepare
the organization for an eventual privatization. Our
conversion into a SOA came as a compromise (discussion
with a Chief Executive Officer of one of the first five
SOAs in January 1995).
Another manager of a future SOA did not at all expect the conversion.
I got this call one day. It was in November 1989. An
official from the Treasury Board Secretariat told me that
our organization would be converted into a SOA. He
scheduled a meeting for the following morning. During
6
that meeting, he asked me to write a document that
would explain the reasons why our organization was to
be converted into a SO A. He needed that document for
noon time. I did not even know what a SOA was.
Asked for some precision about the concept, he simply
said: "You heard about the British agencies, well, a SOA
is similar to them" (discussion with a Chief Executive
Officer of one of the first five SOAs in February 1995).
Some comments about the origin of the SOA concept can be made on
the basis of these statements. First, the initiative originated principally in the
minds of a few technocrats, principally from the Treasury Board Secretariat.
Very few people, among those who ultimately would be responsible for the
implementation of the concept in specific agencies were involved in the
development of the initiative. The Cabinet or individual ministers were also
very marginally involved in the development and the support of the initiative.
Second, while informants liked to compare the SOA Initiative to the British
experience, most seemed to have underestimated the importance of the role
played by British politicians and, more particularly, the then-Prime-Minister
Margaret Thatcher, whose commitment was an important ingredient in the
apparent success of the British initiative (Metcalfe, 1993). Such support in the
case of Canadian SOAs was largely lacking.
Compared to the British experience with executive agencies, the
Canadian initiative presents other differences. For instance, Canadian SOAs
encompass a much smaller part of governmental activities than that of British
agencies. As an indicator, Canadian SOAs employ about 3% of the Canadian
7
civil servants. By contrast., over 70% of the activities of the British government
were estimated to be managed by executive agencies as of October 1993 (Kemp,
1993). Concerning accountability, managers in charge of SOAs are supposed
to report directly to deputy ministers. (They sometimes report to an assistant
deputy minister or a manager with a lower status.) Managers of British
agencies, on their part, are directly accountable to their ministers.
Each Executive Agency has a Chief Executive who has a
"quasi-contractual" relationship with the Minister and the
parent department. . . . The immediate lines of
accountability of the Chief Executive are to the Secretary
of State (the minister) for the achievement of targets and
to the Permanent Secretary (deputy minister) for
adherence to the overriding departmental policies and
procedures. The Chief Executive also has a role as an
Accounting Officer to attend the Parliamentary Public
Accounts Committee and give evidence on the discharge
of its duties (St-Martin & Collins, 1994, p. 14).
A former minister in charge of the Treasury Board had some
explanations for the differences between Canadian SOAs and British Executive
Agencies.
Contrary to Great Britain, Canada is a federation. Much
of service delivery is not done at the federal level but at
the provincial level. That explains at least partly why
the scope of activities covered by Canadian SOAs is
narrower than what you find in Great Britain. I must
also admit that many of my colleagues did not understand
the SOA concept. You see, in the Conservative Party,
some were more conservative than others. Many
considered that the Civil Service was too big, that civil
servants were resisting many of the changes that the
government wanted to bring about and that privatization
was the best, if not the only alternative. I remember
8
some conversations with ministers who were to be
responsible for SOAs. They did not understand why
privatization was not considered instead. Another
problem they had with SOAs concerned ministerial
responsibility. They had problems with the idea that
they would have to refrain from intervening into SOAs’
daily affairs while remaining ultimately responsible for
what would go wrong (discussion that took place on
November 3, 1994).
A Description of SOAs* Main Features
There are fifteen SOAs, five of which started to function with that
status in 1990 while ten others were conferred the SOA status in the following
years. In the fall of 1994, two additional aspirants to the SOA status— the
Survey, Mapping and Remote Sensing Sector (part of the Department of Natural
Resources) and the Translation Bureau (part of Public Works & Government
Services)— were awaiting the Treasury Board’s approval.
SOAs are selected administrative units whose SOA status is negotiated
with their parent department and the Treasury Board Secretariat. With no legal
existence of their own, SOAs operate according to the same laws and policies
that apply to all Canadian federal organizations but with respect to special
provisions agreed upon with their host department and the Treasury Board
Secretariat. Organizations with the SOA status agree to be held accountable for
pre-determined results in exchange for which they are provided with more
management and administrative discretion. General expectations from SOAs
are:
9
1. To promote cost-effective and more businesslike
service delivery;
2. To delegate more responsibility for operational
matters throughout the organization;
3. To improve customer service, client consultation
and monitoring of service quality;
4. To make better use of information technology;
5. To demonstrate government action and concern
for efficient management;
6. To promote innovation and initiative in the
workplace; and
7. To emphasize effective management of people,
including support for training and career development
(The Treasury Board of Canada, 1991, pp. 3-4).
These expectations well indicate the emphasis put on "good"
management; that is, the control of costs and the efficient utilization of
resources in order to provide better services to Canadian citizens.
To the extent that policy matters can be separated from service
delivery, it is clear that SOAs are organizations largely concerned with the
latter. The two main reasons for focusing on service delivery organizations
seem to be that, compared to policy-making units, those organizations are more
likely to function according to relatively precise objectives and standards and
that, because of the nature of their activities, they are less prone to sudden
policy modifications and partisan interventions. Actually, to be involved in the
delivery of services is one of the six criteria formally used by the Treasury
Board to decide upon candidates for SOA status. According to those criteria,
SOAs are:
10
1. Discrete units of sufficient size to justify special
consideration;
2. Concerned with the delivery of services (rather
than internal policy advice);
3. Able to be held independently accountable within
the parent department;
4. Amenable to the development of clear
performance standards;
5. Operating under a stable policy framework with a
clear, ongoing mandate; and
6. Staffed by managers and employees who are
committed to the SOA approach (Treasury Board of
Canada, 1991, p. 4).
In addition to meeting these criteria, potential SOA candidates must
produce a charter document and a multi-vear business plan which are acceptable
to both their host department and the Treasury Board Secretariat. Those
documents will vary for each SOA, taking into consideration their specific
raison d’etre, their mission and the nature of their activities. As a result, the
list and the scope of their flexibilities as well as the accountability requirements
vary according to each SOA’s specific situation.
The charter document, developed by the future SOA in collaboration
with its host department and the Treasury Board, "represents the agency’s
’constitution’" and should include:
. . . the mission, the policy environment, the general
business lines and the services that will be provided, the
guiding principles on which the Agency will be judged,
the accountability for results, including monitoring and
reporting approaches, all special flexibilities and the
Agency’s overall relationship with the parent department
and with other organizations (The Treasury Board of
Canada, 1991, p. 7).
11
The multi-year business plan, to be approved by the host department
and the Treasury Board Secretariat:
. . . covers the financial and service objectives (by
service line) and the human and financial resources and
strategies necessary to meet them. Its main purposes are
to better manage the SOA, establish the operational and
financial targets for the coming year and define what the
Agency needs from its department and from Treasury
Board in terms of mandate, resources and authorities
(The Treasury Board of Canada, 1991, p. 8).
In the case of business plans, confidentiality is required when the publication of
information could harm the success of SOA strategies in a competing
environment.
The present study will necessarily include an examination of both
documents when made available as well as SOAs’ annual plans in which
agencies’ results and accomplishments should be found and detailed.
Table 1 presents a profile of the fifteen Canadian SOAs. This profile
identifies for each SOA, its host department, its budget size, the number of full
time employees, the date on which the SOA status was officially granted, the
SOA’s mission, and a few determinant flexibilities.
12
TABLE 1
A PROFILE OF CANADIAN SOAs
SOAs
(Host Department)
Budget Size and No. of
Full-Time Employees
(Date of Formal
Approval)
SOA’s Mission SOA’s Special
Feature(s)
1. Passport Office (External Affairs &
International Trade)
44 M.
550 FTEs [June 1990]
Produce passports at the lowest
possible cost and the maximum level of
service.
Revolving fund
2. Government Telecommunications
and Informatics Agency (Public
Works & Government Services)
205 M.
250 FTEs
[November 1990]
To provide high quality services to its
clients in an efficient and effective
manner.
Revolving fund
Optional
3. Training & Development Canada
(Public Service Comm.)
15.6 M.
147 FTEs [April 1990]
Excellence in the provision of quality
staff training and development
services.
Revolving fund
Optional
4. Canada Communication Group
(Public Works & Government
Services)
401 M.
1476 FTEs
[June 1990]
Provide efficient and effective
communication services.
Revolving fund
Optional
Separate employer
status*
5. Consulting and Audit Canada
(Public Works & Government
Services)
62 M.
420 FTEs [April 1990]
Contribute to the improvement of
public sector operations and
management by providing a range of
consulting, auditing in an efficient and
effective manner.
Revolving Fund
Optional
TABLE 1 (continued)
SOAs
(Host Department)
Budget Size and No. of
Full-Time Employees
(Date of Formal
Approval)
SOA’s Mission SOA’s Special
Feature(s)
6. Occupational Development
Programs (CORCAN) (Correctional
Services/Solicitor General)
49 M.
363 FTEs
[February 1992]
To assist offenders to fill their work-
related needs in preparation for
successful re-entry . . . into Canadian
society.
Revolving fund
Optional
7. Canadian Intellectual Property
Office (Industry and Science
Canada)
40 M.
450 FTEs [May 1992]
To contribute to Canada’s economic
development by . . . administering
intellectual property systems in Canada
. . . encouraging invention . . .
promoting Canada’s international
property interests.
Revolving fund
8. Canadian Pari-Mutual Agency
(Agriculture and Agri-Food Canada)
14.9 M.
78 FTEs
[November 1992]
To protect the wagering public against
fraudulent practices and ensure the
integrity of pari-mutual betting.
9. Canadian Grain Commission
(Agriculture and Agri-Food Canada)
54 M .
800 FTEs [July 1992]
To establish and maintain standards of
quality for Canadian grain.
10. Canadian General Standards Board
(Public Works & Government
Services)
1.9 M.
57 FTEs
[September 1992]
To be Canada’s leader in
standardization.
11. Transport Canada’s Training
Institute (Transport Canada)
275 FTEs
[July 1993]
To contribute to a safe, effective and
efficient transportation system through
training and development programs.
TABLE 1 (continued)
SOAs
(Host Department)
Budget Size and No. of
Full-Time Employees
(Date of Formal
Approval)
SOA’s Mission SOA’s Special
Feature(s)
12. Indian Oil and Gas Canada
(Indian & Northern Affairs)
50.5 M.
67 FTEs [April 1993]
To honorably fulfill the Crown’s
obligations and do further First nations
initiatives to manage their oil and gas
resources.
Separate employer
status
13. Canadian Heritage Information
Network
(Canadian Heritage Department)
1.7 M.
34 FTEs [July 1992]
To create opportunity for . . .
museums . . . to record, manage,
access . . . information relative to
Canadian heritage.
14. Canadian Conservation Institute
(Canadian Heritage Department)
78 FTEs
[November 1992]
To prolong the life of Canada’s
heritage collections.
15. Physical Resources Bureau
(External Affairs & International
Trade)
12 M.
124 FTEs [July 1993]
To support Canadian international
objectives and programs . . . provision
of office and staff accommodations.
♦An SOA with the status of "separate employer" replaced the Treasury Board as formal employer and can exercise, within limits, some
prerogatives (such as establishing its own classification system).
Source: "Special Operating Agencies: Taking Stock, May 1994." (See Appendix B.)
Although the same criteria formally applied to all governmental
organizations to be converted into SOAs, Table 1 shows that there are important
differences among the agencies. In terms of resources, the budget size varies
from $1.7 million in the case of the Canadian Heritage Information Network to
more than $400 million for the Canada Communication Group. Many SOAs
manage no more than one hundred people, while others have a staff that exceeds
one thousand employees (with the Canada Communication Group being the
largest employer with more than 1,400 employees). The Passport Office is the
only SOA whose direct customers are Canadian citizens; all the others mainly
provide their services to private corporations or other governmental
organizations.
The differences in the types of businesses are striking. Some apply
federal regulations (such as the Canadian Pari-Mutual Agency); others provide
training services to civil servants (Training and Development Canada and the
Transport Canada Training Institute), administer rehabilitation programs for
prisoners (CORCAN), offer consulting services to federal organizations
(Consulting and Audit Canada), develop expertise in specialized domains (the
Canadian Conservation Institute) or print official documents (the Canada
Communication Group).
The last column of Table 1 also indicates that the flexibilities granted to
SOAs vary a great deal from one another. Some SOAs operate a revolving
16
fund, "an authority, granted by the Parliament, to spend for program purposes
the proceeds of fees, etc., generated by the program in question" Treasury
Board of Canada, n.d., p. 22). Others are financed through usual Parliament
appropriations. The services of some SOAs are optional which implies that they
must compete with the private sector or other public organizations to attract
clients and generate revenues. Two SOAs have separate employer status which
allows them to negotiate, within limits established by the Treasury Board
Secretariat, labor agreements with their employees and adapt personnel policies
to their specific context (such as the classification system).
Regarding flexibilities, it must be noted that Table 1 shows only some
of the flexibilities an agency may get through its conversion to an SOA. A
rigorous analysis of each SOA’s charter and business plan is then necessary to
have a complete picture of the flexibilities granted. Finally, it must be
remembered that some SOAs already enjoyed the flexibilities listed in Table 1
before they received SOA status. (Training and Development Canada has
operated a revolving fund since the early 1980s.)
The SOA Initiative and Other Canadian Attempts
To Reform the Federal Public Service
The desire to have a more effective and efficient Canadian Public
Service is not new, and the SOA Initiative must be considered as only one of
the recent measures to reform it. At least four other measures, taken over the
17
last thirty-five years and which shared the main principles underlying the SOA
Initiative, are briefly presented and commented on in this section.2 There are
recommendations of both the Glassco and the Lambert Royal Commissions, the
Increased Ministerial Authority and Accountability (IMAA) and Public Service
2000.
The Royal Commission chaired by M. J. Grant Glassco (referred to as
the "Glassco Commission"), created in 1960, may be regarded as one of the
first major undertakings to improve the management of the Canadian
government and especially that of its public service. Mandated to:
. . . inquire into and report upon the organization and
methods of operation of the departments and agencies of
the Government of Canada and to recommend the
changes therein which . . . would best promote
efficiency, economy and improved service in the dispatch
of public business, . . .
the Glassco Commission recommended:
. . . to improve the government’s budgeting process by
adopting a program approach to budgeting and to
integrate expenditure management with policy analysis
and decision making. . . . The Commission also
proposed that expenditure and revenue projections be
made for a five-year period, with departments and
agencies required to submit long-term forecasts (Savoie,
1990, pp. 53-54).
2 Program review exercises, such as the one led by the Nielsen Task Force
created in 1984, that sought to reform the government by challenging some of
its programs rather than focusing on the means of administration are not
included in this selective review.
18
Detailed controls by central agencies were to be replaced by: "... a framework
of guidance and accountability provided by a unified management center (a role
played by the Treasury Board) and using performance evaluation as the main
vehicle for accountability" (Johnson, 1992, p. 9).
The Commission also recommended decentralizing management
responsibilities to ministries and more particularly to deputy ministers who were
to be administratively responsible for the departments’ current affairs, while the
ministers would retain the ministerial and political responsibility before the
Parliament. Deputy ministers and other administrators in departments were to
become "managers," and the Commission strongly recommended to the
government "to let them manage."
The various measures that were taken in line with the Glassco
Commission’s recommendations encouraged managers to take initiatives in a
context of a growth economy and an expanding state. However, as public
programs multiplied and the federal public service developed, the Auditor
General, in his 1976 annual report, warned that: "... the Parliament
and—indeed the Government—had lost, or is close to losing, effective control of
the public purse" (Auditor General of Canada, 1976, p. 9).
Fifteen years after the Glassco recommendations to decentralize and
grant more discretion to public managers, the time had apparently come for
greater control and more centralization. The creation in November 1976 of the
19
Royal Commission on Financial Management and Accountability, chaired by
Allen T. Lambert, sought to address the Auditor General’s preoccupation. The
apparent loss of control expressed itself in weak accountability at different
levels. Public managers’ accountability to the Government was perceived as
weak, but so was the Government’s accountability to the Parliament and the
Parliament’s accountability to Canadian citizens at large. The 165
recommendations made by the Lambert Commission were essentially aimed at
resolving this accountability issue. Specific measures concerned the
establishment of quinquennial plans by central agencies (the Department of
Finance, the Privy Council and the Treasury Board) and of budgetary limits for
federal departments and agencies. The powers of managers would be exercised
within those limits and according to a new accountability scheme. Finally, the
Commission asked that more information be made available to the Canadian
citizens concerning the programs, the resulting effects and their costs.
In spite of the fact that only part of the recommendations by these two
commissions were effectively implemented, it is interesting to note that two of
their major preoccupations were also at the heart of the conversion of
governmental organizations to SOAs. First, the theme of "letting the public
managers manage" developed by Glassco is in conformity with the granting of
flexibilities to SOAs and the hope that their managers will adopt new approaches
to manage their resources. Second, by stressing the importance of
20
accountability, the Lambert Commission underlined a theme that is also central
to the SOA Initiative.
Increased Ministerial Authority and Accountability (IMAA) and Public
Service 2000 (PS 2000) are more recent measures brought in by the federal
bureaucracy rather than by outside experts (the case of the Glassco and the
Lambert commissions) which shared some of the SOA Initiative’s features.
IMAA was launched in 1986 by the Treasury Board Secretariat. This
measure allowed ministries, through formal agreements with the Treasury
Board, to gain more discretion over the administration of their physical,
financial and human resources. In return for this additional discretion,
ministerial authorities agreed to be held accountable for objectives included in
these agreements. The SOA charter and the IMAA agreement are much alike,
with the main difference being that the IMAA agreement concerns an entire
department; while the SOA charter applies to only one section of a ministry.
Public Service 2000 is another reform launched at the same time the
first SOAs were created (fall of 1989) and proclaimed principles that activated
the SOA Initiative as well. Although much more comprehensive in scope
(addressing, through more than 300 recommendations, various aspects of the
entire Canadian Public Service), the goals of PS 2000 and those pursued by the
SOA Initiative have much in common. The goals of PS 2000 were:
. . . to foster a Public Service that: (1) is professional,
highly qualified, non partisan and imbued with a mission
21
of service to the public; (2) recognizes its employees as
assets to be valued and developed; (3) places as much
authority as possible in the hands of front-line employees
and managers; and (4) provides scope for different
organizational forms to meet differing needs, but in the
context of a single Public Service (de Cotret, 1990,
p. 1).
Like the SOA Initiative, PS 2000 was designed as a truly administrative
reform, focusing on how the Canadian Public Service could better service
Canadians (rather than reviewing public programs). Like the SOA Initiative, it
also sought to modify the culture prevailing in the Canadian Public Service
(Caiden et al., 1995). Indeed, the introduction of specific measures (such as
single operating budgets and more discretion in managing staff) was expected to
install new behaviors and new attitudes in the public service while reinforcing
valued characteristics of the Canadian Public Service (honesty and integrity,
probity and prudence, fairness and impartiality, professionalism). In brief,
changes introduced through both PS 2000 and through the SOA Initiative sought
to transform the prevalent bureaucratic rule-oriented management culture into a
new, people, results-oriented management culture.
22
The Assessment of the SOA Initiative Bv the
Auditor General of Canada
According to a preliminary evaluation of the SOA Initiative made by
the Clerk of the Privy Council3 in 1992, the initiative seemed to have a bright
future.
The first five Special Operating Agencies were created in
1989. Three more were announced by the President of
the Treasury Board at the time of the tabling of the 1991-
92 Main Estimates.4 It is expected that, over time, there
will be more candidates. Indeed several departments
have identified functions in their organizations that could
be considered as future prospects for special operating
agencies. By adopting the best private and public sector
management practices, these agencies are succeeding in
improving customer service and promoting cost-effective
and businesslike service delivery. For example, at
passport offices, client service hours were extended by
16 percent in the larger offices, the delivery time of
passports to applicants using the mail-in service was
reduced and overall productivity increased. One of the
goals for the Government Telecommunications Agency
was to obtain 30 percent savings on inter-city services.
It achieved savings of 35 percent. As the number of
these special units grows, they will have a significant
effect on the way the Government delivers services to
Canadians (Tellier, 1992, pp. 37-38).
3 The Clerk of the Privy Council is the highest ranking public servant in the
Canadian government.
4"The Estimates of the Government of Canada are structured in three Parts.
Beginning with an overview of total governmental spending in Part I, the
documents become increasingly more specific. Part II outlines spending
according to departments, agencies and programs and contains the proposed
wording of the conditions governing spending which Parliament will be asked to
approve. The Part III documents provide additional detail on each department
and its programs primarily in terms of the results expected for the money spent"
(from the cover of The Estimates of the Government of Canada).
23
This first preliminary evaluation was followed by a more substantial,
but less conclusive, review made at the request of the Auditor General of
Canada. Estimating that a first "review of the SOA Initiative was due to inform
Parliament in an appropriate manner" (from a letter dated 21 January 1993 sent
by the Auditor General of Canada to the Secretary of the Treasury Board
Secretariat), the Auditor General o f Canada invited the Treasury Board in 1993
to be a part of a steering group which would, with the help of a joint project
team, take stock of the SOA Initiative. The work of the steering group was:
. . . to gather, organize and present pertinent data that
will help officials and (in a later phase) Parliament to
take stock of the progress of the SOA Initiative to date,
to identify ways in which it might be strengthened, and
to gain a better understanding of its potential. It is
intended that data gathered during this study would help
all parties decide how to proceed in the future (The
Auditor General of Canada, 1994, p. 5).
The steering group recognized that the initiative was still relatively new
and expected that convincing data about improved performance would not
abound; however, they felt that enough evidence existed concerning the first
five created SOAs and an additional one (CORCAN) to provide useful insights.
An Overview of the Auditor General’s Report
on the SOA Initiative
The 56-page report was divided in three parts. The first part briefly
described the context in which the initiative was launched and the assessment
made. Among the most interesting elements discussed in this first part are the
24
theoretical foundations of the initiative: "... stripped to its essentials, the
theoretical model on which the SOA is based is that of a contract. . . . A
second theory that underpins the SOA is that of choice, or market mechanisms"
(P- 4).
The concept of contract is activated through the negotiation of business
plans among SOAs, their host department and the Treasury Board Secretariat.
This concept suggests that, rather than being constrained by a superior authority
to function according to the new status, the SOA provisions were freely and
voluntarily negotiated by these three parties. The implied suggestion that an
SOA, as a contractual party, is free to buy into the SOA formula and free to
accept or reject the conditions imposed upon it by either its host department or
the Treasury Board is far-fetched. After all, SOAs remain parts of a
hierarchical system and must conform to policies that emanate from either
central agencies or their host departments. Moreover, contrary to what the
concept of contract presupposes, many informants confirmed that most SOAs
did not volunteer to get the new status (most being "identified as volunteers," as
one informant said) and that the possibility of breaking the contract, should the
agreement be violated or not honored, was fiction (at least on the part of
SOAs). The concept of negotiated agreements between parties with unequal
power seems to present a more accurate picture of the reality than the concept
of contract advanced in the report.
25
As for the theory of choice or market mechanisms, its relevance to
SOAs is exceptional and partial. Only a marginal number of SOAs offer
optional services leaving customers free to choose among suppliers, an absolute
condition for market mechanisms to play a critical role.
Part two of the report contained 163 "interim observations" grouped
around three themes: (1) the SOA as a delivery vehicle (the results), (2) as a
transitional vehicle (towards other forms of organizations including their
privatization) and (3) as a vehicle fo r learning. Table 2 presents these three
themes as well as a few quotations providing an indication of the main ideas
underlying these observations.
The SOA as a delivery vehicle. On the first theme, the report
advanced, despite limited evidence, that the six SOAs investigated produced
some results and improved their performance; although these improvements
generally fell short of expectations. For instance, there was some indication
that users’ satisfaction increased but only in a few cases. A better achievement
of their public purposes was uncertain. As for their financial performance and
productivity, SOAs’ improvements, when observed, seemed to have more to do
with increases in revenues than cost-effectiveness.
26
TABLE 2
SUMMARY OF PART TWO OF THE AUDITOR GENERAL’S
REPORT ON THE SOA INITIATIVE
1. The SOA
As a Delivery Vehicle
(128 observations)
Quotations From the Report
1.1 Service SOAs pay more attention to users (p. 9).
1.2 Public Purposes Attention to financial targets tends to diminish the
importance of public purposes, particularly those that are
unclear (p. 10).
1.3 Financial Performance and
Productivity
Significant cost and productivity improvement
opportunities are available for exploitation: realizing them
would demonstrate the value of the SOA approach (p.
12).
1.4 Working Environment Agency "specialness" appears to allow a better working
environment, although supporting data are subjective, and
improvements untested (p. 17). Values are changing, and
greater care would be appropriate to ensure that changes
stay within acceptable bounds (p. 18).
1.5 Direction and Focus SOA agreements give focus and direction within the SOA
and— much less firmly— between the SOA and its host
department (p. 19). Clear, concrete and challenging
performance objectives and priorities were sometimes set
(p. 21). Limited consensus about respective
responsibilities of the agency head and host departments
(p. 25). SOA agreements could set clearer boundaries to
authority (p. 28).
1.6 Performance Monitoring Capability to supply information improves slowly in
response to demand. Demand and capacity to use
information remain the weak links (p. 29). Public
disclosure is generally adequate where agencies do more
than Treasury Board demands on them (p. 30).
2. The SOA As a
Transitional Vehicle
(10 observations)
The SOA has been suggested, but not fully tested, as a
transitional vehicle to prepare units to exist in more
independent organizational forms (p. 33).
3. The SOA As a Vehicle for
Learning
(25 observations)
Valuable, but limited, learning has taken place (p. 36).
27
Regarding SOAs’ working environment, much remained to be done.
The agencies found their objectives ambiguous and contradictory. Finally, and
this applied to all performance dimensions, the noticed improvements could not
be directly and uniquely linked to the SOA conversion.
The SOA as a transitional vehicle. Some of the SOAs studied
expressed their preference for more autonomous forms (such as Crown
corporations) and advanced that the SOA status, in some cases, should be
seriously considered as a step towards privatization.5
The SOA as a learning vehicle. The authors concluded with a series of
lessons derived from their observations. These lessons were grouped around
four catalysts, four impediments and the need for stakeholders to support the
SOA Initiative.
The first catalyst addressed the SOAs’ visibility: keeping SOAs visible
was said to be important, although "keeping them visible takes more time and
effort than deputies can provide within existing arrangements" (p. 42). The
second catalyst concerned the importance of accrual accounting and of operating
a revolving fund authority in changing the dynamics of certain SOAs.
According to the third one, "being clear about what was wanted—getting the
basic questions answered—was key" (p. 43). Finally, without the willingness to
Privatization referred to the transformation of a governmental agency to a
private, profit-seeking enterprise with no more structural linkage with the
federal government.
28
make changes, in and around the agency, the authors doubted that the initiative
could succeed.
The impediments included: (1) mixed signals (about the objectives a
SOA should prioritize), (2) unclear responsibility and authority, (3) incomplete
integration of the SOA information processes, and (4) the reluctance of some
SOAs to report and explain their performance.
Finally, the report stressed the importance of stakeholders’ support and
acceptance which was possible only if the SOA Initiative became synonymous
with "better government that costs less" (p. 47).
The main conclusions of the Auditor General’s report. Officially, the
summary of the conclusions of the report appeared in the Appendix of the 1994
Annual Report of the Auditor General (released in November 1994).6 After a
reminder of the context of their establishment, the summary underlined the
essential elements of SOAs: "increased authority, development of strategic and
business plans, responsibility for results, and disclosure of performance."
Then, "the relationship between SOAs and ministers of the Crown [was
considered] as a fundamental issue running through the experience." The most
significant conclusion comprised the recommendations and stated that:
For certain government activities, SOAs should be able
to provide better service at lower cost, and should
therefore be continued if Treasury Board ministers,
“Reproduced in Appendix A.
29
ministers and deputy ministers of departments in which
SOAs are situated, and agency heads,
1. Provide clearer focus and direction for the SOA
Initiative as a whole;
2. Build greater acceptance and support for the SOA
concept among the stakeholders— public servants, unions,
suppliers and competitors, the general public and
parliamentarians;
3. Improve the criteria for determining which
government activities should be converted into SOAs,
and which SOAs, if any, should be moved into an
alternative structure;
4. Set clearer, more concrete performance goals and
improvement priorities for SOAs and include them in
agency charters with appropriate permanence, establish
more clearly the respective responsibilities of SOA heads
and deputy ministers under the umbrella of ministers and
match there responsibilities with appropriate authority
and discretion, and monitor agency performance with
respect to the goals and priorities established;
5. Establish a framework for public reporting using
existing departmental accountability reports (part III of
the Estimates) with appropriate safeguards to deal with
confidentiality;
6. Develop and adhere to clear guidelines for SOAs
that compete for markets in the private sector; and
7. Provide for subsequent stocktaking of the SOA
Initiative to assess progress and make appropriate
adjustments as may be required.
The first three recommendations as well as the sixth one seemed to
confirm that the initiative was insufficiently planned before its launching. The
fourth recommendation covered the classical management problems of setting
concrete goals and priorities, of matching responsibilities with authority, and of
monitoring. The fifth recommendation addressed an important dimension but in
a rather deceptive way. While making public organizations more publicly
30
accountable is an important incentive to improve their management, the
recommendation could be interpreted as an attempt to limit rather than increase
SOAs’ public accountability.
According to interviewees who closely collaborated the Auditor
General’s report, two perspectives had clashed over the making of
recommendations as well as over the kind of analysis found in the report. The
Treasury Board Secretariat conceived the report as an instrument to identify the
aspects of the Initiative which needed to be improved as well as an opportunity
to show that it was a worthy alternative to provide public services effectively.
In contrast, the Auditor General’s Office which, on behalf of Parliament,
oversees government operations, was apparently more interested in pointing out
the Initiative’s deficiencies. The conclusions and the recommendations pretty
well conveyed the Auditor General Office’s perspective but neglected to assert
what the SOA Initiative had accomplished or might accomplish in the future.
The following comment by a member of the Steering Group illustrates
how the clashing of these perspectives translated in important disagreements
over the recommendations contained in the Auditor General report:
I totally disagreed with the recommendations. To ask
ministers, deputy ministers and agency heads to agree on
SOAs’ objectives is pure fiction. It cannot work this
way in the present system. The only thing you can
expect is for the SOAs to determine those objectives and
get the approval from authorities, which is essentially
what the framework documents are supposed to do
31
(telephone interview with a former official of the
Treasury Board Secretariat on November 16, 1994).
A comment on the Auditor General’s report. Rather than an
"assessment" or an "evaluation" of the initiative, the Auditor General’s report
presented itself as a "taking stock" exercise—the expression being formally used
in the title of the report. This precision underlines the fact that there was very
limited quantitative data about the six investigated SOAs which could
convincingly inform the analysts (an estimated equivalent of ten people working
an entire year to take stock of the SOA initiative) of the progress the agencies
may have made regarding their organizational performance since and because of
their conversion into SOAs. Two reasons may be advanced to explain this
situation. First, because the exercise started to take place in 1993, only three
years after the first SOAs were officially converted, insufficient time had passed
to witness the effects that the new status may have had on the organizational
performance of the converted agencies. In that sense, the evaluation was
probably initiated too early in time. Although appropriate delays are difficult to
specify, this appreciation of the delays between a action taken and its related
effects remains a fundamental issue (Senge, 1990, p. 89). Another reason lies
in the fact that, viewed as an experiment or a "program" in "results-oriented
management," the SOA initiative hardly met the conditions identified by Wholey
(1983) to produce "demonstrable improvements in the performance and results"
(p. 11). These four conditions are:
. . . (1) agreement on a set of program outcome
objectives and outcomes indicators in terms of which the
program will be assessed and managed; (2) development
of systems for assessing program performance in terms
of those outcome objectives; (3) use of program outcome
information to achieve improve program performance;
and (4) communication of program performance and
results to policy levels and to the public (Wholey, 1983,
pp. 5 and 8).
The initiative, as a whole, was unclear on what it tried to accomplish.
For instance, the Treasury Board never committed itself to convert a precise
number of governmental organizations to SOAs nor did it establish what the
expected outcomes were or what the indicators would be that were to be used to
appreciate the entire scheme. Given the absence of this first condition, it
followed that the other three conditions suggested by Wholey could not be met.
The evaluation of the initiative as a whole, under such circumstances,
could only be approximated through the evaluation of the results obtained in
individual SOAs. What the Auditor General seemed to have realized, however,
was that, generally, SOAs did not systematically organized themselves so they
could demonstrate the effects of their conversion. O f course, SOAs produce
business plans which contain business goals and are to be used to hold SOAs’
managers accountable for results. But, generally, these business plans,
produced at the request of the Treasury Board Secretariat and necessary to get
the flexibilities that came with the new status, as well as the agencies’ annual
33
reports, do not meet the conditions necessary for a systematic performance
assessment.
Whether this situation will be corrected so that a convincing and
systematic assessment of the SOA Initiative could be done is a question to be
submitted to the Treasury Board Secretariat who initiated the reform. The
position taken here is that, unless such evaluation is conducted, a negative
evaluation made by those who are usually skeptical of public administrative
reforms will prevail.
Therefore, the present dissertation does not seek to assess or evaluate
the SOA initiative. Besides the fact that the basic conditions for such an
assessment may not yet exist (particularly in those organizations recently
converted into SOAs), such an effort by one individual with very limited
resources (compared to those of the Auditor General Office, for instance) would
most probably result in a contribution that would add little to the taking-stock
exercise done by the Auditor General. Rather, this dissertation intends to
explore the SOA initiative to develop a model that may contribute to support its
implementation and development.
The Missing SOA Model
The impressive number of observations reported by the Auditor General
of Canada about the SOA Initiative contained useful insights about what should
be improved. What is missing, however, is a model and a set of integrated
34
propositions, based on observations such as those made in the report, that would
indicate which factors are critical for the effective conversion of governmental
organizations to SOAs, how these factors are related to one another and the
essential reasons why, fundamentally, these related factors are critical in the
successful conversion of governmental organizations to SOAs.
As echoed in the following quotation from the Auditor General’s
report, not everyone thought that such a theoretical framework was required:
"Treasury Board officials, reviewing an earlier draft of the report, reacted
negatively to the suggestion that there was a SOA model. They argued that the
uniqueness of each situation demanded flexibility, precluding any "model"
SOA" (p. 45).
To the extent that one interprets a SOA model as a detailed description
of what the ideal SOA should be so that any new SOA should transform
according to such a prescription, the resistance of these officials to modeling is
understandable and legitimate. On the other hand, to argue that the generation
of a model is impossible because each SOA is unique and that SOAs have
nothing in common would imply that the SOA concept is an "empty" concept or
a "non-concept." A concept, by definition, delineates the specific features
shared by a group of objects (in the present case, SOAs) and "mark[s] the
categories which will tell us more about our subject matter than any categorical
set" (Kaplan, 1964, p. 54). In fact, the SOA concept exists and, based on
35
official documentation referred to in this chapter, is relatively well defined.
What was overlooked is how this concept, in practice, ought to be used,
implemented, operated by governmental organizations converted to SOAs and
what levering factors, actions or changes would lead to a significant and
enduring transformation of these organizations.
The fact that Canadian officials seemed to have neglected to delineate a
guiding model to effectively guide the conversion of governmental
organizations into SOAs may explain, at least partly, the limited expansion of
the initiative or its manipulation to pursue purposes different from the original
intent. The following statement indicates that such a manipulation of the SOA
concept has already taken place.
The conversion of our organization into a SOA does not
mean anything. It was only a facade. We asked for
more authority over one type of transaction and we
demonstrated that this additional authority would
contribute to improve our performance. The Treasury
Board agreed but argued that if it granted this authority
to our organization, other governmental units would ask
for it. Obviously the Treasury Board was not prepared
to grant such authority to other organizations. To avoid
this problem, it was recommended that the SOA status be
granted to us. This is how and why we got the status.
So we asked for the status and got it. To be a SOA
means nothing more than having the right to exercise this
special authority (discussion with a Chief Operating
Officer of one SOA, 25 January 1994).
This comment confirms that the granting of the SOA status may be
nothing more than fiction, an empty symbol, or only a tactic used to cover up
36
the provision of some exceptional authority. This interpretation, however, was
far from being shared by most people met in the course of the present inquiry.
Indeed, many argued that, if the initiative had not lived up to its original
expectations, it nonetheless had positive effects. Still, it was felt that little
guidance existed to further develop the initiative and specify under what
conditions the conversion had the most chances to be effective.
37
CHAPTER II
THE SOA INITIATIVE AS AN ATTEMPT TO CHANGE
THE CULTURE OF THE CANADIAN PUBLIC SERVICE IN
SELECTED AGENCIES
The general overview of the SOA Initiative presented in the previous
chapter suggested that the overall goal of this initiative was to transform the
"culture" of selected agencies or introduce "planned" change into them by
granting a number of "flexibilities" and enhancing their accountability. Indeed,
informants who were involved in the design or associated with the
implementation of the initiative and who contributed to the present study
constantly referred to the themes of "organizational’ and "cultural" changes.
They talked about the importance for public organizations to adapt to changing
environments and to function differently in a context o f serious budget
constraints, about changes in public servants’ values and attitudes, about new
leadership, about re-structuring, re-engineering and the introduction of new
technologies. The impact these changes would have on SOAs’ accountability
was also a theme considered as important.
This chapter intends to clarify, at least from a theoretical perspective,
the themes of organizational change and culture change in organizations. It
38
starts with the use of Bolman and Deal’s framework (1984) to capture the many
and various dimensions organizational change may cover and to appreciate how
the SOA Initiative sought to address these dimensions. The second section opts
for a conception of "organizational culture" that integrates the various
organizational dimensions previously discussed. The implication that this
concept of organizational culture has regarding the conduct of the present
inquiry is also addressed. A third section discusses the processes through which
organizational change takes place according to the contributions of three
important authors in the field. To synthesize what has been said about cultural
change, three propositions and one basic question that will guide the
investigation of the SOA Initiative are suggested. Finally, the last section
briefly addresses how the public character of SOAs was taken into account by
the initiative.
The Various Organizational Dimensions
Addressed bv the SOA Initiative
Bolman and Deal (1984) group the various management theories into
four approaches to managing organizations: (1) the structural approach, (2) the
human resources approach, (3) the political approach and (4) the symbolic
approach. Each approach infers a different conception of organizations and of
dimensions that must be modified to introduce significant organizational change
(Figure 1).
39
FIGURE 1
FOUR ORGANIZATIONAL DIMENSIONS
The Symbolic
Dim ension
The
Hum an Resources
Dimension
The Structural
Dim ension
The Political
Dimension
The Various
Organizational
Dim ensions
Source: Adapted from Bolman, Lee G., & Deal, Terrence E. (1984).
Modem approaches to understanding and managing organizations. San
Francisco, CA: Jossey-Bass.
Those who support the structural approach view organizations as
purposeful entities that seek to survive, develop or grow through the efficient
production of goods or services. Conceptualized as more or less "open
systems," the adaptation of organizations to their environment is considered to
be the critical factor of success. Survival, development, growth and adaptation
will depend on formal arrangements regarding organizational goals, the optimal
design of work (Taylor, 1912), the proper fit between technology and social
aspects of the organization (Woodward, 1965), an appropriate structure and
effective coordination mechanisms (Weber, 1947; Mintzberg, 1979), motivating
incentives, and the skilled exercise of management functions (Fayol, 1916;
40
Gulick, 1937). Changing and improving organizations rest on managers’
capacity to modify one or more of these elements.
This approach, often referred to as the "classical" approach to
management, considers that organizations essentially seek to improve their
efficiency and give priority to instrumental rationality (the systematic search for
the best means to attain pre-determined goals) (Simon, 1947). It remains a
very, if not the most, influential approach despite the important reservations of
many authors who argue that it neglects and ignores important, although more
informal, aspects of organizational life (Peters & Waterman, 1982).
