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ARCHIVED - Internal Audit of Strategic Plan Development Process


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3.0  Audit Findings

In section 3.1 we set out leading practices for strategic planning to be used as criteria for assessing TBS strategic plan development efforts. We have also provided a brief summary of the strategic planning process at TBS during 2002-03 and 2003-04.

We find the TBS strategic planning process meets certain elements of leading practices. However, we have identified several areas where improvements would enhance the strategic planning process. Specific details on the effective practices and areas for improvement are identified in Sections 3.3 through to Section 3.7. Our overall recommendations are presented in Section 4.0.

3.1  Strategic Planning Criteria

The following process flow summarizes the major process components of a strategic planning process.[2]

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Following are definitions of the Strategic Planning Criteria[3] aligned with the process flow:

  1. Planning to Plan:  This first step represents the advance work necessary before the actual planning process can begin. In this step, each organization agrees internally on the overall strategic planning effort and on key planning steps to be undertaken. An effective body is in place to oversee the effort and to ensure that the support and commitment of key decision makers exists. Key stakeholders are identified and their level of participation determined. The form and timing of reports are defined during this step.
  2. Mandate:  Each organization is influenced by constitutional and/or legislative mandates. At an early stage in the process, agencies should review and evaluate the role and significance of these mandates as they pertain to day-to-day business and future activities.
  3. Mission and Vision:  An organization's mission, in tandem with its mandate, provides its raison d'être. Clarifying the purpose of an organization can eliminate a great deal of unnecessary conflict in an organization and can help channel discussion and activity productively. The vision provides a description of what the organization should look like once it has successfully implemented its strategies and achieved its full potential. Stakeholders are identified and their criteria for judging how well the organization has performed are understood. A stakeholder analysis is a way for an organization's decision makers and planning team to be immersed in the politic surrounding the organization, providing invaluable information to identify strategic issues and developing effective strategies.
  4. Environmental Assessment (External and Internal):  External and internal assessment is an evaluation of key factors that influence the organization. A detailed evaluation of trends, conditions, opportunities and obstacles directs the development of each element of the strategic plan. With this information, a risk assessment is performed to identify the organization's strengths, weaknesses, opportunities and threats (SWOT). This type of assessment is both quantitative and qualitative in nature.
  5. Strategic Outcomes/Measures:  Strategic Outcomes are end points or public benefits that are important to the stakeholders and for which a level of success can be determined. Outcome measures are quantifiable information that indicates the degree to which the desired outcomes are achieved. Strategic thinking and acting are more important than the actual output. Effective strategy formulation can be top down and/or bottom up. Overall strategic guidance is given at the top and detailed strategy formulation and implementation occurs deeper in the organization.
  6. Results/Measures:  Results are specific targets for improved performance designed to indicate the success or impact of a program or approach. An organization's business operations are determined through results (what level of success does an organization want to achieve) and strategies. Measures of results are quantifiable information that address whether or not program activities are achieving the desired goals. Alternative strategies should be evaluated against agreed upon criteria prior to selection of specific strategies to be implemented. It is important to discuss and evaluate strategies in relation to key stakeholders. Allocation of resources (budgeting) and quantification of services and products (outputs) are tied to implementation of strategies.
  7. Review and Adoption of Strategies:  Strategies explain how the organization's objectives will be accomplished. Part of an organization's adoption of the plan should be the formal approval by senior management and the board (if one exists).
  8. Action Plans:  Action plans describe how strategies will be implemented and, specifically, who is responsible for doing what and when tasks will be completed.
  9. Budget:  Operational planning and budgeting processes should be linked to the action plans.
  10. Legislation/Policy:  Legislation or policies may result from an organization's strategic planning process, often providing authorization for needed programs or defining the scope of organizational responsibility in addressing a critical issue. Legislation also can take the form of a new mandate, which must be assessed at the outset of the planning process and incorporated into an organization's plan.
  11. Monitor against benchmarks and Key Performance Indicators:  Agencies evaluate their outcome and objective measures and strategies annually, or more frequently if data collection cycles permit, to track progress toward key outcomes and objectives. In the evaluation process, agencies assess the effectiveness and efficiency of their operations and make adjustments in strategic plans, use of resources, and operating procedures to improve results.
  12. Reassess strategies and the strategic planning process:  It is important to review the strategies and the strategic planning process as a prelude to a new round of strategic planning. This can take place as part of the ongoing implementation process. Attention should be focused on strategies and whether they should be maintained, replaced or terminated. The strategic planning process should also be examined, its strengths and weaknesses noted, and modifications implemented to improve the next round of strategic planning.

