Guide for Performance Audits and Special Examinations on Recruitment and Retention (November 2018)

Contents
Introduction
Purpose of this guide
Applicability and audience of this guide
Auditor’s responsibilities
Background and context
Key terms and concepts
Legislative and related requirements
Audit guidance
Why recruitment and retention is important
Identifying and assessing risks for audit selection and/or audit scoping
Recommended audit approach

Introduction

Purpose of this guide

The purpose of this guide is to assist audit teams who have identified a recruitment and retention-related risk that the entity under audit is not able to attract and retain the people with the skills and knowledge required to meet operational goals and objectives. As a result, the audit team is considering and/or planning to carry out audit work in this area.

This guide provides audit teams with

  • an understanding of recruitment and retention, including legislative and related requirements;

  • guidance on determining whether recruitment and retention are an area of risk that should be examined; and

  • a recommended approach to auditing recruitment and retention. While this approach is comprehensive, audit teams may wish to tailor it to their audit context in consultation with the Human Resource Management Internal Specialist.

Applicability and audience of this guide

This guide applies to performance audits and special examinations. It is intended for engagement leaders and their respective audit teams.

Auditor’s responsibilities

Per the Direct Engagement Manual section 3081, audit teams are to consult with internal specialists when dealing with matters requiring specialized knowledge and experience.

Background and context

Key terms and concepts

Recruitment is the overall process of attracting, selecting, and appointing qualified candidates for jobs in an organization. Qualified candidates may be acquired through a variety of approaches, including internal and external recruitment; exchanges with other organizations, such as secondments and interchanges; and through other means, such as independent contracts and employment agencies.

Retention is an organization’s ability to retain the employees required to achieve its operational goals and objectives. Retention strategies may include (but are not limited to) recruiting the right candidates for the job; offering a competitive compensation package; fostering career development; and promoting employee wellness, recognition, and work–life balance.

Legislative and related requirements

The legislative basis for recruitment in the public service is the Public Service Employment Act and the Public Service Commission of Canada’s Appointment Policy, which delegate responsibility to deputy heads to appoint, or provide for the appointment of, persons to or from within the public service.1

The Public Service Commission of Canada’s Values of the Public Service Employment Act also requires that appointments to and from within the public service be merit-based, non-partisan, fair, transparent, accessible, and representative of the Canadian population.2

There are a number of bodies that oversee and monitor compliance with legislation and policy related to recruitment (staffing), such as the Public Service Commission of Canada, the Treasury Board, the Public Service Labour Relations and Employment Board, and the Office of the Commissioner of Official Languages. Given this, OAG audits tend to focus more on the effectiveness of recruitment and retention systems and practices, and their impact on the audit entity’s capacity to deliver on its mandate.

The people management component of the Treasury Board of Canada Secretariat’s Management Accountability Framework includes service standards on time to staff. It also measures the use of collective staffing pools to assess the efficiency and effectiveness of staffing practices, which are collected and reported on annually by the Treasury Board of Canada Secretariat. These measures include:3

  • number of days taken to staff indeterminately a vacant AS-01 position using an internal hiring process,
  • number of days taken to staff indeterminately a vacant EX-01 position using an internal hiring process,
  • percentage of appointments from existing pools.

Recruitment and retention has also been an ongoing priority for the Clerk of the Privy Council. In the March 2017 24th Annual Report to the Prime Minister on the Public Service of Canada, one of the Clerk’s three priorities was attracting, retaining, and developing top talent. The Clerk stated that the public service is experiencing a dramatic demographic shift as baby boomers retire in large numbers (9,000 retired in 2016), and that ensuring the public service recruits, develops, and supports the right people is now the “most pressing challenge.” Effective recruitment and retention systems and practices will be key to organizations’ success in this area.

Audit guidance

Why recruitment and retention is important

Effective recruitment and retention systems and practices are important because they help to ensure that organizations are able to attract and retain the people with the skills and knowledge they need to meet operational goals and objectives. If recruitment and retention systems and practices are ineffective, this can lead to prolonged vacancies in key positions, which can

  • hinder an organization’s ability to carry out its work and meet its goals;

  • result in the work assigned to vacant positions not being completed; and

  • cause organizations to place an over-reliance on other staff (who may or may not be qualified) and/or temporary, more costly resources (e.g., overtime and contractors) to carry out this work, which can result in

    • higher costs to complete the work, and
    • reduced employee morale and productivity.

In turn, these consequences impede the cost-effective and efficient delivery of services to the public, and may prevent the achievement of results for Canadians.

Identifying and assessing risks for audit selection and/or audit scoping

To help determine whether recruitment and retention is a risk that should be considered for audit, audit teams should ask the following questions:

  • Does the organization have a recruitment policy, procedures, and/or guidelines in place?

  • Has the organization developed and implemented recruitment and retention strategies and plans to address its needs?

  • Are recruitment and retention strategies and plans periodically reviewed by senior management to ensure they are achieving intended results and adjusted as required?

  • Does the organization have significant vacancies and/or turnover in key positions?