Much of the SOA Initiative’s official rhetoric, exposed in the previous
chapter, typically relates to themes judged important by the proponents of the
structural approach. Indeed, a major premise of the initiative lies in the
importance for SOAs to use formally granted flexibilities to adapt to the
changing needs of their clienteles and the evolving expectations of their
stakeholders. In that perspective, the definition of pre-determined goals, the
delegation of responsibility throughout the organization, the better use of
information technology, the adoption of cost-effective and businesslike practices,
the promotion of innovation, and initiative in the work place are among the
themes linked to the structural approach and which attempt to improve the fit
between the internal functioning of SOAs and the changing conditions of their
environment.
41
The human resources approach assumes that employees are the most
important organizational resource. In order to get employees’ full collaboration
in the success of the enterprise, the organization must seek to satisfy employees’
various needs (Maslow, 1970). Many advocates of this approach go further by
strongly supporting employees’ involvement in the decisions regarding the
different aspects of organizations. In that perspective, managers are invited to
give priority to group dynamics, the informal side of organizations,
communication and human motivation.
As revealed by the Hawthorne experiment (Roethlisberger, 1946;
Mayo, [1933] 1986), the human dimension of organizations has been explored
by authors like Hiacynthe Dubreuil (1935), Chester Barnard (1938), Mary
Parker Follett (1942) and many others. In more recent prescriptions regarding
the "empowerment" of employees, the encouragement of entrepreneurship in the
workplace translate the importance of capitalizing on the human potential to
improve the functioning of modern organizations.
The SOA Initiative clearly emphasizes the importance of using human
potentiality. Again, the delegation of responsibility, the promotion of
innovation, the importance of managing people effectively and of developing
their capacity (through adequate training) are among the practices expected to
take place in SOAs.
42
The political approach to organizations postulates that tension naturally
occurs in organizations where limited resources cannot satisfy the many
expectations of their stakeholders, their customers, their employees and
managers. People working in organizations are pictured as individuals who
participate in various games and try to protect and advance their interests.
Themes that derive from such a conception and may be targeted as objects of
change are power struggles, groups’ competition for limited resources (groups
that can be located inside or outside of organizations), the building of coalitions,
and the resolution of conflicts. Analyses of well-known organizational
processes, such as the budgetary process and decision making, suggest that the
political dimension of organizations may explain much of what takes place in
them (Wildavsky, 1974; Lindblom, 1959). Authors like Crozier (1963),
Crozier and Friedberg (1977) and Mitroff (1983) have also contributed in
illustrating how "politics" impact on organizations.
By choosing units concerned with the delivery of services rather than
with the making o f policy, the designers of the SOA Initiative sought to protect
SOAs from political and partisan interference and reduce the occurrence of
paralyzing conflicts. SOAs were to be: "... amenable to the development of
clear performance standards, operating under a stable policy environment . . .
and staffed by managers and employees who are committed to the SOA
approach" (The Treasury Board of Canada, 1991, p. 4).
43
To have managers and employees committed to the SOA approach was
another measure to avoid serious conflict or dissidence that would impair the
implementation of the initiative. This measure, which may be difficult to apply,
may prove to be insufficient in relatively old organizations (SOAs not being
newly-created organizations) which may have a long history of tense
relationships, conflicts and internal power struggles. To what extent the
conversion of an organization into a SOA may be affected by existing internal
tension or may exacerbate internal conflicts is a dimension not explicitly
addressed in the official SOA documentation but may be critical to the effective
implementation of the initiative.
The symbolic approach to organizations is not as recent as most people
would think (Wilson, 1989, pp. 91-92) but was certainly the most popular one
in the 1980s. Apparently, symbols, rituals, the language used, the way people
dressed, the various "ceremonies" organized to celebrate employees’
accomplishments or the typical way of doing things in a given organization, all
of which may relate to the "culture" of an organization, explained the success of
excellent enterprises which had to cope with turbulent environments (Ouchi,
1981; Deal & Kennedy, 1981; Peters & Waterman, 1982).
Many symbols, indeed, sought to underline the specialness of SOAs.
The agencies were called "special" to indicate that they were somewhat
exceptional, at least different from other governmental organizations. They
44
were to be managed in a "businesslike" fashion and according to "business
plans," just like successful private firms. Their managers were to be "chief
executive officers" or "chief operating officers" rather than directors or
administrators.
This brief review of the four different approaches to management
depicted by Bolman and Deal and of the dimensions that the SOA Initiative
sought to modify indicates that the reform was relatively comprehensive in
terms of the variety of dimensions it intended to cover. Only the political
dimension seemed to have been somewhat overlooked by the designers of the
initiative.
“Organizational Culture1 1 As An Integrative Concept
The symbolic approach as depicted by Bolman and Deal limited the
scope of organizational culture to its most obvious and superficial manifestations
(such as rituals and symbols). Their framework also considered the culture of
an organization as only one among four organizational dimensions.
An alternative conception uses the concept of organizational culture to
integrate all of the aspects of organizational life rather than limiting it to its
symbolic aspects. It then includes, with reference to Bolman and Deal’s
framework, the structural, the human, the political and, of course, the symbolic
dimensions of organizations. In that sense, an organization does not have a
culture but is a culture. According to that conception, culture is thought of as a
45
"root metaphor" rather than one among many organizational variables
(Smircich, 1983).
This alternative conception of organizational culture also considers that
cultural manifestations are important only to the extent that they are interpreted
as meaningful by the members of an organization. Assuming that people act
and behave on the basis of their perceptions, their interpretations and the
importance they give to cultural manifestations, this conception of culture
implies that, to really understand it, one must go beyond the mere observation
of superficial cultural manifestations and have access to the meanings people
give to them.
Culture as a root metaphor promotes the view of
organizations as expressive forms, manifestations of
human consciousness. Organizations are understood and
analyzed not mainly in economic terms, but in terms of
their expressive, ideational, and symbolic aspects
(Smircich, 1983, pp. 347-348).
Each SOA may then be considered a unique culture, a unique set of
interpretations SOAs’ managers, employees and stakeholders share about the
characteristics of their agency. To the extent that the SOA Initiative was an
attempt to modify, at least partly, the bureaucratic culture of SOAs, the
fundamental question resulting from this conception of culture is: How do
SOAs’ managers, employees and stakeholders interpret the formal modifications
(flexibilities and accountability measures) that came with the SOA status, and to
what extent do they think that they contribute to make them less bureaucratic?
The answer to that question requires a model that integrates both the
modifications formally introduced through the granting of the SOA status and
their interpretation by the people who directly experienced them. Edgar
Schein’s model (1985) meets this requirement.
Edgar Schein’s Model of "Organizational Culture." Edgar Schein
(1985) distinguishes three cultural levels in organizations: they are the artifactual
level, the value level and the level of beliefs (Figure 2).
FIGURE 2
CULTURAL LEVELS
Virtifacts
V alues
B eliefs
Source: Schein, Edgar (1985). Organizational change and leadership.
San Francisco, CA: Jossey-Bass.
47
Artifacts are the most visible manifestations of a culture. In
organizations, the physical setting and formal rules are examples of artifacts. If
artifacts are easily observable, their importance in terms of what the culture
really is depends on the extent to which they really express the values or beliefs
of the members of a given organization. The investigation of such a linkage is
a complex and long undertaking.
Attempts to change an organizational culture usually imply the
introduction of new artifacts which may take the form of new organizational
goals, a new organizational chart, or the promotion of official policies such as
affirmative action. The introduction of new artifacts may result from capricious
decisions and have no important impact on other levels of organizational
cultures. In other cases, however, because real and lasting changes are those
which will materialize at the value level, the explicit goal of making artifactual
changes is to modify, over time, values or the way things "ought to be"
(Schein, 1985, p. 15).
Unfortunately, the detailed processes through which values get
transformed remain unclear. Moreover, if the planned introduction of new
artifacts may contribute to change values, it is also possible that uncontrolled
factors will modify the values shared by people or prevent the effects sought
through the introduction of new artifacts.
48
According to Schein, when values persist over time, they transformed
into beliefs.
As the values begin to be taken for granted, they
gradually become beliefs and assumptions and dropout of
consciousness. Beliefs and basic underlying assumptions
delineate what is fundamentally acceptable and receivable
in a society, in organizations or groups. Congruent with
Argyris’ concept of "theories-in-use" they often
unconsciously guide behavior . . . tell group members
how to perceive, think about, and feel about things. . . .
Basic assumptions, like theories-in-use, tend to be non
debatable (Schein, 1985, p. 18).
As one can easily understand, what was told about the difficulty of changing
values is even truer in the case of beliefs.
In sum, the sound understanding of organizational cultures or of the
changes that may affect them calls for the ability to identify and interpret
meaningful artifacts, employees’ values and beliefs.
The SOA Initiative as an Attempt to Transform the Bureaucratic
Culture. Conceptually, one can interpret the SOA Initiative as an attempt to
modify the bureaucratic culture in selected governmental organizations.
Following that proposition, the designers of the initiative assumed that the
granting of flexibilities and the introduction of measures to enhance
accountability would contribute, over time, to bringing about a new culture in
SOAs to transform the prevailing "rule-oriented bureaucratic culture" into a
"people, results-oriented culture." The following excerpt from the White Paper
on Public Service 2000, a reform launched in December 1989 by the
49
Government of Canada and which paralleled the creation of the first SOAs,
confirmed the reformers’ intent to change elements of this bureaucratic culture.
Public Servants will find themselves operating in a much
more flexible and service-oriented way. The public will
find that service has improved because the traditional
preoccupation with rules and process has been replaced
by an institutional culture and philosophy of management
that put clients and results first (p. 103).
Table 3 reconciles two of the three levels of Schein’s cultural model
with the transformation of the bureaucratic culture into a "managerial" culture
through the SOA Initiative. According to that scheme, the SOA Initiative
ultimately sought to modify the bureaucratic values of managers and employees
working in SOAs by introducing changes at the more superficial level of
artifacts. Examples of such artifacts are SOAs’ new labeling (they became
"special" agencies), the negotiation of agreements between host departments and
the Treasury Board Secretariat, the provision of "flexibilities," and the accent
put on expected results or objectives on the basis of which SOAs are to be held
accountable.
50
TABLE 3
CULTURE CHANGES SOUGHT BY THE SOA INITIATIVE
CULTURAL
LEVELS
"OLD"
Rule
Control-Oriented
Bureaucratic Culture
"NEW"
People
Results-Oriented
Management Culture
ARTIFACTS
(new ones with the
granting of SOA
status)
Becoming a SOA means new flexibilities to improve its
performance and new measures to enhance its
accountability.
VALUES
(*those which are
expected to be
overridden
by
**new ones
following the
granting of the
SOA status)
(*)
Due process
Rigid enforcement of rules
Application of rules
Risk Aversion (status quo)
Conformity to central
controls
Public Servants: resources
to use
Distanced relationships
with stakeholders and
clients
Get results
Flexible enforcement of
rules
Judgment
Risk-taking (innovation)
Accountability for results
Public servants: assets to
develop
Open, collaborative
relationships with
stakeholders and clients
VALUES
(beliefs)***
(those which the
SOA status does
not seek
to change)
Loyalty, honesty, integrity, non-partisanship,
professionalism, fairness and impartiality, ministerial
responsibility.
***Following Schein’s definition of beliefs, the difference between values and
beliefs appears to be one of degree more than one of kind. Having no
rigorous instrument to establish a clear distinction, the value level, in the
present case, must be understood as including beliefs as well.
51
In line with Schein’s model, a significant transformation of the
bureaucratic culture prevailing in SOAs would depend upon changes in the
values shared by people working in SOAs. People would, for instance, judge
that it is more important to produce results than to blindly conform to rules or
policies, that responsiveness to clients’ specific needs is as important as fairness
in the treatment of their demands and that they may innovate without the risk of
being penalized for doing so.
As indicated in Table 3, this cultural transformation should, at the same
time, maintain, if not reinforce, certain values that are considered important in
the context of the Canadian Public Service. Public servants working in SOAs
should remain loyal to Public Service values, avoiding any action that could
challenge the traditions of honesty, integrity and non-partisanship which have
characterized it for decades. They should continue to provide services in a fair
and impartial manner. Finally, public servants should keep on working while
respecting the rule of ministerial responsibility which establishes the principle
that ministers are ultimately responsible, before the Parliament, for all actions
taken in their departments.
The Dynamics of Cultural Change
Now that the various dimensions of organizational change have been
addressed and integrated through the concept of organizational culture, this
52
section reviews a few theories about the dynamics of change and the processes
through which changes may successfully take place.
Kurt Lewin (1951), one of the first among those who theorized about
the dynamics of change, proposed a set of concepts, a "system of analysis," that
is often used to understand the dynamics of change. Lewin basically conceived
any situation as a "quasi-state of equilibrium" resulting from the interplay of
opposing forces. To modify or change this "quasi-state of equilibrium," these
forces must either be strengthened or weakened. The direction the change will
take will depend on the forces affected by the intervention. Finally, over time,
a new "quasi-state of equilibrium" between opposing forces is expected to
emerge following the intervention.
While being relatively abstract, Lewin’s model can be used to interpret
the overall strategy of change adopted by those who designed the SOA
Initiative. According to this interpretation, the designers of the SOA Initiative
chose to modify or unfreeze the "quasi-states of equilibrium" prevailing in
selected governmental organizations by essentially removing some of the
constraints that prevented them from improving their performance (the so-called
"flexibilities"). To counterbalance the possible abuse of these flexibilities (and
to allow the establishment of new "states of equilibrium," as Lewin would say),
new accountability measures were applied.
53
Lewin’s theory is evocative on how change takes place (essentially
through the play and manipulation of opposing forces); however, inspired by the
laws of physics, this mechanistic model is much too simple to guide the
introduction of complex change in human systems and organizations. In other
words, the sole granting of flexibilities, counterbalanced by accountability
measures, may not be sufficient to produce the kind of changes expected.
The process proposed by Beckhard and Harris (1987) to manage change
in organizations is a good example of a model that completes and helps to
operationalize Lewin’s theory. Focusing on organizational change and assuming
that change can be planned and managed, the authors prescribe the
implementation of four steps.
Given the difficulties of making complex changes and the important
investments these changes require, the first step to take is to appraise the need
that legitimizes their introduction. The importance of this first step rests on the
assumption that the successful implementation of organizational change largely
depends on people’s belief that change is necessary. The need for change must
be credible, explicit and convince those whose contribution is essential to
modify a situation. The second step is for the leaders to define the desired state
and midpoint goals "representing a desirable organizational condition
intermediate between the present state and the achievement of the vision"
(Beckhard & Harris, p. 46). The third step, the assessment of the current
54
situation, commands that organizations identify what needs to be modified in
order to attain the future desired state, previously determined. The fourth and
final step refers to the production of a plan depicting the critical activities to
pursue and the decisions regarding the interventions to make, the technologies to
use, and the structures to support the implementation of changes.
The comments made in the preceding chapter regarding the decision to
convert governmental organizations into SOAs suggested that the first step was
not always followed. For instance, at least one manager learned about the
conversion of its organization into a SOA only a few weeks before it was
officially announced. Although it may be argued that this situation was
probably exceptional and characteristic of the first wave of SOAs (launched in
1990), the Auditor General’s report on the SOA Initiative reinforced the idea
that this first step was seriously overlooked. As to the other three steps
prescribed by Beckhard and Harris, only a close examination of SOAs’ charters
and business plans would indicate to what extent they were applied.
According to Schein and others (Kanter, 1983; Peters & Waterman,
1982), cultural changes call for strong leadership, an ingredient not mentioned
by Lewin and only partly alluded by Beckhard and Harris in the second step of
their process.
Schein suggests that the first condition to produce important cultural
changes at the value level rests upon a perceived misfit between a given culture
55
(the values shared by employees) and an environment that is threatening or
perceived as such. This necessary condition is, however, not sufficient.
Alternative values and beliefs must be proposed to replace obsolete ones. It is
through a number of primary and secondary mechanisms (the latter being
effective only if they are consistent with the former [Schein, 1985, p. 237]) that
leaders can either reinforce existing cultures or transform them into more
appropriate cultures that offer better responses to a challenging environment.
Table 4 replicates the list of these mechanisms.
The issue of leadership is one that has a good chance of being a central
one in the case of SOAs. From what is formally known of the initiative,
leadership was not a critical criterion in choosing organizations as candidates for
SOA status (except for the expectation that managers and employees should be
committed to the conversion, noted earlier in this chapter). Indeed, it appears
that people who directed these organizations at the time they were converted
into SOAs have remained in place. To be sure, these managers may
successfully lead the cultural transformation of their agencies. However, such a
possibility assumes that managers who have functioned in a bureaucratic
environment for years were able to turn around and activate the mechanisms
necessary to modify the bureaucratic culture of their agencies. This assumption
might be challenged in the present inquiry.
56
TABLE 4
MECHANISMS TO REINFORCE OR CHANGE
ORGANIZATIONAL CULTURES
Primary Mechanisms
(1-5)
Secondary Mechanisms
(6-10)
1. Attention (leader makes things
that are important explicit)
6. Design of organization (a structure
reflects management values)
2. Reactions to crises
(leader’s kinds of responses
when crises occur)
7. Design of systems and procedures
(which helps in crystallizing
"attention")
3. Role modeling
(leader who "walks the talk")
8. Design of facilities (office layout
may convey values)
4. Allocation of rewards
(leader’s criteria regarding the
allocation of rewards)
9. Stories, legends or myths
(as reflections of culture and
intentional mechanisms to
influence)
5. Selection or dismissal of
personnel (leader’s criteria to
recruit or dismiss employees)
10. Formal statements
Source: Schein, Edgar (1985). Organizational change and leadership. San
Francisco, CA: Jossey-Bass.
Three Propositions and One General Question To Guide
the Present Inquiry
The theoretical considerations made so far contribute to characterize the
SOA Initiative, to raise a number of issues and develop a preliminary
interpretation of the SOA Initiative that will orient the present inquiry. Three
general considerations emerge from this exercise. First, with the exception of
the political dimension which was somewhat overlooked, the initiative appears
57
as a rather comprehensive one which addressed the structural, the human and
the symbolic dimensions of organizational change in its conversion of
governmental units into SOAs. Second, to the extent that the changes affecting
these dimensions can be interpreted as changes affecting the overall
organizational culture, it is important to distinguish between changes that take
place at the artifactual level and those which transform the values of people who
experience these changes. Third, a review of some basic theories about
organizational change raised the importance of some fundamental steps and of
leadership in any important attempt to transform organizations. Whether these
steps were taken in converting organizations into SOAs remains to be verified.
When applied to the SOA Initiative, these considerations may be
summarized in three propositions:
Proposition 1: The SOA Initiative may be interpreted as
an attempt to modify certain characteristics of the
bureaucratic culture prevailing in a number of Canadian
governmental organizations.
Proposition 2: To modify these characteristics, the SOA
Initiative introduced various changes in Canadian
governmental organizations addressing their structural,
their human, their symbolic dimensions and to lesser
extent, their political dimension. These changes
essentially took the form of "flexibilities" and specific
measures to enhance their accountability.
Proposition 3: The modifications to the bureaucratic
culture prevailing in SOAs will take place only if the
formal changes brought in through the initiative have
transformed into changes at the level of employees’
values and beliefs.
58
Following these three propositions, the impact that the SOA Initiative
has had on SOAs may be assessed through the following general question.
To what extent and how, in the opinion of SOAs’
employees (principally their managers), have the
flexibilities granted and the accountability measures that
came with the SOA status contributed to transform SOAs
in less bureaucratic organizations?
In conformity with the conception of organizational culture adopted in
the present study, the evidence to answer that question should not be limited to
official information pertaining to the granting of the SOA status to
governmental agencies but chiefly include the opinions of employees who
experienced the conversion. The next chapter will describe the research
strategy that will use these two main sources of data.
The SOA Initiative and Some Basic Public
Administration Issues
Much of the spirit that inspired the SOA Initiative was founded on the
successful practices of private enterprises. Typically, official documentation
concerning the initiative kept advocating the adoption of "businesslike" practices
by SOAs. Although SOAs were not allowed to become true business or
commercial enterprises, adopting businesslike practices suggested that, while
remaining part of existing ministries and subject to laws and regulations that
apply to all government organizations (with the exception of tailored
59
"flexibilities" granted to them), SOAs were encouraged to adopt practices that
proved successful in private enterprises to the greatest extent possible.
Given the public character of SOAs, it is important to briefly sketch at
least three fundamental public administration issues that establish limitations on
the adoption of businesslike practices. These are: (1) the context in which the
goals of SOAs are determined, (2) the amount of discretion that their managers
may enjoy to pursue these goals, and (3) the accountability rules that apply to
the exercise of that discretion.
The Context in Which the Goals of SOAs Are Determined.
Compared to private firms, the definition and the pursuit of public
organizations’ goals are essentially driven by political rather than economic
motives. Private firms most often confront competitive environments and seek
to improve their positions by providing better services at lower costs. Public
organizations rarely need to compete for clients in order to survive. However,
they must cope with a variety of laws, regulations, public policies and the
pressure of many interest groups that influence much of the way public
organizations establish and pursue goals and objectives.
Although SOAs are mostly concerned with service delivery rather than
policy making, they do not escape this political environment. They also have to
cope with the many expectations from host departments, central agencies and
60
strong unions and must be careful to avoid incidents which could put ministers
and the government in delicate situations.
Moreover, public organizations like SOAs often have to pursue
ambiguous and contradictory goals. The authorities of one particular SOA met
in the course of the present inquiry faced this dilemma when they decided to
abandon activities in some Canadian regions that had generated deficits for
years. This decision, evident in a profit-making context, was vetoed by the
SOA’s host department which considered as critically important the presence of
the agency in all Canadian regions despite the deficit situation incurred by the
agency.
The Amount of Discretion that Public Managers may Enjoy to
Pursue Public Goals. In assuming that public administration in a democracy is
subordinated to elected governments and legislatures, public managers’
discretion, by definition, is limited. Radical positions on this issue are well-
illustrated in the famous debate between Carl Joachim Friedrich and Herman
Finer. According to Friedrich, the discretionary power that public
administrators may enjoy is necessary for them to deal "with problems so novel
and complex that they call for the highest creative ability" (Friedrich, p. 201).
Finer could not accept the exercise of such discretionary power in a democratic
society.
My answer is that the servants of the public are not to
decide their own course; they are to be responsible to the
elected representatives of the public, and these are to
determine the course of action of the public servants to
the most minute degree that is technically feasible
(Finer, 1941, p. 335).
Obviously, the SOA Initiative espoused Friedrich’s position. Not only
are SOAs’ managers provided with additional discretionary power, but it is
understood that, while ministers remain ultimately accountable for SOAs and
could intervene in their day-to-day operations, they will avoid interfering with
SOAs’ daily management. However, such a discretion cannot compare to that
of those managing privately-owned enterprises; for it is bounded by a panoply
of rules and procedures over which public managers have little or no control.
In other words, public managers’ discretion must be exercised in a bureaucratic
context—a situation much less prevalent in private firms.
The Accountability Rules that Apply to the Exercise of Public
M anagers’ Discretion. Like all governmental organizations in a parliamentary
system, SOAs must function with respect to the ultimate rule o f ministerial
responsibility. In Canada, whose political system shares the basic
characteristics of the British parliamentary model, this fundamental rule implies
that ministers, collectively and individually, are responsible before Parliament
for what goes on in ministries. This means that Parliament can, at any time,
question ministers concerning public policies or any related matters that come
under their responsibility. A minister who fails to answer to the satisfaction of
Parliament may have to pay a heavy political price (Woodhouse, 1994). This
ultimate accountability rule reinforces the obligation for SOAs’ managers to be
accountable for their administration before their superiors and ultimately before
the ministers in charge of host departments.
Therefore, to counterbalance the provision of discretion over the
management of SOAs, their managers were expected to be accountable for the
pursuit of clear and pre-determined goals and indicators and to make their
results and their operations more visible and more transparent through the
publication of annual reports.
The general question guiding this inquiry needs to be amended as
following to take into account these basic public administration issues.
Given the public character of the context in which SOAs
evolve, to what extent and how, in the opinion of their
employees (principally their managers), the flexibilities
granted and the accountability measures that came with
the SOA status contributed to transform them in less
bureaucratic organizations?
63
CHAPTER HI
THE RESEARCH DESIGN TO DEVELOP AN SOA MODEL7
The first chapter of this dissertation presented basic information about
the SOA Initiative and commented on the taking-stock exercise done by the
Auditor General of Canada. It also pointed out that an SOA model was
missing, an omission this dissertation will try to rectify.
The second chapter proposed a general theoretical interpretation of the
initiative which established that the measures advanced by the initiative sought
to formally address, with the exception of the political dimension, the various
7 The present inquiry seeks to develop a "model" rather than a "theory.”
To develop a theory would not only appear as too high an expectation in the
present case but, on the basis of the conceptual difference Abraham Kaplan
makes between the two terms, the concept of "model" seems to be more
appropriate.
The theory is more or less abstract [than a model]. . . .
The model is conceived as a structure of symbols
interpreted in certain ways, and what it is a model of is
the subject matter specified by the interpretation.
Relations among the symbols are presumed to exhibit
corresponding relations among the elements of the
subject matter. . . . In a strict sense, not all theories are
in fact models: in general, we learn something about the
subject-matter from the theory, but not by investigating
properties o f the theory. . . . The theory states that the
subject-matter has a certain structure, but the theory does
not therefore necessarily exhibit that structure in itself
(Kaplan, 1964, pp. 264-265).
64
organizational dimensions that may be targeted to change organizations. The
interpretation went further by suggesting that these various dimensions could be
integrated and approached through the concept of "organizational culture," a
concept that stresses the importance of considering the different cultural levels
in analyzing organizations (conceived as "cultures"). Finally, following a
review of some basic prescriptions pertaining to change processes, this
theoretical interpretation of the SOA Initiative led to three propositions and to
one general question orienting the present exploration of the SOA Initiative.
The present chapter discusses the research design adopted to produce a
model deriving from the analysis of three SOAs and from the answers
employees from these three SOAs will give to the general question developed in
the preceding chapter. The main characteristic of this design is that this inquiry
does not seek to prove or disprove any pre-determined theory or set of
hypotheses using the SOA experience. Rather, it attempts to uncover a model
depicting the critical elements pertaining to the effective implementation of the
initiative. It is hoped that such a model will guide its further development or
the development of initiatives of the same kind.
This chapter starts with a presentation of the main difference between
two fundamental research perspectives—that of testing existing theory versus the
discovery or the generation of theory grounded in some particular instances.
The reasons legitimizing the choice for generating a theory rather than testing an
65
existing one in the present study are then exposed. The second section
describes the seven sequential steps of the procedure applied to uncover a model
grounded in the SOA Initiative. The last section comments on the choice of the
research design previously exposed by putting it in a larger theoretical context.
The Generation of a Model Grounded in the
SOA Initiative
The research design applied in this dissertation essentially builds on the
position of Barney G. Glaser and Anselm L. Strauss (1967) who advanced the
idea that while most of the research in sociology, their discipline, has
concentrated on the verification and the testing of existing theories, the
generation of new theories has been neglected. Arguing that the generation of
new theories is at least as important as the verification and the testing of
existing theories, these two authors developed a procedure to systematically
discover or uncover theories grounded in empirical data. Before exposing how
that procedure is used to uncover a model grounded in selected SOAs, the main
difference between the two perspectives is unveiled.
Testing a Theory versus Generating or Discovering One. Typical
scientific investigation seeks to prove, disprove, complete or advance existing
theory, a segment of an existing theory, or a newly formulated theory which
provides a logical explanation regarding an unknown or partially-known
66
phenomenon. Glaser and Strauss labeled this approach the logico-deductive
approach to theory-building (Figure 3).
FIGURE 3
CONTRASTING THE TWO PERSPECTIVES ON THEORY-BUILDING
Logico-deductive approach
to theory building
* A priori assumptions &
common sense
* Theory and hypotheses
generated through
logical reflection
and deduction
* Empirical verification
and testing
Main purpose:
the verification and
the testing of theory
Grounded theory
* Empirical data
* Categories & properties
* Hypotheses and significant
relationships
* Substantive theory
* Formal theory
Main purpose:
the discovery or
the generation of theory
The overall characteristic of that approach is that theories, theoretical
frameworks or models, most often derive from a priori assumptions (non
proven, taken-for-granted propositions), common sense or from previous
research. These theories, with their hypotheses or implied relations among
variables, are to be tested or verified using sophisticated protocols regarding the
collection and the analysis of empirical quantitative and qualitative data.
67
Testing an existing theory is expected to produce knowledge that will complete
what was known until then about a given phenomenon.
The right-hand side of Figure 3 shows that the discovery or the
generation of grounded theory adopts a totally different perspective. Contrary
to the logico-deductive approach, the grounded theory perspective postulates that
some theory is grounded in the phenomenon under study. This theory can be
discovered through the systematic examination of empirical data and the
development of "properties," "conceptual categories" and hypotheses. (These
concepts will be defined later in this chapter.) The result of this kind of inquiry
is the emergence of a theory that could eventually be validated and tested using
the logico-deductive approach in order to reinforce its validity (particularly its
external validity; that is, the extent to which the theory applies to other
instances).
The Reasons Why this Study Opts for the Grounded-Theory
Perspective. Now that the main difference between the two perspectives has
been sketched and that it has been established that they could be compatible
(grounded theory, once uncovered, may be tested), the important question to
address is why the present inquiry opts for the grounded-theory perspective to
develop an SOA model?
In fact, the right choice between the two perspectives essentially
depends on the nature of the context in which theory is to be built. In some
68
cases, the logico-deductive perspective makes more sense, particularly in
situations when a large body of knowledge regarding some specific phenomenon
exists, and is considered as valid and calls for more sophistication. Such is the
case of many natural sciences, such as physics, chemistry and biology, which
can capitalize on a large amount of knowledge that provides direction for further
research. Only in situations where the body of existing knowledge is useless or
irrelevant would natural scientists be inclined to adopt the alternative
perspective; that is, to start with empirical data and try to uncover a theory
grounded in it.
Social sciences, which have tried to imitate, with relative success,
natural sciences in their quest for knowledge, often face situations for which
existing knowledge is very limited and whose validity is subject to much
perplexity. That seems to be the case of public administration and
management—two disciplines that do better at raising questions than bringing
convincing answers to theoretical or practical issues. Still, the volume of
prescriptive and descriptive theories, hypotheses and models that exist regarding
the management of organizations is impressive and keeps growing at an
impressive speed. Every year or so, new theories and new techniques, based on
these new theories, are proposed to replace those that were developed only a
few years before. This anarchic situation is partially due to and illustrate the
lack of a solid body of knowledge on which these disciplines could develop. In
69
such a context of fragile theoretical foundations, the grounded-theory building
perspective appears as a sound alternative to the logico-deductive perspective.
In the case of the present inquiry, other reasons support the choice of
the grounded theory-building perspective. First, given the many dimensions that
the initiative sought to cover (see Chapter 2), the adoption of the logico-
deductive approach to theory-building would require starting the inquiry with an
existing theory that integrates all of these dimensions or with a series of various
theories embracing each of these dimensions. The identification of a
comprehensive theory that encompasses the structural, human, political and
symbolic dimensions and that is precise enough to guide an exploration of the
SOA Initiative remains to be found. As far as the testing of a series of theories
addressing these different dimensions, it would require time and resources
which are beyond the means the author of this dissertation can afford.8
The second argument supporting the choice for the grounded theory-
building perspective has to do with the fact that no articulated theory that could
be tested or verified inspired those who conceived the SOA Initiative despite
8 At this point, it is important to clearly understand from what standpoint
the concept of "organizational culture" and the model developed by Edgar
Schein were developed in Chapter 2. The concept of "organizational culture" as
a "root metaphor" and Schein’s model were not used as propositions that the
present study would try to verify empirically (following the logic of the logico-
deductive approach). Rather, they were used to characterize the SOA
experience in terms of cultural change, to underline how the notion of "cultural
change" could help to grasp the scope of the initiative and to legitimize the
preference for qualitative research to understand people’s values.
70
their claim that: "... the theoretical model on which the SOA is based is that
of a contract. . . . A second theory that underpins the SOA is that of choice, or
market mechanisms" (The Auditor General of Canada, 1994, p. 4).
The relevance of these two basic principles in the case of the SOA
Initiative has been disputed in a preceding chapter. Moreover, besides the fact
that the relevancy of these two principles was disputed, these principles cannot
be considered as testable theories. Finally, even if these principles were
testable, their testing would not contribute in any way to understanding and
guiding the conversion of governmental organizations to SOAs.
A third reason for using the grounded theory-building perspective in the
present case has to do with the importance of producing a model which will be
perceived as being useful by public managers interested in reforms such as the
SOA Initiative. Practitioners’ systematic resistance to theoretical frameworks
that do not fit their reality or are useless in interpreting and solving the issues
they face is often observed by those involved in their training. In the worst
cases, public managers develop an anti-theory attitude and view theorists as
disconnected from the field, unable to support practical efforts to improve their
practice of public administration.
To avoid the prescription or the description of existing theories or at
least postpone their exposition until people make their "own theories" explicit
and reflect on them (Schon, 1983) is one strategy that may break the resistance.
71
This strategy essentially considers practitioners as theorists who developed,
often unconsciously, through their experience, their own theories about how
things are done or should be done. When these theories grounded in a given
practice are made explicit, it then becomes easier to reconcile practitioners with
the concept of theory and its importance in trying to improve their practice.
So, it is believed that by adopting the grounded theory-building
perspective, by reviewing official data on selected SOAs, and by taking into
account the experience people have had with their conversion into SOAs, this
dissertation increases its chances of producing a model that will make sense
from a practitioner’s point of view. Such a model will then correspond to what
Michael Harmon calls a "practical" theory that:
. . . either illuminates possibilities for action that would
not be apparent or stimulates greater understanding of
what [public managers have] already been doing [in
implementing the SOA concept], A second feature of a
practical theory is its novelty; that is, its power to evoke
new and unexpected insights that are different from those
revealed by common sense or illuminated by other ways
of looking at the situation (Harmon & Mayer, 1986,
p. 61).
The Procedure To Uncover a Model Grounded in
the SOA Initiative
The model this study seeks to develop and the procedure used should
provide answers to the following basic question mentioned in the preceding
chapter.
72
Given the public character of the context in which SOAs
evolve, to what extent and how, in the opinion of their
employees (principally their managers), the flexibilities
granted and the accountability measures that came with
the SOA status contributed to transform them in less
bureaucratic organizations?
That general question could have been answered following the
examination of only one case study. However it was felt that a more
convincing strategy required the investigation of more than one SOA. The
exploration of a series of either successful or ineffectual SOAs would have
provided answers to the guiding question and, under the condition that these
answers went in the same direction, they could have permitted the emergence of
a model depicting the factors associated with the success or the failure of a
group of SOAs. That option, however, raised two issues. First, the researcher
had to develop and apply criteria to differentiate successful SOAs from failing
ones. Second, by choosing to focus on either one of the two categories, there
was a risk that the study would miss part of the general picture of an initiative
that, most probably, worked in some cases and did not work in others. So, the
option finally taken was to study at least two governmental organizations whose
conversion into SOAs had totally different impacts and to contrast the findings.
It was hoped that such strategy would contribute to pinpoint the critical factors
associated with the totally different impact the SOA status had in the two cases.
That strategy had the advantage to simplify the selection of case studies. The
first case study could either be a success or a failure. It did not matter. What
mattered was that the second one contrasted the first one regarding the impact of
the conversion. As of the criterion to judge whether an SOA was a success or a
failure, the researcher would simply trust consensual judgments made by various
informants (who would define success or failure from their own criteria).
It is important to note that the selected SOAs, given the perspective of
the present research, did not need to constitute a representative and randomly-
selected sample of all SOAs. To draw a statistically representative sample of all
SOAs would have required that SOAs form a relatively homogeneous
"population" or group which is not the case. (See Chapter 1 for a presentation
of the 15 SOAs.) Rather than statistical sampling, the sampling strategy used in
the present study corresponded to theoretical sampling defined as:
. . . the process of data collection for generating theory
whereby the analyst jointly collects, codes, and analyzes
his data and decides what data to collect next and where
to find them . . . the initial decisions for theoretical
collection of data are based only . . . on a general
subject or problem area . . . not based on a preconceived
theoretical framework (p. 45). The basic question in
theoretical sampling is: what groups or subgroups does
one turn to next in data collection? (p. 48) (Glaser &
Strauss, 1967).
Finally, it must be understood that, although quantitative data will be
collected and analyzed, the importance of qualitative data to uncover grounded
theory will be most important. The importance of qualitative data in the present
study is conformed to the concept of organizational culture and the role of
people’s interpretation of changes formally introduced in organizations. (See
74
Chapter 2.) Another important aspect concerns the very limited quantitative
data expected to be found regarding the effects of a reform as recent as the SOA
Initiative. Moreover, all informants met in the course of the present study
prevented any interpretation of the initiative on the basis of numbers that could
not reflect the impact of flexibilities granted only a few years ago.
Figure 4 presents the seven steps of the procedure that will ultimately
lead to the generation and the formulation of a model grounded in the
conversion of governmental organizations to Special Operating Agencies.
FIGURE 4
THE SEVEN STEPS OF THE RESEARCH PROCEDURE
1. The choice
of a first case
study
2. The collection of 3. The emergence
information —^ of properties and
core categories
4. The emergence of 5. The choice of a
relationships, of second case study
hypotheses and of a (and the application
model specific to of steps 2, 3 and 4)
third case study
(and the application
of steps 2, 3 and 4)
6. The choice of a
the SOA
7. Looking for confirmation or variations
between the three case studies
and the elaboration of a 'substantive'
model grounded in the three case studies
75
The Choice of a First Case Study (Step 1). The process of
generating a grounded theory started with the choice of a first SOA. The choice
of this first case study proceeded essentially from practical considerations. In
searching for a first SOA, some candidates were put aside for the following
reasons: their remote location (the Canadian Grain Commission is located in
Winnipeg, and Indian Oil and Gas Canada is located in Calgary); the
geographical dispersion of their staff (Passport Canada and Pari-Mutual
Canada); the too recent acquisition of the SOA status (the Physical Resources
Bureau); or simply their refusal to collaborate in the present study (the
Transport Canada Training Institute and the Canada Communication Group).
Other SOAs welcomed the research. Among them, Training and
Development Canada became the first candidate for the following five reasons.
First, a personal contact provided the author with some basic, informal but
important information about the organization. Second, the Chief Operating
Officer of the organization enthusiastically agreed to collaborate (a designated
official supported the researcher). Third, most of the staff was located in one
place, namely Hull (next to Ottawa), which facilitated the organization of
meetings with employees. Fourth, the author had some basic knowledge about
the type of training activities in which the organization was engaged. Fifth, the
fact that, in this SOA, most interviews could be conducted in French (the
author’s mother tongue) facilitated the fine tuning of the interview protocol.
76
The Collection of Information (Step 2). The present inquiry looked
for any information, quantitative or qualitative, that people who managed SOAs,
worked in them or dealt with them, found important to disclose to make the
researcher understand what the SOA Initiative meant to them. Examples of
quantitative data included financial indicators, data on customers’ satisfaction
and market share and were to be found principally in the agencies’ official
documentation (charter documents, business plans and annual reports).
Qualitative information was essentially collected through individual and group
interviews with SOAs’ employees.
Interviewees were chosen according to the three following criteria:
their formal position with the organization (the SOA or its host department), the
nature of their work and their length of employment. Indeed, most interviewees
were managers who had worked in selected SOAs ever since they were
converted. Final selection took place following discussions with representatives,
the study of formal documents (such as organization charts) and initial contacts
(by phone or by fax) between the researcher and the interviewees to explain the
goal of the interview and get their collaboration.
Interviews were planned so that they could take place in the same
organization over a period of three or four consecutive days. However,
additional contacts by phone or electronic mail often occurred weeks or months
77
after the initial interviews to complete data collection and share the author’s
interpretation of data.
Every interviewee received a four-page document containing the
interview guidelines, in both French and English, a few days before the
meeting. Appendix B contains a copy of this document which, in accordance
with the exploratory nature of the document, includes no specific questions.
This document mentioned, in its first part, the general interest of the
study for "the changes that took place following the granting of the SOA status"
to the organization, indicated how interviewees were selected and offered the
opportunity to people not personally contacted to participate in the research.
The second part of the document (referred to as "the background o f the
study") provided general information about the SOA Initiative.