The following sections report findings for strategic planning criteria 1- 7 included in the scope of this audit.

3.2  Strategic Planning Process at TBS

Overview

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TBS Strategic Planning Process - Overview

The TBS strategic planning process has been primarily a bottom-up exercise led by the TBS Strategic Policy and Planning Directorate for fiscal years 2002-03 and 2003-04. The Secretary and the business line leaders provided some direction on key priorities. Outputs from the process were distributed and discussed at the TBS Executive Committee retreats and more broadly distributed at the TBS Town hall events. The key process activities are illustrated in Figure 1[4] below.

Process Enablers and Outputs

Participants in the TBS strategic planning process included:

  • Strategic Policy and Planning Directorate – coordinated the strategic planning process;
  • Secretary and Business Line Leaders – involved with the strategic planning process by providing overall direction and review of the results;
  • Strategic Planning Network – made up of representatives from all Branches and Sectors and supported the work of the three Business Line leaders; and
  • Executive Committee – reviewed output from strategic planning process and discussed at ExCo retreats.

Process documentation was facilitated by the use of data gathering templates.

Final deliverables from the process included the Strategic Planning and Results Framework and linkages to other TBS planning and reporting activities including business line plans and the Report on Plans and Priorities (RPP).

Audit findings in the following sections highlight effective activities performed by TBS and areas for improvement from the current process.

3.3  Planning to Plan

Leading practices research indicates that conduct of preparation work is essential prior to beginning the planning process. Key requirements include:

  • An effective policymaking body is in place to oversee effort;
  • Support and commitment of key decision makers exists; 
  • Each organization agrees internally on the overall strategic planning effort and on key planning steps to be undertaken;
  • Form and timing of reports is defined;
  • The key stakeholders are identified and their level of participation determined; and
  • The role, functions and membership of the strategic planning team are defined.

Activities performed by TBS consistent with leading practices

We have observed effective practices at TBS to support the Planning to Plan activities. These are summarized as follows:

The Treasury Board Secretariat ("TBS") established a Strategic Policy and Planning Directorate operating under the guidance of an Assistant Secretary.

A Strategic Planning Network was established with members from across all business lines in TBS. The network defined its mandate as:

  • Act as a sounding board, for all matters related to strategic planning issues, including the planning cycle and the environmental scan.
  • Participate in the fleshing out of the TBS Strategic Planning and Results Framework, including key results, performance measures, priority initiatives/activities and the associated resources.
  • Foster integration of branch and sector planning with the TBS results-based corporate strategic planning process.

The Planning Network prepared information, such as the templates for the risk profiles, to be used in the strategic planning process.

Internal key stakeholders were identified and represented in the Planning Network.

Variances from leading practices

We have observed the following areas for improvement to support effective Planning to Plan activities.

Roles of the key stakeholders not clearly defined

The link between the roles of the Strategic Policy and Planning Directorate and the senior executives' strategic planning activities was not clear. Although strategic priorities have been communicated from the top, these have not been clearly adopted in the planning effort and documentation produced by the planning team. It should be noted that for 2003 – 2004 the priorities were communicated late in the process at the October ExCo retreat. 