  • Is the organization experiencing difficulties in attracting qualified candidates for positions?

  • Is the organization relying on term, casual, and/or contract employees to fill indeterminate vacant positions?

  • Do employee survey results and/or exit interviews indicate issues with workload and/or overtime due to resource shortages?

  • Does the organization have a significant number of staffing complaints?

Audit teams should request and review relevant documents, such as

  • Recruitment policy, procedures, and guidelines;

  • Recruitment and retention strategies and plans;

  • Workforce statistics and performance indicators (e.g., vacancy, turnover, and retention rates by position and level; application rates for positions advertised; time to staff; probation success rates);

  • Most recent employee survey results;

  • Summary of exit interviews;

  • Corporate risk profile and risk assessments;

  • Reports to senior management on recruitment and retention.

Recommended audit approach

The tables below outline the audit criterion and sources, as well as the audit questions, key interview questions and documentation, and audit steps and techniques recommended to carry out the examination work on recruitment and retention.

Audit Criterion and Sources

Audit criterion: The organization recruits and retains the people with the skills and knowledge it needs to meet operational goals and objectives.

Sources:

NOTE: Also refer to the organization’s own recruitment and retention policies, guidelines, and/or procedures for criterion sources.

Public Service Employment Act, last amended 2017 (http://laws-lois.justice.gc.ca/eng/acts/p-33.01/)

“PART 1 – Public Service Commission, Deputy Heads and Employer”

(…)

“Mandate and Functions of Commission

Mandate

11 The mandate of the Commission is

(a) to appoint, or provide for the appointment of, persons to or from within the public service in accordance with this Act;”

Delegation by Commission to Deputy Heads

Exercise of powers and functions by deputy heads

15 (1) The Commission may authorize a deputy head to exercise or perform, in relation to his or her organization, in the manner and subject to any terms and conditions that the Commission directs, any of the powers and functions of the Commission under this Act, other than its powers under sections 17, 20 and 22, its power to investigate appointments under sections 66 to 69 and its powers under Part 7.

Regulations and Policies of Employer

Regulations of Treasury Board

26 (1) The Treasury Board may, in respect of organizations named in Schedule I or IV to the Financial Administration Act, make regulations

(a) respecting deployments;
(b) defining the word promotion for the purposes of subsection 51(5);
(c) establishing periods of probation for the purposes of subsection 61(1) and notice periods for the purposes of subsection 62(1);

Policies of separate agencies

(2) A separate agency to which the Commission has exclusive authority to make appointments may make policies for the purposes referred to in subsection (1) in respect of the separate agency.

Policy Framework for People Management, 2010 (https://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=19134)

“This Framework outlines an approach to people management that builds on past changes and further enables organizations to manage people in a way that best accomplishes their business objectives. The approach is based on legislated authorities, common principles, sound risk management practices and enhanced collaboration between parties. The application of this approach is expected to achieve a public service that

  1. attracts, recruits and retains talented individuals, and maximizes the potential of its workforce to meet both current and future organizational needs;

  2. provides a workplace where employees have meaningful work in a fair, safe, supportive and ethical environment;

  3. fosters leadership that sets clear direction, engages employees and demonstrates and promotes the public service values and ethics; and

  4. invests in an infrastructure of people and systems that enables high quality people management services.”

Ultimate HR Manual, 2015

Retention Strategies—section 2500—Overview

“Retention strategies are typically a critical part of the overall human resources strategic plan. In many organizations, talent management is a key human resources strategy—that is, the ability to attract/recruit, retain and develop their employees. Organizations that focus on talent management are better able to maintain and improve their intellectual capital, which contributes to these organizations being more successful.”
Audit Question Key Interview Questions and Documentation Audit Steps and Techniques

Q1—Does the organization have a recruitment policy, directive, procedures, and/or guidelines in place?

Key interview questions

  • Do the policy, directive, guidelines, and/or procedures outline the steps in the recruitment process?

  • Are roles and responsibilities for recruitment clearly defined and communicated to those responsible for recruitment, and if so, how?

Key documentation

  • Recruitment (may also be called hiring or staffing) policy, directive, guidelines, and/or procedures.

  • Communications to staff regarding roles and responsibilities for recruitment.

  • Delegation of HR authorities instrument.

Request and review documentation.

Interview

  • Officials responsible for recruitment; e.g., VP HR, Director / Manager responsible for recruitment and staffing, recruitment and staffing advisors

  • Senior / line managers / supervisors

Assess whether the organization has a recruitment policy, directive, procedures, and/or guidelines in place and whether roles and responsibilities are clearly defined and communicated to those responsible for recruitment.

Document observations and respond to audit question.

Q2—Has the organization developed and implemented recruitment and retention strategies and plans?

Key interview questions

  • Does the organization have a recruitment strategy, and if so, what information is used to develop it (e.g., HR and business planning information about workforce needs)?

  • Does the recruitment strategy specify the following:

    • number and types of knowledge and skills needed (including employment equity considerations)?

    • analyses regarding talent availability for positions identified?