The third part presented the four goals of the research which were:
1. To identify the changes that took place or that
were taking place following the granting of the SOA
status to selected governmental organizations;
2. To define the nature of the changes observed
(regarding the formal dimensions of organizations, the
work processes, the management practices, the
professional practices, the employees’ attitudes and so
on);
3. To verify the perceived correlation between the
changes observed and the long-term objectives of the
initiative; and
4. To establish possible linkage between those
changes and the improvement of the organizations’
overall performance (particularly in terms of service
costs and the quality of services).
78
To help the interviewee to prepare for the interview, the fourth part
displayed "a list of changes that may have taken place following the granting of
the SOA status" to the agencies.
1. Changes in the mission and in the objectives of
the organization;
2. Changes in the organizational chart;
3. Changes in the relationships between those who
are directly involved in the core activities of the SOA
and supporting staff (functional services) located in either
the SOA itself or in the host department;
4. Changes in management practices (such as more
consultation, decentralization of responsibilities, more
emphasis on managing costs and revenues, on improving
services, on the importance of consulting clients, and so
on);
5. Changes in the way people accomplish their work
or exercise their profession (for instance, were people
encouraged to innovate, to take initiatives, to be more
creative?);
6. Changes in work processes;
7. Changes in the way the organization supports the
development of employees’ abilities and professional or
technical skills; or
8. The introduction of new technologies.
The last section of the document indicated the planned duration of the
interview (one hour for individual interviews) and the criteria upon which
interviewees were selected. The argument in favor of open interviews was
underlined by stressing that the formula provided interviewees with greater
freedom to express themselves.
79
Finally, the exploratory nature of the research was made explicit.
The methodology fits the exploratory nature of the
research. The author does not seek to prove or disprove
any given hypothesis. However, he hopes that the study
will contribute to a better understanding of the
transformation of public organizations into SOAs and the
resulting consequences.
In reality, the typical interview would start with a reminder of the
general goals of the study. Then, the researcher would simply ask the
interviewees to talk about their organization since its conversion to an SOA.
Interviewees, in most cases, were well-prepared and expressed themselves on
aspects that they thought were important concerning the functioning of their
organization rather than on the goals of the study or the list of changes included
in the guidelines. This list of changes was only used at the end of the interview
to make sure that the interviewees covered all the change aspects they felt were
important. Many interviews lasted for more than one hour. Obviously, people
liked to talk about their organization, and most appreciated that rare opportunity
to reflect on what had gone on in their organization since it was converted to an
SOA.
Interviews were not taped. However, handwritten notes, comments and
impressions were transcribed, analyzed and categorized the same day each
interview took place.
80
Data Analysis (Steps 3 and 4). Data analysis covers Step 3 ("the
emergence of properties and core categories") and Step 4 ("the emergence of
relationships and hypotheses") presented in Figure 4.
With reference to the procedure developed by Glaser and Strauss
(1967) and Glaser (1992), one basic process, the constant comparative coding of
data, was applied to the data throughout these two steps.
Glaser defines "coding" as the process of ". . . conceptualizing data by
constant comparison of incident with incident, and incident with concept to
emerge more categories and their properties" (Glaser, 1992, p. 38); and
"constant comparative coding" as the fundamental operation by which "... the
analyst codes incidents for categories and their properties and the theoretical
codes that connect them" (Glaser, 1992, p. 38).
Coding defined along these lines means more than simply putting
different codes on pieces of data, a rather mechanical undertaking. Coding, as
defined by Glaser, implies the analysis of basic data (incidents) and its
conceptualization through constant comparisons. The result is the construction
of "properties," "categories" and hypotheses.
A category stands by itself as a conceptual element of the
theory. A property in turn, is a conceptual aspect or
element of a category. A systematic relationship exists
between the two. Both categories and properties are
concepts indicated by the data, and not the data itself.
Both vary in degree of conceptual abstraction. They
have a life apart from the evidence (Glaser & Strauss,
1967, p. 36).
81
According to this procedure, the analyst starts with no pre-conceived
categories and properties. The analysis begins by pointing to, and comparing,
pieces of information found in documents and incidents identified and described
by informants. Comparisons among incidents reveal categories under which sets
of incidents sharing a pattern or similarities are grouped.
As this operation begins, one can expect the emergence of an important
number of categories. But, according to Glaser and Strauss, quite rapidly, core
categories are likely to emerge and grasp the essentials of incidents and
properties reported by various informants. Core categories are important
because they are the basic elements used in the following stage of unfolding
possible and probable hypotheses. Hypotheses are suggested linkages between
categories.
The analysis of data, the production and the interpretation of
"properties," "categories" and hypotheses will ultimately lead to the generation
of a model, specific to each case study, and suggest how a combination of
factors can be associated with the kind of impact the SOA status has had in each
specific case.
The Choice of the Second Case Study (Step 5). The Canadian
Intellectual Property Office (CIPO) became the second case study investigated in
the course of the present inquiry. The rationale for choosing an agency whose
conversion to an SOA was apparently successful was to contrast the findings to
82
those made in the case of TDC, which expressed much frustration with the SOA
status.
The collection and analysis of data in CIPO proceeded in the same
manner as in TDC. The only difference was the use of electronic mail with
some officials, which allowed the author to get additional information, exchange
comments and check the interpretation of some findings.
The Choice of the Third Case Study (Step 6). The comparative
analysis of the first two case studies identified the main critical elements that
will later be used to produce a substantive model about the conversion of
governmental organizations to SOAs. However, following the analysis of these
two case studies which stressed the importance of "significant flexibilities" in
the conversion process, one important question needed to be addressed. That
question concerned the impact of non-significant flexibilities granted to
governmental organizations which, given their context, did not need to bring
about important organizational changes. The choice of the Canadian
Conservation Agency (CCI) sought to answer that question.
The collection and the analysis of data in the case of CCI did not differ
from the way these operations were conducted in the two preceding case studies
except for the extended use of electronic mail. CCI was the only agency where
all employees could be reached through E-mail. E-mail also facilitated the
treatment of information, because comments and opinions could be easily
83
transferred in their original format to another software and be more easily coded
and transformed into properties, categories and hypotheses.
The Elaboration of a Substantive Model (Step 7). The elaboration of
a substantive model was the ultimate goal of the present inquiry. Such a theory
resulted from the comparative analysis of the three models developed following
the separate analysis of the three case studies—TDC, CIPO and CCI. One
entire chapter focuses on the elaboration of such a substantive model.
An Appreciation of the Research Model Adopted
in the Course of the Present Inquiry
This last section briefly outlines and comments on the properties of the
research design used in the present study. It does so by making explicit its
underlying assumptions using Burrell and Morgan’s paradigmatic distinctions
(1979). It then reviews some criteria usually used to judge the quality of a
research design.
The Assumptions Underlying the Research Design. In conjunction
with the four paradigms described by Burrell and Morgan (1979), the design
used in the present study essentially shares interpretivist assumptions regarding
the nature of the world (ontology), the nature of what constitutes adequate
knowledge (epistemology), the essence of human nature, and the methods to
produce adequate knowledge (Figure 5).
84
FIGURE 5
INTERPRETIVISM AS THE PARADIGM THAT CHARACTERIZES
THE RESEARCH DESIGN USED IN THE PRESENT INQUIRY
S
u
b
j
e
c
t
i
v
i
t
y
Interpretivism
O n to lo g y : n o m in a lism
E p iste m o lo g y : a n ti-p o sitiv ism
H u m a n N a tu re : vo lu n tarism
M e th o d o lo g y : ideographic
F u n c tio n a lism
O n to lo g y : realism
E p iste m o lo g y : p o sitiv ism
H u m an N atu re: d e te rm in ism
M e th o d o lo g y : n o m o th etic
0
b
j
e
c
t
1
v
i
t
y
Source: Burrell, Gibson, & Morgan, Gareth (1979). Sociological
paradigms and organisational analysis. Hants, England: Gower.
The research design adopted in the present case assumed that
organizations are essentially human constructs in constant mutation which, like
any social reality, can be conceived as ". . . pattem[s] of symbolic relationships
and meanings,. . . social construction^] [Berger & Luckmann, 1966] or even
. . . projection^] of human imagination" (Morgan & Smircich, 1980, p. 494).
Epistemologically, the design assumes that adequate knowledge "is a
soft,. . . subjective, spiritual or even transcendental kind, based on experience"
(Burrell & Morgan, p. 1) that cannot be gained by limiting the analysis to
observable or objective manifestations (or artifacts). It becomes then essential
85
for the inquiry to look beyond these manifestations and include the interpretation
and the meaning people attribute to them.
Methodologically, this led the author of the present inquiry to opt for a
design which takes into account and interprets the documentation concerning
SOAs and "the subjective experience of people . . . an understanding of the way
. . . the individual creates, modifies and interprets the world" (Burrell &
Morgan, 1979, p. 3). This approach is rooted in both the hermeneutic tradition
and in ethnomethodology (Burrell & Morgan, 1979, pp. 235-238 and 247-250)
and is said to be essentially "ideographic" for it "is based on the view that one
can only understand the social world by obtaining first-hand knowledge of the
subject under investigation" (Burrell & Morgan, 1979, p. 6).
This approach is likely to produce in the present case a "substantive"
model anchored in the specific conversion experience of three selected SOAs. It
is assumed that such a substantive model may inform "formal theory" (such as
those reviewed in the preceding chapter), which, most often, developed through
a nomothetic approach emphasizing "the importance o f basing research upon
systematic protocol and technique . . . [focusing] upon the process of testing
hypotheses in accordance with the canon of scientific rigor" (Burrell & Morgan,
1979, p. 6). A substantive model may also be used to develop formal theory,
should the model be tested according to such a nomothetic approach. Figure 6
shows how the relationship between the ideographic and nomothetic approaches
86
may be established through the completion or the confirmation of formal theory
by substantive models.
FIGURE 6
THE RELATIONSHIP BETWEEN IDEOLOGRAPHIC
AND NOMOTHETIC APPROACHES
Ideographic
Nomothetic
Approach
Approach
▼
Substantive
▼
^ Formal
Model ^ Theory
Finally, this design considers that human beings are "volunteerists";
that is, the main actors in the creation and the transformation of social
organizations. "Human beings are social actors interpreting their milieu and
orienting their actions in ways that are meaningful to them . . . [they] create
their realities in the most fundamental ways . . . they are viewed as intentional
beings. ..." (Morgan & Smircich, 1980, p. 494).
Judging the Research Through Traditional Criteria. Following this
brief presentation of the fundamental assumptions characterizing the present
design, this section comments on the use of four conventional criteria to judge
the quality of research designs—construct validity, internal validity, external
validity and reliability.
87
Yin noticed that the establishment of "correct operational measures for
the concepts being studied" (Yin, 1989, p. 40), which defines construct validity,
is most often problematic in case-study research. This is even more true in the
present inquiry where only a few concepts are used to explore the SOA
Initiative. Among them is the concept of culture which was proposed to guide
the examination of SOAs (and not to verify a specific aspect or hypothesis about
them). Another concept, omnipresent in this inquiry, is the concept of change
which, in fact, was neither precisely defined (although such definitions were
reviewed through the models of Lewin and Schein), or strictly measured. The
appreciation or the measure of the magnitude of change (significant versus non
significant) was left to the perception people had of it. In that sense, the
measuring of what may have taken place in agencies following their conversion
to SOAs remains highly subjective— a feature in accord with the interpretivist
paradigm previously exposed and which characterizes the present design.
Internal validity is a main concern when research seeks to establish a
causal or explanatory relationship. Internal validity is, however, relatively less
crucial in the present study which is mostly exploratory and seeks to yield a
path of deep description to better understand and improve the practice of
organizational transformation rather than trying to prove or disprove a pre
determined theory or pre-established hypotheses. The result should appear in a
more complex form than a straight and typical linear causal relationship where
88
"a causes b ." Rather than such a causal arrangement, the SOA model should
give way to a combination of factors supporting the effective conversion of
governmental organizations to SOAs (or similar agencies). Still, it is believed
that the contrasting of two agencies with different impact following their SOA
conversion should contribute to raise the internal validity of the design research.
The possible generalization of the model or its external validity was not
a primary objective pursued in the course of the present inquiry. However, as
indicated in the first section of this chapter, once uncovered, it is assumed that
the SOA model could be tested in order to verify to what extent it applies to
other SOAs or other organizations experiencing a similar change process.
Reliability refers to the probability that a replication of the research
procedure used in the present study would produce identical results (a similar
SOA model). Regarding the collection of information, it is believed that the
same information would be gathered should the inquiry be repeated in a similar
context. There is no reason to think that informants would change their
opinions on the conversion of their organization to an SOA obtained through a
very general and open question. However, a new analysis of the data collected
through interviews (and of the data found in official documentation) by the same
analyst or another analyst could, but not necessarily, produce different results.
It must be remembered that the analyst interpreted and coded raw data in terms
of properties, categories and hypotheses using essentially its judgment to
89
establish logical linkages and relationships. Since the analysis was subjectively
conducted, it may have affected the reliability of the design used to some
degree.
The Ultimate Validity Test. To view organizations as human
constructs, to suggest that subjectivity, far from preventing adequate knowledge,
is a normal condition that contributes to its production and that qualitative
research is a critical source of data to understand human phenomena are all
positions which raise much disagreement on the part of scientists who opt for
functionalist assumptions. So, the pertinence of the methodology used in this
inquiry could be challenged on the sole basis of the interpretivist assumptions
underlying it. But to present arguments or counter-arguments in favor or
against these interpretivist assumptions would appear as a rather futile exercise
given what this study seeks to accomplish. Indeed, what makes the present
research design relevant are not its underlying assumptions but the perspective
in which the inquiry is conducted. Again, as explained in the first section of the
present chapter, the research seeks to uncover a practical model grounded in the
analysis of a few SOAs which, in turn, will inform public administrators and
public managers about the conditions that could make the SOA Initiative or an
initiative of the same kind a more effective one. Therefore, the main criterion
that should ultimately be used to judge the resulting model should be its
usefulness in understanding and in reforming governmental organizations
90
through administrative reforms such as the SOA Initiative. To be sure,
practitioners will not use a model that they will not find valid. But their criteria
for validity will essentially rest upon their conviction that the model truly
reflects their own experience with organizational transformation or the
experience of other practitioners with initiatives similar to that of the SOA’s and
that the "collection and reporting of data [were] done systematically, with care,
discipline . . . integrity [and] soundness" (Smircich, 1983, p. 165).
91
CHAPTER IV
THE CASE OF A STERILE SOA CONVERSION:
TRAINING AND DEVELOPMENT CANADA (TDC)
This chapter describes, examines and analyzes the conversion of
Training and Development Canada (TDC) to an SOA, using official
documentation and interpreting the content of interviews with managers and
employees who experienced the conversion.
The chapter is divided into four sections. A first section presents
general information about TDC and reviews TDC’s Charter and three Business
Plans. The second section takes a look at TDC’s performance using the Public
Service Commission’s Annual Reports and the Public Accounts of Canada. The
third section synthesizes the opinions expressed about TDC’s conversion to an
SOA by its managers and employees. The last section identifies five elements
that seem to have played a critical role in the sterile TDC’s conversion to an
SOA.
TDC’s Charter and Business Plans
Basic Information about TDC. As one of the first five organizations
converted to SOAs in 1990, Training and Development Canada (TDC) is part of
92
the Public Service Commission of Canada (PSC). The main role of PSC,
created in 1918, is to apply the merit principle in the recruitment, the promotion
and other operations regarding the management of Canadian federal public
servants. Besides, the Commission offers language courses (English and
French) to federal employees through Language Training Canada (LTC) and
trains public servants in various administrative aspects since 1942 (TDC’s
Business Plan, 1990/91-1992/93, p. 2).
With regard to training public servants, the Public Service Employment
Act (R. S., c. P-32, S. 1) gives PSC the responsibility to . . operate and
assist deputy heads in the operation of staff training and development programs
in the Public Service" (Article 5.b).
The exercise of this responsibility, however, remains largely dependent
upon the Treasury Board of Canada which has the authority, in virtue of the
Financial Administration Act (R. S., c. F-10, S. 1) . . to determine
requirements for the training and development of personnel in the public service
and fix the terms on which such training and development may be carried out"
(Article 11.2.a).
It is in that legal context that Training and Development Canada
(TDC), with a staff of approximately 150 employees "... provides
professional, technical, policy, middle management and supervisory training and
related specialized training and training services in both official languages to
93
federal public servants across Canada in response to Treasury Board policies
and departmental demands" (PSC 1993-94 Estimates, p. 34).9
Three characteristics are worth mentioning regarding TDC’s activities.
First, TDC essentially markets two types of training programs—those which
specifically address federal governmental operations (for instance, courses on
government accounting) and those which concern more general training needs
(such as computer training). Second, TDC’s training activities are cyclic—while
the level of activities is moderate from September through December, it is very
intense from January through March and very low from April through
September. Third, about 70% of TDC’s revenues comes from services offered
in its headquarters in Hull (a few kilometers from Ottawa), while 30% is
generated by training sessions offered outside the Capital, in other Canadian
regions.
TDC’s main challenge since the late 1980s has been to survive and
grow in a market that has been increasingly competitive. TDC’s traditional
clients (federal ministries) now have a variety of training options to choose
from.
The principal strategy TDC developed to cope with this situation was to
offer customized services to better respond to the specific and changing training
9 Until 1989, the PSC also covered the training needs of public
executives. The Canadian Center for Management Development (CCMD),
created in 1989, is now in charge of this clientele.
94
needs of the public service. But TDC’s limited control over costs has hindered
the pursuit of that strategy. Indeed, the major part of TDC’s costs relates to
salaries and conditions that are determined exogenously—the working conditions
of the entire Canadian public service apply to TDC as well. Such a constraint
limits TDC’s capacity to compete on costs and forces the maintenance of a
pricing policy that often encourages clients to look for alternatives. The
situation of TDC outside the Ottawa region is even more fragile where
attendance at training sessions rarely covers costs. It is in such a context that
TDC was converted to an SOA.
The Elaboration of TDC’s Charter. Managers and employees of the
Staff Training Program, later renamed Training and Development Canada
(TDC), were informed, only a few weeks before the official announcement in
December 1989, that their organization would become an SOA on April 1,
1990. Still, less than six weeks following this official announcement, TDC’s
staff produced a discussion paper that contained the basic elements of TDC’s
charter (to be officially approved a few months later).
The discussion paper reaffirmed the organization’s will to continue to
operate on a cost recovery basis using a revolving fund authority (which they
95
had used since the early 1980s)1 0 and to exercise the responsibilities regarding
training delegated to PSC by the Treasury Board. However, the document
stressed the urgent need to improve its services, given the profound changes that
affected the management of federal public servants, and called for new measures
(in addition to those already taken) in order to cope with these changes.
Among these measures that would "maximize flexibility and minimize
administrative burden" (p. 4), TDC’s management wanted to determine with the
Public Service Commission:
. . . the level and type of operational, financial and other
support services that are deemed to be essential to its
success. Once these services are determined, the Agency
will select the suppliers that offer the most cost effective
perspective from the Agency’s profitability objective
(p. 5).
TDC also recommended the creation of an "Advisory Board of key
stakeholders and decision makers," modifications to the organizational structure
(p. 6), the development of a human resources plan (p. 6) and a communication
plan (pp. 7-8), and a survey of "client needs and market training services"
(p. 7). The investments required to bring about these changes were to come
from a surplus of $3.1 million accumulated over the years since 1983.
1 0 Although the Agency covers the greatest part of its costs with revenues
generated from the sale of its services, it also receives a subsidy from the
Treasury Board to finance the design of new programs, to cover the costs
associated with the offer of services in regions, and the compliance with
government policy objectives (such as affirmative action). This subsidy
amounted to $2,885,000 in the 1992-93 fiscal year and to $4, 574,000 in 1993-
94 over a total budget averaging $15,000,000.
96
A section on "Authority and Accountability Framework" (pp. 11-12)
enumerated the authorities considered necessary to improve the functioning of
the agency. They were:
1. The abandonment of the "total person-year
control";
2. The authority to set fees for courses, services and
products;
3. New accounting and administrative procedures
(for instance, the right to earn interest on surpluses, to
collect and account for pre-payments; the copyrighting of
material developed by the Agency; the payment of
bonuses; the granting of special traveling authorities, and
so on);
4. Autonomy in the management of real property;
5. The authority to dispose of fixed assets and to
retain sales; and
6. The removal of personnel administration
constraints that would simplify and speed up the
recruitment of necessary resources.
Finally, the document presented a plan to implement the various measures
suggested.
The Formal Approval of TDC’s C harter. An official version of
TDC’s requests contained in the discussion paper was most probably submitted
to the Treasury Board in March or April 1990.1 1 This version presented a
summary of TDC’s requests, further detailed in three annexes. The first annex
specified the proposed accountability framework; the second listed the
authorities or flexibilities required from the Treasury Board; and the last one
“ The version of the document that was reviewed by the author was not
dated.
enumerated the flexibilities the agency expected to exercise following
negotiations with the Public Service Commission.
Two elements of the summary are worth mentioning. First, it specified
that the "establishment of the Agency will not result in any incremental costs to
the Government of Canada" and, second, that "the Chief Operating Officer of
the Agency will report to the Chairman of the Public Service Commission" (first
and second pages of the document—whose pages are not numbered).
Regarding the last provision, Annex "A" indicated that the Chief
Operating Officer (COO) of the new agency would be held accountable for
results obtained following the implementation of a three-year business plan (not
attached to the document). It also stated that: "The Agency will prepare and
publish detailed financial accounts in the Public Accounts of Canada" (page 1 of
Annex "A"). Finally, the annex stressed that "a measure of the Agency’s
performance will be its ability to cover its costs from revenues" and enumerated
eleven non-financial indicators that should be used to annually report on the
performance of the agency. (Examples of these indicators were the results
regarding course evaluation, TDC’s market share and the number of participants
to TDC’s sessions.)
Annex "B" reproduced the authorities or flexibilities requested from the
Treasury Board and mentioned in the discussion paper prepared by the staff of
TDC and previously discussed in this chapter. Annex "C" listed the flexibilities
98
to be granted by the Public Service Commission to the new agency. Table 5
lists the authorities requested by the future agency and granted by the Treasury
Board and the Public Service Commission. A brief analysis of the table’s
content reveals that the great majority of the requests made by the future agency
and submitted to the Treasury Board were officially granted. Among the
flexibilities not granted or partially approved were the copyrighting of the
agency’s original material (which, after verification, did not need to be
approved by TB), the payment of bonuses (for which specifications had to be
provided), and the increase in the number of management positions (TB agreed
on three instead of five). The flexibilities to be granted by PSC (rather than by
the TB) were also officially approved.
99
TABLE 5
LIST O F AUTHORITIES REQUESTED BY TRAINING AND DEVELOPMENT CANADA AND
GRANTED BY THE TREASURY BOARD OR BY THE PUBLIC SERVICE COMMISSION
Authorities Asked
For By the Agency
The Rationale For the Request Authorities G ranted By the Treasury Board
(or by the PSC)
Exemption from
person-year control
The Agency will be in a better position
to acquire resources in a timely fashion
and then be more responsive to clients’
needs.
Authority granted. The person year controls
are eliminated.
The authority to set
fees
By establishing itself prices for its
services according to existing policies or
on competitive grounds, the Agency
will be in a position to use this new
marketing tool to generate more
revenues.
Authority granted. The chairman of the PSC
can approve the fee structure.
To travel business
class
In the past, employees could be allowed
to travel business plan under the
condition that would not charge time for
course preparation or post-course
reports. The Agency is asking TB to
formalize this cost-effective practice by
delegating such authority to the COO.
Authority granted.
TABLE 5 (continued)
Authorities Asked
For By the Agency
The Rationale For the Request Authorities G ranted By the Treasury Board
(or by the PSC)
To contract with
form er pubic
servants
Former public servants are not entitled
to contract with their former employer
for a certain period of time.
For TDC, former public servants are
often the only expert resource available
to teach certain courses. Moreover they
require little preparation and often
charge less than would cost the services
of external resources. Permission is
asked to contract with them when
needed.
The exemption from the abatement provisions
established by Treasury Board with respect to
public servants in receipt of a pension.
The awarding of non-competitive contracts
for teaching or research activities with
contractors (including former public servants)
for an amount up to $100,000 and authority
to renew such contracts up to $50,000.
Earned Interest At the time of the request, interests
could not be earned from surplus
although interests had to be paid on
money borrowed the revolving fund.
The authority to reflect earned interests
in the agency’s financial statements
when in a cash surplus would represent
a legitimate source of revenues.
Authority granted.
TABLE 5 (continued)
Authorities Asked
For By the Agency
The Rationale For the Request Authorities G ranted By the Treasury Board
(or by the PSC)
Copyright "To safeguard the Agency’s intellectual
property and to minimize competitive
disadvantage" (p. B-4), permission is
requested to copyright original material.
This request did not need to be approved by
the Treasury Board. Copyrights are
automatically granted to authors. They can
be registered with the Canadian Intellectual
Property Office.
Accommodation The Agency wish to be treated as a
commercial client by Public Works
Canada regarding accommodation.
"This status would allow the Agency to
respond quickly to rapidly changing
requirements for short-term
accommodation" (p. B-5).
Authority granted.
Payment of a bonus
to selected
employees
In line with the transition from a
bureaucratic environment to a
businesslike environment, this measure
would reward individual performance.
"Treasury Board expects the Agency to
develop options on the payment of such
bonuses for further review by the Treasury
Board" (p. B-5).
TABLE 5 (continued)
Authorities Asked
For By the Agency
The Rationale For the Request Authorities G ranted By the Treasury Board
(or by the PSC)
Imperative Staffing Delegation of authority to the Chief
Operating Officer of the Agency to
approve imperative staffing actions for
key bilingual positions within the
agency (subject to PSC approval). This
authority would reduce the time to staff
positions.
This authority had to be negotiated with the
PSC.
According to annex "C," TDC is exempted,
under certain conditions, from the Priority
Clearance System, according to which federal
departments must hire civil servants from a
list and respecting an order of priority
established by the PSC.
Management
Category
Complement and
SAPP Allotments
"The Agency requests an increase of
five in its Management category
complement and five in its SAPP
allotments" (p. B-6).
Will allow the Agency to attract
required executive expertise to
participate in its development (on a
secondment or temporary assignment
basis).
The authority to increase the agency’s
Management category complement by 3 and
SAPP Allotments by 3.
Source: Annex "B" of a document confirming the Treasury Board’s "program approval for the Staff Training
Special Operating Agency" (not dated).
General Comments on TDC’s Charter. Many elements covered in
the discussion paper and concerning internal matters (such as implementation
approaches regarding the changes to be brought) were not found in the Charter
document officially approved by the Treasury Board. Other modifications are
worth mentioning. While the discussion paper recommended the creation of a
"chief executive officer" exclusively in charge of TDC, the position of CEO
that was approved was to manage both TDC and Language Training Canada.
TDC, under that arrangement was to be under the direct authority of a "chief
operating officer" (COO). Moreover, the clause from the discussion paper that
recommended the executive in charge of TDC to report directly to the chairman
of the PSC was never applied (Figure 7).
FIGURE 7
PLANNED VERSUS EXISTING ACCOUNTABILITY RELATIONSHIPS
BETWEEN THE CHIEF OPERATING OFFICER OF TDC AND
OFFICIALS OF THE PSC
PSC Chairperson
4
CEO of the
Training
Programs Branch
COO of Training
and Developement
COO of Language
Training
i ^ . Planned Accountability Relationships
Existing Accountability Relationships
104
Another action that was never carried out concerned the creation of an
advisory board. Such a board, staffed with the agency’s main stakeholders,
clients’ representatives and other counselors, would have normally advised the
deputy minister (in the present case, the chairman of the PSC) on issues,
problems and opportunities concerning the agency.
Another important measure not implemented was the issuing of annual
reports by the agency. This measure was to increase the visibility of the
agency’s results and improve its accountability. Instead, the Public Service
Commission, in its annual reports and in the Public Accounts of Canada, was to
present, in very general terms, the agency’s activities and basic financial
information. (A later section of this chapter examines the contents of PSC’s
annual reports regarding the agency’s activities as well as the information from
the Public Accounts of Canada.)
A last general comment concerns the nature of the authorities asked by
the future agency: Although these authorities may have looked important in the
eyes of those who managed the agency, they were, in fact, relatively modest.
To be sure, these flexibilities, taken separately or as a whole, hardly announced
a radical transformation of TDC. In support of this judgment, it must be
mentioned that some of these authorities were already exercised by the agency
before it got the SOA status. Such was the case of the permission given to the
trainers to fly "business class." Other authorities, like the cancellation of
105
person-year control, applied to the entire public service a few years later (a
measure adopted in the context of Public Service 2000 and which took effect in
all departments as of April 1, 1993).
A possible cause of the modest character of the authorities granted to
TDC may lie in the fact that TDC, before its conversion to an SOA, was
already functioning according to rules that conferred a de facto special status to
the organization. One of these rules concerned the obligation for TDC to cover
most of its operating costs with the sale of its services. That rule made the
organization a special one long before it got the SOA status and was an
incentive that had encouraged the agency to be more responsive to clients’ needs
through the development of adapted products. Two additional rules, accrual
accounting and its access to a revolving fund, contributed to the organization’s
preoccupation to control its costs. In such a context, the authorities granted to
the future agency appeared more as solutions to minor irritants than significant
flexibilities that would profoundly transform the entire organization.
TDC’s Three Business Plans
TDC generated three business plans. The first one, dated May 4,
1990, covered a three-year period (1990/1993) and was officially submitted to
the Treasury Board to get the SOA status. The second plan was an updated
version of the first plan. Approved by the Chairman of the PSC on July 19,
106
1991, this second plan covered the "1991/94" period. The "1993/95" period
was the object of a third plan.
Table 6 presents an overview of the structure of each of these three
business plans. Noticeably, the structures of the first two plans look much
alike; while the last plan appears to be quite different when compared to the
first two.
TABLE 6
TRAINING AND DEVELOPMENT CANADA’S BUSINESS PLANS:
A COMPARATIVE OVERVIEW OF THEIR CONTENTS
Plan #1
(1990/1991 - 1992/93)
Plan #2
"1991-92 to 1993-94"
Plan #3
"1993-94 - 1994-95"
Introduction Introduction Executive Summary
Current Situation Current Situation The Business Planning
Project
Environment Factors Context A Continuous Learning
Environment
Business Description Business Objectives and Goals TDC’s Portfolio of
Services
Financial Plan Operational/Financial and
Human Resources
Development Plans
Responsiveness and
Client Satisfaction
Accountability and
Management Framework
Accountability and
Management Framework
Tools and Methodologies
for Maximum Value
Appendices Appendices Organization For
Teamwork
Commitment to
Implementation
Budget
107
This first TDC’s Business Plan (1990-93). This plan was presented as
a "directional, not a definitive plan," to be reviewed six months later (p. 2). It
replicated much of what was included in the agency’s charter (regarding, for
instance, accountability arrangements and the production of annual reports).
New elements, however, contributed to a better understanding of the agency’s
situation.
Indeed, the plan addressed the issue of TDC’s market share which, in
1989, corresponded to only 14% of its potential market—a proportion that
remained unchanged over the five preceding years despite a curriculum of more
than 100 calendar courses. To develop its market and attract new clients, the
agency developed an impressive series of five broad "business" strategies,
twelve "operational" strategies and forty-four operational goals regarding the
marketing of its services, the design and the delivery of courses, consulting and
training services, quality assurance, regional activities, and the management of
finance, personnel and physical resources. Globally, the agency planned to
increase its revenues by offering more customized services to fit the specific
needs of certain clientele by adopting a new pricing policy and by better control
of its operating costs.
The document also reported that, for the period of six years starting in
1984-85, the agency globally broke even, producing net incomes in four cases
108
and losses in two (1987-88 and 1988-89). For the 1990-91 period, the agency
expected to incur a small deficit and a net surplus in the following two years.
Finally, the document listed more than seventeen non-financial
performance indicators to evaluate the agency’s effectiveness and was completed
with six annexes detailing the fee schedule, the pricing policy, the cash flow
forecast, the type of information to be included in financial and annual reports,
the proposed organizational structure of the agency and the list of authorities
and flexibilities.
The second TDC’s Business Plan (1991/1992-1993/94). The second
business plan was issued in July 1991, about a year after the first one.
Although many parts of this second business plan were similar to those of the
first one, it contained some interesting complements. (See Table 6.) For
instance, the document described the accomplishments and results obtained
during the 1990-91 budget exercise, the first year TDC operated as an SOA.
Among the various and apparently significant accomplishments, the report
mentioned the adoption of a new name and logo, the development of a
marketing plan, a survey of "the training community and other major client
groups” (p. 1), the opening of two regional offices (in Victoria and Quebec
City), the enhancement of regional operations, the successful negotiations of
accreditation agreements with different Canadian universities, the creation of a
training reference centre, the refining of internal systems and the introduction of
109
new office technology, and the offering of new courses (p. 2). "In summary,
many important steps were taken to effect the change from a control-driven
organization to a service and client-driven revenue" (p. 2).
Following this long list of changes was a repeated commitment to focus
on clients’ needs, to expand existing markets (p. 2) and develop new ones
(international cooperation seemed promising) p. 5). The report stressed the
importance of Public Service 2000 as a contextual element that could play in
favor of TDC considering the importance that administrative reform gave to
training as a tool to change the culture of the Canadian Public Service (p. 9) and
to install a "continuous learning culture" (p. 10).
A long section on business objectives, goals and strategies1 2 showed
slight differences with those presented in the first business plan. Overall, one
could count seven business objectives (p. 13), nineteen operational strategies
(pp. 14-15) and twenty-nine operational goals (pp. 16-17).
As shown in Table 7, and despite the long list of changes brought in
1990/91, the financial results forecasted for that particular year looked rather
modest. So was the expected financial performance of the agency for the 1992-
1994 period. (See the last three columns of Table 7.)
1 2 These basic concepts are used ambiguously and in an interchangeable way.
For instance, while in the first plan the expression "business strategies" was
used, the same strategies are presented as "objectives" in the second plan.
"Goals" seem to be used for objectives that are operational rather than strategic.
110
TABLE 7
TDC’S FINANCIAL RESULTS AND FORECASTS
Bus. PI.
90-91
Forecast
90-91
Variance Budget
91-92
Budget
92-93
Budget
93-94
Total Revenues* 13,191,163 12,377,783 813,380 15,120,923 15,600,000 16,236,000
Total Expenses 12,082,780 12,767,759 684,979 14,698,663 14,887,000 15,492,000
Income (loss) 1,108,383 (389,976) -1,498,359 422,260 713,000 744,000
External
Overhead**
1,147,810 440,000 -703,810 419,700 660,000 690,000
Net Income
(loss)
(39,427) (833,976) 794,549 2,560 53,000 54,000
*Including a subsidy of $2,885,000.
♦♦External overhead (services from the PSC) and an element called "contribution margin."
Source: TDC’s Business Plan (1991-94).
The report predicted a net loss of $833,976 for the 1990-91 year (third
column of the table) compared to an original planned loss of $39,427 (second
column of the table).1 3 This net loss resulted from a combination of
overestimated revenues (revenues of $12,377,783 compared to a planned
estimate of $13,191,163) and underestimated expenses (expenses of $12,767,759
compared to planned expenses of $12,082,780).
Various reasons were advanced to explain these results such as start-up
costs (higher than expected), important investments (a total of $3,500,500,
including an amount of $2,300,000 in curriculum design and development), the
establishment of new offices and shortfalls in the expected number of
participants and in the demand for consulting services.
A final section on accountability detailed a set of approved corporate
performance indicators (presented under the form of operational goals) and a list
of five new authorities that the organization planned to ask for.
This synthesis of the second business plan calls for some comments and
raises a number of interrogations. First, despite the long list of changes
introduced, it is difficult to judge how significant the conversion of the
organization to an SOA was at that particular time. Second, if the document
insisted on the importance for TDC to be more responsive to clients’ needs,
there was little evidence that the organization went beyond mere rhetoric (at
1 3 PSC’s Public Accounts report a final deficit of $952,000.
112
least at that point in time). For instance, the report mentioned a survey of
clients’ needs but gave no information regarding their expectations and the
specific actions intended to meet them. Third, compared to financial and
personnel matters, the plan gave relatively limited attention to marketing issues
in spite of the fact that, with only 14% of its potential market, TDC obviously
had a major marketing problem. Finally, another striking aspect of the report
was the total lack of information on how the organization established its
operational goals or objectives. One hypothesis, reinforced by the budget
forecasts that appear in the last three columns of Table 7, was that goals and
objectives were essentially projections of past results. If such was the case, the
planning exercise was essentially done in a typical bureaucratic way and sought
to respond to the cyclical demands for plans by central agencies (such as the
Treasury Board) or by the host department (the Public Service Commission)
rather than to provide a tool to help TDC to adapt to the changing needs of its
clients or the changing trends observed in its environment. If, as previously
advanced, TDC was already functioning less bureaucratically than other
governmental organizations at the time it became an SOA, this last comment
would mean that, following its mutation to an SOA, TDC has not made
additional progress in transforming its bureaucratic, control-oriented, culture
into a culture more centered on clients’ expectations.
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TDC’s Third Business Plan (1993-95). Called "A Plan for Service,"
the third business plan produced by TDC was significantly different from the
two previous ones. (The titles of the sections of this plan presented in Table 6
give a good indication of these differences.) The document reported a $600,000
surplus for the 1992-93 exercise as well as an important 30% increase in the
number of participants (from 18,264 to 23,754) (p. 1). Officially, these good
results were explained by the SOA conversion and by the dedication of TDC’s
employees.
With the advent of the SOA approach, a spirit of client
service and entrepreneurship has touched every level of
the organization. It is the dedication of TDC’s
employees that has guaranteed its success. TDC’s
employees have long been recognized for the quality of
their services and a high level of professionalism (p. 1).
Many important changes were announced in the plan to enhance this
performance. A formal reorganization of the existing functional structure along
six product lines (calendar courses, contract courses, customized training,
consulting services, international services, and other services) was to take place
in 1993. The corresponding organizational structure showed fourteen divisions,
to be physically located in the organization’s new office in Hull, six regional
offices and three district offices. Each division came under the authority of a
manager who directly responded to the COO. It was said that the new
organizational structure would:
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. . . focus on functional accountability, strong internal
communication and liaison, and a team approach to
achieving results. A reduction in hierarchical layers will
increase client responsiveness as well as efficiency. The
management of human resources will be improved to
clarify accountability, ensure fair performance
measurement and promote personal development (p. 2).
This reorganization was a partial answer to the message expressed by
clients and stakeholders surveyed and according to whom:
TDC needed to improve its capacity to be responsive
. . . in the timely delivery of cost-effective design and
development resources (p. 5) . . . the study confirmed
that awareness of TDC products and services [was]
limited; communication lines with clients [were]
confused; its image [was] inconsistent; and its marketing
and promotional material [was] less than effective
(p. 16).
Other elements of the strategy to satisfy clients’ needs, presented as
"the measure of success in a renewed TDC” (p. 15), included the creation of
special accounts for clients with large volumes of business (p. 15), the
production of a marketing plan, the use of marketing tools and techniques, and a
better support of regional activities (pp. 16-17).
This third business plan was essentially designed by a new COO who
joined the agency in January 1993. The new COO had experience from the
private sector and was very much oriented towards the marketing of services, a
recognized weakness inside the agency. Unfortunately, the new executive left a
few months after the production of the third plan.
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Essentially, two characteristics of this plan need to be underlined.
First, its strong marketing orientation made it very different from the two
former ones. The accent put on clients’ needs sounded more convincing and
was supported by specific measures such as a large consultation conducted in
various Canadian regions. The second characteristic was the absence of precise
goals or objectives to pursue (compared to the two previous plans). The most
logical explanation for this situation most likely resides in the lack of sufficient
information to produce credible and realistic goals.
TDC’s Performance Assessment
As previously mentioned in the analysis of official documentation about
TDC, the agency does not produce annual reports detailing its performance.
However, some information can be found in PSC’s annual reports and in PSC’s
Public Accounts issued once a year.
PSC’s Annual Reports. The information found in PSC’s annual
reports regarding TDC is meager. In general, the section on TDC is limited to
a list of the main initiatives taken in the course of the year by the agency.
PSC’s 1990 Annual Report was really the first to discuss the results of
the organization following its first year as an SOA. The two pages concerning
the agency mentioned TDC’s new mission ("to be a center of excellence"), its
new motto ("Quality, Excellence and Service"), the establishment of two new
regional offices, the design of new courses and conveyed the impression, like
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the 1991-94 Business Plan, that the mutation of TDC to an SOA was already a
success.