  • The strategic planning process appears to have been primarily a bottom-up approach that did not clearly link with the strategic priorities at the senior executive level;
  • The analysis performed by the Planning Network did not meet the needs of senior executives for their strategic planning activities; and
  • The material prepared by the Planning Network was primarily provided as background material for the ExCo Retreats.

Not all key external stakeholders were identified or consulted as part of the environmental scan and strategic planning process.

Key elements of strategic planning process were not clear

Key elements of the strategic planning process were not clear to many of those involved in the strategic planning effort. There was no common understanding of:

  • Who was the client of the process?
  • Who was the audience?
  • Who were the key stakeholders?
  • What was the final output?
  • What was the impact of the process?

The output from the strategic planning process was not well defined. Strategic planning process templates were not designed and discussed with business line leaders in advance of planning efforts. Senior managers viewed it as more of a "form filling" exercise completed at the middle management level representing a detailed tactical analysis of current activities.

Strategic planning not well integrated with other TBS planning activities

Although common data was used for the TBS RPP and business plan, there is not always a clear link between the strategic planning process and the other related planning processes in the organization: 

  • The people responsible for these processes are different and the timing was not well aligned.
  • There appears to be confusion among the various planning and reporting processes in terms of how they integrate and what would be the most effective practice.
  • The activities to prepare the various planning documents seem to take place in parallel rather than being interdependent.

Role and functions of Planning Network not effective

The Planning Network was not used to its maximum potential:

  • The members of the Planning Network were not given an indication at inception of the amount of effort that would be required during the strategic planning process;
  • The Planning Network was not consulted at inception on issues such as the format of the templates, or to map out the steps required in the process;
  • The Planning Network lacked structure and met on an irregular basis. Time and other constraints prevented the Strategic Policy and Planning Directorate from using it effectively;
  • The Planning Network was used mostly as a tool for communicating guidelines and requirements of the process and to complete the documentation used in the process; and
  • The Planning Network lacked formal authority from senior executives.

3.4  Mandate, Mission and Vision

Leading practices research indicates that each organization is influenced by constitutional and/or legislative mandates. An organization's mission provides its raison d'être. Key requirements include:

  • At an early stage in the process, review and evaluate the role and significance of mandates as they pertain to day-to-day business and future activities;
  • Clarifying the purpose of an organization can eliminate a great deal of unnecessary conflict in an organization and can help channel discussion and activity productively; 
  • The vision provides a description of what the organization should look like once it has successfully implemented its strategies and achieved its full potential;
  • Stakeholders are identified and their criteria for judging the organization's performance are understood; and
  • Attention to stakeholder concerns is critical. A stakeholder analysis is one way for an organization's decision makers and planning team to be immersed in the politic surrounding the organization, providing invaluable information to identify strategic issues and developing effective strategies.

Activities performed by TBS consistent with leading practices

We have observed that the mandate and vision were adopted from applicable legislation, Results for Canadians and other government pronouncements.

Variances from leading practices

We have observed areas for improvement to support effective Mandate, Mission and Vision activities. These are summarized as follows:

Lack of clear vision and stakeholder analysis

The strategic planning process was not effective in driving a consistent and clear vision:

  • Cohesiveness (linkages) across business lines is not strong ("stovepipe orientation"); and
  • The management team has seen considerable turnover and as a result has not been able to focus, as a team, on addressing the broad mission and vision of TBS nor to discuss strategic alternatives.

There is no evidence in the documentation that a structured external stakeholder analysis was conducted.

TBS Strategic planning does not support a changing environment

Strategic planning and direction setting does not appear to plan for flexibility and uncertainty although the TBS environment is very dynamic and subject to change.

Some examples of TBS' changing environment are:

  • Being able to respond to the "crisis of the day" is a regular function of TBS but not addressed in the vision.
  • The reorganization of December 12 has impacted TBS operations and the mandate has been refocused.