    • practices that are key to a successful recruitment process (e.g., timely process, areas to recruit talent)?

    • areas that will be used to recruit talent needed (e.g., internal [promotion, transfers], external [Internet, social media, job fairs, college and university recruitment programs, associations]?

    • area(s) of selection (local, national, international)?

    • selection criteria?

    • budget?

    • how the strategy will be monitored and assessed?

  • Does the organization have a plan to implement the recruitment strategy, and if so, does it specify the following:

    • positions to be filled (number and type)?

    • key milestones and timelines?

    • roles and responsibilities?

    • how the plan will be monitored and assessed?

  • Does the organization have a retention strategy, and if so, does it specify the following:

    • the methods the organization uses to retain its employees (e.g., compensation, employee recognition, career development, employee wellness programs, employee recognition)?

    • how the strategy will be monitored and assessed?

  • Does the organization have a plan to implement the retention strategy, and if so, does it specify the following:

    • roles and responsibilities?

    • key milestones and timelines?

    • how the plan will be monitored and assessed?

  • Are recruitment needs identified from the organization’s strategic human resource planning exercise? If not, how are these needs determined?

Key documentation

  • Most recent recruitment and retention strategies and plans and related documentation.

  • Most recent strategic HR plan.

  • Most recent employment equity plan.

  • Other relevant documentation, e.g.

    • senior management committee documentation (agendas, minutes, presentations and reports discussed, records of decisions);

    • HR committee meeting documentation;

    • annual staffing reports (Staffing Management Accountability Framework);

    • relevant internal audits or evaluations of recruitment and retention.

Request and review documentation.

Interview

  • Officials responsible for recruitment and retention; e.g., VP HR, Director / Manager responsible for recruitment and staffing and/or retention, recruitment and staffing advisors

  • Senior / line managers/supervisors

Assess whether the organization has developed and implemented recruitment and retention strategies and plans and whether they include the components referred to under “Key interview questions and documentation.” Also determine whether recruitment needs were identified from (and are aligned with) the organization’s strategic HR planning exercise.

Document observations and respond to audit question.

Q3—Does the organization monitor and evaluate its recruitment and retention strategies and plans to ensure they are achieving intended results, and make course corrections as required?

Key interview questions

  • Has the organization implemented systems and practices to monitor recruitment and retention activities and results?

  • What information systems (electronic or paper-based) exist to document recruitment and retention activities and results?

  • Does the organization track and monitor key workforce statistics and performance indicators, such as vacancy, turnover, and retention rates; application rates for positions advertised; time to staff; probation success rates; and employee survey and exit interviews?

  • Does the organization have data quality systems and practices in place to ensure the integrity of HR data, including recruitment and retention data?

  • Are recruitment and retention strategies reviewed (at least annually) to determine whether they are achieving intended results?

  • Are adjustments to strategies and plans made as required?

  • Are results reported on regularly to senior management?

Key documentation

  • Documentation that describes the systems and practices in place to monitor recruitment and retention.

  • HR information system documentation (e.g., user manuals, guides, data quality reports) where recruitment and retention data is collected and maintained.

  • Analyses and/or related documentation that show the results of recruitment and retention strategies and plans.

  • Workforce statistics and performance indicators, such as vacancy, turnover, and retention rates; application rates for positions advertised; time to staff; probation success rates; and employee survey and exit interviews for the last two fiscal years.

  • Reports to senior management on the results of recruitment and retention strategies and plans.

  • Other relevant documentation, e.g.

    • senior management committee documentation (agendas, minutes, presentations and reports discussed, records of decisions);

    • HR committee meeting documentation;

    • annual staffing reports (Staffing Management Accountability Framework);

    • relevant internal audits or evaluations of recruitment and retention.

Request and review documentation.

Interview

  • Officials responsible for recruitment; e.g., VP HR, Director / Manager responsible for recruitment and staffing and/or retention recruitment and staffing advisors

  • Senior / line managers / supervisors

Perform a walkthrough of key HR information systems (electronic or paper-based) that collect and maintain recruitment and retention data (including workforce data) to determine what information exists, its quality, and how it is used and reported on, if this was not already done in the planning phase.

Analyze workforce statistics and performance indicators, such as vacancy, turnover, and retention rates; application rates for positions advertised; time to staff; probation success rates; employee survey and exit interviews; and any other statistics and indicators used by the organization to assess its recruitment and retention efforts, and determine whether they reveal any recruitment and/or retention-related issues.

Assess whether the organization monitors and evaluates its recruitment and retention strategies and plans, makes adjustments as needed, and regularly reports results to senior management.

Document observations and respond to audit question.

1 Public Service Employment Act, sections 11(a) and 15(1): http://laws-lois.justice.gc.ca/eng/acts/p-33.01/

2 Values of the Public Service Employment Act: https://www.canada.ca/content/dam/canada/public-service-commission/migration/centres/val-psea-lefp-eng.pdf

3 Treasury Board of Canada Secretariat Management Accountability Framework: https://www.canada.ca/en/treasury-board-secretariat/services/management-accountability-framework.html