Office of the City Auditor - Human Resources Branch Audit - April 2, 2008

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Human Resources
Branch Audit
April 2, 2008

EDMONTON 07220 - HR Branch Audit

The Office of the City Auditor conducted
this project in accordance with the
International Standards for the
Professional Practice of Internal Auditing
Office of the City Auditor EDMONTON 07220 - HR Branch Audit
Table of Contents

Summary for City Council................................................................................................. i
1. Introduction................................................................................................ 1
2. Background 1
2.1. Organizational Description......................................................................... 1
2.2. Corporate Human Resources Strategy: A Three-Year Plan ...................... 2
3. Objectives, Methodology and Scope ......................................................... 2
4. Observations.............................................................................................. 5
4.1. Human Resources Branch Cost Effectiveness .......................................... 5
4.1.1. Have significant variances occurred within the Branch budget?................ 5
4.1.2. Are Branch costs comparable to other organizations? .............................. 6
4.1.3. Are Branch staff ratios comparable to other organizations? ...................... 7
4.1.4. Is the Branch operating in a cost effective manner? ................................ 10
4.2. Staff Recruitment ..................................................................................... 10
4.2.1. Is the duration of the recruitment process reasonable? ........................... 10
4.2.2. Are business areas confident in the recruitment process?....................... 13
4.2.3. Does COE have a fair and open recruitment process?............................ 14
4.2.4. Is the recruitment process effective, efficient, and economical? .............. 15
4.3. Retention of Staff 15
4.3.1. Are the COE turnover rates comparable to others?................................. 15
4.3.2. What are the potential impacts of turnover on the City? .......................... 17
4.3.3. Are HR clients confident HR strategies will help them retain employees?18
4.3.4. Is the Branch effective in its role of helping retain employees? ............... 19
4.4. Workforce and Succession Planning ....................................................... 20
4.4.1. What is workforce planning?.................................................................... 20
4.4.2. What is succession planning?.................................................................. 20
4.4.3. Is the Branch providing support for workforce planning? ......................... 22
4.4.4. Are business areas satisfied with workforce planning support?............... 23
4.4.5. Does the City have up-to-date succession plans? ................................... 24
4.4.6. h succession planning support?............. 25
4.4.7. Is the City’s succession planning working?.............................................. 26
4.4.8. Are workforce and succession planning activities effective?.................... 27
5. Conclusions and Recommendations ....................................................... 28
6. Management’s Response to Recommendations ..................................... 30

Office of the City Auditor EDMONTON 07220 - HR Branch Audit
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Office of the City Auditor EDMONTON 07220 - HR Branch Audit
Human Resources
Branch Audit

Summary for City Council

The Human Resources Branch business objective is to develop and implement human
resources strategies that will attract, develop and retain a diverse, engaged, productive,
and talented workforce.

Our audit objective was to determine if the services provided by the Branch are
effective, efficient, and economical in addressing the human resource needs of the City
of Edmonton. Our audit results focused on the Branch’s overall financial performance
and on three high risk areas: staff recruitment, staff retention, and workforce succession
planning. The three primary methods we used to gather the evidence were internal
research, external research with other cities, and industry benchmark comparisons.

Financial Performance
The 2007 Human Resources Branch budget was $9.6 million. The branch’s budget has
grown by $1.2 million (14%) from 2005 to 2007. During that time, actual expenditures
have increased by about $1.6 million or 20% because the Branch under-spent its
budget by $391,000 in 2005 and over-spent by $35,000 in 2007. This was due to
implementing the Employment Outreach service package, implementing the Health
Care Spending Account benefit for employees, transferring a safety position from Asset
Management and Public Works, salary increases, and program cost increases due to
inflation. We reviewed the financial data for the fiscal years 2005, 2006 and 2007 and
found no significant program budget variances.

We researched other cities and found that the Human Resources Branch’s cost per City
employee in 2007 was $872 per employee (Full and part-time) compared to the average
of $968 of the cities surveyed. The industry benchmark data further showed that the
Human Resources Branch costs in relation to the City’s total operating costs are at the
median level, meaning that 50% of those surveyed have higher cost ratios. The Human
Resources Branch staff levels have remained conservative since 2003 (up 3%) while
civic administration staffing on the whole has grown by 16%. The Branch’s staff ratios
are comparable to the other municipalities we surveyed. The industry benchmark
comparison showed that the Branch is staffed at the 75 percentile level (only 25% of
other cities surveyed supported more staff per HR employee). Based on this analysis,
we concluded that the Branch is operating in a cost effective manner.

Staff Recruitment
The Human Resources Branch has not achieved its targeted Time-to-Fill rate of 52
days, but at 56 days, it is within reason. We compared the City’s actual Time-to-Fill rate
to that of other cities and found that it is near the average. The Branch is moving
forward to improve recruitment efficiency by introducing an electronic recruitment
Office of the City Auditor Page i EDMONTON 07220 - HR Branch Audit
system. No external or industry benchmark information for recruitment costs was
available for comparison, so we are unable to determine whether the Branch’s
recruitment services are economical. The Branch’s clients indicated varying levels of
confidence in its ability to attract qualified candidates, which we believe reflects a very
competitive labour market. Our recruitment process review found that the process is fair
and open. The Branch has proactively engaged in several recruitment initiatives to
support and promote a diverse labour workforce, such as the Employment Outreach
program. Based on this analysis we conclude that the Branch has effective and efficient
processes in place to recruit new employees.

Staff Retention
The City’s turnover and resignation rates are in line with the other cities we surveyed.
These rates are rising and associated cost impacts are increasing. We found that client
confidence in the Human Resources Branch’s retention strategies varied. The increase
in employee turnover in the past few years and the competitive labour market
undoubtedly affect clients’ levels of confidence. We conclude that the Branch is effective
in helping the City retain employees; however, opportunities exist to increase
effectiveness. To help increase effectiveness in retaining employees:
1. We recommend that the Human Resources Branch communicate to all employees
the benefits and programs offered by the City of Edmonton that define it as an
attractive workplace.
2. an Resources Branch develop criteria, including
timelines, for periodic compensation reviews.
3. an Resources Branch determine acceptable turnover
thresholds for each job family and monitor the actual turnover rates, taking
appropriate action when a rate exceeds the acceptable level. They should also
assess these thresholds periodically to ensure they are still appropriate.

Workforce and Succession Planning
The Human Resources Branch has made significant progress in workforce planning and
the HR clients indicated a high level of awareness of these activities with overall
moderate satisfaction ratings. We also believe the Branch’s efforts have moved the City
towards best practice in succession planning. Although not all business units have
formal succession plans, the Branch is very aware of the need for such plans and is
successfully moving the succession planning process forward. We believe it will take
several years to culturally ingrain succession planning as an ongoing business planning
practice. We conclude that the Human Resources Branch is effective in supporting
workforce and succession planning activities. We believe that the Branch must co