3.5  Environmental Assessment

Leading practices research indicates that external and internal assessments identify factors that influence an organization and should be considered as part of the strategic planning process. An effective environmental assessment should have the following elements:

  •  A detailed evaluation of trends, conditions, opportunities and obstacles directs the development of each element of the strategic plan;
  • With this information a risk assessment is performed to identify the organization's strengths, weaknesses, opportunities and threats (SWOT); and
  • The assessment should be both quantitative and qualitative in nature.

Activities performed by TBS consistent with leading practices

We have observed the following effective practices at TBS to support the Environmental Assessment activities.

External scan activities were conducted:

  • There was an environmental scan performed during the first cycle of the strategic planning process (September 2002). The scan was performed by looking at factors at the national level, the government level and internal to TBS.  
  • A second scan was conducted in two parts during the second cycle (July 2003 and September 2003). Some external parties were consulted (e.g., chairs of regional councils and members of academic advisory panels).

A risk assessment component was included in the second scan.

Information related to the environmental scan was put into context by business lines in conducting the strategic planning process.

The Environmental Scan was included as background material for strategic planning participants (Planning Network, Business Line Leaders, ExCo).

Variances from leading practices

We have observed the following areas for improvement to support effective Environmental Assessment activities.

Environmental scanning not effectively incorporated into strategic planning

Environmental scan activities were not well structured and cohesive:

  • The Secretary, business line leaders and Strategic Planning and Policy Directorate conducted a number of independent scanning activities; and 
  • Generally, it appears that key external stakeholders (e.g., TB Ministers, key departments) were not consulted for the risk assessments or environmental scan.  
  • Environmental scans conducted by TBS were not effectively incorporated into the strategic planning process:
  • It was not obvious "how" the environmental scan was used to influence strategic outcomes or any other aspect of the strategic planning process;
  • It was not evident "who" may have analyzed the environmental scans and incorporated the results into the strategic plans;
  • There was no reference to the environmental scans in the risk assessment templates; and
  • There was no reference to the environmental scans in the Guidelines for Business Line Leaders.

Lack of TBS-wide integration and analysis

The internal assessment lacked cross-business line analysis:

  • Planning Network members were not given an opportunity to collaborate on various issues and share best practices; 
  • There were time constraints as well as a lack of internal resources/skills to perform the environmental scan;
  • The Planning Network was not asked for input to the environmental scan or to analyze the results as a collaborative team;
  • Completion of the risk profiles/templates by the various business lines, was not consistent across business lines; and
  • There was little focus on the Corporate Administration business line.

3.6  Results and Measures

Leading practices research indicates that strategicoutcomes are end points or public benefits that are important to the stakeholders and for which a level of success can be determined. Key requirements for effective results and measures include:

  • Outcome measures are quantifiable information that indicates the degree to which the desired outcomes are being achieved;
  • Results are specific targets for improved performance designed to indicate the success or impact of a program or approach;
  • An organization's business operations are determined through results (what level of success does an organization want to achieve) and strategies;
  • Strategic thinking and acting are more important than the actual output;
  • Effective strategy formulation can be top down and/or bottom up. Overall strategic guidance is given at the top and detailed strategy formulation and implementation occurs deeper in the organization;
  • Alternative strategies are evaluated against agreed upon criteria prior to selection of specific strategies to be implemented;
  • It is important to discuss and evaluate strategies in relation to key stakeholders; and
  • Allocation of resources (budgeting) and quantification of services and products (outputs) are tied to implementation of strategies.

Activities performed by TBS consistent with leading practices

We have observed effective practices at TBS to support Results and Measures activities. These are summarized as follows:

  • TBS senior management met with the Secretary during a series of round tables to discuss issues facing TBS;
  • Strategic outcomes and results were reviewed at the ExCo retreat with the business line leaders and assistant secretaries;
  • Strategic outcomes are documented and communicated in the Strategic Planning and Results Framework and the Report on Plans and Priorities; and
  • The Planning Network played a key role in establishing the outcomes by business line.

Variances from leading practices

We have observed the following areas for improvement to support effective Results and Measures activities.