In its Annual Report of 1991. PSC described the offering of new
courses in line with the Public Service 2000 reform to renew the Canadian
Public Service. It also announced the establishment of the Training Reference
Center, "a clearing house of information and training materials available across
the Public Service to promote cooperation and sharing of resources and to
reduce duplication of effort of training" (Public Service Commission of Canada,
p. 29).
PSC’s 1992 Annual Report restated TDC’s support of Public Service
2000 by offering courses on various topics related to that administrative reform.
It also indicated its involvement in technological experiments applied to
learning.
Finally, PSC’s 1993-94 Annual Report mentioned the undertaking by
TDC of "a study of all aspects of its activities" and the rationalization of "its
portfolio of services into well-defined activity sectors" (p. 26) as well as a
revision of all its courses dealing with human resources, the development of
computer-based training and its involvement in distance-teaching and
teleconferencing.
The only quantified information published in these annual reports
concerned the number of courses (by subject area), the number of participants
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in these courses, and the language in which these courses were offered (French
or English). Table 8 summarizes the volume of courses and participants over a
period of 6 years (1988-1994).
These numbers show important increases in terms of courses offered
and participants. A closer look provides other interesting insights. First,
calendar courses increased at a much lower rate than contracted courses which
confirms the clients’ increasing preference for customized services. This
tendency is confirmed by an increase of participants in contracted courses that is
more important than the increase of participants in calendar courses. Second,
one can observe that these increases started to show before the organization was
transformed to an SOA. This information would support the idea that the
conversion of TDC to an SOA did not significantly influence its performance
defined in terms of the number of courses offered (its main output) and the
number of its participants (an important measure of the attractiveness of its
services). Finally, these numbers indicate that the trend in favor of contracted
courses also started before TDC was converted to an SOA.
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TABLE 8
TDC: NUMBER O F COURSES AND PARTICIPANTS FROM 1988 THROUGH 1994
Training
Courses*
Contracted
Courses**
Participants in
TC
Participants in
CC
Total
Participants
1988 852 257 12,622 3,389 16,011
1989 808 365 12,271 5,565 17,836
1990 933 376 13,843 5,860 19,703
1991 952 401 13,061 6,528 19,589
1992 1,037 496 14,847 8,247 23,094
1993-94 1,033 651 14,334 10,375 24,709
%(4 years)♦♦♦ 10% 73% 3.5% 77% 25.4%
%(6 years)**** 21% 153% 13.5% 206% 54.3%
♦Calendar courses.
♦♦Contracted courses are calendar courses offered on contract, courses customized to departmental needs, as well
as courses designed specifically for departments.
♦♦♦% of increase between 1993-94 and 1990
♦♦♦♦% of increase between 1993-94 and 1988
Source: Public Service Commission’s Annual Reports.
The Public Accounts of Canada. Table 9 discloses some data about
TDC’s financial situation since its conversion to an SOA. A large part of this
information was extracted from the Public Accounts of Canada.
Although these numbers must be carefully interpreted, they seem to
show that, with the exception of two years (1992-93 and 1993-94), TDC ran
deficits. It must be noted, however, that a subsidy explains much of the
surplus made in 1993-94. Revenues other than the subsidy increased until 1992-
93 after which they started decreasing. The same trend (increase in expenses
followed by a gradual decrease) applied to expenses. Preliminary results for the
1994-95 year indicates that TDC’s financial situation has deteriorated.
Obviously, the SOA status did not financially revitalize TDC. TDC’s
financial situation, since it was converted to an SOA, has been, on average, no
better than before the conversion. As reported in TDC’s first business plan
(commented on in a previous section of this chapter), over a period of six years
preceding its conversion (from 1985 through 1990), the agency broke even or
made small surpluses four times and incurred two yearly losses. By
comparison, over the 6-year period extending from 1990 to 1995, the
organization ran four yearly deficits and two surpluses. (See Table 9.)
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TABLE 9
TDC: TRAINING PROGRAMS—STATEMENT O F OPERATIONS
(in thousands of dollars)
90-91* 91-92** 92-93* 93-94* 94-95* 94-95***
Revenue (course
fees and services)
9,622 11,397 12,742 12,476 11,317 —
Revenue (subsidy
from the TB)
2,855 2,885 2,885 4,574 2,928 —
Total Revenue 12,507 14,282 15,627 17,050 14,245 11,600
Total Expenses 13,459 14,546 15,021 16,710 15,189 14,000
Surplus (deficit) (952) (264) 606 340 (944) (2,400)
■ “Reported in "Special Operating Agencies: Taking Stock," a report to the Auditor General, p. 13.
■ “■ “Information taken from Part III of the Public Accounts (Estimates) of Canada concerning the Public Service
Commission.
■ “■ “■ “Unofficial and approximate numbers provided by one agency official.
TDC’s Conversion To An SOA: Its Interpretation By
TDC’s Managers and Employees
Twenty-two people from TDC were interviewed (eight in groups and
fourteen individually) in January and February 1995 to gain understanding of
how they experienced the conversion of TDC to an SOA.1 4
A content analysis of interviews conducted with TDC’s managers and
staff resulted in a number of emerging and recurring themes (or properties)
which were grouped into five categories. Table 10 summarizes these categories
and some of their properties.
The Non Pertinence of the SOA Status. TDC’s managers and
employees saw their organization as different compared to other governmental
organizations, and they considered this difference as highly positive. They
perceived that TDC was less bureaucratic, more responsive to clients’ needs,
and driven by rules different from those of ministries and other federal
agencies. Even people who had recently joined the organization felt that TDC
was different from the organizations they had worked for before. Said a
secretary who worked in a ministry before she joined TDC:
People here like their work. They care about the quality
of what they do and they care about clients. I did not
see that in the ministry I worked before and I doubt that
you will find it in any big department (interview
conducted on 26 January 1995).
1 4 Additional interviews were held later in May 1995, and many interviewees
were re-contacted to clarify or complete their statements.
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TABLE 10
CONCEPTUAL CATEGORIES AND PROPERTIES CRYSTALLIZING
THE STATEMENTS MADE BY TDC’S MANAGERS AND STAFF
Categories Properties
-- - ..............
1. The Non-pertinence of the
SOA Status.
Employees’ pride of being part of TDC.
Employees’ perception that TDC is
"different."
Flexibilities granted but not activated.
The SOA status did not contribute to
confirm and to expand the special
identity or the specificity of the
organization.
2. Disillusion Concerning the
PSC Role in the Conversion
Process.
Flexibilities granted but not activated.
Illusory consultation by the PSC.
3. The Confusion about
Functioning in a
Businesslike Fashion.
The bottom line is all that counts.
The meaning of being businesslike: to
break even financially or to make a
profit? The accent on short term results.
Businesslike practices not implemented.
The competence of TDC’s managers
challenged.
4. Discontinuity and
Inconsistency in Leadership.
Four COOs in five years
Different leadership styles.
5. Permanent Internal State of
Conflict inside TDC.
The existence of two opposing groups
inside TDC.
To illustrate that difference, employees liked to recall the fact that,
since the early 1980s, the organization has operated on a cost-recovery basis
with a revolving fund rather than under the usual appropriation system. For
many, this fundamental rule had made TDC a cost-conscious organization and
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one that was responsive to clients’ needs a long time before the concept of SOA
was introduced by the Treasury Board. As a consequence, employees did not
expect that the granting of the SOA status would create a revolution in the basic
way their organization had functioned for years. Rather, they saw in the new
status an opportunity to stretch TDC’s difference, to have the possibility of
attracting new clienteles, to be more responsive to those they were serving and
to better cope with a competitive environment.
Unfortunately, over the months following the official granting of the
new status, many decisions contradicted the very meaning they first attributed to
the change in status. The new status, then, started to lose its potential
significance. Many declared that the status did not change anything or that it
only brought superficial changes. Some went further by suggesting that the new
status made things worse than ever by exacerbating problems already in
existence in the organization. Part of the frustration expressed about the new
SOA status related to the perception that the new status did not contribute to
confirming or extending the unique character of the organization. Many
claimed that, in their view, the granting of the new status was and remained
merely symbolic. Their expectation that the new status would contribute to
making their organization even more special and more effective gradually
vanished. Many times, interviewees referred to flexibilities not granted (like the
payment of bonuses) or provisions not implemented, like the issuing of annual
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reports,1 5 to explain their perplexity regarding the SOA Initiative. This
frustration led many interviewees to hope for the privatization of their
organization—the only alternative that, in their view, could improve TDC’s
performance. One interviewee even recalled formal discussions about that
possibility:
In the course of a meeting that took place in 1992, some
managers, disillusioned with the new status, suggested
that TDC should be privatized. Some of us had heard
that federal government’s laboratories were in the
process of being privatized and we thought that such an
alternative for TDC was a viable one. Our idea of being
privatized was to allow the employees to buy TDC from
the federal government and be left free to function like a
private business (interview conducted on 25 January
1995).
The fact that many people referred to that possibility only confirms their
perception that the SOA status fell short of meeting employees’ expectations.
One interviewee, a formal PSC’s official, expressed a different opinion
suggesting that the conversion produced good results: "TDC faced financial
problems before it got its new status and had a problem with the quality of its
services. Today these problems are solved, so I think that the SOA conversion
was successful" (interview conducted on 8 February 1995).
It is difficult to reconcile this appreciation with the information
collected from official documentation. As indicated before, the agency is still
I5 A former CEO of the Training Branch explained that the idea of producing
annual reports to cover the Agency’s activities was dropped for financial reasons
(supposedly under a request by the Treasury Board!).
confronting important financial problems. As for the quality of the services
offered by the agency, the records consulted in the course of the present inquiry
showed that the vast majority of participants appreciated the services offered by
the agency before its conversion to an SOA.
PSC’s Overall Lacking Support. Comments concerning the additional
discretion that TDC got through "flexibilities" confirmed that many did not
materialize or partly materialized. But the greatest frustration came from the
difficult relationship between TDC and the Public Service Commission. TDC’s
managers and staff perceived much resistance on the part of PSC regarding the
granting of flexibilities which would have facilitated the management of TDC’s
operations. The example most often cited concerned "imperative staffing"
which was to allow TDC to speed up their hiring of human resources by being
freed from going through the usual procedure established by PSC regarding
recruitment. Although officially granted and included in TDC’s Charter, PSC
never enforced that flexibility. Apparently the Commission feared that, by
activating it, other agencies would accuse the Commission of not applying its
own policies internally while imposing them on all other governmental
organizations. Interviewees were aware of that possibility but maintained that,
if PSC had truly recognized the particularities of the agency’s operations, it
would have found a solution to that problem.
126
In addition to the rigidity shown by the PSC, interviewees had
anecdotes to illustrate how the relationship between the agency and the PSC
hardly evolved with the granting of the SOA status. For instance, one recalled
the process by which the agency was to get a new name and a new logo.
A small group of employees produced a list of
suggestions. The list contained 150 suggestions made by
the staff. An analysis of the suggestions ended up in the
proposition of three names submitted to the Chairman of
PSC. None of the them was retained and the Chairman
finally opted for a name not on our list (interview
conducted on 8 February 1995).
Another raised PSC’s refusal to include a short publicity items on
TDC’s services with civil servants’ biweekly paychecks. Although a common
practice in many private organizations, PSC did not support this simple and
cost-free idea claiming that it could create a risky precedent (interview
conducted on 24 January 1995). A final illustration of PSC’s limited support
concerned TDC’s many fruitless efforts to hire a marketing expert—a much
needed resource. Despite the interest of some serious candidates for the job,
TDC kept confronting PSC’s strict rules and policies which prevented the hiring
of one of these good candidates.
In brief, most interviewees expected that the new SOA status would
improve the relationship between TDC and PSC. They expected a more
collaborative and supportive role by PSC in the efforts the agency was making
127
to improve its performance. Rather, their perception was that PSC continued to
behave bureaucratically, unable to adapt to the specificity of the agency.
The Confusion About Functioning in a "Businesslike Fashion."
Nobody doubted that the real and only bottom line that counted for PSC and TB
was short-term financial results. Despite all the rhetoric about the quality of
services and the importance of adapting the agency’s services to respond to
changing needs, interviewees thought that these elements were secondary
compared to good short-term financial performance. A former COO of TDC
confirmed that perception: "I was hired by the Chairman of the PSC with the
explicit goal to rapidly ameliorate the financial performance of the agency.
That was the most important thing to do" (interview conducted on 8 February
1995). A PSC official confirmed PSC’s concern about the financial situation of
TDC and PSC’s expectation for quick improvements.
The emphasis on short-term financial results created some confusion
about what it meant for a governmental agency such as TDC to function in a
"businesslike” fashion. Interviewees, for instance, questioned the financial
objectives TDC should pursue and what practices it should adopt given that the
agency had to operate in a "businesslike" fashion. Some interviewees expressed
the view that being "businesslike" meant that TDC had to function like a profit-
making organization. Other people opposed that interpretation arguing that, in
the case of a governmental organization like TDC, profit-making was
128
unacceptable. To function in a "businesslike" fashion, in their view, meant that
TDC had to break even. They explained that a profitable TDC would face
major problems with competitors or clients who could attest that TDC’s profits
resulted from unfair competition (because of TDC’s easier access to
governmental information), excessive pricing or was due to the large subsidy the
agency annually received from the Treasury Board. These interviewees went
further by suggesting that, paradoxically, deficits were preferable to profits,
because they were easier to deal with in the actual governmental system.
To function in a "businesslike" fashion created confusion and
frustration in TDC’s regional offices as well. Said one official working in a
regional office:
The Head Office expects us to increase our revenues.
The way to do it is be to better market our services and
offer them to non traditional clienteles such as civil
servants from provincial governments. But marketing
requires investments which TDC, apparently, cannot
afford. So, on one hand, we are asked to run this place
like a business and use business strategies while, on the
other hand, we are not equipped to do so (interview
conducted on 21 January 1995 in Qudbec City).
Interviewees also thought that functioning in a "businesslike" fashion
would provide TDC with more freedom concerning the use of surpluses
estimated to be more than $3 million dollars, accumulated over the years
preceding the granting of the new status. Unfortunately, this surplus could not
be used and was recuperated by the Treasury Board, a decision that frustrated
129
TDC’s managers and employees and prevented the making of initial start-up
investments to conduct surveys, upgrade services and modernize the equipment
(which were to be delayed).
The confusion about functioning in a "businesslike" fashion did not
only come from financial considerations. It had to do with changes in
management practices as well. Like their private counterparts, TDC’s managers
expected to have more discretion over the administration of their resources,
including human resources. They thought that the business rationale would
allow more flexible policies in the use of their resources, that they would be
freed from many of the usual controls by either PSC or the Treasury Board and
that they would be supported in the introduction of good "business" practices.
But they quickly realized that old rules continued to apply, that petty controls
remained and that good "business" practices could not be used. Employees, for
their part, did not notice new managerial attitudes that would have encouraged
creativity or initiative in the workplace. To be sure, they did not feel more
empowered since the conversion of their organization to an SOA.
A final point that was raised by many interviewees disputed the
capacity of many TDC managers to function in a businesslike fashion. Most
managers in TDC had acquired their experience in the public service; and,
although they recognized the need to be business-oriented, they did not seem to
know what practices needed to be modified and how to change them.
130
Discontinuity and Inconsistency in Leadership. Between April 1990
and April 1995, no less than four different people acted as Chief Operating
Officer (COO) of TDC.
Interviewees liked to recall the type of leadership the agency
experienced through the 1980s: Typically exercised by managers with a strong
military background, they characterized it as being "directive and paternalistic."
In 1988, a new executive came in with a totally different style.
The person was easy going and would consult people on
what they wanted to do, a very unusual practice at the
time. In contrast with TDC’s former executives, this
new executive wanted us to participate to decisions. We
were asked to take initiatives. Unfortunately, there was
no clear direction. Agreed-upon objectives would
suddenly change and many promises were not kept
(interview conducted on 26 January 1995).
An indication of this democratic style is found in the systematic
participation of TDC employees in the identification of changes that the new
SOA intended to make, which led to the production of the discussion paper,
commented on earlier in this chapter, and of TDC’s Charter. Curiously, many
people remembered that working in such a context was difficult. After all, they
were used to "taking orders" from former leaders and were much less prepared
to take initiatives. This first COO left TDC in February 1992, two years after
the organization received the SOA status.
For almost a year, that is, from February 1992 until January 1993, the
COO position remained vacant. The Chief Executive Officer (a level higher
131
than the COO) acted as the interim COO. Nobody seemed to know exactly why
no new COO was hired at that time. However, some suggested that, by
putting the CEO directly in charge, the PSC wanted to exercise more direct
control over the management of TDC, at least for a certain time.
In January 1993, the position was filled by a manager with experience
in the private sector who had previously worked for PSC. This COO became
the main architect of the third business plan—a plan that differed much from the
two preceding ones. The new executive’s priority was to gain a better
knowledge of what TDC’s clients expected from the agency. A large
consultation took place: clients and stakeholders from all parts of the country
were invited to comment on TDC’s services. The result was a detailed
marketing plan,1 6 largely focusing on clients’ needs and calling for important
internal changes. A new organizational chart was adopted; the hierarchy was
flattened; and the number of managers tripled (18 managers). Unfortunately,
this manager resigned and returned to the private sector in the summer of 1993.
As a consequence, most of the changes proposed were not implemented. This
departure frustrated all managers and employees interviewed. After all, they
got excited by the new management approach and participated actively in the
discussions concerning the new direction that TDC was to take. After all these
efforts, many felt abandoned when this third COO prematurely left the
1 6 The author could not get a copy of this plan but had a chance to review it
during the meeting with this former COO.
132
organization. Officially, the executive left for personal reasons, but nobody
knew exactly what the reasons were. Some advanced that there was serious
disagreement between the new executive and some PSC executives about how to
manage TDC. Others thought that the executive could simply not decline an
interesting offer from the private sector. When interviewed, the former COO
invoked personal motives. In the course of the conversation, however, the
interviewee dropped the following comment.
Because of internal dissension, I rapidly realized that I
could not make the changes that I felt were necessary.
Managers constantly disagreed over decisions and could
not arrive at consensus. Some could not be trusted.
They systematically opposed the changes that I wanted to
make (interview conducted on 8 February 1995).
The last COO to be in charge of TDC took the position in October
1993. This new COO, a former teacher who worked as a manager in PSC’s
Language Training Division, had serious problems trying to apply the measures
planned by the former COO. For instance, despite many efforts, the
organization could not find a marketing manager, a key person in the strategy
delineated by the former COO. Besides, at the time the interview took place,
the agency was forecasting a substantial financial deficit despite an important
reduction in its expenses. The main reason advanced by the manager to explain
this deficit was the difficulty to attract new customers in a context of budget
cuts.
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This brief review of the actions and styles of the different people who
acted as COOs of TDC illustrates a few interesting points. For instance, one
can only be puzzled by the number of people who took this critical position over
such a short period of time. In the five years following the granting of the SOA
status, TDC has had four chief operating officers which denotes an absence of
constant (sustained) leadership. This situation was made problematic by the
rather different styles and approaches the four COOs adopted. Moreover, none
of these people succeeded in providing the agency with a vision to espouse, a
direction to take and objectives to pursue. Finally, as shown in the next
section, the absence of strong leadership apparently contributed to perpetuating
and exacerbating the effects of an internal state of conflict.
TDC’s Internal State of Conflict. At least two COOs explicitly
pointed out that internal dissension was a major issue which prevented the
conversion of TDC to a better-performing organization. One of them talked
about a permanent state of conflict inside the agency.
If you want to understand this organization, you must
know that most managers and many employees in this
organization belong to two opposing groups. They are
led by two managers who can’t stand each other. Their
mutual opposition is systematic and has lasted for years.
If one says something in a meeting, you can be sure the
other will take the opposite stand. This organization
would solve many of its problems if it could get rid of
these two people and a few more. I would say four or
five (interview conducted on 24 January 1995).
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Many interviewees, who would not talk about this situation unless the
interviewer insisted, confirmed this internal cleavage. Apparently, this situation
started to develop years before, under the participatory leadership of the first
COO, before the organization received the SOA status. It developed over the
years and has affected the management of the organization since then. When
interviewed, the two managers apparently responsible for this state of conflict,
did not mention anything in relation to it. But, ironically, they both expressed
the same opinion indicating that there was a problem of leadership in TDC.
The Emergence of a Model Grounded in the
Conversion of TDC to an SOA
The review and the analysis of the official documentation pertaining to
the formal conversion of TDC to an SOA as well as the comments collected
from TDC’s managers and employees who actually experienced the conversion
suggest that the SOA status has had a sterile impact on TDC.
Five categories were derived from the main comments expressed by
informants and replicated in Table 11 reinforce the conclusion that the SOA
status had a deceptive impact on TDC.
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TABLE 11
THE FIVE CATEGORIES DERIVED FROM THE STUDY OF TDC
1. The Non-Pertinence of SOA Status
2. PSC’s Overall Lacking Support
3. The Confusion About Functioning in a "Businesslike Fashion"
4. Discontinuity and Inconsistency in Leadership
5. A Permanent State of Conflict Inside TDC
A close analysis of these five categories suggests that the first two
presented in Table 11 are more critical in understanding the sterile impact of
TDC’s conversion to an SOA, i.e., (1) that SOA status was not appropriate,
given the contextual changes the agency had to cope with, and (2) that PSC’s
lack of support of the conversion process following the granting of the SOA
status further eroded the impact of the initiative. The other three categories,
although important, may, in fact, be closely associated with the non-supportive
role played by the Public Service Commission. Timely interventions by PSC
would have cleared up the confusion about the meaning of TDC functioning in a
businesslike fashion, would have reinforced TDC’s leadership and would have
addressed the permanent state of conflict inside TDC. Figure 8 depicts the
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relative importance of the five categories as well as their relationships in the
sterile impact which the SOA status had on TDC.
FIGURE 8
SUGGESTED RELATIONSHIPS BETWEEN FIVE CATEGORIES AND
THE STERILE IMPACT OF THE SOA STATUS ON TDC
The Non Pertinence of SOA
Status
PSC's Overall
Lacking
Support
The Confusion about Functioning
in a 'Business-like' Fashion
The Sterile
Impact
of SOA Status
on TDC
Discontinuity
and Inconsistency
in Leadership
A Permanent State
of Conflict inside TDC
The first category is of particular importance, because it questions the
appropriateness or the pertinence of having granted the SOA status to TDC. By
arguing that the SOA status did not add to the agency’s specificity and that the
flexibilities that came with the new status did not help the agency to cope with
its evolving context, respondents expressed the view that they expected more
from the status.
137
The main contextual change may be found in the fact that, since the
late 1980s, TDC has gradually lost its monopoly over many of the training
services required by federal departments. With the exception of training that
pertains to special governmental policies, such as affirmative action and job
equity, most of TDC’s services became optional. As a result, TDC confronted
growing and sometimes fierce competition. But TDC’s capacity to compete was
seriously bounded by rules and policies that did not apply to most of its
competitors (particularly those from the private sector). The very limited
control TDC has had over its costs and the working conditions of its employees
made its competitive edge, which essentially rested upon its intimate knowledge
of the federal government’s operations, less effective in trying to maintain or
develop its market share.
The flexibilities and authorities that came with the SOA status, when
they could be used at all, did not help TDC in its efforts to adapt to this new
context, to be more responsive to clients’ needs, to attract new clienteles, to
control its costs and increase its revenues. Moreover, many of the measures
included in its Charter which were to improve TDC’s accountability, visibility
and autonomy were not implemented; TDC was not allowed to publish its own
annual reports so that its accomplishments, its results and its progress could be
assessed; and its COO reported only indirectly to the president of the Public
Service Commission and, seemingly, had little influence over PSC’s policies
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that could impact on the agency. Finally, TDC did not profit from the support
of an advisory board, an important element of the SOA scheme. Managers and
employees of the agency, almost unanimously, pictured the conversion of TDC
to an SOA as an ineffective and deceptive attempt to modify the agency’s modus
operandi and to help TDC face its changing context. It is hardly surprising that
many suggested the privatization of TDC, a possibility that should have been
examined more closely before it was decided to convert TDC to an SOA.
The confusion about the meaning of functioning in a "businesslike"
fashion should have been cleared up very early in the process of converting
TDC to an SOA. Why this confusion has persisted in the minds of many
employees for so many years can not be answered precisely. However, this
confusion existed; because the Treasury Board Secretariat and the Public Service
Commission had not been clear about what they expected from TDC and had
not clearly communicated these expectations to TDC’s management and staff.
"Strong" leadership is usually considered important, particularly in
organizations that go through important changes. The state of discontinued and
inconsistent leadership that has prevailed in TDC since its conversion into a
SOA has severely handicapped its chances of successfully transforming TDC
into a more active organization. Obviously, PSC authorities did not find or
were not able to retain leaders capable of mastering the conversion process in
TDC. But, perhaps what may be seen as a more determining factor, given all
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the comments made about PSC not backing up the conversion of TDC, is the
very limited assistance TDC’s leaders have had from the authorities of their host
department when confronted with difficult issues (such as clearing up the
confusion about TDC functioning in a businesslike fashion or resolving, at least
partly, the permanent state of conflict inside the agency).
The state of conflict experienced by TDC was not in itself an
exceptional organizational issue. All organizations must deal from time to time
with conflicts. That such a state of conflict has lasted for years and has
gradually contaminated the overall climate of the organization is, however,
difficult to understand. Apparently, this conflictual situation began before the
conversion of TDC to an SOA and only made harder and often impossible the
introduction of changes in TDC. Discontinuity and inconsistency in leadership
most probably contributed to maintain or aggravate this conflictual situation
which, in turn, caused the departure of one of the four COOs who seemingly
had the potential to turn the agency around. More intriguing is the relatively
passive role played by the Public Service Commission regarding this situation.
One may interpret the direct interim management of TDC by the CEO
(responsible for both TDC and LTC) in 1992 as an attempt to at least control
the situation. The hiring of a new Chief Operating Officer following this
interim and coming from outside the agency may be seen as another attempt to
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resolve the conflictual situation. Obviously these measures did not succeed; and
it is probable that, at some point in time, more drastic measures were required.
The foregoing comments made about the three categories concerning
the confusion about TDC functioning in a "businesslike" fashion, the
"discontinuity and inconsistency in leadership" and the "permanent state of
conflict" inside TDC suggest that the PSC and, to a lesser extent, the Treasury
Board, should bear responsibility for the emergence of these three
issues—categories of sets of reasons advanced to explain the failure of the SOA
conversion. In fact, these three categories can be seen as subsets of another
category; that is, PSC’s overall lacking of support of the conversion process that
was to follow the granting of the SOA status to TDC. As many informants
pointed out, not only did PSC resist the exercise of flexibilities or the taking of
initiatives by TDC, it also remained passive in the resolution of these three
issues.
It was in that perspective that some advanced the idea that TDC could
not transform itself unless it was located outside PSC. After all, PSC is
essentially a controlling agency which makes sure that the federal government
applies the merit principle in the management of human resources. The training
services offered by TDC may be considered as an add-on to PSC’s principal
mission and as marginal compared to the Commission’s overall activities. It is
then hardly surprising that TDC had problems attracting the attention of PSC
141
top administrators to deal with the kinds of issues that affected its
transformation efforts. Moreover, by asking for exceptional treatment through
the granting of flexibilities, TDC could only place PSC in an uncomfortable
situation where it attempted to set the example by strictly applying to itself the
policies it expected the whole public service to respect. Where an agency such
as TDC should be located remains an open question. However, the problems
that TDC have met and that have been commented on here suggest that the issue
should have been discussed before the granting of the SOA status. The
Treasury Board’s decision to grant the SOA status to TDC was, in that
perspective, premature.
Conclusion: The Latest Developments Regarding TDC
The latest developments regarding TDC’s performance seem to confirm
the perception that its mutation to an SOA did not meet the initial expectations.
Indeed, for the 1994-95 budget year (April to March), the agency expected a
deficit totaling $2.4 million, despite a significant reduction of its expenses ($14
million compared to planned expenses of $16.5 million). Even more
preoccupying was the fact that TDC, during that same year, generated only
$11.6 million in revenues (compared to planned revenues of $16 million).1 7
Quite obviously, TDC, as an SOA, has not been able to demonstrate its
I7 This information was informally communicated to the author in May 1995
by one of TDC’s officials.
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financial viability. As a result, the agency was restructured on April 1, 1995.
TDC lost its COO and is now directly managed by a CEO who is also in charge
of Language and Training Canada (LTC). Many of TDC’s activities are to be
merged with those of LTC which is not an SOA (Public Service Commission,
1995, pp. 1-2). This reorganization seeks to rationalize and better control the
operations of both TDC and LTC. Now that TDC is losing much of its relative
autonomy and that many of it activities are integrated with those of LTC, one
may wonder what remains of the SOA status and its future role in the
conversion of TDC.
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CHAPTER V
THE CASE OF A FERTILE SOA CONVERSION:
THE CANADIAN INTELLECTUAL PROPERTY OFFICE
(CIPO)
The analysis of TDC in the foregoing chapter concluded that its
conversion to an SOA in 1990 has had a sterile impact on it and that its
managers and employees were quite disillusioned about the effects resulting
from the conversion.
In conformity with the logic of theoretical sampling applied in the
course of this dissertation, the choice of a second case study was to complete
the model that emerged from the analysis of TDC’s conversion to an SOA. The
choice of the Canadian Intellectual Property Office (CIPO) as the second case
study came about following preliminary indications by informants that,
apparently, the SOA status was making a difference in the way this organization
was operating. CIPO appeared then as a good choice to identify and verify
what elements may be associated with its successful metamorphosis and how
these elements compared to those which characterized TDC’s experience.
TDC and CIPO differ on three important points. First, CIPO is part of
the second generation of SOAs. While TDC was one of the first five SOAs
144
created in 1990, CIPO was officially established as an SOA two years later, in
1992. Presumably, CIPO may have learned to avoid some of the problems that
the first five SOAs experienced. Second, while TDC operates in a competitive
and a rather turbulent environment, CIPO profits from a monopolistic situation.
Third, CIPO evolves in a regulated environment, and its operations are much
influenced by international agreements, laws and regulations concerning
intellectual property. By contrast, no set of legal rules regulated the content,
the design or the delivery mechanisms of TDC’s training services.
The present chapter describes, examines and analyzes the conversion of
the Canadian Intellectual Property Office (CIPO) to an SOA, using official
documentation and interpreting the content of interviews with CIPO’s staff.
This chapter is divided into four sections. The first section provides an
overview of CIPO and its activities. The second section summarizes CIPO’s
Charter (or Framework Document) and Business Plan as well as the content of
two Annual Reports and a few issues of the organization’s monthly publication,
CIPO-INFO. The third section synthesizes the opinions expressed by people
who have experienced this conversion as managers or employees. The fourth
section identifies the elements that seem to have played a critical role in such
conversion.
145
An Overview of the Canadian Intellectual
Property Agency
Worldwide, modern states have legal provisions to protect the use of
inventions, copyrights, trademarks and other intellectual products. The
Canadian Intellectual Property Office, on behalf of the Canadian Government, is
responsible for managing the intellectual property program in Canada, a federal
government responsibility that goes back to the passage of the first Patent Act in
1872 and the creation of the Canadian Patent Office Record in 1873 (reported in
the March 1995 issue of CIPO-INFO).
CIPO, a unit of the Consumer and Corporate Affairs Ministry until a
governmental reorganization in June 1993, is now part of the Department of
Industry. CIPO’s mission is:
. . . to accelerate Canada’s economic development by
fostering the utilization of intellectual property systems
and the exploitation of intellectual property information,
by encouraging invention, innovation and creativity in
Canada, by administering the intellectual property
systems in Canada and by promoting Canada’s
international intellectual property interests (CIPO’s
Charter, p. 2).
The official intent behind the conversion of CIPO to an SOA was to
". . . capture the benefits and expand the potential of intellectual property"
(CIPO Business Plan, p. 3). The new status also sought to improve CIPO’s
services and results.
In becoming an SOA, the Canadian Intellectual Property
Office made a commitment to apply an organizational
146
concept to accomplish service improvements founded on
(1) a continuous interaction with clients to identify needs,
(2) the provision of products, within reason, to meet
those needs, (3) the ongoing development of effective
service structures to deliver products, (4) the continuous
assessments of new services and new approaches to their
delivery, (5) a service driven alignment of both
managerial and staff responsibility with accountability for
results and (6) an organization-wide concentration on
achieving results (CIPO Business Plan, p. 3).
With a staff of about 450 full-time employees, CIPO manages five
different product lines: patents, trademarks, copyrights, industrial designs and
integrated circuit topographies. These product lines generated revenues
amounting to $45.6 million in 1993-94 (CIPO’s 1994-95 Annual Report, p. 18).
Table 12 provides an overview of the five product lines’ relative
contribution to CIPO’s revenues, the expenses they generate and the percentage
of CIPO’s workforce working on each product line. It should be noted that two
product lines, patents and trademarks, are responsible for almost all of CIPO’s
revenues and expenses. As for integrated circuit topographies, they constitute
the newest CIPO’s product line; and, since the enforcement of the Canadian
legislation regarding this service in May 1993, no application has been made.
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TABLE 12
THE RELATIVE IMPORTANCE OF CIPO’S PRODUCT LINES
Product Lines % of CIPO’s
Revenues
% of CIPO’s
Expenses
% of CIPO ’s
Staff
Patents 73 71 71
Trade-Marks 25 25 25
Copyrights 1 1 1
Industrial Designs 1 3 3
Integrated Circuits - - -
Source: The Canadian Intellectual Property Office, 1993-96 Business
Plan, pp. 14, 21, 24, 26, 28.
CIPO serves three groups of clients: the creators and inventors of new
intellectual concepts, Canadians or Canadian enterprises who may wish to
exploit intellectual property rights, and the agents who act on behalf of the
creators and inventors (CIPO’s Framework Document, 1993, p. 7). In reality,
most of CIPO’s contacts are with agents specializing in intellectual property
rights who represent the interests of creators and inventors.
The general process that applies to requests for intellectual property
rights comprises four steps: (1) the formal application to obtain property rights
(in most cases, this is done by lawyers or agents specializing in intellectual
property rights); (2) the request’s examination (done by CIPO’s examiners);
(3) the request’s formal approval (if the examination is conclusive); and (4) the
148
maintenance of the rights granted (through the payment of fees by the owner of
the right) (CIPO’s Framework Document, p. 8). The examination of
applications constitutes the most time-consuming stage. In the case of patents,
for instance, it may take three years before CIPO’s examiners recommend the
formal recognition or rejection of a new concept or product. The examination
of an application requires rigorous and specialized investigation by analysts who
need to be highly skilled in one or more intellectual domain (such as drugs,
biotechnology or electronics). CIPO’s professionals must also respect many
legal provisions concerning the granting of intellectual property rights. These
job requirements explain that all newly-hired patent agents, for instance, follow
an in-house training program that may last two years before they may act as
competent examiners.
Over the last few years, the context in which CIPO evolved has forced
the organization to bring about various changes. First, the Canadian
government made important amendments to the legislation that regulates CIPO
activities in order to conform to the new economic reality derived from the
North American Free Trade Agreement (NAFTA) between Canada, the US and
Mexico. Second, in a world where inventions and discoveries in various
intellectual disciplines mushroom, pressure has increased to get more efficient
and quality services from intellectual property offices. To remain competitive,
CIPO made important investments in modem automation technology to improve
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the quality and the efficiency of its services. One of the main goals pursued by
CIPO in making these adaptations was to profit from:
. . . the opportunity to become [an] internationally
recognized search and examination authority . . . [an]
internationally sanctioned patent authority. With this
sanction, [a] cost-effective and service-driven [CIPO] can
attract applications and their related revenues; already,
the United States, Japan, the United Kingdom, Sweden
and Australia have moved to acquire international status
(CIPO’s Business Plan, p. 7).
Third, there is a strong tendency worldwide to harmonize national
legislation and the processes through which intellectual property rights are
granted. CIPO, in such a context, has sought to play a leading role in the
international scene.
Converting CIPO to an SOA: The Official Documentation
CIPO’s Charter (or Framework Document)
CIPO’s Charter was officially issued in August 1993, more than a year
after the official announcement that the organization would be converted to an
SOA. Its twelve pages specified: (1) the business of CIPO, (2) the
accountability and reporting framework and (3) CIPO’s authorities.
Following the usual information regarding CIPO’s mission, its product
lines and its clients, summarized in the previous section, the framework
document specified CIPO’s four (4) strategic objectives which were to:
. . . (1) maximize the benefits to Canadians of the
intellectual property system and help Canadian industry
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become more competitive . . . (2) be the centre of
intellectual property expertise in Canada . . . (3) be a
centre of management excellence in the public service
. . . (4) operate on a self-financing basis and achieve
agreed-upon objectives (CIPO’s Charter, p. 4).
In the pursuit of these strategic objectives, CIPO was to apply a
number of management principles. Among them were its functioning according
to a business plan, the primary importance of adequately serving clients, the
development of employees’ capabilities, the encouragement of performance, the
fostering of participatory leadership, the preoccupation for efficient and effective
operations, and the adjustment of fees for services (CIPO’s Charter, pp. 4-5).
Regarding accountability, the Charter stipulated that CIPO would
remain under the authority of the Commissioner of Patents and Registrar of
Trade-Marks who would become the Chief Executive Officer (CEO) of the new
SOA. The CEO was to be accountable to the Deputy Minister of Industry
Canada while the minister remained accountable for CIPO activities before the
Parliament. The document also announced the creation of a new position, that
of the Chief Operating Officer (COO). The new COO would report to the CEO
and would be responsible for the daily operations of the agency. CIPO’s
officials were to be held accountable on the basis of "specific financial and
operational performance measures established and negotiated with the deputy
minister" and specified in CIPO’s business plans (p. 8). Finally, the document
151
stipulated that CIPO’s performance results would be published in the agency’s
own annual reports.
CIPO’s Charter did not specify the authorities granted or requested by
the agency to operate in a businesslike fashion. The document only indicated
that the necessary flexibilities regarding finance, personnel and administration
were to be obtained from its host department and the Treasury Board.
CIPO’s Business Plan
CIPO produced only one business plan. Dated August 1993, this 63-
page document (including two appendices totaling 23 pages) covered the three-
year period extending from 1993 to 1996. The plan was comprised of four
parts. The first part described the benefits and the business of intellectual
property. The second part addressed the forces influencing intellectual
property. The third part, which constituted the core of the plan, identified the
issues that CIPO faced and the actions it intended to take. The last part
established CIPO’s priorities and commitments. Finally, the appendices
displayed various quantitative data on CIPO operations (such as projected
workload volumes, turn-around times) and pro forma financial statements.
Since the main elements of the first two parts of CIPO’s Business Plan were
discussed before in this chapter, the following synthesis concentrates on the two
last parts of the plan and its two appendices.
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CIPO’s Main Issues and Corresponding Actions. As indicated
earlier, CIPO serves three distinct groups of clients: creators or inventors, users
of intellectual property and agents (representing creators). Following the
perception that Canadians did not capitalize on intellectual property as much as
they could, CIPO, in its 1993-96 Business Plan, decided to give priority to one
of these three groups—namely, small Canadian firms— by making its services
more accessible (p. 11).
Following this commitment to improve services to small Canadian
firms, CIPO’s Business Plan addressed the strategic and operational issues
pertaining to each of the five product lines and proposed corresponding actions.
Patents, which provide more than 70% of CIPO’s revenues (see Table
12), 97% of which come from offshore (p. 35), faced three strategic issues:
(1) the need for more effective dissemination of information to Canadian firms
and industry (p. 14), (2) "the impact on patent operations of a deliberate
decision to seek international searching and/or preliminary examining authority
under the Patent Cooperation Treaty" (p. 15), and (3) the regionalization of
patent services (in the context of NAFTA) (p. 15). The main actions to meet
these challenges included the further development of TECHSOURCE, a $60
million automation project started in 1986 which was expected to significantly
improve the dissemination of information on patents, a study of all the
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implications related to CIPO’s potential role as an international searching and
examining authority, and the exploration of opportunities offered by NAFTA.
Operational issues affecting patents concerned the integration of
TECHSOURCE and other automation projects (p. 16) and the realization of
productivity savings as well as revenue-generating opportunities. Actions
consisted of various measures to discontinue or to reassess the offering of some
existing services, to introduce fees to cover the cost of some specific operations
and to generate new revenues (pp. 17-19).