Output from strategic planning does not drive towards TBS-wide measurable outcomes

The strategic outcomes and results are not quantifiable:

  • The strategic outcomes and results are too broad – certain terms such as "sound financial performance", "excellence" or "measurable improvement" are not readily measurable; and
  • There is a lack of results with specific targets for improved performance designed to indicate the success or impact of a program or approach. During the course of the audit we were unable to find any documents that described the strategies TBS was planning to use to achieve the strategic outcomes and results.
  • The strategic planning process was not successful in gaining cross-business line integration:
  • There was a lack of cross-business line integration in evaluating strategies, outcomes and results planned for TBS. Further, there was limited opportunity to have discussions from the perspective of TBS as a whole; and 
  • A large portion of the planning effort was done in stovepipes. There is a general consensus that there is a roll-up of business line plans but not a strategic direction for TBS as a whole.

3.7  Review and Adoption of Strategic Plan

Leading practices research indicates that part of the organization's adoption of the plan should include formal approval by senior management and the board (if one exists). Key requirements for effective review and adoption include:

  • Other implementing groups or organizations are also likely required to approve the plan and strategies in order for implementation to proceed effectively.
  • Drafts are typically reviewed by planning team members, key decision makers, governing board members and at least a few selected outside stakeholders.

Activities performed by TBS consistent with leading practices

We have observed effective practices at TBS to support the Review and Adoption of Strategic Plan activities. These are summarized as follows:

  • The business line leaders and assistant secretaries discussed the planning documentation annually at the ExCo Retreat. This represented an opportunity to take stock of TBS' direction as a whole and to identify directions for business lines for the next planning period.
  • The Strategic Policy and Planning Directorate provided background information for the ExCo Retreats that was obtained from the Planning Network.
  • The Strategic Planning and Results Framework was distributed to employees through a TBS Town Hall, which took place in April 2003.
  • The Report on Plans and Priorities (RPP) for 2003‑04 was based on this framework and was tabled in Parliament and posted on the TBS website.

Variances from leading practices

We have observed the following areas for improvement to support effective Review and Adoption of Strategic Plan activities.

No formal adoption or approval of strategic plan

There is not a clear indication of a formally approved TBS Strategic Plan that communicates the vision, risks, priorities, strategies, plans and resources for TBS as a whole for the upcoming 3 - 5 year period. The TBS RPP and business plan were not considered strategic documents by most interviewees.

Executive Committee Retreats not effective in developing the strategic plan

The October 2003 ExCo retreat received mixed feedback with respect to strategic planning and priority setting:

  • A lot of effort was put into preparation of material for the ExCo retreat but there was limited presentation or recognition of the material;
  • The agenda for the meeting included having each business line leader present their priorities and plans. This did not occur;
  • This was primarily an information sharing session as opposed to a decision-making forum; and
  • The retreat took place too late in the process to establish TBS priorities for purposes of the strategic planning process.

Other findings

We were told that the planning approach within the Chief Information Officer Branch, while not linked to an overall TBS strategic plan, was well integrated within the Branch and that the strategic objectives flowed through business plans and operational plans and was supported by financial and other reporting systems. Since this was beyond the scope of the audit, we did not validate this information but senior management may want to look more closely to see if this would be a suitable model for the entire Secretariat.

3.8  Conclusion

The strategic planning process was consistent in many ways with the leading practice criteria for strategic planning. Some areas where the process was not consistent with leading practices have also been identified in the previous sections.

Based on an analysis of the leading practice criteria, the TBS strategic planning process did not result in the production of a formal strategic plan. Key elements expected to be part of a strategic plan are not present, such as:

  • There is no formally adopted or approved strategic planning document;
  • The output from the strategic planning process does not identify TBS-wide measurable outcomes with strategies for achieving them; and
  • The strategic planning process was not successful in gaining cross-business line integration.

The results of the strategic planning process do not provide adequate direction for TBS to drive operational planning, resource allocation, results setting or development of implementation strategies.