The unique strategic issue of trademarks, the second largest source of
CIPO’s revenues (see Table 12), concerned international harmonization (p. 21).
The plan called for an assessment of "costs and benefits of current directions in
trademark harmonization" (p. 21). On the operational side, the trademarks
division planned to reduce the registration time of trademarks which took in
excess of two years in 1993. This was to be done primarily through an
automation project called INTREPID which started in 1989 (p. 22).
Copyrights’ only strategic issue had to do with the necessary merging
of responsibilities regarding policy and legislative changes affecting this product
line which were shared between two departments (p. 24). The two main
operational issues concerning copyrights were the increase of fees (to cover
expenses) and the establishment of "a more effective and nationally available
data base of copyright registrations" (p. 25). New fees were to be introduced in
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July 1994. The issue regarding data dissemination needed to be further
examined.
The need for legislative changes (after consultation with clients) and the
possibility of granting "petty patents" were the two strategic issues regarding
industrial designs. Operational issues included the introduction of new fees for
the application and the registration of industrial designs (to balance revenues and
costs), the assessment of new software and the potential use of TECHSOURCE
(pp. 26-28).
This short summary of CIPO’s issues and actions indicates that the
agency’s principal objectives regarding product lines were to improve their
quality and accessibility to reduce production costs and increase revenues.
CIPO intended to realize these objectives essentially by automating more of its
operations, by reviewing and streamlining existing processes and procedures,
and by increasing fees for services.
CIPO’s Internal Changes. To realize its objectives, CIPO proposed a
new structure, various initiatives regarding the management of its human
resources and the modification of its financial status.
At the time CIPO produced its Business Plan, its activities were
structured according to the four main steps implied in the treatment of
intellectual property requests. (These steps were detailed earlier in this
chapter.) The problem with such a structure was that "the potential economies
155
of scale that might have been gained from grouping 'like-activities’ [were]
being lost to functional fragmentation" (p. 29).
The recommendation was then to re-structure operations along product
lines "to achieve product-line-oriented accountability" before fiscal year 1993-94
(p. 29). An additional structural change, suggested in CIPO’s Charter, and
which took place in the course of the 1992-93 fiscal year, concerned the
creation of the Chief Operating Officer’s position (p. 30). The document also
planned to create an Advisory Board— a measure consistent with the SOA
Initiative.
Stating that "the benefits of Special Operating Agency status will only
manifest themselves if the organization is able to change its culture and adopt a
more market-driven posture," the plan called for nine specific initiatives to
support human resources. These initiatives included the design and delivery of
an information program for CIPO employees (p. 30), the review of recruitment
procedures in order to get people with experience in various industrial sectors,
the development of staffing, training and personnel development strategies and
policies (pp. 31-32), the re-design of the organization to take into account
technological changes, and the support of measures to facilitate the transition to
automation (p. 32).
A review of CIPO’s financial status and of its accounting and financial
information systems in 1992 led the organization to propose and undertake
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important changes— that of operating a revolving fund and financing all its
operations through the sale of intellectual property rights. CIPO expected to
financially break even in the two years following the implementation of these
changes.1 8 To financially break even was defined as bringing revenues in line
with expenses and was explicitly distinguished from profit-making. The plan
made a strong argument against CIPO pursuing a profit-making objective,
alleging that such an objective would not be compatible with its mandate and
could create strong negative reactions from clients and stakeholders (pp. 34-35).
The cost-recovery dynamics and the operation of a revolving fund were to
provide the necessary flexibility to pursue CIPO’s objectives, "to reinforce
organizational and product line accountability" (p. 35) and to facilitate the cash
management of its operations (p. 36).
The last section of CIPO’s Business Plan concluded with a list of
precise priorities and commitments for each of the three years covered by the
plan. These priorities and commitments rallied the various change elements
discussed above and do not need to be repeated here.
CIPO’s Expected Results. Two appendices completed CIPO’s
Business Plan. The first appendix provided information on "anticipated activity
and workload volumes, by product-line" over the three years covered by the
plan as well as performance measures "to monitor and measure service results."
1 8 In fact, the provision of the revolving fund authority implied that the
agency would break even by the end of a five-year period.
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On average, workload volumes were expected to remain at the same level over
the three-year period. The only striking exception concerned the volume of
maintenance fees for patents which was expected to vary from 96,000 in 1993-
94 to 133,000 in 1994-95 and to 159,000 in 1995-96. These important
variations were due to modifications brought to the Patent Act in 1989, which
started to manifest only in 1992. This appendix also predicted productivity
gains in the treatment of patent, trademark and copyright requests.
The second appendix contained pro forma financial statements
extending from 1993 through 1998. Excerpts from these statements are
presented in Table 13.
According to these pro forma financial statements, CIPO expected to
incur a loss of $115,000 in 1993-94 and to generate net incomes in the
subsequent years. Continuous increases in revenues from patents explained
much of the expected growth in CIPO’s total revenues. The exceptional net
income in 1995-96 was explained by "fees for patent automation" that the
agency would disburse in 1993-94 and in 1994-95 (but not in 1995-96).
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TABLE 13
CIPO’S PRO FORMA FINANCIAL STATEMENTS
(in thousands of dollars)
1993-94 1994-95 1995-96 1996-97 1997-98
Total
Revenue
39,845* 45,426** 55,362 55,713 60,502
Total
Expenses
36,082 37,046 37,962 48,788 50,020
Department
Services
3,878 3,972 4,069 4,657 4,733
Net Income
(loss)
(115) 4,408 13,331 2,268 5,709
*An amount of $7.1 million covering fees for patent automation was subtracted
from revenues of $46.8 million.
**An amount of $6.4 million covering fees for patent automation was subtracted
from revenues of $51.7 million.
Source: CIPO’s 1993-96 Business Plan. Appendix 1.
To summarize these financial projections, CIPO was confident at the
time that productivity gains combined with fee adjustments would transform its
financial situation into a healthier and enviable one.1 9
1 9 The pro forma numbers presented in Table 13 raise a contradiction
between expected net revenues over this five-year period (1993-98) that could
add up to more than $25 million and CIPO’s formal objective to break even by
the end of that period (a requirement that comes with the revolving fund
authority). Discussed with a few CIPO’s officials, including the CEO, that
possibility did not worry them; for they expected to make some major capital
investments over the next few years which would be financed through these net
incomes.
159
CIPO’s Annual Reports
Since the official granting of the SOA status to CIPO in 1992, two
annual reports have been produced covering the 1992-93 and the 1993-94 fiscal
years. This section starts with a brief summary of the measures reported in
each of these two reports. Then, results concerning volumes of activities as
well as CIPO’s revenues and expenditures reported in the two documents are
combined and commented.
CIPO’s 1992-1993 Annual Report. The first CIPO’s Annual Report
presented the 1992-93 fiscal year as a transition period to the SOA status (1992-
93 Annual Report, p. 1). Consequently, the use of this report to assess the
effects of the SOA status on CIPO’s outputs or outcomes would be
inappropriate. Rather, the interest of this report lies in the identification of
measures effectively taken or introduced in 1992-93 as a result of CIPO’s
conversion to an SOA.
The 1992-93 Annual Report comprised 15 pages and three appendices
detailing the changes brought to CIPO’s organizational structure, describing its
planning strategies and providing various statistical information about its
activities.
Among the many measures taken in 1992-93 linked to the granting of
the SOA status was the preparation of CIPO’s Charter and Business Plan,
summarized in a foregoing section of this chapter. Other measures included
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more systematic consultation with clients through the establishment of an
"Operations Committee," "additional partnerships with the private sector for
marketing CIPO’s products," the implementation of financial and administrative
authorities delegated to CIPO’s managers, the improvement of internal
communication (through the revival of a monthly newsletter), and the approval,
in principle, of a revolving fund for the agency which would be officially
enforced on April 1st, 1994 (Highlights of The Year, pp. V-VI, pp. 15-16).
The report officially announced changes in CIPO’s organizational
structure (put in place in October 1993). The new structure was to improve
CIPO’s functioning by adding a new executive position, that of a Chief
Operating Officer, by reorganizing activities along product lines and by creating
two new branches, the human resources branch and the finance and
administration branch. The two new branches translated CIPO’s intent to be
more autonomous in the management of its human and financial resources (p. 2
and Appendix A).
The other measures of the 1992-93 Annual Report were not directly
linked to the organization’s transition into an SOA, although many may have
contributed to reinforce the meaning of that conversion. Such is the case of
automation projects such as TECHSOURCE (patents), which began in 1986,
and INTREPID (trademarks), whose first phase was completed in September
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1989. These two projects were entering new phases during the 1992-93 fiscal
year.
The report also listed many legislative developments and amendments
that did not result from CIPO’s conversion to an SOA. Such legal changes
sought to simplify the administration of intellectual property, to clarify
operational procedures, to adapt to the provisions of the North American Free
Trade Agreement (NAFTA) and to define a new type of intellectual property
(Integrated Circuit Topography).
Finally, the report mentioned the participation of CIPO in various
international activities (pp. 13-14).
In short, this first annual report confirmed the implementation of many
measures that were expected to improve CIPO’s performance which derived
from its conversion to an SOA.
CIPO’s 1993-1994 Annual Report. Most of the eighteen pages of the
1993-94 Annual Report only confirmed measures that were initiated during the
previous fiscal year. For instance, it highlighted the enactment of new legal
provisions and amendments, the approval of CIPO’s Charter and of its Business
Plan, the further development of automation projects (TECHSOURCE and
INTREPID), the formal approval in February 1994 of CIPO’s revolving fund,
and the adoption of the new organizational chart. The report then outlined the
concrete consequences of these changes for each branch and product line.
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Some Data Taken from CIPO ’s Annual Reports. Both the 1992-93
and the 1993-94 annual reports produced by CIPO included data concerning its
productivity, revenues and expenditures. This information taken from the two
reports is replicated in Tables 14 and 15.
TABLE 14
CIPO’S VOLUMES OF PRODUCTS AND SERVICES*
Product Lines 1991-92 1992-93 1993-94
Patents
Applications received 26,423 26,865 25,357
Patents granted 16,248 17,247 14,283
Maintenance fees processed 20,805 60,318 101,713
Technical information searches 1,319 1,334 —
processed
Inquiries processed 26,096 34,624 39,803
Trade-M arks
Applications received 23,418 24,280 25,194
Trade-Marks granted 14,087 14,093 15,878
Inquiries processed 14,347 19,098 23,254
Copyrights
Applications received 8,675 9,512 9,949
Copyrights granted 8,135 8,921 9,949
Inquiries processed 17,251 17,957 17,587
Industrial Designs
Applications received 2,361 2,210 2,395
Industrial designs registered 2,089 2,114 1,876
Inquiries processed 5,766 5,896 6,192
" “ Except for the Integrated Circuit Topography Division services.
Source: CIPO’s 1992-1993 and 1993-1994 Annual Reports.
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TABLE 15
CIPO CASH REVENUES ("R") AND DIRECT
EXPENDITURES ("E") BY PRODUCT LINE*
(in thousands of dollars)
Product Lines 1991-92 1992-93 1993-94
Patents
(R)
28,587
(R)
32,614
(R)
32,614
(E) 19,280 (E) 23,950 (E) 33,512
Trade-Marks
(R)
12,920
(R)
12,742
(R)
11,764
(E) 6,501 (E) 6,991 (E) 7,113
Copyrights
(R)
483
(R)
479
(R)
634
(E) 608 (E) 485 (E) 343
Industrial Designs
(R)
592
(R)
583
(R)
627
(E) 481 (E)
547
(E) 540
Total
(R)
42,583
(R)
46,679
(R)
45,641**
(E) 26,872 (E) 32,038** (E) 41,643**
Surpluses 15,771 14,641 3,998
*Except for the Integrated Circuit Topography Division services.
**Variations are due to revenues and expenses by Integrated Circuit Topography
Division.
Source: CIPO’s 1992-93 and 1993-94 Annual Reports.
Before these numbers are further discussed, it is important to note that,
although 1993-94 was the first year CIPO functioned as an SOA, it would be
presumptuous to draw any conclusion from these numbers pertaining to the
effect the SOA conversion may have had on the agency’s performance. Indeed,
since CIPO started to operate its revolving fund in April 1994, this flexibility
cannot be linked to these numbers. Moreover, many factors, other than the
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granting of the SOA status, such as modifications to laws, could explain these
results. Therefore, interpretations of the data presented in Tables 14 and 15
must be made very cautiously.
Table 14 details CIPO’s output in terms of volumes of products and
services for three fiscal years—1991-92, 1992-93 and 1993-94. One can notice
that the number of patents received and granted increased between 1991-92 and
1992-93 and decreased in 1993-94; these variations, however, are not explained
by the agency’s productivity but by the activity of inventors’ and creators (over
which CIPO has no control). As for the number of patents granted, which
diminished by 17% in 1993-94 (compared to 1992-93), it can be explained by
changes brought to the Patent Law in 1989.
"Old act" applications (before 1989) were to be examined
automatically on application . . . "new act" applications
do not have to be examined until the applicant requests
examination . . . applicants have up to seven years to
research their market or refine their invention before
requesting examination (1993-94 Annual Report, p. 5).
To those who would be tempted to evaluate the Patent Division
performance on that indicator alone (number of patents granted), it must be
remembered that other indicators, not presented here (such as the average
treatment time of requests), would need to be considered in order to have a
complete and fair picture.
Trademarks and copyrights, for their part, show a more encouraging
tendency. For instance, the volume of trademarks granted in 1993-94 increased
165
by 13% compared to the previous year (while the volume of trademarks in
1992-93 remained at the level of 1991-92), and CIPO granted 4% more
copyrights in 1993-94 than in 1992-93 (which, in turn, showed a 9.6% increase
compared to 1991-92).
Industrial designs show a slight decrease in registrations between 1993-
94 and 1992-93, while a small increase took place in 1992-93 compared to
1991-92.
The volume of inquiries processed (following requests for information
on intellectual property rights) have increased, sometimes very significantly, for
almost all products (the exception being copyrights), a tendency, however, that
could be observed before the agency formally became an SOA.
Of course, this information will not convince anyone who looks for
evidence that the SOA status has improved CIPO’s performance defined in
terms of volumes of outputs. As indicated before, it is too early in time to
advance any conclusions about the real effects following CIPO’s conversion to
an SOA. This cautious statement also applies, following the examination of
CIPO’s financial performance as depicted in Table 15.
The most striking observation from this table is the important decrease
in CIPO’s surpluses in 1993-94 compared to previous years (although the 1993-
94 results grossly correspond to pro forma financial statements as seen in Table
13). This was essentially due to "major expenditures incurred for the
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development of TECHSOURCE" which amounted to $18 million in 1993-94
compared to $7 million in 1992-93 (CIPO’s 1993-94 Annual Report, p. 18).
(See note in the table presenting CIPO’s Direct Expenditures.) Other than that
illusory change in the surplus tendency, the numbers suggest a small decline in
the agency’s total revenues which is "mainly attributable to the abolishment of
Trade-Marks Registered User provisions in the Trade-Marks Act and the
revocation of the Compulsory License Application Fees" (CIPO’s 1993-94
Annual Report, p. 18).
In sum, the numbers for the 1993-94 fiscal year confirmed that the
SOA status granted a year before had not yet had an impact on CIPO’s
financial situation.
CIPO Monthly Publication-CIPO-INFO
"CIPO-INFO," CIPO’s monthly publication, was the last official source
of information reviewed concerning this SOA. Five issues (from February
through May 1995) provided noticeable clues about the kind of conversion that
was taking place in the agency.
The awarding of employees’ contributions was particularly interesting
given the accent SOAs should place on human resources. For instance,
individual employees’ efforts which resulted in productivity gains or in quality
improvement were officially acknowledged and awarded (and sometimes
financially rewarded). Team efforts were also reinforced: the Trade-Marks
167
division, for example, in two consecutive issues of the publication, announced
that it significantly reduced the overall processing time by 12% and 16%
compared to the previous year (CIPO-INFO, February and March 1995 issues).
Clients’ satisfaction was presented as a priority and all improvements were
officially praised. (Trademarks publicized a client satisfaction rate of 80% in
the May issue.) Original management initiatives were tested and results were
reported to all employees: such was the case of "upward feedback" (through
which employees evaluated their manager’s performance) which proved
successful and was to be adopted in other divisions of the organization.
CIPO-INFO also stressed the roles played by new or restructured
branches of the agency. For instance, three consecutive issues described the
role of the new Marketing Branch, the services it would offer to other directions
and how it would function.
Finally, the May issue of CIPO-INFO featured CIPO’s Management
Advisory Board (MAB), created to:
. . . continuously gain exposure to innovative
management practices. The Board will ensure these
practices are appropriate to CIPO’s strategic directions,
to the operation of the revolving fund and to
commitments arising from CIPO’s Business Plan (CIPO-
INFO, May Issue, p. 3).
The eight voting members of the MAB were to represent CIPO’s
clients, partners and stakeholders, and their suggestions were to be submitted to
both the deputy minister of Industry Canada and the CEO of CIPO.
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Concluding on CIPO’s Official Documentation
The examination of CIPO’s Charter, Business Plan, Annual Reports
and the latest issues of CIPO-INFO tends to support the thesis according to
which the conversion of CIPO to an SOA provided a timely opportunity for the
organization to consolidate changes that were introduced before its conversion to
an SOA (such as process automation) and to introduce new changes that will
most likely show improvements in its performance (although there is no hard
evidence that this is the case yet).
One of the most interesting features of CIPO’s Charter lies in the
absence of a formal list of flexibilities, granted either by the Treasury Board or
by its host department. This is most surprising given the fact that one of the
main goals of an SOA Charter is precisely to identify the flexibilities that will
make the agency "special," distinct from other governmental organizations and
able to function in a more businesslike fashion. CIPO’s charter stated that the
necessary flexibilities were to be negotiated later with TB authorities and with
its host ministry. Based on discussions with CIPO officials, the reason for not
listing any flexibilities at that point in time was that the negotiation about the
required authorities needed to be completed. In fact, one critical flexibility was
the object of intense negotiation. This flexibility was to allow CIPO to function
on a cost-recovery basis using a revolving fund with the obligation to break
even at the end of a five year period (1993-98). Until then, although CIPO was
169
charging for its services, its operations were financed through legislative
appropriations, and the agency had no control over the money it generated. As
a consequence, the most important formal change associated with the granting of
the SOA status in the present case concerns the use of a revolving fund to
manage and balance revenues and costs generated by CIPO’s operations.
CIPO’s Business Plan, which covered a three-year period, also raised
much interest; for it clearly stated, for each CIPO product line, the main
strategic and operational issues as well as the approaches used to cope with
these issues. The pro forma volumes of activities and financial statements also
provided a good idea of what the organization would try to accomplish in the
coming years.
Finally, CIPO’s two Annual Reports and, to a certain extent, its
internal publication, CIPO-INFO, confirmed the introduction of multiple internal
measures to bring about changes in its modus operandi. They also contained
elements that could be used to start appreciating, although with much care, the
preliminary results produced by CIPO since its conversion to an SOA.
The Conversion of CIPO to an SOA: Its Interpretation
By CIPO’s Managers and Employees
The review of CIPO’s official documentation suggested that a number
of formal changes preceded and followed the granting of the SOA status to
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CIPO and that these changes were likely to produce significant improvements in
the performance of the organization.
This perception will now be compared to that of CIPO’s employees,
managers and non-managers. Ten people, most exercising management
responsibilities, were interviewed in the first half of February 1995. (One could
not be met before mid-July.) Further contacts were made through phone and
electronic mail following the analysis of data gathered during the interviews.
Later, in June, eight examiners expressed their opinions by phone regarding the
impact the conversion of CIPO to an SOA has had upon their work. Six
examiners from the Patent Division and two from the Trade-Marks Bureau
shared the same viewpoint that the conversion of their organization to an SOA
did not influence their work or the way they were doing it. Rather, they
identified process automation as the main element impacting on their work.
Still, in relation with the SOA status, some signaled some changes in the
attitudes of CIPO managers who were more concerned about the financial
dimension of operations. In summary, exchanges with examiners only
confirmed that, if the SOA status may have influenced the work and the
attitudes of managers, it had not yet reached the core operators of CIPO.
A content analysis of interviews conducted with CIPO’s managers and
staff resulted in a number of emerging and recurring themes or opinions which
171
were grouped into four categories. Table 16 summarizes these categories and
their main properties.
The SOA Status’ Meaningfulness Came with the Revolving Fund
Authority. It was impossible to trace back to the exact circumstances or the
exact reasons why CIPO was converted to an SOA, although two interviewees
remembered one official from the Treasury Board’s Secretariat who strongly
advocated the candidacy of CIPO for the new status. Apparently, this official,
who considered the SOA status as "a vehicle for change,”2 0 thought that CIPO,
with the new SOA status, could transform into a more efficient organization that
could generate more revenues. One CIPO official, who joined the agency to
manage the conversion, explained that:
People from the Treasury Board Secretariat thought that
CIPO could generate large profits from issuing
intellectual property rights. The rule of thumb they used
was that every dollar spent to operate CIPO could
generate two dollars. We thought that this goal was not
realistic. We finally convinced them that the best we
could do was to break even or cover our costs with
revenues from issuing property rights (interview
conducted on 9 February 1995).
2 0 This expression was used by the official in a telephone conversation with
the author.
TABLE 16
CATEGORIES AND PROPERTIES CRYSTALLIZING THE
STATEMENTS MADE BY CIPO’S MANAGERS AND STAFF
Categories Properties
1. The SOA status’
meaningfulness came
with the revolving
fund authority.
• The SOA status in itself: merely a symbolic
change.
• CIPO needed different fundamental conditions
to operate. The "revolving fund authority"
provided these conditions.
• Many changes started to take place and
impact on CIPO in the mid 1980s. In that
context, the SOA status may have had a
catalytic effect.
2. The various effects of
the revolving fund
authority.
• Adapted to CIPO type of operations.
• The critical changes came with the operation
of the revolving fund authority.
• The revolving fund authority created an
obligation for all to demonstrate the viability
of their proposals in terms of revenues and
costs (contributed to increase accountability
and to the emergence of value added
mentality).
• Internally, specific revolving funds were
created for each division.
• The revolving fund authority legitimized the
creation of new divisions (finance, personnel,
marketing).
• The revolving fund authority contributed to
make CIPO’s services more relevant and to
market new services.
• Important management initiatives resulted in
some divisions (such as a decrease in
hierarchical layers and process re
engineering).
3. "Strong" leadership. • Adequate leadership arrangements at the top
("dual leadership”).
• Leadership throughout the organization.
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TABLE 16 (continued)
Categories Properties
4. Host department’s
benevolent
indifference.
• Harmonious relationships with two host
departments.
• CIPO highly regarded by its present host
department.
• Host department and CIPO share the same
mission.
CIPO needed more than a few flexibilities to transform the way it
operated. It needed to create new conditions that would fundamentally modify
the way the organization was approaching its business, its services and its
clients. To function with a revolving fund would create these new conditions.
Said the same official who participated in the negotiations with the Treasury
Board:
The critical flexibility we needed was the revolving fund
authority. We argued that although we could not meet
some of TB officials’ expectations in terms of revenues,
we could significantly improve CIPO’s performance if
we could operate with a revolving fund (interview
conducted on 9 February 1995).
In the view of all those interviewed, it is the revolving fund authority
that gave the SOA status its full strength. Said a manager of one of CIPO’s
divisions who had more than twenty years of experience with the organization:
Following the announcement that CIPO would become a
SOA, we draw a list of possible flexibilities. A closer
examination of that list combined with administrative
measures that were about to come into force in 1993
(such as single operating budget) showed that most of the
174
important changes we wanted to bring only required the
acquisition of the revolving fund authority (interview
conducted on 9 February 1995).
Besides the importance of the revolving fund authority that interviewees
closely associated with the SOA status, many interviewees expressed the opinion
that the granting of the status, by itself, may have had a catalytic effect given
the different changes that CIPO was going through at the time of its SOA
conversion. As signaled before in this chapter, by the time the conversion was
officially announced in 1992, the organization, since the mid-1980s, had already
initiated important changes. For instance, CIPO had launched huge automation
projects (TECHSOURCE in 1986; INTREPID in 1989) which had started to
have some impact on how requests for intellectual property rights were
processed. Many important modifications to the laws influencing the
management of intellectual property had also started to modify the way CIPO
had operated for years. These formal changes, not linked to the SOA status,
created some confusion in the minds of many interviewees in their efforts to
appreciate the direct effects of the SOA status on CIPO’s operations. Despite
this difficulty, respondents thought that the SOA status was consistent with other
initiatives and the intent to transform CIPO in a significant way in order to
improve its performance. In sum, most interpreted CIPO’s conversion to an
SOA as one additional change that became really significant with the granting of
175
a revolving fund and which turned out to be a catalyst in the making of
concurrent changes inside CIPO.
The Revolving Fund and Its Various Effects. From a strictly
accounting point of view, the revolving fund mechanism makes more sense than
yearly legislative appropriations when an organization like CIPO incurs
important time delays between disbursements and revenues linked to the same
operation. The costs of processing a patent request, for instance, is a matter of
many years. But, once granted, the patent right produces revenues during many
more years with the patent’s owner having to pay yearly maintenance fees to
maintain this right.
But the revolving fund authority meant much more than a simple
change in accounting procedures. Indeed, many managers expressed the view
that the revolving fund dynamics profoundly modified the way they managed.
With the revolving fund, we now have an obligation to
support our ideas with numbers. We must detail the
costs and the revenues and demonstrate that the agency
will profit from a given proposal. . . . Costs and
revenues become much more visible. . . . People learned
to add and subtract. . . . We better understand what we
are operating, what are our operating costs (interviews
conducted on 7-10 February 1995).
In brief, to function with a revolving fund authority made managers
more accountable for their decisions. Following the granting of a revolving
fund authority that applied to the entire agency, CIPO’s direction went further
to strengthen this accountability effect by creating specific revolving funds for
176
each of the five product lines. This decision was to contribute to control cross
subsidization among divisions by making costs and revenues more visible for
each division and induce competition among them. It was also a recognition
that every division operated in a different environment, conforming to different
laws, serving different clientele, and managing different work processes.
The revolving fund authority not only reinforced CIPO’s accountability;
it also provided the agency with more autonomy in the way it operated. It is
from that standpoint that CIPO decided to repatriate, from its host department
(Industry Canada), personnel and financial functions and create two
corresponding new divisions.
An additional effect of operating a revolving fund was to motivate
managers to think about alternatives to generate new sources of revenue. The
usual way to do it was to increase fees that clients had to pay for services.
However, the approval of fee increases must go through a long process and can
be denied by ministerial or governmental authorities. An optional way to
generate new revenue lied in the development and marketing of new products to
satisfy clients’ needs. A better understanding of clients’ needs and expectations
sounded as a leitmotiv that interviewees often reiterated in the course of
interviews. One interviewee even suggested that making clients’ satisfaction a
priority facilitated the making of many management decisions. "Clients are
important because they make decisions in your place. They tell you what they
177
want, how they want it and how much they are ready to pay" (interview
conducted on 9 February 1995).
Being responsive to clients or citizens’ needs is a principle recognized
by most public organizations, at least in formal discourse. Still, public
organizations often have much difficulty identifying concrete measures to better
understand and respond to clients’ expectations. Regarding this aspect, CIPO
may be considered as an exception given the many measures the agency took to
apply marketing principles. The creation of a marketing division inside CIPO
in 1994 is an initiative that interviewees mentioned that was to help CIPO
increase its knowledge of clients’ needs and improve its services accordingly.
The hiring of a marketing specialist with experience in the private sector in
order to adapt and apply marketing tools to one of CIPO’s divisions is another
measure that illustrated CIPO’s interest in getting better knowledge about its
customers. Here is how this marketing specialist saw the advantage of applying
marketing in CIPO.
Everyone agrees that a better understanding of clients’
needs may provide useful information and contribute to
increase revenues. Besides, getting feedback from
clients may become an important source of pride and
motivation. The problem lies in the fact that people do
not have the techniques and the tools to get that
understanding. My work is to help people to acquire
these tools. One recent initiative was a study of the
eighteen-month process that leads to formal decisions
concerning one type of property right. As a result, a fast
track process alternative was developed to satisfy clients
who were ready to pay a premium for this service. This
178
is one example of what we are doing to improve clients’
satisfaction and increase revenues (interview conducted
on 8 February 1995).
According to one CIPO official, the SOA status and the operation of a
revolving fund encouraged the taking of such initiatives which, in turn, were
expected to gradually but slowly modify managers’ attitudes.
We took many actions to make managers and employees
more aware of clients’ needs; however, the old reflexes
remain. For instance, a private firm recently offered
CIPO to buy part of its information on intellectual
property (patents and trademarks). Their intent was to
re-sell that information in a format that was attractive to
their clients. Our initial reaction was to wonder why the
firm would not buy more information from CIPO. We
wanted to sell more than what was required by the client.
One old reflex that we must change is to stop trying to
sell what we have rather than trying to satisfy needs as
expressed by clients (interview conducted on 9 February
1995).
Finally, the accountability spirit and the value-added mentality
consistent with the operation of a revolving fund triggered interesting
management initiatives. For instance, CIPO officials were proud to point out a
decrease in hierarchical layers and re-engineering initiatives in one particular
division which they expected would contaminate other divisions.
"Strong" Leadership. Interviewees kept referring to many people they
considered as strong leaders or managers, located in different positions in the
organization, who believed in the positive consequences of the SOA status and
179
who, in many different ways and through various decisions and behaviors,
incarnated the changes to be made.
Strong leadership started at the top. Until the conversion, the
Commissioner for Patents and Registrar of Trade-Marks cumulated the functions
now shared between a CEO and a COO. The actual Chief Executive Officer of
CIPO, who continues to act as the Commissioner for Patents and Registrar of
Trade-Marks, is mostly involved in policy-making issues pertaining to the
intellectual property systems and represents the agency in various international
forums. It must be noted that all interviewees had much esteem for the present
holder of that position because of its long experience and its enviable reputation
in the field of intellectual property. But the main modification to CIPO’s
leadership, directly linked to its conversion to an SOA, came with the hiring of
a Chief Operating Officer (COO). The COO concentrates on the day-to-day
operations of CIPO and leaves the policy issues to the CEO. Strongly in favor
of approaches that consider the satisfaction of clients as the top priority, the
present COO saw one of his roles as supporting all the initiatives that go in that
direction and challenging the too many taken-for-granted assertions held by
many CIPO managers. "When I am told that it takes nearly two years to
process a trademark request, I simply ask: why not 48 hours?" (interview held
on 9 February 1995).
180
While the CEO’s reputation is mainly founded on its intimate
knowledge of intellectual property systems, in Canada as well as in other
countries, the skills of the COO have more to do with the capacity of managing
and implementing change. This particular situation suggests that, in terms of
appropriate leadership arrangements to bring about important and significant
management changes in an organization whose tasks are highly specialized,
"dual leadership" may be seen as a valid alternative. "Dual leadership" refers
to a system through which leadership at the top of an organization is essentially
exercised by two individuals, one individual being recognized as a specialist
concerned with the core activities pursued by the agency while the other acts
more as a supporter of change and as a facilitator. This system does not deny
the possibility of having only one person to exercise both types of functions.
However, since it is often difficult to find such a leader, "dual leadership"
becomes an alternative that, at least in the case of CIPO, seemed to work well.
Leadership was not seen only at the top and was relatively disseminated
throughout the organization. Many comments suggested that middle managers
started to change their attitudes and behaviors, being more open to initiatives
taken by employees and encouraging them. One division manager, formally
identified by many interviewees as a "change agent," personified the new
emerging model of managers or leaders.
. . . open-minded, supportive but very demanding . . .
asking to accomplish very difficult things in short delays
181
. . . a manager with clear but exigent goals . . . a
manager who will expect you to take initiatives, who will
forgive your failures but will not forgive you for not
taking initiatives. . . . (interview conducted on 8
February 1995).
CIPO’s Harmonious Relationships with Its Host Department. Since
CIPO was officially converted to an SOA in 1992, the agency has been part of
two different departments. Until June 1993, CIPO was part of the Ministry of
Corporate and Consumers Affairs (MCCI). Following MCCI dismantlement,
CIPO became part of the Ministry of Industry (MI).
MCCI was described as a small, well-managed department which
endorsed the idea of converting CIPO to an SOA. As of CIPO’s affiliation with
Industry Canada, it apparently created no problem. One reason mentioned for
the smooth integration was the consistency of CIPO’s mission with that of the
ministry. A second, more practical, reason was advanced in the following
terms by one respondent.
At the time of our junction with Industry Canada, the
new ministry was so busy reorganizing that its
administrators had little time for us. Our mission was
clear and we were not an issue for the department which
had many other issues to deal with at that time (interview
conducted on 9 February 1995).
In other words, timing may have contributed to make CIPO a relatively
autonomous agency within its new ministry.
Other comments suggested that CIPO’s well-established reputation was
recognized and respected by the authorities of Industry Canada. The decision to
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make the CEO of CIPO a member of the ministry’s executive committee, an
unexpected honor given the size and the relative importance of the agency
within the department, was seen as an indication of the enviable reputation the
agency had. Another reason mentioned was the interest the ministry had, at the
time, in improving its services and learning from CIPO’s attempted changes.
Other informants thought that the new host department had more selfish
reasons to collaborate. The manager of one CIPO newly-created division
suggested, for instance, that, in a context of budget constraints, the host
ministry was mostly interested in sharing some of its operating costs with CIPO
and transferring some of its staff to the new SOA. Another manager thought
that the ministry hoped to recuperate part of the surpluses CIPO could make
from selling its services which would explain the ministry’s positive attitude
towards the agency.
Whatever the motives that may motivate the attitude Industry Canada
had since CIPO became part of it, the major point is that this attitude was
generally positive and collaborative, allowing the agency to make internal
decisions to improve its performance and to function with much autonomy.
The Emergence of a Model Grounded in CIPO’s
Experience With the SOA Status
Three variables describe the fertile impact of the SOA status in the case
of CIPO. First of all, the operation of a revolving fund, coupled with the
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obligation to break even by the end of a five-year period (1993-98), has been a
determining element in the transformation in how CIPO operated. This
flexibility not only allowed for many formal changes (such as a reorganization
along product lines or the managing of functions such as personnel or finance
delegated by the host department), but it also contributed to making clients’
needs a critical parameter in CIPO’s decision-making processes. In the opinion
of the managers interviewed, the SOA status would have had very little
significance without the granting of the revolving fund authority. As far as the
employees who are directly related to the analysis and the production of
property rights, they seemingly have not yet felt the specific effects derived
from the operation of a revolving fund; and other changes, such as those linked
to work automation, have had more impact on their work.
The second variable stressed the leadership arrangements at the top and
the presence of leaders throughout the organization. Interviewees confirmed
that CIPO could count on leaders who had a deep knowledge of the intellectual
property business and were determined to change CIPO so that it could adapt to
its evolving environment. Moreover, these leaders were committed to operate
according to values that considered the satisfaction of clients as a priority while
respecting the constraints of functioning in a governmental setting. A promising
innovation lay in the concept of "dual leadership," which refers to the special
and apparently successful arrangement at the top of the agency where the two
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positions of the CEO and the COO are held by two different executives with
their own specific skills and competencies.
The third and last variable concerned the relationship between CIPO
and its actual host department. To describe this relationship as a supporting one
(by the host department towards CIPO) may not correspond to the reality as
perceived and described by informants. Indeed, there has been little indication
that the actual host department has energetically embraced and systematically
sustained the change process following the granting of SOA status to CIPO.
But, there is evidence that the host department never took action to slow down
or hold up the process. The Ministry of Industry did not oppose the granting of
the revolving fund authority (although some will argue that the process implied
mostly the Treasury Board Secretariat and that the discussions began while
CIPO was part of another department) and did not resist the will of CIPO to
repatriate responsibilities pertaining to the administration of personnel and
finance. Therefore, a "benevolent indifference" would better characterize a
situation which allowed the agency to act with much autonomy in initiating
changes to improve its functioning.
Although it may be suggested that all three variables are of equal
importance in the fertile impact the SOA status has had on CIPO, a strong
argument can be made in favor of another combination that would make the
granting of the revolving fund authority the most determining variable in making
185
the conversion effective. The two other variables, in such a scheme, would be
considered as variables that reinforced or gave full impact to the revolving fund
authority. Figure 9 illustrates the suggested relationships between the three
categories or variables and the resulting fertile impact the SOA status had on
CIPO.
FIGURE 9
SUGGESTED RELATIONSHIPS BETWEEN THREE CATEGORIES
AND THE FERTILE IMPACT OF THE SOA STATUS ON CIPO
'Strong Leadership’
Host Department's Benevolent
Indifference
The Operation of a Revolving Fund
Coupled with the Cost-Recovery Rule
The Fertile
Impact of SOA
Status on CIPO
The important association between the revolving fund authority and the
fertile impact of the SOA status on CIPO was stressed by all managers and a
few professionals who started to feel the consequences of what functioning in a
businesslike fashion meant. Of course, other flexibilities were mentioned, those
regarding, for instance, the administration, by the agency rather than by its host
department, of personnel and finance matters. However, compared to the
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revolving fund authority, these authorities did not modify the basic conditions
under which the agency operated. Moreover, it is the revolving fund authority
which allowed the agency to claim much autonomy in managing itself internally.
Finally, without depreciating the importance of the two other variables, it may
be said that, without the revolving authority, strong leadership and the host
department’s benevolent indifference alone would have had much less
importance in the conversion of CIPO (although important changes not related
to the SOA status, such as automation projects, would have been completed
anyway).
One can only speculate on the effects of the revolving fund authority
without the exercise of strong leadership. For one thing, it is far from evident
that the authority would have been granted without the determination of CIPO’s
leaders to get it. There is some indication that the negotiation with the Treasury
Board Secretariat regarding this authority was difficult and that, without the
insistence of CIPO’s managers, CIPO would have continued to operate under
the legislative appropriation system. Another important element is that, without
strong leadership, the meaning of the revolving fund authority could limit itself
to a simple change in accounting rather than providing an opportunity to
transform people’s attitudes and behaviors. There were many illustrations of
decisions made by CIPO’s leaders to capitalize on the possibilities offered by
the revolving fund authority. One of these refers to the installation of specific
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revolving fund authorities for each product line, providing middle managers
with more discretion over the conduct of operations and pushing the idea that
everyone should be held accountable for results down the hierarchical line.
As to the "benevolent indifference" on the part of Industry Canada,
CIPO’s host department, its importance becomes more evident if one compares
CIPO to TDC where the absence of support by TDC’s host organization
prevented a fertile conversion. As one top manager from CIPO said: "A
ministry, a minister, a deputy minister or an assistant deputy minister does not
gain anything by having a SOA under its authority" (interview conducted on 9
February 1995).
Indeed, the creation of an SOA requires that ministerial authorities
decentralize part of their prerogatives to the agency and trust that everything
will go fine. If something goes wrong, they get into trouble. If the experience
proves successful, they will not get much credit and will be pressed to delegate
more authority to the agency. Finally, to have an SOA as part of your
department generates all sorts of internal tension. It is in such a context that
"benevolent indifference" may prove crucial in making the SOA status effective.
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CHAPTER VI
THE CASE OF A NEGLIGIBLE SOA CONVERSION:
THE CANADIAN CONSERVATION INSTITUTE (CCD
The analysis of Training and Development Canada (TDC) and the
Canadian Intellectual Property Office (CIPO) suggested that these two
governmental organizations converted to SOAs with contrasting degrees of
success. TDC, for a variety of reasons, apparently failed to capitalize on its
new administrative status. CIPO, for its part, seemingly built on its new status
to bring about modifications to its modus operandi to expand or consolidate
changes initiated before it obtained the SOA status (such as process automation).
Despite the differences between these two SOAs regarding, for
instance, the type of services offered or the relative importance of legal
constraints in processing their services, TDC and CIPO shared one
commonalty—that of evolving, particularly since the late 1980s, in changing
contexts or environments which required adaptive strategies. Hence, TDC
developed more customized, tailored training services to cope with growing
competition. CIPO, for its part, motivated by the new provisions of the North
American Free Trade Agreement (NAFTA), reorganized along product lines and
189
sought means to improve its productivity in order to remain an internationally-
recognized reference in the domain of intellectual property.
TDC and CIPO also shared the characteristic of operating according to
rules that made them distinct from most governmental organizations. The
requirement to cover their costs with revenues generated from the sale of their
services constituted an example of such rules. Their financing, through
revolving funds rather than usual parliamentary appropriations, was another of
these rules consistent with businesslike practices which apply to only a few
Canadian governmental organizations. But the analysis of TDC and CIPO also
indicated that adapting to a changing environment and functioning according to
distinct financial arrangements were not sufficient factors to make the
conversion to SOAs a successful and significant undertaking. Other conditions
linked leadership and the host department’s attitude to the fertile or sterile
impact that the SOA status has had on these two governmental organizations.
Following the analysis of both TDC and CIPO, one important question
is: What kind of conversion could operate following the granting of the SOA
status to governmental organizations which do not face a changing environment
(like TDC and CIPO) and do not function according to distinct financial rules
such as those that applied to these two SOAs? This question is particularly
relevant because many organizations converted to SOAs since 1991, contrary to
TDC and CIPO, operate under the usual appropriation system, and function in
190
an environment which, at the outset, appears as similar to that of most Canadian
governmental organizations which, since the late 1980s, have to cope with
yearly budget cuts. So, why were such organizations granted the status of
SOA? What kind of flexibilities were provided to them and what sort of
conversion resulted from the use of these flexibilities? These are the general
questions that came forth after the analysis of the two first case studies and
called for the analysis of a third case study.
The Canadian Conservation Institute (CCI) was selected because it met
the criteria of an SOA, apparently facing an environment that remained
relatively stable over the years and operating according to the usual financial
rules that apply to most Canadian governmental organizations (i.e. legislative
appropriations). An additional reason lay in the enthusiasm expressed by its
management to participate in the present inquiry.
This chapter, which contains three sections, describes and analyses CCI
conversion to an SOA. The first section provides general information about the
organization and its activities, summarizes the content of CCI’s framework
document (or charter), its two business plans (1993-94 and 1994-95) and its two
annual reports (1992-93 and 1993-94). The second section reports on interviews
and exchanges with some of CCI’s staff. The last section discusses what can be
learned from the CCI experience.
191
An Overview of CCI and the Official Documentation
Pertaining to its Conversion To An SOA
The Canadian Conservation Institute was created in October 1972 "to
promote the proper care and preservation of Canada’s moveable cultural
heritage, and to advance the practice, science and technology of conservation"
(CCI’s Framework Document, p. 2).
Financed through legislative appropriations, with a staff of 80 people
and a budget of $6.3 million in 1993-94, CCI has essentially two mandates.
First, it provides conservation services and training to Canadian public museums
and their staff. While the Canadian conservation community and the demand
for conservation services were pretty limited at the time CCI was created in
1972, the organization has had to cope with a growing demand for these
services since then. In fact, the Institute contributed to this trend by sensitizing
the conservation communities to conservation issues and by training
conservators working in Canadian museums who now request CCI to solve
conservation problems. The policy of offering CCI services free of charge to
Canadian public museums also explains this important demand. This policy was
established and has been maintained on the premise that Canadian public
museums did not have the necessary resources to afford the services offered by
CCI.
CCI also does conservation research. This second mandate has
contributed to making CCI an organization internationally recognized for its
192
excellence in the discipline. CCI researchers prioritize new and unusual
conservation issues that require original solutions (a critical criterion to research
on conservation issues). As a result, CCI researchers develop new conservation
processes and solutions which are disseminated worldwide through publications
in specialized journals and conferences.
The conversion of CCI to an SOA was officially announced in
February 1991. The new status, however, became effective only twenty months
later, in November 1992, once agreements over its framework document (or
charter) and its first business plan were reached.
CCI’s Framework Document (or C harter). CCI’s Framework
Document, a 14-page document with two annexes, was officially signed on
November 16, 1992. It covered the following elements: CCI’s status, its
mission and its objectives, its services and activities, its structure, financial
planning and control, the delegation of authorities regarding the management of
finance, human resources, and administrative policies, and accountability.
CCI’s mission, quoted before in this chapter, was to be pursued
through a series of nine objectives and fourteen principles. Loosely enunciated,
the nine objectives indicated the will of CCI:
. . . (1) to carry out an active conservation research and
development program, (2) to provide conservation
services free of charge to eligible Canadian public
institutions . . . according to well defined criteria, (3) to
disseminate conservation knowledge, (4) to recover
certain costs for services provided to foreign
193
organizations, (5) to achieve performance targets set out
in the business plan, (6) to represent Canada’s interests,
(7) to maintain and attract excellent workforce, (8) to
maintain, improve and renew facilities and (9) to develop
programs to respond the emerging needs of clients
(pp. 2-3).
The fourteen principles led CCI to commit itself to remain a:
. . . non-commercial, non-competing and government-
funded agency . . . [that] will continue to offer services
free o f charge to Canadian institutions according to well
established criteria . . . [that] will identify potential cost
recovery activities and recover costs when feasible, [that]
will primarily focus on the provision of services to
clients . . . [that] will place a strong emphasis on the
professional capabilities of its employees by providing a
challenging work environment in which superior
performance is encouraged and acknowledged . . . [that]
will apply the highest standards and respect the code of
ethics of the conservation profession . . . [that] will
apply the best public and private sector employment and
management practices . . . and will function with due
regard to economy, efficiency and the achievement of
financial objectives (pp. 5-6).
The document grouped CCI services into four categories which
correspond to three of the four CCI’s divisions (Figure 10). These categories
include the conservation treatment services (in CCI laboratories in Ottawa), the
training of Canadian conservators (located in Canadian museums), the research
services, and the dissemination of information and knowledge (publication of
scientific articles and of CCI Newsletter) (pp. 6-7).
194
FIGURE 10
CCI’S FOUR DIVISIONS AND FORMAL ACCOUNTABILITY
RELATIONSHIP TO HERITAGE CANADA
Heritage Canada
The Minister
The Deputy Minister
Assistant Deputy Ministers
The Canadian Conservation Institute
Director Gen. and COO
- Conservation Services (Including Training)
- Conservation Research Services
- Information and Extension Services
-Administration
The Director General and Chief Operating Officer (COO) of CCI are
responsible for the daily operation of the Institute and are accountable to one of
the assistant deputy ministers of Heritage Canada, CCI’s host department.2 1 It
must be noted that the SOA status only changed the official denomination of the
position and re-confirmed the accountability relationship which existed before
the conversion.
The financial rules that apply to CCI are similar to those that most
governmental organizations must respect. Financed through appropriations, a
very small portion of its budget is, however, submitted to vote netting, a
2 1 At the time of its conversion in 1992, CCI was part of the Department of
Communications. In June 1993, CCI became part of Heritage Canada.
195
procedure by which an administrative unit is advanced a definite amount of
money corresponding to revenues it plans to generate from the sale of services.
The amount credited is reimbursed with those revenues. In the case of CCI, the
vote netting authority applied to an amount of $35,000 over a total budget of
more than $6.3 million for the 1994-95 fiscal year (CCI Business Plan, 1994-
95).
CCI, by virtue of its conversion into a SOA, enjoyed the use of more
than twelve flexibilities listed in Table 17. Six of these flexibilities pertained to
the finances of CCI. The exemption from person-year control granted to CCI in
1992 hardly constitutes a very special one, since it became a policy that applied
to all federal organizations in 1993. As far as the authority to carry over 10%
of its budget, it may be interpreted as an incentive for CCI to more rationally
manage its budget; however, this is another measure that now applies to all
ministries. It is interesting to note, though, that at least three of the flexibilities
sought to motivate CCI to increase its participation in revenue-generating
activities (financial flexibilities 2, 3, and 5).
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TABLE 17
FLEXIBILITIES GRANTED TO THE CANADIAN CONSERVATION INSTITUTE
CCI’s Financial Flexibilities CCI’s Flexibilities Concerning the
Management of Human Resources
CCI’s Administrative Flexibilities
1. Exemption from person-year control;
2. Authority to set or adjust fees and
charges;
3. Authority to retain and spend revenues
generated in excess of forecast vote-
netted revenues;
4. Authority to carry over up to 10% of
CCI’s total budget from one fiscal year
to the next without restrictions;
5. To enter joint projects with other
ministries, the private sector and
foreign organizations, to accept money
and spend money to carry out such
projects;
6. Authority for the COO or his-her
delegate to certify that funds are
available for all financial transactions.
1. The COO of CCI is granted full level
A delegated authorities in HR
management;
2. CCI may recruit and appoint foreign
specialists when Canadians are not
available;
3. The COO can approve training
requests.
1. The COO can approve:
a. business/executive-class air travel,
travel outside America and
comprehensive allowances;
b. attendance at conferences regardless
of the number of employees
attending;
c. more than two membership sin one
organization in the same geographic
area;
d. approve official hospitality of up to
$1,500 to government employees in
businesslike situations;
2. The COO has full authority for the
procurement of goods and services.
Delegation to the COO (same as
regional executive director);
3. The COO has the authority to deviate
from the Federal Identity Program
requirements when work is done on
behalf of clients not part of the
Government of Canada.
Two of the three flexibilities regarding human resources are to provide
the COO with more discretion to manage them. Accordingly, the COO can
exercise "level A" authorities (instead of "level B" which were somewhat less
extended) and can directly approve training requests. As of the recruitment and
the appointment of foreign specialists, this flexibility only confirmed a
procedure CCI informally controlled before it was converted to an SOA.
The last series of flexibilities presented in Table 17 concerned the
general administration of the Institute, although some directly impact on the
management of employees.
Although the flexibilities granted to the new SOA, altogether, add up to
twelve, a look at their substance suggests that these flexibilities could hardly
bring about important changes in the agency. Indeed, most of the so-called
"administrative flexibilities" and the flexibilities pertaining to the management of
human resources sought to marginally adapt existing rules to the specific nature
of CCI activities, not to transform them in any important manner. As far as
most financial flexibilities are concerned, they sought to create incentives to
motivate CCI to diversify and expand its sources of revenues, but in a very
marginal way—almost all of CCI’s revenues would continue to come from
legislative appropriations.
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CCI’s Two Business Plans. CCI produced two business plans which
covered the 1993-942 2 and 1994-95 fiscal years. Both plans were quite similar
(the second one being an amended version of the first one) and essentially
displayed a long list of objectives, strategic directions and operational goals.
Table 18 summarizes the six CCI objectives listed in its 1993-94
Business Plan. The subsequent business plan 11994-951 only added one
objective to that list, which was "to provide conservation training that meets the
needs of various client groups" (CCI 1994-95 Business Plan, p. 2).
Stated in very general terms, these objectives appeared to be identical
to those CCI has pursued for years and that naturally derived from its
mission— the exception being the explicit intent to recover the costs of certain
services (the fourth objective in Table 18).
2 2 The CCI 1993-94 Business Plan is an updated version of a first business
plan "prepared earlier in 1992, in anticipation of the status change" (CCI 1993-
94 Business Plan, p. 1).
TABLE 18
CCI’S OBJECTIVES
1. To carry out an active conservation research and development
program that is relevant to the needs of the Canadian heritage and
conservation communities. . . .
2. To provide conservation services free of charge to eligible Canadian
public institutions and authorities in an efficient and effective
manner. . . .
3. To disseminate conservation knowledge through publications,
presentations. . . .
4. To recover in part, or in total, the costs of providing specialized
services which are beyond the general activities of CCI. . . .
5. To represent Canada’s interests and to play a leadership role both
nationally and internationally. . . .
6. To develop additional innovative service programs to respond to the
emerging needs of clients.
Source: CCI Business Plan 1993-94.
The strategic directions CCI intended to take in 1993-94 were limited
to three. First, CCI sought to recover its costs and generate modest revenues
from the services offered to Canadian commercial institutions (private museums)
or to foreign organizations. CCI expected to recover $30,000 in 1993-94, the
same amount it planned to recover during the five preceding years. Second, to
cope with the growing volume of services offered to its Canadian clienteles
200
(measured in total hours in Table 19), CCI intended to review its programs and
deliver them in a more flexible way. Third, CCI sought to remain active on the
international scene while continuing to carefully control the costs of its
involvement. (Table 19 shows a decrease in hours from 1991-92 compared to
1992-93 but an important net increase compared to the average number of hours
over 6 years.)
TABLE 19
LEVELS OF SERVICES PROVIDED BY CCI TO CANADIAN
AND FOREIGN CLIENTS
(Research and Publications Excluded)
Services To Canadian
Clients
Services To Foreign
Clients
Fiscal Year # o f
Requests
Total Hours # of
Requests
Total Hours
1991-92 1,583 29,361 368 4,458
1992-93 1,441 52,692 373 3,843
6 Years Average 1,515 34,692 290 2,796
Source: CCI’s 1993-94 Business Plan, p. 5.
To the extent that "strategic directions" should provide information
about the means CCI intended to use in order to realize the objectives
mentioned before, these directions are rather vague. Neither the 1993-94 or the
1994-95 business plan provided clear information on how CCI planned to
recover the costs of its services offered and not covered by the Canadian policy
201
regarding conservation. How precisely more flexible services would help the
organization control its growing volume of services is not explained either. And
the careful control of CCI’s international involvement appeared less as a
"strategic direction" than as a mere declaration of intent.
The 1993-94 Business Plan also listed seventeen operational goals, most
of which concerned conservation services (p. 7) and twenty-five on-going
research projects (p. 8). With some exceptions (the plan sought to provide
18,000 hours of treatment services in 1993 and to increase this level to 20,000
hours in 1994), the goals stated looked more like activities to begin than results
to reach. Illustrations of these objectives were "to continue developing the laser
scanner for recording museum objects," and "to host a five-day workshop in
Churchill, Manitoba, in August 1993 on preparing skins using Inuit techniques."
Financially, the plan reported CCI’s ambitious goal to "strive for funding levels
that are sufficient to fully execute its mandate and objectives" (p. 6) without
specifying what these levels are or ought to be. A review of the allocation of
human resources among CCI’s divisions was also on the agenda, a task that was
to be made easier with the introduction of single operating budgets (one of the
flexibilities granted to the Institute) (p. 8). The plan included more precise
outputs regarding the dissemination of information (the publication of studies for
instance). Finally, CCI intended to maintain the provision of training services
at a level comparable to that of previous years.
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The 1994-95 Business Plan also outlined a series of goals related to
CCI’s management, finance, human resources, research activities, the
dissemination of information and training programs. Among the main goals or
activities listed was the organization of the International Institute for
Conservation’s Convention (to be held in Ottawa in September 1994), of a
Varnishes Colloquium and Workshop for paintings conservators (in September
1994 as well), the ongoing review of certain administrative procedures and the
development of a marketing strategy "in order to capitalize on revenue-
generation opportunities outside Canada" (p. 8). Following a 10% budget cut,
the Institute planned to reduce the volume of certain activities (such as visits to
museums, conference attendance, training activities and its participation in
conservation projects) and establish priorities to manage the increasing demand
for its services. Finally, CCI expected to support more than thirty research
projects and ten treatment activities. The 1994-95 Business Plan also praised
the results of two surveys (a goal of the 1993-94 plan) conducted in early 1994
among 200 CCI’s clients (pp. 4-5) who expressed a high rate of satisfaction
regarding the various aspects of CCI services (access to services, technical
quality and employee attitudes) and recognized the expertise of the Institute.
The only weaknesses concerned "the scheduling of treatments and analyses" and
the lack of information "about progress while work was underway."
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A last point that must be mentioned concerned "the issue of
performance indicators" specifically addressed in the conclusion of the 1993-94
Business Plan. Essentially, it was argued that CCI, as a highly specialized
research organization, has had difficulty in establishing quantitative
measurement of its performance, the nature of almost all of its activities being
more prone to qualitative assessment. Performance measurement appeared as
particularly problematic regarding research activities.
Scientific research can sometimes be assessed by its
potential economic impact. However, the real impact of
CCI’s research and development program, the enhanced
preservation of Canadian heritage, cannot easily be
measured in quantitative terms. How can one measure,
for example, the fact that the life expectancy of several
hundred paintings may be doubled or tripled as a result
of a single research project on the mechanical behaviour
of paintings? . . . In all but a few activities, acceptable
quantitative measurements do not exist (CCI 1993-94
Business Plan, p. 11).
This statement alone may explain the vagueness of the goals, the
"strategic directions" and the objectives contained in both CCI’s business plans.
As such, the usefulness of true "business plans" for an organization such as CCI
may be questioned. Indeed, in the case of governmental organizations such as
CCI, which are heavily research-oriented and serve captive clienteles (by virtue
of national policy), the production of business plans may be considered more as
a rhetorical exercise than an effective management tool. It is interesting to
note, though, that, contrary to the typical SOA’s business plans which extend
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over three-year periods, CCI’s business plans covered only one year at a time.
That also seems to indicate the difficulty for CCI to produce medium-term and
long-term objectives and strategies in a context of financial constraints over
which the agency has little, if any, control. Yet, the emphasis put on self
generated revenues, even if they constitute only a small portion of CCI total
budget, can be seen as an attempt to help CCI to better cope with such budget
uncertainty.
CCI’s Two Annual Reports. Since its conversion to an SOA, CCI
has issued two annual reports covering 1992-93 and 1993-94. These two
reports share the same structure. Typically, a short introduction by the Director
General and Chief Operating Officer of CCI is followed by detailed descriptions
of activities pursued by each of the four divisions of the Institute. Each report
is then completed with a yearly financial statement. Supplemented with many
photos of CCI’s employees at work, the content of these reports well conveyed
the specific character of CCI’s activities.
Because of the detailed and descriptive format of these reports, it is
almost impossible to summarize them so that the reader could get a good
overview of CCI’s performance during that period (1992-94). More
importantly, an examination of these reports reveals very little about the impact
the SOA status may have had on CCI. As illustrated by the following excerpt,
the two annual reports give the impression that the conversion of CCI to an
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SOA had a very limited impact and only facilitated initiatives or actions that
CCI would have taken anyway. "During 1992, a major initiative was
undertaken to develop Service Standards that will help CCI to better serve
Canadian museums. This move was also precipitated in part by becoming a
SOA" (CCI 1992-93 Annual Report, p. 1).
Moreover, among the changes mentioned in the 1992-93 Annual Report
that may have influenced the way CCI operated, such as office automation and
the renovation of buildings, only the introduction of the single operating budget
procedure can be directly linked to the conversion of CCI to an SOA.
The 1993-94 Annual Report remains vague on the effects the
conversion may have had. As in the 1992-93 Annual Report, the single
operating budget procedure appears as the most important advantage that came
with the SOA status. "One significant organizational change that CCI has
undergone over the last few years is that it became a Special Operating Agency
(SOA) and began working under a Single Operating Budget" (CCI 1993-94
Annual Report, p. 21).
The last element included in both CCI Annual Reports are yearly
financial statements. Table 20 summarizes these statements for the two years
covered by the annual reports.
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TABLE 20
CC I’S FINANCIAL STATEMENTS
(1992-93 and 1993-94)
1992-93 1993-94
CCI Number of Employees 79 82.5
Salaries 3,881,612 4,012,712
Operating Expenses 1,585,308 1,687,308
Capital 459,981 469,675
Miscellaneous 168,213 166,788
Total (Single Operating Budget) 6,095,114 6,346,483
Revenue (Cost Recovery) 37,238 25,695
Source: CCI’s 1992-93 and 1993-94 Annual Reports.
It can be noted that the rise of CCI’s expenses from 1992-93 to 1993-
94 was principally due to increases in the number of employees under operating
expenses (which included the purchase of professional services, travel, repair
and maintenance expenditures). The other element that is worth mentioning
pertained to the revenue generated through the sale of CCI services. The
important decrease in 1993-94 ($25,695) compared to 1992-93 ($37,238) was,
however, not explained in the 1993-94 Annual Report.
These numbers are the only ones to be found in CCI’s Annual Reports
regarding its financial situation. In the absence of clear goals and explicit
outputs and outcomes to which these numbers could be related, this financial
207
information is of little help in appreciating the effectiveness and the efficiency
of CCI, much less in appreciating the possible impact the SOA conversion had
on CCI performance.
To summarize this review of CCI’s official documentation, it can be
said that it had the advantage to reveal the rather unusual character of CCI
activities. Indeed, CCI activities have more in common with a typical
university research center than with most governmental organizations. So, the
nature of CCI operations may explain the vagueness of the goals, objectives and
strategies presented in the agency’s business plans. As to the flexibilities listed
in CCI’s framework document (or charter), despite their large number, they
could have hardly produced a major transformation of CCI following its
conversion to an SOA. CCI’s two annual plans only confirmed that assertion.
The two elements that announced some possible changes in the functioning of
CCI were its concern for recovering a very limited part of its operating costs
through the sale of services (a measure that would change very marginally how
the agency has financed its operations so far) and its formal preoccupation to
adapt its services to clients’ needs.
208
The Conversion of CCI to an SOA: Its Interpretation
Bv CCI’s Managers and Employees
Nine people from CCI were met or contacted in May and June 1995.2 3
Five of them were managers; and four were professionals doing research,
providing advice or doing conservation work. Among the managers
interviewed, one manager has worked for CCI since its founding in 1972 and
was a key actor in the elaboration of the official documentation previously
reviewed (CCI’s Charter, Business Plans and Annual Reports).
The comments collected were grouped into properties and resulted in
three categories which are depicted in Table 21 and further elaborated in the
next paragraphs.
The Anxiety Created by the Granting of the SOA Status. The
announcement that CCI would become an SOA came as a surprise to all.
Besides, nobody seemed to know exactly why CCI was chosen as an SOA
candidate. One informant advanced that CCI may have been chosen to become
a SOA because of its stable policy context. Indeed, CCI’s activities were
pursued according to a clear Canadian policy concerning the conservation of
Canadian heritage, and these activities were not politically sensitive.
2 3 At the time of the author’s visit to CCI’s office in Ottawa, three of its
managers were interviewed. Six other employees expressed their comments on
how the SOA status may have impacted on their work and on the organization
through electronic mail or by phone.
209
TABLE 21
CATEGORIES AND PROPERTIES SUMMARIZING THE
STATEMENTS MADE BY CCI’S MANAGERS AND STAFF
Categories Properties
Anxiety created by the
granting of the SOA status
The SOA status came as a surprise; many
feared the cost recovery rule and saw the
SOA status as a step towards privatization.
The peripheral character of
SOA flexibilities
Most flexibilities impacted on the work of
managers—little impact on conservators’
work; many flexibilities extended to all
government organizations soon after they
were granted to CCI; some flexibilities,
under recent budget constraints, could be
repatriated by the host department.
Potential changes in some
prevalent attitudes
The missionary culture prevailing among
conservators; the growing acceptance that
some CCI services could be marketed; the
production of a marketing plan but the lack
of skilled resources.
CCI employees were not only surprised by the announcement that their
agency would become a SOA; many recalled that, by that time, they started
fearing that CCI’s conversion to an SOA would be the first stage toward the
privatization of their organization or worse. Said one interviewee: "This place
could not be privatized. To privatize CCI would signify that it would close
down very shortly. Our clients cannot afford paying the full costs of the
services we provide them" (interview conducted on 24 May 1995).
210
Others feared the possible obligation for CCI to recover all of its
operating costs through the sale of services. "The switch to SOA status was
viewed with a certain amount of trepidation— the fear of having to go full cost-
recovery for our services was an issue" (interview conducted on 24 May 1995).
More than a year and a half elapsed between the official announcement
that CCI would be converted to an SOA and the formal approval of its new
constitution. Asked why it took so long, one interviewee, who conducted the
negotiation for CCI, responded: "We did not know what a framework document
and a business plan were. We had long discussions over the flexibilities to be
granted to CCI. Some resistance came from the Treasury Board and from the
host department" (interview conducted on 24 May 1995).
That delay seemed to have fueled employees’ anxiety. It took some
time for employees to know exactly what the new rules would be. At last, the
conversion of CCI to an SOA proved not to be a stage toward privatization
(although one employee personally thought that the privatization of CCI was still
a possibility), and cost recovery was to be a rule limited to only a few CCI
activities.
The Peripheral Character of the Flexibilities Granted. Generally,
interviewees judged that the changes linked to the SOA status were not
significant. To be sure, they had little, if any, effect on the work of
conservators, scientists and researchers who continued to pursue their activities
211
as usual. Here is how one conservator summarized this perception: "I have
been at CCI since April ’88 and so was here during our transition to a SOA. I
am personally not aware of any changes that have resulted from this transition.
Perhaps some changes have occurred at higher levels" (a comment made
through electronic mail on 29 May 1995).
For their part, CCI managers indicated some changes that they linked
to the new status. Single operating budgets and the carry-over of unspent
budget allocations, for instance, provided budget flexibility that was appreciated.
Said one supervisor:
By allowing us more flexibility with handling our
budgets, management is perceived as being able to make
more logical decisions. It is a positive move to be able
to move money between different budgets with little
bureaucratic fussing. Most of the staff have a strong
academic background so logical action rather than rule-
following to maintain out-dated procedures is
appealing. . . . Being able to carry over a percentage of
our budget to the next fiscal year is an enlightened step
that all the employees appreciate. In many ways, the
SOA status facilitates common-sense management (a
comment made through electronic mail on 1 June 1995).
CCI’s staff also mentioned that decisions concerning their participation
in conferences or the purchase of equipment were made more rapidly, since the
institution got its new status.
Finally, a manager thought that the most original and perhaps the most
promising flexibility of all was to allow CCI to keep revenues in excess of those
made under the vote netting authority. CCI wanted to increase its self-generated
212
revenues up to 5 % of their total budget which could amount to $300,000, or ten
times the amount actually recuperated through the net voting authority.
Further exchanges on the effects of the conversion raised divergent
comments. For instance, one informant was quick to point out that many
flexibilities granted to CCI only confirmed old informal practices; while others,
like the abandonment of the person-year control and the introduction the single
operating budget, applied to the entire government only months after CCI got
them. The same informant added that the one flexibility that had some meaning
to many in the organization (the approval of international assignments by the
COO rather than by the assistant deputy minister) was being reviewed in the
context of recent budget cuts. So, CCI could soon lose the little flexibility it
gained from the status. While one informant argued that the production of a
framework document and business plans had the merit of forcing a reflection on
CCI’s activities and future directions, and that annual plans contributed to
increase CCI’s visibility, a colleague, who was in a middle-management
position, thought that the most noticeable change was an increase in workload
now that an annual business plan and an annual report had to be produced (a
comment made through electronic mail on 31 May 1995).
Changes in Prevalent Attitudes. One interviewee thought that the
SOA status may have contributed to gradually transforming the CCI’s prevalent
"missionary" mentality. For instance, the idea that CCI should recover at least
213
some of its costs through the sale of services was slowly gaining support among
employees.
Most professionals in CCI see themselves as
missionaries, people who espoused a cause, that of
saving important elements of the Canadian heritage.
This conception explains their dedication and their
enthusiasm. But, it also explains their resistance to make
their interventions conditional to financial or budgetary
considerations. In the present difficult financial context,
however, some people start to accept that we may need
to diversify our sources of revenues (interview conducted
on 24 May 1995).
One conservator agreed with this attitudinal change regarding cost recovery.
The initial fear of losing our international clients if we
had to charge for services has been put to rest. On the
contrary, in our lab we have had more requests for
advice from outside Canada than ever, and our clients
expect to be charged. It is not an issue, it is in keeping
with the way governments and other agencies are doing
business. . . . During our division and all-staff meetings,
staff are encouraged to come up with ideas for revenue
generation; the feeling is one of "yes, we will accept
change if it makes sense." Being able to make a
contribution to CCI by marketing our skills has a positive
effect, although we are still dealing with the unknown (a
comment made through electronic mail on 5 June 1995).
Developing new sources of revenues to complement decreases in
appropriation funding was the main issue at the time the interviews took place.
A better marketing of CCI services abroad was considered as a partial solution
to the problem. However, the required skills proved to be deficient. At least
three respondents raised doubts about CCI expertise in marketing its services.
214
One of the stumbling blocks is the fact that none of us
are trained in running a business. We are great at fixing
pots and cleaning paintings, but have no experience
outside the government (a comment made through
electronic mail on 1 June 1995).
I have always felt that we need the advice of skilled
marketing professionals to set up a marketing service for
our products and services which capitalize on the CCI
name. The division which is responsible for this task
now, does well, but. . . does not have any marketing
staff (a comment made through electronic mail on 12
June 1995).
We are spending much time and money exploring
"marketing." I am not sure if we have enough CCI
expertise in this field to take meaningful decisions (a
comment made through electronic mail on 14 June
1995).
Despite this lack of business skills, a marketing plan was under
preparation in the spring of 1995 and was expected to identify revenue
generating opportunities.
To be sure, these changes in attitude toward the marketing and the sale
of CCI services to private museums in Canada and foreign museums cannot
result from the new SOA status alone. The severe budget cuts that have struck
the Canadian federal bureaucracy over the last years forced CCI to explore new
ways of financing its activities. In the absence of these severe constraints, the
marketing and the sale of CCI services would have probably been resisted.
Under these budget constraints, CCI had little choice. The overall result is an
215
organization that gradually saw these constraints as an opportunity to function in
a less bureaucratic way—in a more businesslike fashion. Said one supervisor:
The overall result is a more efficient organization. One
comment from the American archaeologists we did the
cost-recovery work for was that they have never dealt
with a bureaucracy so easily. It was one-on-one between
me and the project archaeologist, with me keeping my
Director informed, but there were no cumbersome
approvals apart from our normal contract and treatment
proposal forms. We billed them, they paid. . . . The
administrative details of being a SOA are still unknown
to me in any detail. All I know is that overall, the
change was timely. . . . In general, I think that SOA
status has been good for CCI and has put us in a better
position to develop programs (a comment made through
electronic mail on 1 June 1995).
To summarize the comments made by CCI’s informants, the conversion
of CCI to an SOA apparently had a very limited impact, if any, on the way the
agency has operated. The most promising effect seemed to rest upon the
perception by some respondents that the status, but more precisely the idea that
CCI should market and sell at least some of its services, was gradually
accepted. If this effect ever materializes, new revenues could make up, at least
partially, for lower appropriation budgets. Such eventuality could also modify
the prevalent attitude on the part of most CCI employees who believe that the
marketing of certain CCI’s services could negatively affect their quality and
development. Other than this potential change, the SOA status, in the case of
CCI, meant the relaxing some administrative rules and controls; however, these
changes impacted more on the managers’ work than on the work of CCI’s staff.
216
The Emergence of a Model Grounded in CCI’s Experience
With the SOA Status
On the basis of the official documentation pertaining to the conversion
of CCI to an SOA and of the comments made by CCI’s staff, two conclusions
can be reached. First, the nature of the flexibilities granted were peripheral:
although some were found advantageous, they affected very marginally the way
CCI was managed and did not impact on the core activities of the agency. For
instance, the flexibility that informants kept repeating as the example of a useful
flexibility was the new procedure that allowed the COO, rather than the
assistant deputy minister, to approve staff traveling requests. It must also be
said that the measures to enhance CCI’s accountability, when enforced (the
production of annual reports for instance), did not really help to appreciate and
make judgments on the performance of the organization. As suggested before,
this could be explained by the nature of CCI’s mandate and main research
activities.
Second, budget constraints which affected the entire Canadian
government, coupled with a few new financial flexibilities, would explain
changes that are apparently taking place concerning staffs attitudes towards the
marketing and sale of CCI services. At this point in time, however, the
evidence to support this hypothesis is inconclusive.
As a consequence, a relatively simple theory emerges from the CCI
experience with the SOA status. As illustrated in Figure 11, it may be
217
As a consequence, a relatively simple theory emerges from the CCI
experience with the SOA status. As illustrated in Figure 11, it may be
advanced that the peripheral character of the flexibilities granted had only a
negligible impact on CCI.
FIGURE 11
THE SUGGESTED RELATIONSHIP BETWEEN ONE CATEGORY AND
THE NEGLIGIBLE IMPACT OF THE SOA STATUS ON CCI
The Peripheral
Character
of SOA Flexibilities
The
Negligible
Impact
of SOA Status
on CCI
This simple model does not retain the "anxiety that the SOA status
may have created" as a category that would be associated with the actual impact
of the SOA status on CCI. Quite obviously, this anxiety was due to the initial
ignorance of the real meaning of the SOA status which, among other things,
caused the making of hypothetical scenarios about the privatization of CCI.
This anxiety vanished as soon as the nature of the flexibilities granted confirmed
that CCI would remain part of the federal government and continue to pursue
the same mission according to the same policies and the same rules.
218
evolves in an environment that has remained pretty stable over the years and is
financed through appropriations. In the case of CCI, such a conversion did not
translate into any discernible and significant conversion. The few changes
mentioned, such as the cost-recovering attempts, were essentially related to
budget constraints; although it may be advanced that the SOA status supported
such initiatives.
219
CHAPTER VII
THE SOA MODEL EMERGING FROM A CROSS-ANALYSIS
OF TDC, CIPO AND CCI
The analysis of three SOAs—Training and Development Canada
(TDC), the Canadian Intellectual Property Office (CIPO) and the Canadian
Conservation Institute (CCI)—indicates that the conversion of these three
organizations to SOAs had very different consequences. (See Table 22.)
TABLE 22
THE DIFFERENT IMPACT OF THE SOA CONVERSION ON
TDC, CIPO AND CCI
TDC CIPO CCI
Global Judgment Sterile Fertile Negligible
About (negative) Impact Impact
SOA Impact Impact
In the case of TDC, the SOA conversion appeared as a rather sterile
operation that did not help the organization to improve its performance; it may
even be said that the conversion had an overall negative impact by worsening
the effects of some TDC’s dysfunctional aspects (such as leadership’s
inconsistency and its internal state of conflict). The investigation of CIPO
220
suggests that the SOA status has had a totally opposite type of effect: in
combination with other change initiatives (such as automation), the SOA status
seemingly transformed the organization into a more potent one. As for CCI,
the nature of the SOA flexibilities granted impacted in a negligible way on its
management and modus operandi.
This chapter develops a model which reflects the conditions and factors
which appear to make the SOA conversion effective. The chapter starts with a
comparison of the three specific models resulting from the analysis of each of
the three cases; then, this comparative analysis is used to develop a preliminary
version of an SOA model. This first version is then refined and completed by
comparing the environments of the three agencies and the nature of their core
operations as well as the accountability measures that came with the SOA status.
The chapter concludes with the presentation of the resulting substantive SOA
model2 4 and a set of four corresponding propositions grounded in the
experience of the three selected SOAs.
A Comparison of the Three Models Grounded in the Conversion
of TDC. CIPO and CCI to SOAs
Figure 12 depicts the three models or combinations of variables
associated with the type of impact the SOA conversion has had in each agency.
2 4 The resulting SOA model is called "substantive," because it is based upon
the experience that three agencies have had with their SOA conversion.
221
FIGURE 12
THE THREE MODELS GROUNDED IN THE CONVERSION O F TDC, CIPO AND CCI TO SOAs
T raining and D evelopm ent C anada (TDC) T h e C anadian Intellectual Property O ffice (CIPO)
The N on Pertinence of SOA Status
PSC's O verall Lacking Support
The Confusion about Functioning in a 'Business-like' Fashion
D iscontinuity and Inconsistency in Leadership
A Perm anent State of Conflict inside TDC
The O peration of a Revolving Fund C oupled w ith the Cost
Recovery Rule
Strong Leadership
H ost D epartm ents' Strong Support
The N un Pertinence of
SOA Status
‘ Strong Leadership'
Conflict inside
IUC
Host Departments*
Strong S upport
JS C s Overall Lacking
Support
The Fertile Im pact
of SOA S tatus on
C l 1 * 0
I l e Sterile
(Negative) Impact
of SI)A Status
mi TLX.’
The Confusion al>out Functioning
in a 'Business-like* Fashion
The Peripheral C haracter
of SOA Flexibilities
The Negligible
Impact
of SOA Status
on CCI
The O peration of a Revolving Fund
Coupled w ith the Cost-Recovery Rule
T he P eripheral C haracter of Flexibilities
T he C anadian Conservation In stitu te (CCI)
A look at the three models confirms the critical importance of
flexibilities. Flexibilities are at the core of the conversion and have the
potential to make an SOA truly "special." In the case of TDC, the flexibilities
granted were simply not relevant given the environment this agency had to cope
with—a point discussed in Chapter 4 and further developed in a later section.
In the case of CCI, meaningless flexibilities were the only critical
factors closely linked to the negligible impact the SOA status has had on this
agency.
Interestingly, compared to TDC and CCI, CIPO was provided with
fewer flexibilities. However, it got one that, according to all respondents,
played a determinant role in transforming CIPO. It was the operation of a
revolving fund coupled with the requirement to cover its costs through the sale
of its services.
If significant flexibilities appeared as a necessary condition to turn
governmental units into more effective agencies, TDC’s and CIPO’s models
indicate that at least two other variables or factors played a critical role as well.
They are the type of relationships that existed between the agencies and their
host departments and leadership.
The Relationships Between the Agencies and Their Host
Departments. The idea of providing special flexibilities and more autonomy to
one portion of a ministry is far from being evident from a ministerial point of
223
view. Quite naturally, it may be expected that departmental divisions will envy
the special status granted to the given unit and fear a loss of responsibilities in
favor of that unit.
TDC’s staff had many anecdotes to illustrate their frustration with the
Public Service Commission. Their overall perception was that PSC did not
really care about providing what the agency needed to transform itself into a
more effective organization, because it would have created unacceptable
precedents. But what made ministerial support an even more critical condition
in the case of TDC derives from the interpretation that PSC’s lacking support
allowed three other factors to have a deteriorating impact on TDC’s conversion
process. A supporting PSC would have quickly cleared up the confusion about
the implications of TDC’s functioning in a "businesslike fashion." Had PSC
really been concerned about TDC’s efforts to improve its performance, it would
have addressed the issue pertaining to the discontinuity and inconsistency of
leadership that plagued TDC. Finally, a committed PSC would have put an end
to the enduring state of conflict which divided the staff of TDC and undermined
change initiatives.
In contrast with TDC, CIPO, throughout its conversion process,
benefited from the "benevolent support" by ministers and deputy ministers of its
two successive host departments. This support did not prevent tension between
the agency and ministerial divisions over the sharing or the transfer of
224
responsibilities. However, this support meant that, when satisfying agreements
could not be reached, top authorities could bend in favor of the agency’s claims.
CCI felt neither explicit support nor opposition from its two successive
host departments regarding its conversion. An explanation for this situation
most likely resides in the nature of the flexibilities granted to CCI which did not
seriously challenge departmental prerogatives.
Leadership. A comparison of the three agencies regarding the kind of
leadership that accompanied their conversion to SOAs shows critical differences.
TDC was characterized by discontinued and inconsistent leadership. Over a
period of five years, no less than four people acted as chief operating officers.
More importantly, their styles were different, an element that created much
ambiguity and frustration on the part of TDC’s employees.
CIPO’s top leadership continued to be exercised by someone who was
in charge before the organization was transformed into an SOA and was highly
respected by the agency’s staff. However, the creation of a chief operating
officer’s position and the appointment of an experienced manager in that
position were crucial in making the conversion a successful experience. "Dual
leadership" allowed the CEO to concentrate on policy issues concerning the
agency while the COO could direct its full attention to the internal
reorganization of the agency, the introduction and the support of various
management initiatives, and issues affecting the agency’s bottom line. A final
225
element that made leadership particularly critical in the case of CIPO was their
top managers’ firm belief that their organization could profit from the SOA
status and that it could help the agency improve its performance in a significant
way.
The leadership in CCI remained unchanged following its conversion to
an SOA. Neither the nature of flexibilities granted or the type of environmental
issues the organization had to face indicated that a new type of leadership or
new leaders were necessary.
The Confusion about Functioning in a "Businesslike" Fashion and
Internal Conflicts. Interviews with TDC’s informants revealed that two other
factors played a determinant role in preventing the SOA status from having the
expected impact: (1) the confusion about what to function in a "businesslike
fashion" meant for TDC and (2) a permanent state of conflict inside the
organization. Part of TDC’s staff thought that, despite the claim that TDC’s
bottom line was to break even, the real objective of the agency was to make
profits—a goal they perceived as being in contradiction with their traditional
mission. As of the permanent state of conflict resulting from the systematic
opposition between two groups, it undermined change initiatives that the
conversion could have inspired.
The confusion about functioning in a "businesslike" fashion was not
mentioned in the case of CIPO simply because the issue was formally, explicitly
226
and clearly addressed by the agency in its charter. The information collected
from CIPO informants also confirmed that an harmonious climate was
prevailing in the agency throughout the conversion process.
CCI’s initial fear of privatization quickly vanished with the production
of CCI’s charter and the confirmation that it could pursue its traditional
mandate. The functioning of the agency in a "businesslike" fashion did not
seem to concern the staff and was mostly perceived as an incentive to develop
alternative sources of revenues (most CCI activities being financed through
legislative appropriations). Finally, no internal state of conflict that could have
blocked change attempts in CCI was detected.
Figure 13 presents the preliminary version of a substantive model that
derives from the comparison among the three models developed for each of the
three SOAs surveyed. According to this model, "significant flexibilities"
become the determinant factor,2 5 which has the potential to effectively
transform governmental agencies converted to SOAs. However, two supporting
factors must be present to activate significant flexibilities and make the
conversion effective. They are: (1) the explicit support by the host department’s
top authorities and (2) the exercise of "strong" leadership by those in charge of
the agency.
“ Accountability measures constitute the other critical factor which will be
discussed later in this chapter.
227
FIGURE 13
THE BASIC FACTORS MAKING THE SOA CONVERSION
EFFECTIVE
ONE (1) TWO (2 ) O N E m G L O B A I
DETERMINANT SUPPORTING r m r r
FACTOR FACTORS E F F E C T
Significant
flexibilities
Strong leadership
on the part of
managers in charge
of the SOA
Strong and explicit
support
by host
department's top
authorities
The effective
conversion
of the SOA
Refining the Model Emerging From the Comparison
Among the Three Agencies
The preliminary version of the SOA model inspired by the three case
studies constitutes a first step towards the elaboration of a substantive model to
guide the SOA conversion. This preliminary model, however, may be refined
by specifying what a "significant flexibility" stands for. As a general premise,
a flexibility or a set of flexibilities, will qualify as significant if it has the
potential to effectively transform a given agency’s internal activities and if. bv
228
doing so. it improves the agency’s adaptiveness to its environment.2 6 This
premise assumes that a preliminary condition to have significant flexibilities is
the perception that the agency’s environment requires the kind of organizational
changes these flexibilities may bring about.
Table 23 lists the two parameters used to stretch the comparison among
the three case studies under hand and to refine the basic model presented in the
preceding section. They are: (1) the agencies’ environments and (2) the
agencies’ internal operations.
The Environments of the Three Agencies. Many references to the
environment specific to each of the three agencies were made by respondents.
The description of their organization explicitly included a description of the
environment in which it evolved. Indeed, all perceived that a key criterion to
judge their organization’s performance was its capacity to adapt to its particular
environment. Budget constraints and clienteles’ expectations were the two
environmental factors which informants from all three agencies identified as
being influential regarding the functioning of their agencies. However, these
two factors influenced the three agencies in very different ways.
2 6 The analysis of the agencies’ environments presented in this chapter limits
itself to their "stability-turbulence" dimension (Katz & Kahn, 1978). It must be
also noted that, because the roles of host departments have already been
commented before in this text, "host departments," as an important element of
the agencies’ environments, is excluded from the following analysis.
229
TABLE 23
CHARACTERISTICS OF THE THREE SOAs’ ENVIRONMENTS AND
INTERNAL OPERATIONS
Parameters TDC CIPO CCI
• Budget • Budget constraints; • Budget
constraints; • Clientele’s constraints
• Clientele’s expectations for • A demand for
The changing needs; more effective CCI services
Agency’s • Growing services that exceed CCI
Environment competition;
• Ambiguity in
mission.
• New legislation. capacity.
* * *
High turbulence Moderate turbulence No turbulence
• Support & control • Support & control • Support &
activities activities control activities
centralized in decentralized; centralized in
PSC; • Core operations Heritage
• Core operations’ moderately C anada;
processes highly standardized and • Core operations
standardized exercised by highly not standardized
Internal Operations (dysfunctional); skilled specialists; and exercised by
(Support, Control • New services • In-house training. highly skilled
and Core Activities’
Characteristics)
would require
professionals with
new skills.
specialists.
** ** **
(Some changes (Changes required at (No change
required at the the levels of support required at the
levels of support and control activities levels of support,
and control did take place. No control and core
activities took
place. Changes in
core activities did
not take place.)
need to change core
activities)
activities.)
In the case of CCI, for instance, budget constraints meant direct cuts in
its budget—a situation confronted by all other governmental organizations
financed through legislative appropriations. TDC, for its part, was only
230
indirectly concerned with budget constraints because of its functioning on a cost-
recovery basis with a revolving fund. However, over the years, as a result of
budget cuts, the money ministries traditionally invested in training had shrunk;
and TDC expected that situation to worsen. Because of its recent operation of a
revolving fund and of its clientele who were non-governmental (private
companies asking for trademark registration) and often located outside the
country (foreign inventors asking for patents), CIPO was neither directly nor
indirectly affected by governmental budget cuts.
All three agencies made the satisfaction of their clients’ needs a
priority, but this priority had different consequences for the three agencies.
TDC was deeply concerned by the changing needs of its clientele (reinforced by
the fact that many other organizations competed to satisfy them). They
expected training services be more adapted to their particular situations. This
required TDC to update its courses’ contents as well as its pedagogical
approaches. As a result, TDC started developing tailored services more
conformed to clients’ expectations. CIPO also felt pressure to be more
responsive to its clientele. But, CIPO’s challenge had less to do with the
development of new products than with the faster processing of requests for
intellectual property rights. Such improvement was to keep the Canadian
system a reference worldwide and attract more clients (mostly those who apply
for patents’ rights). As of CCI, most of its clients’ expectations remained
231
essentially unchanged. Clients, of course, expected that their conservation
needs would be treated more rapidly. But they had no way to influence CCI in
that respect and had virtually no other alternative to get free, high quality
conservation services. To deal with such an excessive demand, the agency
continued to apply its own internal criteria to identify the needs it would
primarily respond to.
Besides budget constraints and clientele needs, TDC and CIPO had to
cope with additional, but particular, environmental issues.
TDC was the only one among the three agencies which had to cope
with growing competition. This competition did not only come from outside the
federal government, although private-sector enterprises were clearly identified as
a source of serious and sometimes unfair competition by TDC managers, it also
came from federal departments which were developing their own training
services or buying them from TDC’s competitors. According to TDC’s
employees, an element which made this situation even more critical was the
Treasury Board’s ambiguous policy regarding training in the Public Service,
which left deputy-ministers with total discretion regarding that matter.
CIPO informants also liked to picture their organization in competition
with foreign intellectual property offices. But a more important challenge in the
case of CIPO came from the changes in its legal environment following the
provisions of new international agreements— the most important being the North
232
American Free Trade Agreement (NAFTA) between Mexico, the United States
and Canada.
This summary of the environmental factors influencing the three
agencies leads to two conclusions. First, the three agencies faced three rather
different environments. Second, it is possible to characterize these three
environments as more or less turbulent, the degree of turbulence varying with
the number of environmental factors influencing the different agencies as well as
the critical nature of their impact on the survival and the development of the
three organizations (Table 24).
TABLE 24
A CHARACTERIZATION OF THE ENVIRONMENTS OF
TDC, CIPO AND CCI
TDC CIPO CCI
Type of
Environment
Highly
turbulent
Moderately
turbulent
Not particularly
turbulent
TDC’s environment qualifies as highly turbulent, at least the most
turbulent one compared to those of CIPO and CCI. TDC’s high degree of
turbulence was principally due to the existence of growing competition and the
uncertainty created by the ambiguous policy regarding training in the Canadian
Public Service. CIPO’s environment is said to be less turbulent than that of
TDC—the degree of turbulence in this case being essentially caused by changes
233
in laws and rules governing the management of intellectual property rights and
an international context that pressed for more rapid service. CCI’s environment
is perceived as pretty stable or at least no more turbulent than that of the vast
majority of governmental organizations that had to cope with budget constraints.
The Three Agencies’ Internal Operations. As illustrated in Figure
14, the operations of an organization may be grouped into core, support and
control activities (Mintzberg, 1979).
FIGURE 14
THE RELATIONSHIPS BETWEEN AN ORGANIZATION’S CORE,
SUPPORT AND CONTROL ACTIVITIES
The Organization's Mission
Control Activities
y Support Activities
N* .
------------------------1 V
Core Activities
Core activities or tasks are those directly linked to the agency’s central
mission. TDC’s core activities include the design and offering of training
sessions. CIPO’s examiners analyze requests for intellectual property rights.
CCI provides conservation services to Canadian museums and undertake
research projects to solve conservation issues. Examples of support activities
234
include CIPO’s counseling services offered by its personnel division, TDC’s
library and CCI’s administration which manage the necessary steps to provide
new instrumentation or laboratory material solicited by conservators. Control
activities refer to rule-making and activities ensuring that formal rules are
properly applied. Those in TDC who design and format course content exercise
much control over TDC’s services. CIPO’s division of personnel controls
staffing, and CCI’s administration applies guidelines and controls to
conservators who travel abroad to attend conferences.
The core activities of all three agencies share two characteristics.
First, they are relatively complex. Second, they are accomplished by skilled
professionals. It is because of relative complexity that the control over work
processes through the application of standards must be limited and allow
professionals to exercise a certain degree of freedom in choosing how the tasks
can be best accomplished. This degree of freedom is even more important
when the quality of services depends on professionals’ capacity to take clients’
particular needs into account.
Given the limitations of work process standardization, two other forms
of standardization may come into play to guarantee that professional workers
execute and coordinate their work and efforts well and that they use their
discretion in an appropriate fashion (Mintzberg, 1978, p. 7). By hiring people
with similar skills or providing its own training to them, an organization may
235
apply skill standardization. By inviting employees to share and pursue the same
explicit objectives, the organization may control through output standardization.
Many flexibilities granted to SOAs involved the transfer of support and
control activities from their host departments. The transfer of personnel and
financial authorities are two typical examples. Such transfer did not seek to
modify agencies’ core activities as such but let them manage their support and
control services in a more decentralized way. These authorities, when they
were granted, had a different impact on the existing combination and the
balance that prevailed between the three forms of standardization (work
processes, skills and outputs) characterizing the agencies’ core operations.
Table 25 summarizes the different combinations of standardization
forms that could be observed in the three agencies.
TDC’s core activities. A relatively high degree of work and output
standardization applied to most of TDC’s courses and other training services.
Indeed, strict rules governed what could be communicated through courses and
how it was to be communicated. Course designers set the learning goals in
advance and prescribed the learning activities as well as the sequential
scheduling of these activities that trainers should respect. Typically, trainers
had little freedom to modify or adapt course content in response to participants’
specific needs. This way of organizing TDC’s core tasks had two major
advantages. First, a series of well-developed "calendar" courses could be
236
TABLE 25
A COMPARISON OF TDC, CIPO AND CCI IN THE
FORMS OF STANDARDIZATION
Forms of
Standardization
TDC CIPO CCI
W ork
Standardization
High Moderate Low
Skill
Standardization
Moderate High High
O utput
Standardization
High Moderate
(used to be lower)
Low
Overall
Comments Over
the
Combination
A combination
that needed to
be modified by
diminishing the
high degree of
work and
output
standardization
and by
compensating
with higher
skill
standardization.
A combination that
partly resulted
from the granting
of the SOA status
(more output
standardization
took place).
A combination
that remained
unchanged with
the SOA status
and that did not
need to be
modified.
The Impact of
SOA Status on
the
Combination
Flexibilities did
not contribute
to modify the
combination.
Flexibilities
encouraged
management by
results (through
output
standardization).
Flexibilities did
not contribute to
modify the
combination.
237
advertised months before their provision. Second, once developed, these
courses required minimal preparation on the part of trainers who only needed to
follow the detailed sequence of activities included in elaborate course plans.
But since the late 1980s, TDC gradually realized that standard courses
did not make sense when clientele expressed particular training needs and
expected training to be adjusted to their own reality. As a result, the volume of
standard courses offered by TDC started to proportionally diminish in favor of
services designed to respond to clients’ particular and varying training needs.
This new tendency required that course designers and trainers modify their
traditional approach to training. A new perspective on training called for closer
relationships between course designers, trainers and clients. It also called for
more freedom on the part of trainers in order to take into account clients’
specific needs. In other words, the traditional division of work between
designers and trainers that characterized TDC’s core activities had to be
challenged: work and output standardization needed to be reduced and balanced
with more skill standardization. These skills would equip TDC’s professionals
with a capacity to efficiently design, adapt and provide training services which
would fit clients’ specific training needs. Unfortunately, these modifications to
TDC’s training approaches have been too slow to materialize in a market that
commanded quick and important modifications to TDC’s services. The
flexibilities granted to TDC did little to speed up these changes and, indeed, did
238
not contribute to modify its core activities. Rather, the flexibilities granted
addressed superficial aspects of the agency’s modus operandi (such as the
authority to set fees for courses and to remove some constraints regarding the
hiring of personnel).
In sum, the flexibilities granted to TDC were of little help and non
significant given the challenge posed by its environment and the need to re
engineer its core activities. These modifications would have required strong
leadership, a long-term commitment by TDC’s host department and important
investments to recycle or retrain TDC’s professional staff—conditions that were
not present in the agency at the time of the inquiry.
CIPO’s core activities. CIPO’s core work processes were moderately
standardized, and CIPO’s technocrats had little control over the rules and
standards that applied to the treatment of intellectual property requests. Indeed,
most standards that applied to CIPO’s core activities took the form of legal
provisions pertaining to how intellectual property requests were to be processed.
These provisions also defined the criteria that CIPO had to respect in issuing
intellectual property rights. As of output standardization, CIPO used its SOA
status as an opportunity to increase its degree. For instance, the agency
established goals to diminish the processing time of trademark requests and was
about to set similar goals for patents at the time of the inquiry.
239
Of particular interest regarding CIPO’s core activities is that the
analysis of requests for intellectual property rights requires special expertise in
various disciplines. The examination of requests for patent rights, for instance,
may call for knowledge in biochemistry, engineering or electronics. As a
result, all CIPO examiners must be experts in fields of advanced knowledge.
Their expertise, most often acquired outside CIPO, is typically completed with
in-house training regarding the many rules that must be respected in the
examination of demands for intellectual property rights. In sum, the
organization plays a partial but active role in controlling the acquisition and
standardization of skills its examiners must possess.
CCI’s core activities. Almost no rules or standards applied to the way
CCI executed its core operations (conservation services or research) and its
outputs. Contrary to CIPO, no law or regulation could impose the smallest
degree of work standardization to tasks or work activities which exclusively
depended on the nature of the conservation issues to be solved. The few rules
or standards that CCI’s conservators and researchers applied essentially were
state-of-the-art in the field of conservation which continuously developed. In
some cases, CCI professionals faced conservation issues that were so unique
that they had to literally invent conservation procedures. The aleatory nature of
many conservation processes seriously limited output standardization as well. In
summary, the degree of work and output standardization that applied to CCI’s
240
core operations was very low and could only be supplemented by skill
standardization. But, contrary to CIPO, which had some control over the
acquisition of skills by its examiners, the skills of CCI’s conservators were
mostly acquired outside the organization (through academic training), through
work experience or exchanges with other conservation institutes often located in
other countries.
While the combination among the three standardization forms seemed
appropriate in the case of CCI, the analysis of these forms in TDC suggests
that, in order to adapt to the changing conditions of its environment, the
combination among these three forms needed to be modified by putting less
emphasis on work and output standardization and by strengthening skill
standardization. CIPO, on its part, used the SOA opportunity to increase output
standardization.
Taking into consideration the differences between the specific
environments and the core activities of the three SOAs studied, it becomes more
evident that these two parameters called for flexibilities of different nature and
scope. TDC did not only require flexibilities that would affect its management
or its support services but flexibilities that would have encouraged the agency to
modify its core activities in order to adapt to an environment that commanded
important changes in the services it offered. CIPO’s environment also dictated
that the agency modified itself but not to the point of questioning its basic
241
activities and the fundamental way they were designed and conducted. The
flexibilities CIPO received, and its obligation to cover it costs with its own
generated revenues, encouraged its management to bring about these
modifications (increased output standardization). As of CCI, its environment
remained stable over the years, although the demand for its services never
stopped increasing. So, nothing in CCI’s environment really challenged the way
its core activities were executed. Under these circumstances, the flexibilities
that came with the SOA status in the case o f CCI, did not need to be significant
and, indeed, they were not.
The various considerations made about the three agencies’ environments
and their internal operations may now be used to complete the basic model
exposed earlier. Figure 15 depicts the revised model.
242
FIGURE 15
A REVISED MODEL OF THE CONDITIONS AND FACTORS
MAKING THE SOA STATUS EFFECTIVE
Strong leadership
on the part of
managers in charge
of the SOA
Strong an d explicit
support
by host departm ent's
top authorities
1. The flexibilities
granted helped the
agency to D etter
adapt to its
environment
the flexibilities granted
will make the changes
possible.
The perception
(1) that the
environment
calls for internal
changes, (2) that these
changes will
principally affect the
agency's support and
control activities
THREE (3)
PRE-CONDITIONS DETERMINANT SUPPORTING
FACTOR FACTORS
Significant
flexibilities
ONE (1) TWO (2)
ONE (1) GLOBAL
EFFECT
and ONE (1)
OUTCOME
The effective
conversion
This revised version of the SOA model states that three preliminary
conditions should exist to have significant flexibilities that may effectively
transform a governmental organization formally converted to an SOA. This
organization must first perceive the need to adapt to a changing environment.
Second, the administrative changes to be made internally to adapt to this
changing environment should essentially target support and control activities and
minimally affect the agency’s core activities. Any major modification regarding
the way core operations are exercised by professionals in a governmental
243
bureaucracy pose problems that the sole granting of administrative flexibilities
can influence very marginally. Third, the organization must perceive that the
flexibilities granted will effectively help it to adapt to that environment.
Integrating the Accountability Dimension With the SOA Model
To improve organizational performance through the granting of
flexibilities and the adoption of businesslike practices was not the only goal
pursued by the SOA Initiative. Another major component of the reform, which
is of special concern given the public character of SOAs, sought to enhance
their accountability. It is then important to try to appreciate to what extent the
SOA Initiative contributed to improve the agencies’ accountability. Figure 16
shows how the model integrates this new parameter.
Because accountability’s enhancement sought to counterbalance the
exercise of the new flexibilities granted to agencies, accountability measures and
significant flexibilities are adjacently shown as the two determinant factors in
the model.
One pre-condition must exist to enhance an agency’s accountability: its
performance criteria must be quantifiable, at least to some degree. This, in
turn, facilitates the determination of clear goals and the assessment of results.
Performance criteria that are less prone to quantification poses more serious
problems to goal definition and accountability based on results than performance
criteria that are less easily quantifiable.
244
FIGURE 16
THE SOAs’ ACCOUNTABILITY MEASURES INTEGRATED
WITH THE BASIC MODEL
FOUR (4) TWO (2) TWO (2) ONE (1) GLOBAL
PRE-CONDITIONS DETERMINANT SUPPORTING EFFECT
FACTORS FACTORS and TWO (2)
OUTCOMES
The effective
conversion
of the SOA
Strong leadership
on the part of
managers in charge
of the SOA
Strong and explicit
support
by host
department's top
authorities
1. The flexibilities
granted helped the
agency tobetter
adapt to its
environment
2. The measures
planned to enhance
the agency's
accountability were
activated
Measures
to enhance the
agency's
accountability
Significant
flexibilities
The perception
(1) that the
environment
calls for internal
changes, (2) that these
changes will
principally affect the
agency's support and
control activities
(and marginally affect
the agency's core
activities) and (3) that
the flexibilities granted
will make the changes
possible.
(4) The agency's
performance is
subject to some
degree
of quantification.
Since the SOA status is granted to governmental organizations involved
in service delivery rather than policy making or rule application precisely
because their outputs are expected to be more easily quantifiable, the three
SOAs investigated are expected to meet that pre-condition. The "raison d ’etre"
of their business plans was precisely the production of such goals. Still, a
close look at the first of the four accountability measures that were to be applied
245
by most SOAs (Table 26) shows that the production of clear and quantifiable
goals against which results could be compared varied between the three
agencies.
TABLE 26
ACCOUNTABILITY MEASURES APPLIED BY
THE THREE AGENCIES
Parameters TDC CIPO CCI
• Many operational • Many operational • No operational
objectives based objectives objectives
on past tendency; integrated to clear (replaced by a
Measures To • No annual reports goals and precise list of activities);
Increase issued; strategies; • Production of
Accountability • Diffused • Production of annual reports
accountability specific annual that do not allow
relationship; reports; an appreciation
• No advisory • Clear of the agency’s
board. accountability
relationship
between the CEO
and the deputy
minister;
• A management
advisory board
created in 1995.
performance;
• Accountability
relationship
unchanged;
• No advisory
board.
♦ * *
Accountability not Accountability Accountability not
enhanced enhanced enhanced
TDC, for instance, in its first and second business plans, effectively
presented a long list of quantified objectives which essentially derived from an
extension of past results rather than from a systematic inquiry about market
expectations. Its third business plan did not present any clear objectives to be
pursued. CIPO also produced a long list of objectives but, contrary to TDC in
246
its two first business plans, these objectives addressed specific issues and were
integrated with larger goals and specific strategies. CCI set objectives, but only
regarding a marginal part of its activities (e.g., the revenues expected from the
sale of its publications). Typically, the nature of many of CCI’s operations
prevented its commitment towards quantified goals (those related to research,
for instance). To summarize, on this accountability measure, only TDC and
CIPO were in a position to meet the pre-condition set in the model. CCI,
because of the nature of its activities, could only partially meet it.
The second accountability measure consisted of the production of
annual reports by SOAs. It is principally through these reports that results
could be compared to the goals set in business plans. As previously mentioned,
TDC did not produce annual reports, and only some information about its
accomplishments were published in the Public Service Commission’s annual
reports. CIPO, for its part, since it got the SOA status, issued two annual
reports in which operational and financial results were detailed. CCI also issued
annual reports which detailed the various conservation undertakings whose
content did not help to appreciate the global performance of the organization.
The third accountability measure was the establishment of more direct
accountability relationships between the agency’s top officials (the Chief
Executive Officer or the Chief Operating Officer) and host department’s senior
management. Although TDC’s Charter formally indicated that the agency
247
would be under the direct responsibility of a chief executive officer (CEO) who
would report to PSC’s top authorities, a chief operating officer (COO)—rather
than a chief executive officer—was put in charge of the new SOA. Moreover,
an additional hierarchical level (a CEO responsible for two divisions, including
TDC) was created which prevented a more direct accountability relationship
between TDC’s COO and PSC’s top authorities. In the case of CIPO, a CEO,
accountable to the Parliament through the minister of Industry Canada, was put
in charge of CIPO. As for CCI, its chief operating officer was only indirectly
accountable to the highest authorities of Heritage Canada, its host department.
Finally, the creation of advisory boards, whose membership was to
include representatives of the agencies’ main stakeholders, was a measure likely
to enhance SOAs’ accountability. The creation of advisory boards was to
provide assistance and advice to managers in charge of SOAs. But advisory
boards could also be considered a mechanism to reinforce the accountability
relationship between those responsible for the agencies’ operations, host
departments’ authorities and the agencies’ main stakeholders. Unfortunately,
TDC, CCI and their host departments chose not to create advisory boards.
Only CIPO set a "management advisory board" reporting to both its CEO and
the deputy manager of Industry Canada.
Comparing the measures that came with the SOA status and could
contribute to enhance agencies’ accountability, it is quite evident that only CIPO
248
fully used the SOA status as an opportunity to improve it. TDC, despite formal
measures announced in its charter, did not use its new status to modify its
traditional accountability structure. CCI went further than TDC by publishing
annual reports whose content, however, fell short of demonstrating improved
performance.
The Impact of the SOA Status on Organizational Climate
So far, the global effect or the effective conversion of SOAs following
their conversion is said to be assessable through two different outcomes. (See
Figure 16.) The modifications effectively implemented in the agencies and
made possible by the activation of flexibilities is the first outcome largely
commented on in this chapter and in chapters where each agency was
individually analyzed. The second outcome refers to the accountability
measures which are effectively activated by the agency.
A third outcome, which concerns a more subjective dimension, can
now be introduced. This outcome refers to the agencies’ internal climate, as
perceived by the analyst. A simple assumption can be made that a more
positive climate will prevail where the impact of the SOA conversion is
perceived as having been effective, while a much less positive climate will
predominate in agencies where informants consider that the SOA conversion has
249
had no positive impact, or worse, a negative impact. As illustrated in Table 27,
the researcher perceived three different climates following site visits, meetings
and interviews with various informants.
TABLE 27
THE INTERNAL CLIMATE IN TDC, CIPO AND CCI AS
PERCEIVED BY THE AUTHOR
TDC CIPO CCI
The
Researcher’s
Perception of
Internal
Climate
Pessimism
about the future
of the agency
Enthusiasm and
confidence
about the future
of the agency
Resignation to budget
constraints with some
apprehension about
the future of the
agency
By the time interviewees were contacted, all federal public servants
were confronting a difficult context and much uncertainty. Months before the
1995-1996 federal budget presented on February 27, 1995, persistent rumors
about large cuts in the federal public service had spread; and many public
servants feared for their career. Although managers and employees from TDC
shared this anxiety, they seemed less concerned by these cuts because of the
cost-recovery rule and the revolving fund authority that somewhat protected
them from governmental cuts in appropriations. Indeed, TDC’s employees,
who were proud to belong to TDC, were more preoccupied by the future of the
entire organization. Many expressed the opinion that the agency could
disappear if something was not done to redress the difficult situation it was
250
experiencing. The atmosphere was tense; only a few believed that those in
charge could bring about the type of change needed. Using one word, TDC’s
respondents were "pessimistic" about the future of their agency and their own
future in it.
Like TDC respondents, CIPO’s managers were confident that the
budget cuts would only marginally affect the agency which was operating on a
cost-recovery basis with a revolving fund (although only since April 1994).
However, contrary to TDC, CIPO respondents were optimistic about the future
of their organization and felt that the organization had all the necessary
ingredients to survive and grow.
Managers and employees from CCI met a few months after the budget
cuts were announced. Many felt relieved that the cuts had not reduced the
number of employees but feared that such a relief could be of a short duration.
Feeling powerless in the face of that situation, CCI’s employees only hoped that
the Canadian policy regarding conservation would remain unchanged,
confirming the existence of CCI and endorsing the basic conditions under which
it functioned.
Conclusion: The Substantive Model and Four
Related Propositions
Figure 17 depicts the final version of the model which emerged from
the comparative analysis of TDC, CIPO and CCI.
251
FIGURE 17
THE MODEL EMERGING FROM THE ANALYSIS OF THE
CONVERSION OF THREE CANADIAN GOVERNMENT
ORGANIZATIONS TO SPECIAL OPERATING AGENCIES
ONE (1) GLOBAL
EFFECT
and THREE (3)
OUTCOMES
TWO (2)
DETERMINANT SUPPORTING
FACTORS FACTORS
TWO (2)
FOUR (4)
PRE
CONDITIONS
1. T h e flex ib ilities
g ran ted h e lp e d the
ag en cy to Defter
a d a p t to its
e n v iro n m en t
3. E n th u sia sm
a n d c o n fid e n c e
a b o u t th e fu tu re
o f th e ag e n c y
2. T h e m ea su re s
p la n n e d to e n h a n c e
the ag en cy 's
a c c o u n ta b ility w e re
a c tiv a te d
T he effective
c o n v e rsio n
o f the SO A
S tro n g le a d e rsh ip
o n th e p a r t o f
m an ag ers in ch arg e
of th e SO A
S tro n g a n d e x p licit
s u p p o rt
b y h o st
d e p a rtm e n t's top
a u th o ritie s
M e asu res
to en h an ce the
agency's
acco u n ta b ility
S ignifican t
flexibilities
T h e p e rc e p tio n
(1) th a t th e
e n v iro n m e n t
c alls fo r in te rn a l
ch a n g e s, (2) th a t these
c h a n g e s w ill
p rin c ip a lly a ffe c t th e
a g en cy 's s u p p o r t an d
c o n tro l a c tiv itie s
(a n d m a rg in a lly affect
th e ag en cy 's c o re
activ ities) a n d (3) th at
th e flex ib ilities g ra n te d
w ill m a k e th e c h a n g e s
p o ssib le.
(4) T h e a g e n c y ’s
p e rfo rm a n c e is
subject to so m e
degree
o f q u a n tific a tio n .
Assuming that the impact of the SOA conversion may be assessed
through the agencies’ better adaptation to their environment, the number of
accountability measures effectively activated and the overall climate prevailing
inside them, the model this dissertation has developed can be summarized in
four propositions.
252
First, the flexibilities granted to an SOA will prove to be significant if
they provide its management with more autonomy in making internal changes
and if these flexibilities contribute to harmonize the relationship between the
agency and its environment. However, given the nature of the flexibilities
which usually come with the SOA status, they may not be convenient when an
agency, in order to adapt to its environment, should transform its core
operations in an important fashion. In such a case, an alternative conversion
scheme may be more appropriate.
Second, the enhancement of accountability on the basis of results is
more likely to take place in agencies whose performance criteria are
quantifiable.
Third, explicit support of the conversion by host departments’ top
authorities is a necessary condition for significant flexibilities to facilitate the
expected conversion and for accountability enhancement to take place.
Fourth, strong and committed leadership on the part of those directly in
charge of the agency is required to adequately activate the flexibilities granted
and implement the accountability measures.
253
CHAPTER VIII
LEARNING FROM THE SOA MODEL
This chapter discusses the substantive, methodological and theoretical
lessons that may be inferred from this dissertation and their possible extension
into future actions or undertakings to make the SOA Initiative or reforms of the
same nature more effective.
The drawing of substantive and theoretical lessons is consistent with
Glaser and Strauss’ opinion (1967) according to which an effort to develop
grounded theory should involve work at two levels: (1) substantive theory that is
closely linked to the originating cases and (2) formal theory that begins to
position the ideographic inquiry (here, three cases specific to Canadian SOAs) in
a broader nomological network of concepts that apply in a wider variety of
situations (e.g., concepts like organizational culture and change process).
Substantive Lessons To Guide the SOA Practice
The SOA Conversion Can Be Effective (although this may be rare).
An overall lesson from the present inquiry is that the SOA initiative, under
certain conditions, can produce effective organizational conversion and that it
may be a successful instrument to bring about significant changes in
254
governmental organizations. The present dissertation neither disputes nor
challenges that many contextual obstacles may have impaired the SOA effort to
reform the administration of selected governmental agencies or the idea that,
globally, the initiative might have been deceptive. To advance such judgments,
however, would require a full assessment of the entire initiative—an undertaking
that this dissertation did not pursue. Rather, this dissertation chose the SOA
Initiative to uncover a model which can be used to learn about the conversion of
governmental agencies. As for the success or the failure of the SOA Initiative,
the only proposition that could be made following the present inquiry is that the
SOA status proved effectual, beneficial and fertile in at least one of the three
SOAs investigated, ineffective and sterile in at least one and had no important
impact, either positive or negative, in a third one. In that sense, the Canadian
Intellectual Property Agency (CIPO), the only successful SOA investigated in
the course of the present inquiry, could be the exception; that is, the only
governmental organization among fifteen Canadian SOAs to have taken
advantage of it.
Lessons and Suggestions Deriving from the SOA Model. Important
lessons can be drawn from the main output of the present inquiry; that is, the
production of a model and propositions pertaining to the critical factors that
make the SOA conversion effective. Before listing them, it is important to
remember that such a model was not only non-existent; but many doubted that it
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could be developed at all given the many differences between the governmental
organizations converted to SOAs (an opinion formally expressed by the Auditor
General of Canada in its report on SOAs—see Chapter 1). To be sure, the SOA
model developed in the course of the present dissertation may be completed and
enriched, and its validity may be improved (related suggestions are made in a
forthcoming section of this chapter). But, at least, and for the first time since
the SOA Initiative was officially launched in December 1989, a model grounded
in the conversion of three governmental organizations to SOAs is now in
existence.
A quick review of the SOA model provides the opportunity to make
some practical suggestions to increase the effective conversion of agencies to
SOAs and raise some questions that should be examined more thoroughly should
the SOA Initiative be extended or a similar operation launched.
The model identified at least three critical elements about which
practical suggestions can be made. The first one questioned the pertinence of
selecting SOA candidates on the sole basis of the criteria formally established by
the Treasury Board Secretariat. These criteria ought to be completed with a
systematic evaluation of the total situation each potential candidate faces. Such
an evaluation, similar to a strategic planning exercise (Bryson, 1988), would
ultimately specify the scope of flexibilities that best fits the particular situation
of each candidate and would evaluate to see if the SOA status is really the most
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relevant type of interventions given the situation. This kind of evaluation, in
the case of TDC, could have concluded that more significant flexibilities were
required or that the SOA status was less appropriate than the privatization of
this agency or its conversion to another form of governmental organization (a
Crown Corporation, for instance). In the same manner, an evaluation of CCI’s
context could have demonstrated that, unless the Canadian policy regarding
conservation was modified, there was no need to convert it to an SOA (and that
the flexibilities required did not call for a change in its administrative status).
The second critical element concerned the attitude that host departments
have towards "their" SOAs. This study advances that an effective SOA
conversion depended on host departments’ support. Interestingly, as illustrated
in the case of CIPO where this support was labeled as "benevolent
indifference," host departments’ proper attitude does not need to take the form
of close surveillance of or permanent assistance to SOAs. It only requires that
host departments commit themselves to do whatever is necessary to remove their
own internal obstacles to help the new SOAs to effectively capitalize on their
flexibilities and enforce the accountability measures specified in their charter.
One important question then refers to the means which should be used by those
who are responsible for the overall initiative (the Treasury Board Secretariat in
the present case) to make sure that SOAs get proper support from host
departments. Although there is no unique and conclusive answer to that delicate
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question, at least three suggestions can be made. The first suggestion is to
require that host departments make the CEO or the COO in charge of the SOA
directly accountable to the deputy minister. Second, every host department
should commit itself to create an advisory board which would be representative
of the SOA’s main stakeholders and which would report to both the deputy
minister and the CEO or the COO directly in charge of the agency. It must be
noted that these provisions can actually be found in many SOAs’ charters. So,
the recommendation is to make their enforcement mandatory rather than leaving
it to the discretion of host departments’ authorities. A third suggestion is to be
particularly careful in cases where the mandate of the potential SOA candidate
differs from its host department’s central mission. In a situation like this, the
proper location of the SOA should be discussed before the SOA status is
granted. This suggestion rests on the premise that, in such cases, host
departments are likely to have less interest in making the conversion a success.
Contrary to those of CIPO and CCI, TDC’s activities regarding the training of
public servants had little to do with the central mission of its host
organization—the Public Service Commission. This certainly did not help TDC
to get PSC’s attention.
Should these suggestions appear as insufficient or impossible to
implement because of ministerial resistance, the alternative of making SOAs
more autonomous should be seriously considered. Some who closely followed
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the British experience with "Executive Agencies" believed that it should be the
way to go.
Agencies should become genuinely independent. . . . The
most important [requirement] is to cut agencies loose
from their parent department. . . and turn them into free
standing units accountable to ministers and Parliament in
their own right. The point is not just a technical one.
Being "part of the department" leads the core to believe
it has more rights and responsibilities in respect to the
activity, and in particular in respect of the workforce
undertaking that activity, than should be the case (Kemp,
1993).
"Strong" leadership, according to the model, is the third critical
element to consider. Curiously, despite the importance of leadership in
transforming organizations, underlined in the management literature in general
and stressed by those who participated in the present investigation, the Treasury
Board Secretariat, which formally launched and supervised the SOA Initiative,
has not formally committed itself to the type of leadership that would fit or
make effective the kind of changes sought by the reform. Indeed, important
aspects concerning the appropriate kind of leadership for SOAs remain
unexplored to this day. For instance, the following questions are still left with
very partial answers: What values should executives in charge of SOAs share,
and what skills should they possess? How could these values and skills be
assessed? Can those skills be acquired by public bureaucrats who have managed
these organizations essentially in a bureaucratic fashion for years, or is it
preferable to look for different leaders more familiar with businesslike
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practices? Should special incentives be available to attract the best candidates?
Answers to these questions about the proper type of leadership would most
likely challenge the actual practice of automatically confirming in the positions
of CEOs or COOs those who managed the agencies before their SOA
conversion.
Additional Lessons and Propositions to Improve the SOA Practice.
Quite clearly, not all SOAs were comfortable with some of the important
instruments that were to be used to convert governmental units to SOAs. For
instance, the analysis of the three SOAs’ business plans showed that not
everyone understood what a business plan was supposed to be, what it was for,
what it should contain and under what format it should be produced. Therefore,
more guidance and support should be offered to SOAs in drafting their charter
and their business plans. (TDC and CCI would certainly have profited from
such guidance and support.)
The investigation of the three selected SOAs also suggests that much
remains to be done to involve their staff in the conversion effort. It seems
urgent to go beyond the official discourse claiming that human resources are
critically important by specifying how managing people in SOAs should improve
as a result of the conversion. So far, a very few substantial and formal
measures, other than the expectation that SOA managers will modify their
attitudes and approaches to managing people as a result of the conversion, have
260
been announced. Among the measures that could be taken are a commitment to
and corresponding financial investment in the formation of SOA personnel in
"business disciplines" (in marketing, for instance, a discipline in which all
informants felt weak), the introduction of participation mechanisms to decision
making processes (regarding, for instance, the improvement of the quality of
services) and the dissemination of the agency’s charter and business plan among
employees (many interviewees never had the chance to consult these
documents). With many SOAs having the advantage of being rather small
organizations, they should capitalize on it in order to more systematically
involve employees willing to participate in the conversion process.
A third lesson concerns the lack of tools managers have to understand
and deal with organizational culture and cultural change. These concepts have
been repeatedly used by all those contacted in the course of the present study.
Still, a very few seemed to know what organizational culture stood for and how
they could practically and effectively try to modify it. Assuming that these
concepts can be useful and powerful in transforming organizations (an
assumption this study makes), there is much to do to help practitioners develop
concrete tools to manage organizational culture. Efforts in that direction are
strongly recommended.
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Methodological Lessons and the SOA Model As a
Starting Point For Future Research
Methodological Lessons. The reasons for adopting a theoretical
perspective combining interpretivist assumptions and grounded theory-building
were detailed in Chapter 3 and do not need to be repeated here except to say
that, in the view of the author, this perspective seemed to be appropriate under
the circumstances. Given the important role that such a perspective can play in
reconciling practitioners with theory (and even, perhaps, with theorists) and by
producing useful knowledge, one of the author’s personal goals is to further
develop research skills in using and implementing that perspective and
improving the corresponding procedure. Although the procedure applied in the
course of the present inquiry worked as planned, two elements regarding
investigation tools are worth mentioning. First, it was felt that the process of
developing a theory grounded in the experience people had with the SOA
conversion would have gained from a more systematic participation from
practitioners in the identification and confirmation of properties, categories and
hypotheses leading to the formulation of the SOA model. Time constraints were
not the only factor that prevented more involvement on the part of participants.
What was more problematic was the absence of mechanisms that would allow
people to actively participate in all the stages of the process. Ideally, such
mechanisms would contribute to create a network through which the participants
could exchange among themselves rather than uniquely exchanging with the
researcher. Combined with the theory-building perspective espoused in the
present inquiry, these mechanisms would support the emergence of a learning
community with a main interest in improving the functioning of their
organization. Of course, the role of the researcher, in such a context, would
extend beyond the usual process of collecting and analyzing data and would
include the support of this network by producing syntheses of discussions by
providing information required by participants, by pointing out contradictions
and by identifying the elements that could be generalized to other organizations.
Second, the unplanned use of electronic mail to collect and analyze
opinions expressed by respondents also suggests that this tool is a very
promising one. The financial advantage is obvious, and so is the possibility for
informants to participate without the usual time and space constraints. What is
less evident, but was verified in the course of the present inquiry, is the
appreciation people expressed regarding the use of this medium and its
acceptable degree of confidentiality, providing that the interviewee trusts the
researcher’s commitment to treat the information accordingly. This medium
also provides informants with more control over the communication of
information. In the present case, for instance, this resulted in intermittent, but
sound, dialogues between the author and informants over periods of time that
often lasted a few days. Particularly well-adapted to qualitative research,
electronic communication must be considered as a potentially useful and handy
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means of collecting data that will certainly be developed in the next years (but
whose exact potential remains to be explored).
Future Research Seeking to Confirm or Refute the SOA Model. As
specified in Chapter 3, because of the interpretivist scheme adopted in this
study and the comparison of a very limited number of SOAs, the usual criteria
used to appreciate the validity of the findings, the truth and the integrity of the
SOA model would partly be satisfied. Given these reservations, it is important
to consider the SOA model as a starting point towards further research and
investigation regarding the kind of change the SOA Initiative sought to
introduce. The SOA model must then be seen as a work-in-progress whose
development in the near future could take many directions.2 7
A direction in which future research could develop would seek to
validate or refute the SOA model (or anyone of its constituting parts). This
could be done through the activation of two alternatives. The first alternative
would imply the circulation of the SOA model to those who participated in the
present inquiry. Besides the fact that, by doing so, the researcher would respect
a commitment made to share the research findings with informants and that this
would contribute to the dissemination of the SOA model, this operation would
2 7 The reader will note in the next paragraphs that those directions include
suggestions that use a methodology different from the methodology used to
uncover the SOA model—this in conformity with the linkage that may be
established between the grounded-theory-building perspective and the testing
theory perspective discussed in Chapter 3.
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allow the gathering of comments and propositions which would help to fine tune
or adjust the model. A wider dissemination of the findings and the model,
through the publication of an article, would follow the analysis of these
comments and a probable update of the present SOA model.
The second alternative would build upon Karl R. Popper’s idea that the
best way to challenge the validity of a theory (or a model) is to look for its
refutation (Popper, 1965). Following this proposition, the SOA model would be
considered as valid until it is refuted. This would imply that, rather than trying
to confirm the validity of the SOA model through its testing, or through the
verification of causal relationships deriving from it, by investigating additional
case studies, the researcher would first look for one SOA whose conversion
proved ineffective despite the existence of the four conditions and the four
factors depicted in the model qt proved effective in the absence of these pre
conditions or factors. The search for a refuting case could be easily initiated by
submitting the SOA model and a detailed questionnaire designed around the
model’s variables to officers working in SOAs not investigated in the course of
present study. These people would have to appreciate the relevance of the
model given their experience with the SOA conversion. Should a refuting case
be identified following this step, the next one would be to conduct an inquiry
about the reasons why the SOA model, as developed in the present study, fails
to apply in that particular case. It should be noted that the end result of this
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process is likely to be an improved or modified version of the existing SOA
model rather than its mere refutation. This perspective is consistent with the
belief that the SOA model is a work-in-progress and will remain so until efforts
to confirm or refute it or its revised versions are interrupted.
Future Research Seeking to Refine the SOA Model. A second
direction for future research would seek to refine the SOA model (rather than
look for its confirmation). Such research effort could concentrate on at least
two aspects. First, the model would gain from the establishment of a series of
indicators to define and measure the meaning and scope of two o f its
constituting factors; namely "strong leadership" and "strong and explicit support
of the SOA conversion by host departments." There is an obvious need to
specify what a "strong leadership" stands for in converting governmental
organizations to new structural forms such as SOAs, where and how such
leadership should manifest itself and with what indicators and instruments this
important factor should be measured. Better information on this crucial factor
would contribute to better estimating the capacity of existing leadership to bring
about the necessary changes and could feed the decision-making process leading
to the conversion of specific organizations to SOAs. The development of a
series of indicators and instruments would also be most relevant to try to
measure and appreciate the level of support that can be expected from host
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departments before the conversion of their constituting units to SOAs are
considered.
Another important topic of research that would contribute to the
sophistication of the SOA model concerns the identification of performance
indicators that would produce more substance regarding the model’s three
outcomes. Such a research effort would seek to define the kind of evidence
necessary to interpret the model’s outcomes and develop instruments to collect
quantitative and/or qualitative data to substantiate: (1) SOA’s better adaptation
to its environment’ (as a result of flexibilities granted), (2) the enhancement of
its accountability (through the implementation of formal accountability measures
that came with the SOA status), and (3) its staff’s enthusiasm and confidence
about the future of the agency (confirming that SOAs’ employees believed in the
positive effects of the SOA conversion).
Future Research Seeking to Evaluate the Cost-Effectiveness of an
SOA Conversion. The cost-effectiveness of administrative reforms is one of
their important aspects. Still, many times, analysts focus on reform outputs and
outcomes while neglecting to address the costs associated with the production of
these outputs and outcomes. A good reason for such neglect resides in the fact
that these costs are often difficult to trace and that an ultimate judgment
regarding the cost-effectiveness of a particular reform calls for the examination
of very complex questions. Among those are the determination of all direct
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costs of producing given outputs and outcomes, the relations that may be
established between outputs, outcomes and costs, and the comparison of the
reform’s cost-effectiveness with the cost and the possible loss of effectiveness
the organization would have suffered in the absence of the reform. Although
answering these questions is difficult, it is believed that the SOA Initiative offers
an interesting opportunity to try to answer them. A realistic scheme would not
try to evaluate the cost-effectiveness of the SOA initiative as a whole but cost-
effectiveness at the level of individual SOAs. A good beginning would be the
analysis of the Canadian Intellectual Property Office (CIPO)—the only case
among the three agencies investigated in this dissertation to have experienced an
effective SOA conversion. Because CIPO already has some data on its
performance since its conversion, it should be easier for this SOA to trace back
the costs directly related to it.
Future Research Seeking To Assess the Real Effects of the SOA
Conversion. A final suggestion regarding future research concerns the use of
an interrupted time series design. Such a design "calls for several observations
before the introduction of [an] independent variable" (O’Sullivan & Rassel,
1989, p. 63). In the present case, the independent variable is the conversion of
a governmental organization to an SOA (or to a similar structural form). The
dependent variable is the performance of that organization defined along pre
determined criteria. The application of such design would, first, imply the
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choice of one SOA; and, second, the measurement of its performance criteria at
some points in time before its conversion (for instance, every year-end during a
period of three years). A third step would consist of measuring the performance
criteria of that organization at different points in time following the conversion.
(See Figure 18.)
FIGURE 18
AN ILLUSTRATION OF HOW AN INTERRUPTED TIME SERIES
DESIGN COULD APPLY TO SOAs
Oi 0 2 0 3 X 0 4 0 5 06
O i , 0 2 , O 3 = O b se rv a tio n s m a d e d u rin g th e first, th e se c o n d a n d th e th ird y e a r
b e fo re the c o n v e rsio n (= X )
O 4 , O 5 , 0 6 = O b s e rv a tio n s m a d e d u rin g th e fo u rth , th e fifth an d th e six th y e a r
a fte r the co n v ersio n (= X )
X = th e p o in t in tim e w h en th e o rg a n iz a tio n is fo rm a lly c o n v e rte d in to a S O A
This kind of design would be more convincingly established if the
conversion has real consequences on organizational performance and the extent
to which these consequences can be attributed to the conversion. It could also
be useful to estimate the delays that must be expected before these consequences
materialize and to appraise their lasting effect.
The application of an interrupted time series design to existing SOAs
would be problematic. For instance, the assessment of their performance before
their conversion could not be made directly by the researcher who would have
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to trust intermediary sources of information. Among the more interesting
candidates would be a governmental organization whose conversion is to take
place in the near future. But this would be possible only if governmental
authorities, responsible for the initiative, agree to collaborate in that sense, if
such a candidate can be found, and if a period of some years before the
conversion can be used to make the necessary "pre-test" observations. It would
also be important that the decision to convert the investigated agency in a few
years does not affect its performance before the conversion. In case a SOA
candidate could not be found, one or a few "unites autonomes de gestion"
("autonomous units of management") among the thirty that will be created by
the Quebec government in the coming years, and which have much in common
with Canadian SOAs, may offer a better opportunity to apply such design.2 8
Theoretical Lessons To Guide Future Theorizing
This study began with a theoretical interpretation of the initiative. This
interpretation portrayed the SOA Initiative as a comprehensive undertaking
which attempted to cover most of the usual organizational dimensions addressed
in the management literature. The initiative was also interpreted as an endeavor
to modify, to some extent, the bureaucratic culture prevailing in SOAs. Finally,
the review of some basic theories regarding how change takes place questioned
2 8 The first four agencies started to work with their new status on April 1,
1995.
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the way change was introduced to these agencies. This section revisits this
theoretical interpretation and raises some questions deriving from the present
study that may contribute to enrich the scope of that interpretation.
The Organizational Dimensions Covered By the Initiative. An
analysis of the literature pertaining to the SOA Initiative concluded that it
covered at least three of the four organizational dimensions described by
Bolman and Deal (1984)—the structural, the human and the symbolic
dimensions. Only the political dimension seemed to have been overlooked.
The investigation of TDC demonstrated that to neglect the political
dimension in a change attempt can be, indeed, fatal. The equivocal relationship
between TDC and its host organization, as well as TDC’s internal state of
conflict, jeopardized the chances for an effective conversion.
While the initiative underestimated the importance of the political
dimension (which had negative consequences in only one of the three cases), the
structural dimension, through the formal granting of "flexibilities" and the
production of "business" plans and goals, was the dimension through which the
initiative sought to modify SOAs. In this sense, it was hoped that the granting
of flexibilities and the priority managers would give to getting results over rule
application would influence another important dimension—the management of
human resources.
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Despite the discourse regarding the need to better use employees’
potential, the present study cannot reach definite conclusions on the real impact
this discourse had in SOAs. In the case of TDC, for instance, the evidence
suggests that the SOA status did not contribute to developing employees’
potential and satisfying their expectations. As with CIPO, it may be advanced
that the conversion has had some impact on managers’ attitudes which places
more emphasis on the production of results. Whether this will eventually
transform the way they manage employees may take some time to assess.
(Most CIPO employees have not felt the difference yet.) In the case of CCI,
the SOA status apparently had little, if any, impact on the way managers
supervised employees.
The symbolic dimension operated at two different levels. At the level
of the initiative as a whole, the Treasury Board Secretariat used a number of
symbols to convey the idea that SOAs were different and distinct from other
government organizations: the agencies got a new designation, to functioned in a
"businesslike" fashion and were managed by "CEOs.” At the agency level,
these symbols made sense only to the extent that coherent actions could be
linked to them. Anecdotes reported by TDC’s managers and employees
indicated that becoming an SOA may prove to be only symbolic and that
coherent actions may not correspond to the official discourse. CIPO, for its
part, made a number of decisions that clearly demonstrated that the status was
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not an empty shell. For instance, following the decision that it would operate
with a revolving fund, the agency decided to reorganize internally along product
lines, allowing every division to function with its own revolving fund. The
agency also took specific measures to assert its autonomy in managing personnel
and finance by repatriating from its host ministry. In the view of most CCI
employees, the SOA status had very limited symbolic meaning and materialized
in a few, quite unimportant administrative flexibilities.
In sum, this dissertation indicates that the three SOAs investigated
unevenly addressed the four organizational dimensions described by Bolman and
Deal. The comparative analysis of the three agencies also suggests that the
conversion increases its chance of being effective when the various
organizational dimensions are properly taken into consideration.
To look at organizations and organizational change through various
theoretical lenses contributes to pinpoint the elements that designers of reforms
often overlook. It is generally accepted that human beings, almost naturally
influenced by their culture, their education, and their environment, tend to
perceive the world and act upon it by referring to a limited, and limiting, set of
paradigms (Kuhn, 1970), perspectives, theories, models, metaphors or images
(Morgan, 1986). These influencing factors frame our thinking as well as our
actions, enabling us to screen large amounts of data and allowing quick
diagnosis and decision-making. However, at the same time, these factors act as
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filters which prevent important information to be taken into account and lead
people to neglect important dimensions of complex and multifaceted realities
(Barker, 1993). Multi-perspective frameworks, such as Bolman and Deal’s, are
in that sense most useful to interpret reality through different theoretical
approaches. But, to what extent such multi-perspective frameworks can be
useful to those who are responsible for the framing and the implementation of
organizational change is a question that requires more thought. In fact, one
main obstacle to a more systematic use of a multi-perspective approach in action
or to reflect in/on action is the little guidance theory offers in how practitioners
may integrate different approaches into reality. Indeed, Bolman and Deal do
not specify if the four approaches can be integrated into specific actions, which
approach practitioners should start with and how the others should follow, and
under what circumstances a given perspective should prevail. To be more
attractive from a practitioner’s point of view, and effectively used in changing
organizations, multi-perspective theorists would need to address these questions.
The Initiative as an Attempt To Modify the Bureaucratic Culture
Prevailing in the Selected Agencies. The concept of culture, adopted to
integrate the various organizational dimensions mentioned, underlined the
importance of going beyond the visible and formal manifestations of change to
verify how these were interpreted by people. Given the late granting of the
SOA status, particularly in two of the three cases studies (CIPO and CCI), and
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due to the methodology used in the present inquiry, conclusions pertaining to
the changes that may have taken place at the level of people’s values following
the granting of the SOA status would be presumptuous. However, a few
hypotheses deriving from the many comments made by employees may be
addressed. In the case of TDC, for instance, the SOA status, seemingly, has
not had the kind of effect on people’s values sought by the initiative. Following
their initial enthusiasm, TDC people lost confidence in the potential change
associated with the new status. While they expressed their pride for being one
of the first SOAs, which in their view only confirmed that their agency was
different compared to other governmental organizations, they quickly became
disenchanted with the new status. As a result, they lost confidence in the
capacity of TDC to cope with its problems and started to express pessimism
about its future. Quite ironically, while TDC employees had perceived their
organization as being less "bureaucratic" than the rest of the federal
government, the SOA status did not contribute to confirm this opinion. Because
of the type of non-collaborative relationship that persisted between the Public
Service Commission and TDC, employees perceived that the SOA status
contributed to reinforce rather than decrease the bureaucratization of the agency.
Managers from CIPO had a totally different perspective on the SOA
status, and many decisions taken have apparently contributed to gradually "de-
bureaucratize" the way CIPO operates.
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In the case of CCI, there was little indication that the flexibilities
granted, given their nature, were making a difference in the values people
shared about their organization and the way it has functioned since its creation
in 1972. However, the examination of CCI emphasized the importance of
taking into consideration the values shared by professionals who are responsible
for conducting the core operations of their agencies. As was stressed before in
this dissertation, there are limitations to what can be done to make public
organizations more businesslike. But these limitations do not come only from
their public character, from external factors (such as host organization’s will to
collaborate) or from limited managerial capacity. They also derive from the
nature of the tasks and the type of employees who accomplish them. CCI’s
conservators function according to their own set of rules and values concerning
conservation, and such an organization has no other choice but to take into
consideration this "sub-culture" in its attempt to transform its overall
organizational culture.
To summarize, although it may be useful to investigate a change
initiative with the concept of "culture" because it forces the investigation to go
beyond the formal and often superficial manifestations of organizational change,
this study cannot confirm that the SOA Initiative has yet been effective in
modifying the bureaucratic culture of the three SOAs. But this is hardly
surprising. Cultures, by definition, do not change overnight, and the conversion
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of CCI and CIPO are too recent to identify changes at the value level of culture.
In that sense, the choice of culture as a guiding concept to guide an exploration
of important organizational changes should be questioned when too little time
has passed since these changes took place. How much time should have passed
certainly depends on many factors and is a question to which cultural change
theory has not provided useful answers so far.
The Dynamics of Change. Some lessons can be learned from the
examination of the change processes used to transform the three agencies by
reviewing some basic theories pertaining to the dynamics of change. Kurt
Lewin conceptualized an organization as a "quasi state of equilibrium" resulting
from the action of opposing forces. According to this theory, modifications
brought to these forces are expected to change such "quasi state of equilibrium."
Modifications, in the case of SOAs, came principally from the flexibilities
granted, counterbalanced by accountability measures. In Lewin’s terms,
flexibilities were to liberate agencies from the application of some rules and
policies and allow people, chiefly their managers, to "unfreeze" them.
Following Lewin’s model, the unsuccessful attempt experienced by TDC could
be closely linked to the nature of the flexibilities granted. These flexibilities,
when they were effectively enforced, were not sufficient to eliminate or weaken
the influence of certain rules or policies affecting TDC’s attempt to adapt to its
turbulent environment. On the part of CIPO, the operation of a revolving fund
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appeared as one of the key elements which modified the "state of equilibrium"
that was prevailing before the SOA conversion. The nature o f flexibilities
which CCI enjoyed as an SOA was apparently not sufficient to alter the existing
state of equilibrium.
Beckhard and Harris’ prescription of four sequential steps to bring
about organizational changes brings new light to the processes applied by the
different agencies. Table 28 lists these four steps as well as an appreciation of
their application in the three investigated SOAs.
TABLE 28
THE APPLICATION OF BECKHARD AND HARRIS’ STEPS
BY TDC, CIPO AND CCI
Beckhard’s Steps TDC CIPO C C I
1. Needs Appraisal No Yes No
2. Definition of Desired State No Yes No
3. Needed Modifications Yes Delayed Yes
4. Detailed Plan Yes Yes No
Source: Beckhard, Richard, & Harris, Reuben T. (1987). Organizational
transitions: Managing complex change (2nd ed.). Reading, MA: Addison-
Wesley.
According to Table 28, only CIPO appraised the need for change
before it got the status and after discussions between its top managers and
officials from the Treasury Board Secretariat took place. TDC and CCI, on
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the basis of the information gathered, were not involved in any sort of reflection
leading to the decision to convert them to SOAs. As indicated in Chapters 4
and 6, the decision regarding their conversion to SOAs came as a surprise.
As for the definition of a desired state, none can be found in either
TDC’s or CCI’s business plans. The examination of TDC’s first two business
plans contained an impressive list of objectives, goals and strategies but no
vision about where these would or should lead the organization. The third
business plan included convincing measures to provide a better picture of
clients’ needs; but, again, there was no articulated vision of where that would
take TDC. As for CCI, its business plan only confirmed that the organization
would continue to function according to its original mission. CIPO’s vision can
be found in its conception of the important role it wants to play to make the
Canadian economy more competitive and the leading role it seeks to play
internationally (by managing the best or one of the best intellectual property
systems in the world).
The third step, that is, "needed modifications," essentially refers to the
flexibilities granted to the agencies. This step was necessarily respected by all
agencies. (An SOA without flexibilities would make no sense.) However, what
is most interesting is when this step is taken in relation to the two preceding
ones. TDC and CCI got flexibilities without a systematic appraisal of their real
need and the explicit articulation of a vision or some desired state (which
279
flexibilities would help to realize). It can be advanced that the flexibilities
granted would have been quite different had these two agencies respected these
preceding steps. In contrast, it must be noted that CIPO, on that point, took
about a year after its formal conversion to an SOA to reach an agreement over
the granting of its main flexibility; that is, its operation of a revolving fund.
As of the fourth step, TDC and CIPO indeed produced business plans
which included details about when and how they would try to accomplish
predetermined goals using the flexibilities granted to them. The difference
between the two agencies resides in the fact that TDC produced three
ambiguous business plans, while CIPO issued only one whose structure and
content were more convincing. CCI’s business plan essentially contained a list
of projects to realize and did not correspond to what one could expect from a
true "business plan."
The last theoretical reference pertaining to the dynamics of change
concerned Edgar Schein’s cultural model which considers "leadership" as a
determining element to bring about change. With "strong leadership" being one
of the important factors in the SOA model already commented, its importance
does not need to be emphasized here. Moreover, as previously indicated in this
chapter, "strong leadership" is to be explored more systematically through
further research. Such research should also look at how primary and secondary
280
mechanisms listed by Schein were activated or should be activated in the case of
SOAs. (See Table 4 in Chapter 2.)
To summarize the dynamics of change, it can be suggested that
Beckhard and Harris’ model is particularly useful in pinpointing some of the
reasons the SOA conversion was less effective in CCI and TDC and more
effective in the case of CIPO. Still, one may wonder if the application of such
a rational, logical and sequential process is realistic in organizations which
have little influence on reforms often imposed on them (most SOAs did not
volunteer for their new status). Although theoretically and conceptually very
attractive, such processes hardly take into account many of the factors that often
come into play when organizational change is introduced in governmental
organizations. Among these factors are inconsistent political support, the
limited involvement of implementers in reform design, the preference for top-
down approaches that overlook the specific conditions of individual
organizations, and the little patience for reforms that do not produce short-term
results (Caiden et al., 1995). One suggestion derived from this observation
calls for more comprehensive theories about organizational change in a
governmental context.
281
CONCLUSION
If there is a single research priority for public
administration, it is to study the organizational forms on
which bureaucracies are based (Wildavsky, 1990,
p. xviii).
Since the early 1980s, the reforming of governmental administration is
a top priority in all developed countries. A mix of different types of reforms
has been advanced to transform the administration of government in a context of
serious fiscal constraints, budget cuts and a loss of confidence in state
interventions on the part of the general public. One type of reforms challenges
the pertinence of public policies which are too costly and do not produce
expected outcomes. A second type of reform looks for new mechanisms to
implement public policies, questioning the near monopoly public organizations
have exercised over it in the past decades. Finally, another approach seeks to
cure the bureaupathologies prevailing in governmental or public organizations
(Caiden, 1991, pp. 126-128). Stripped to its essentials, this approach advocates
the provision of greater discretion to public managers and bureaucrats in
exchange for greater accountability and the production of measurable and
improved results. This approach assumes that, while continuing to function in a
bureaucratic and a political context, governmental organizations can adopt new
organizational forms and significantly improve their effectiveness, their
efficiency, their responsiveness and their accountability. The conversion of
Canadian governmental organizations to Special Operating Agencies is a good
illustration of this last type of reform. By granting flexibilities to them and by
taking measures to enhance their accountability, while keeping these agencies as
parts of existing ministries, the Canadian government assumed that it was
possible to modify the prevalent bureaucratic culture obsessed with rule-making
and rule-application into one that was more managerially-oriented and more
sensitive to citizens’ needs.
It is doubtful that the SOA Initiative is perceived as a successful
undertaking, although a formal and comprehensive assessment supporting this
position remains to be done. Still, this dissertation has attempted to demonstrate
that useful and usable lessons, from a theoretical but also from a practical point
of view, could be drawn from the analysis and the contrasting of three Canadian
governmental organizations converted to Special Operating Agencies. The
result is a model describing four conditions that should prevail and four factors
that should come into play if the SOA conversion is to be effective.
Three of the four conditions recall that the SOA conversion and the
flexibilities that come with it must be perceived as a solution to issues related to
the agency’s capacity to adapt to its environment. The fourth condition suggests
283
that accountability enhancement will be much easier if the agency’s performance
can be subject to some degree of quantification.
One determining factor, linked to the first three conditions, is the
granting of significant flexibilities. The second determining factor implies the
provision of measures that will effectively push for accountability enhancement.
The activation of these determining factors necessitates both strong support by
the host department and strong leadership inside the agency. Should these
factors come into play, the SOA conversion can prove effective, help the agency
to better cope with its environment, enhance its accountability and create
enthusiasm and optimism on the part of its staff.
The agency concept is assumed to be one and only one of the many
means that governments may use to improve some parts of its administration.
In using it, however, it should be careful to provide some orientation and some
direction to facilitate its implementation which is the real test and its most
critical stage. The model developed in this dissertation will hopefully contribute
to support this prescription.
284
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292
APPENDIXES
APPENDIX A
CONCLUSIONS FROM "SPECIAL OPERATING AGENCIES:
TAKING STOCK," FINAL REPORT, MAY 1994
294
Mr. L. D. Desautels, FCA
Auditor General of Canada
and
Mr. R. Giroux
Secretary of the Treasury Board and Comptroller General of Canada
Gentlemen,
TAKING STOCK OF SPECIAL OPERATING AGENCIES:
SUMMARY OF CONCLUSIONS
1 You asked that we take stock of the Special Operating Agencies
initiative. We are pleased to summarize our main conclusions and
recommendations.
Introduction
2 Economic and political forces are causing the Government of Canada to
change the way it works. Continuing deficits and mounting debt pose hard
choices about the services the government should provide, about how to manage
the various organizational structures that have been created or inherited, and
about how to improve service and do more with less. The Special Operating
Agency initiative is a part of this broad agenda for reform.
3 SOAs may be granted certain freedoms from government— wide rules in
return for undertaking to achieve specified results. They are located on a
continuum that stretches from traditional government departments through
Crown corporations to privatized entities. The essential elements of SOAs—
increased authority, development of strategic and business plans, responsibility
for results, and disclosure of performance-have been recognized for many years
in Canadian administrative reform. Although difficult to implement, they
represent good government practices that are as applicable to the public service
at large as to organizations selected to be SOAs.
4 On 15 December 1989, the President of the Treasury Board announced
that the government was introducing special operating agencies as pilot projects.
By the end of 1993, fifteen SOAs had been approved, employing about three
per cent of public servants. Their activities vary: five provide services
primarily to other government departments; two provide specialist services to
the departments in which they are situated; and eight serve the public on a
limited basis. Also, the manner of operations differ: some are optional— they
295
provide goods and services to the government in competition with other
suppliers— while others are mandatory; some depend on parliamentary
appropriations while others are self-sustaining; and two have separate employer
status, although most do not.
5 The government has learned a great deal from operating these SOAs and
from this stocktaking study. A fundamental issue running through the
experience that must be addressed is the relationship between SOAs and
ministers of the Crown. For practical purposes, the Steering Group has
assumed that SOAs will continue to operate within the framework of traditional
ministerial accountability. However, the additional freedoms granted SOAs will
create tensions in the system. Support by ministers will be essential if SOAs
are to work.
Conclusions
6 The Steering Group has concluded that, for certain government
activities, SOAs should be able to provide better service at a lower cost, and
should therefore be continued if Treasury Board ministers, ministers and deputy
ministers of departments in which SOAs are situated, and agency heads:
° provide clearer focus and direction for the SOA Initiative as a
whole;
° build greater acceptance and support for the SOA concept among the
stakeholders-public servants, unions, suppliers and competitors, the
general public and parliamentarians;
° improve the criteria for determining which government activities
should be converted into SOAs, and which SOAs, if any, should be
moved into an alternative structure;
° set clearer, more concrete performance goals and improvement
priorities for SOAs and include them in agency charters with
appropriate permanence, establish more clearly the respective
responsibilities of SOA heads and deputy ministers under the
umbrella of ministers and match there responsibilities with
appropriate authority and discretion, and monitor agency
performance with respect to the goals and priorities established;
296
° establish a framework for public reporting using existing
departmental accountability reports (part III of the Estimates) with
appropriate safeguards to deal with confidentiality;
° develop and adhere to clear guidelines for SOAs that compete for
markets in the private sector; and
° provide for subsequent stocktaking of the SOA Initiative to assess
progress and make appropriate adjustments as may be required.
7 Government activities for which SOAs would seem best suited are those
whose objectives and outputs can be reasonably measured, that do not require
significant ongoing ministerial involvement and, although this is quite
subjective, that operate in a relatively stable policy framework. While not a
prerequisite, another useful criterion might be revenue dependence— activities
that are self-financing on the basis of their outputs.
A Final Word from the Steering Group
8 Hard data to support our conclusions have been difficult to come by and
somewhat contradictory (see detailed report), partly because of unclear
objectives for individual SOAs, partly because SOAs have not been required to
develop the data, and partly because of their limited life span. We recognize
that our conclusions represent judgments based on interpretation of available
facts, supported by reasoning derived from the experience of other jurisdictions
and the private sector.
9 We hope that the results of our work will be useful to Treasury Board
ministers and their advisors in deciding the future of special operating agencies.
297
APPENDIX B
INTERVIEW GUIDELINES
fitude portant sur les changements qui se sont produits
suite 4 1 'attribution du statut d ’Organisme de Service Special (OSS) a:
’Nom de l’OSS’
(Paramfetres d'entrevue)
A study of the changes that took place following the granting
of the Special Operating Agency (SOA) status to the:
'Name of the SOA’
(Interview Guidelines)
Nom de la personne interviewee: Name o f the person to be interviewed:
M./Mme: M r./Ms./M rs.:
Date et lieu de l'entrevue: The date and the place o f the interview:
Ce bref document prdsente des informations
generates sur l’&ude et est soumis 4 ceux et celles
qui seront invitd(e)s & discuter, lors d ’entrevues
individuelles ou de discussions de groupe, des
changements qui se sont produits suite &
l’attribution du statut d ’Organisme de Service
Special 4 leur organisation.
This short document presents general information
to those who will be interviewed or who will
participate in focus group discussions concerning
the changes that took place following the granting
of the SOA status to their organization.
L ’identification des personnes interviewees a et6
faite aprbs consultation auprbs de representant(e)s
de l’organisme concemd. Si vous n’avez pas ltd
invite(e) k une entrevue dans le cadre de la
prdsente etude et que vous souhaitez y participer,
l'auteur vous invite k le contacter.
Interviewees were selected following consul
tations with representatives o f your organization.
If you were not selected but wish to participate to
this study, please contact the author.
Cette dtude serait impossible sans votre col
laboration. Son auteur tient done a vous en
remercier. 1 1 s’engage en outre 4 faire parvenir 4
ceux et 4 celles qui le souhaitent un rdsumd des
conclusions
(disponible 4 l’automne 1995).
This study would be impossible without your
collaboration. The author is indebted to all those
who participate. Upon request, the author will
provide those interested with a summary o f the
conclusions o f the present study (not before Fall
1995).
Daniel Maltais, professeur
£cole nationale d'administration publique
(Universite du Quebec)
945 Wolfe, Ste-Foy, Quebec, Can.,
G1V 3J9
T ei.: (bur.) 418-654-2696: (dom.) 650-3825
Teidcopieur: 418-657-2620
Internet: daniel_maltais@enap.uquebec.ca
Daniel Maltais, professor
£cole nationale d'administration publique
(Universite du Quebec)
945 Wolfe Av., Ste-Foy, Quebec, Can.,
G1V 3J9
Phone: (off.) 418-654-2696: (ho.) 650-3825
Facsimile number: 418-657-2620
Internet: daniel_maltais@enap.uquebec.ca
299
Contexte de I’&ude.
Au debut des annees '90, le gouvemement du
Canada creait les cinq premiers organismes de
service spdciaux (OSS). U en existe maintenant
une quinzaine oeuvrant dans differents secteurs
d ’activitds gouvemementales et ayant en commun
d'offrir des services aux Canadiens, it des
entreprises canadiennes ou it d'autres organismes
gouvemementaux.
Dans son rapport de 1994, le Vdrificateur general
concluait que les OSS constituaient une initiative
valable quoique leur fonctionnement pourrait
s'am eliorer si certains aspects etaient corriggs.
L ’attribution du statut d ’OSS k un organisme est
conditionnelle k la ndgociation et k l’acceptation
par le Conseil du Trdsor, le ministkre au sein
duquel fonctionne l’organisme et I’organisme lui-
meme d ’une charte et d ’un plan d ’affaires. Ces
documents contiennent des informations gdndrales
sur la raison d ’etre, la mission, les objectifs
poursuivis ainsi que les pouvoirs consentis au
nouvel OSS lui permettant de fonctionner avec
plus de latitude et d ’atteindre plus efficacement et
de maniere plus efficiente les objectifs predtablis.
Les pouvoirs et les conditions dont profitent les
OSS varient: par exemple, la plupart ont
l’obligation de recouvrer leurs coflts,
partiellement ou totalement, en tarifant leurs
services; certains fonctionnent avec un fonds
renouvelable; d'autres ont le statut d ’employeur
sdpard.
L 'auteur de la presente dtude presume que ces
nouveaux pouvoirs et ces nouvelles conditions, si
elles ne transforment pas les pratiques de gestion
et les pratiques professionnelles des gens qui
travaillent dans les OSS, risquent d'avoir peu
d ’effets ou de ne pas avoir les effets escomptds
sur la performance de ces organisations.
The background of the study.
In 1990, the Government o f Canada created the
first five Special Operating Agencies (SOAs).
Fifteen SOAs are now in operation, pursuing
various governmental activities and delivering
services to Canadians, Canadian enterprises or to
other governmental organizations.
In his 1994 report, the Auditor General expressed
the view that SOAs were a viable initiative
although he also recommended modifying certain
aspects in order to improve their functioning.
The granting o f the SOA status follows the
negotiation and the approval, by the Treasury
Board, the host department and the potential
SOA, of a framework document and a business
plan. These documents include information about
the "raison d ’etre", the mission, the objectives
and the powers the new SOA will enjoy in order
to function in a more flexible way and to realize
more effectively and more efficiently pre-
established objectives.
The new powers provided to SOAs vary from one
to another; for instance, most must totally or
partially recover their costs through the selling of
their services; certain SOAs function with a
revolving fund; others have the "separate
employer status".
One of the premises of the present study
considers that these new powers will not have the
expected impact or will only have a limited
impact upon organizational performance unless
people who w ork in SOAs transform existing
management and professional practices.
300
Les objectifs de I’ltu d e . The objectives of th e study.
Les objectifs & long terme que formulait le The lone-term objectives that the Treasury Board
Conseil du Trdsor & l'endroit des nouvelles had for SOAs were;
agences dtaient:
«1. de favoriser la prestation de services "1. to promote cost-effective and more
rentables selon une formule plus stSrieuse; businesslike service delivery;
2. de d£l£guer plus de responsabilitds 2. to delegate more responsibility for operational
opdrationnelles dans l’ensemble de matters throughout the organization;
l’organisation;
3. d ’amdliorer le service it la clientele et le 3. to improve customer service, client
contrdle de la qualitd du service et accroitre consultation and monitoring of service
la consultation des clients; quality;
4. d ’utiliser plus judicieusement la technologie 4. to make better use o f information technology;
de l’information;
5. de montrer que le gouvemement est bien 5. to demonstrate government action and
determine it rendre la gestion plus efficiente concern for efficient management;
et prend les mesures voulues pour y parvenir;
6. de favoriser l’innovation et l’esprit d ’initiative 6. to promote innovation and initiative in the
dans le milieu de travail; et workplace;
7. de mettre en relief la gestion efflcace des 7. to emphasize effective management o f people,
ressources humaines au moyen, par exemple, including support for training and career
de la formation et du perfectionnement.» development.''
L ’auteur de l’etude consulte les gens qui The author of the present study is consulting
travaillent dans les OSS ou transigent avec eux SOAs’ employees and people who deal with
afin: SOAs in order to;
(1)
d ’identifier, le cas dchdant, les changements
(1)
identify the changes that took place o r that
qui se sont produits ou qui s'amorcent suite & are taking place following the granting o f the
l’attribution du statut d ’OSS it 1'organisation; SOA status to this organization;
(2) de prdciser la nature de ces changements (2) define the nature o f the changes observed
(relatifs aux aspects formels de 1 ’organisation, (regarding the formal dimensions of the
aux processus de travail, aux pratiques de organization, the w ork processes, the
gestion, aux pratiques professionnelles, aux management practices, the professional
attitudes des employ d(e)s, etc.); practices, the em ployees' attitudes, and so
on.);
(3) de verifier dans quelle mesure les
(3)
to verify the correlation between the changes
changements observes rejoignent les objectifs observed and the long-term objectives of the
it long terme du Conseil du Trdsor; Treasury Board;
(4) d ’dtablir les liens possibles entre ces
(4) to establish possible linkage between those
changements et l’amdlioration de la changes and the improvement o f the
performance globale de 1'organisation organization’s overall performance
(notamment au chapitre des coflts et de la (particularly in term s o f service costs and the
qualitd des services). quality of services).
301
Une liste des changements qui ont pu d&ouler
de (’attribution du statut d’O SS h votre
organisme.
A titre indicatif. voici une liste des changements
de differente nature que vous avez pu observer ou
que vous observez dans votre organisme et qui
peuvent etre relids & la transformation de votre
organisation en OSS.
1. des modifications au chapitre de la mission et
des obiectifs de l'organisme;
2. des modifications apportdes &
l’organigramme:
3. des modifications au chapitre des relations
entre le «centre ot>drationnel» (ceux et celles
qui sont associds directement it la production
des services principaux de l’organisme) et les
services conseils ou de support (au sein de
1 ’OSS ou au sein du ministdre ou de
l'organism e dont l’OSS fait partie);
4. des modifications dans les pratiques de gestion
(par exemple, des consultations plus
frdquentes, une plus grande ddcentralisation
des responsabilitds aux niveau opdrationnel,
une plus grande insistance sur la gestion des
coflts et des revenus, sur l’amdlioration de
l’efficacitd, sur l'amdlioration des services
offerts, sur l’importance de consulter les
clients, etc.);
5. des modifications dans les pratiques
professionnelles (par exemple, les gens sont-
ils encourages it travailler autrement, it faire
preuve de plus d’initiative, it etre plus
crdatifs, plus innovateurs dans 1 ’exercice de
leur profession?);
6. des modifications dans les processus de
travail:
7. des modifications dans le support au
ddveloppement des competences et des
habiletds professionnelles des membres de
1 ’organisation;
8. des modifications quant it l’utilisation de
nouvelles technologies.
A list of changes that m ay have taken place
following the granting of the SOA status to
your organization.
Here is a list o f changes of different kinds that
you may have observed in your organization and
that are linked to the transformation of your
organization into a SOA.
1. changes in the mission and in the objectives
o f the organization;
2. changes in the organizational chart;
3. changes in the relationships between those
who are directly involved in the core
activities o f the SOA and supporting staff
(functional services’ ) located in either the SOA
itself or in the host department;
4. changes in management practices (such as
more consultation, decentralization of
responsibilities, more emphasis on managing
costs and revenues, on improving services, on
the importance o f consulting clients, and so
on);
5. changes in the wav people can accomplish
their work o r exercise their profession (for
instance, are people encouraged to innovate,
to take initiatives, to be more creative?)
6. changes in w ork processes:
7. changes in the way the organization supports
the development o f employees’ abilities and
professional o r technical skills:
8. the introduction o f new technologies.
302
L ’interviewee) est en outre invitefel & se
prononcer sur les relations qu’il(elle) etablit ou
q u ’il(elle) croit pouvoir dtablir entre ces
modifications touchant le fonctionnement de son
organisme et l'im pact qu’elles ont pu avoir sur la
performance de l’organisme notamment au
chapitre de la qualite des services et des coflts des
services (coflts de production et coflts
d ’acquisition des services par les clients).
La m&hodologie.
Les donnees utiles it l’analyse des aspects
couverts par la presente etude seront recueillies
lors d'entrevues individuelles et de discussions en
petits groupes. L'entrevue individuelle devrait
d urer environ une (1) heure. La duree des
discussions en groupe variera selon le nombre de
participants mais ne devrait pas ddpasser deux (2)
heures.
Parmi les critiires utilises pour identifier les
personnes & interviewer, les trois suivants ont 6 1 6
particuliflrement importants: leurs responsabilites
formelles dans l’OSS, dans le ministfere ou
l’organisme dont fait partie l’OSS, la nature de
leur travail et la durde d ’emploi au sein de
1'organisation.
L 'auteur choisit de procdder & des entrevues
ouvertes, laissant un maximum de libertd aux
participants dans l’expression de leurs points de
vue et de leurs opinions sur les aspects relatifs
aux changements ddcoulant de la transformation
de l’organisme en OSS.
Cette mdthodologie est conforme k la nature ex-
nloratoire de l’dtude. L’auteur ne cherche pas &
valider ou verifier une ou des hypotheses
prdddtermindes. Par ailleurs, il esp&re que l’dtude
permettra de mieux comprendre le processus de
transformation d ’organismes publics en OSS et
les consequences qui en ddcoulent.
The interviewee should be ready not only to
identify changes but also to comment on the
possible linkage between such changes and their
impact on the overall performance of the
organization, in particular the quality of services
and their costs (to the organization as well as to
the clients).
The methodology.
Data for the present study will be obtained
through individual interviews and focus group
discussions. Individual interviews should not
exceed one (1) hour. The duration of focus group
discussions will vary according to the number of
participants but, in no case, should last more than
two (2) hours.
Among the criteria used to select interviewees,
the following three were most important: their
formal position in the organization or in the host
department, the nature of their work and the
length of their employment in the SOA.
The author has chosen open interviews so that
interviewees have great freedom to express
themselves on changes that may have taken place
following the transformation o f their organization
into a SOA.
The methodology fits the exploratory nature o f
the research. The author does not seek to prove
or disprove any given hypothesis. However, he
hopes that the study will contribute to a better
understanding o f the transformation of public
organizations into SOAs and the resulting
consequences.
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