CASE STUDY
THE DEPARTMENT OF INDUSTRY AND DEVELOPMENT
PROVINCE OF WESTFAL
A Case Study in Applying a Management Framework Analysis
School of Policy Studies
Queens University
The Management Framework
He felt that he had been dropped – unplanned and unwilling - into the middle of one of his favourite sports – white water kayaking – on a course that had lasted the past three months and was not over yet. He liked his thrills, but he wanted to set the pace. Dan Pringle was ADM of Commercial Oversight and Development for the Department of Industry and Development (DIAD) for the Province of Westal. He was new to the job and new to the Department, although he had lots of relevant experience working in the government. He was still excited about his new job, except that now he realized that his new job was not the new job that he had accepted. It was something else. It had become something else.
Dan had walked in with one set of ideas about his management challenges, but soon learned he had more and different ones. This had thrown him off a bit and left him in need of a Plan B. The time had come to sort it out. He was familiar enough with the job and the environment that he knew that he had to take charge or he would be taken out. He needed to corral the chaos. In bureaucratic terminology, he needed a framework to manage all of his challenges.
Where Dan Works: The Department Itself – DIAD
Like so many government departments, DIAD is an amalgam of many different functions. Broadly speaking, its role is to encourage the development of industry while at the same time regulating certain aspects of how business is conducted in the province. It oversees commercial licensing (that’s Dan’s job, among others). It also is concerned with consumer protection, illegal use of commercial operations, fraud and commercial crime. On the other hand, it has a large mandate to encourage business growth. It operates a large developmental program as well as national and international outreach to encourage investment in the province. As such, it is concerned that it creates a business-friendly climate, i.e., free of unneeded rules and procedures. In this role, it works with the federal government which has the international lead for the country, something that DIAD and the government of Westal feels means their needs get ignored for more central provinces with more votes.
Department of Industry and Development: Top Level Organization
*Resources for DM’s office are included with Corporate Services
** A separate agency whose CEO reports directly to the Minister but with corporate services provided from the department.
The Department is also responsible for what is loosely called regional or local economic development. As such, it oversees – or tries to – on a series of local developmental boards that have provincial funds for local developmental projects. This is part of Dan’s responsibilities. He has a Director of Regional Development, currently vacant. These are often seen as political sink-holes (translation into good public talk: areas of intense local prioritization and segmentation). This is another part of Dan’s shops and why the term Development is in his title.
DIAD is organized into five business units:
Economic Policyand Planning
Responsible for developing and driving the Government's economic development policy agenda and for managing the department's strategic and business planning process. This is seen as the policy unit and serves as a key co-ordinator for the Deputy Minister and Minister. It also means that other business units – or Branches as they are called on organizational charts – must work closely with this Branch.
Business Development
Responsible for all business development activities throughout the department. Includes Office of Science and Technology, Office of Manufacturing and Office of Service Industries.
Commercial Oversight and Development
Responsible for the key areas of Small Business, Investment Facilitation, International Business and Exports, Program Support. It also operates the commercial licensing program for the Province which entails licensing of all commercial operations, their inspection and dealing with citizen complaints about business practice. Each of these functions is related to compliance with regisltration legislation for coporations in the province, not the full range of inspections such as health and safety. It provides services to business to assist in their start-up and the development of basic business skills. This Branch is also responsible for the already mentioned regional development committees which are in place to distribute funding to small business enterprises for start-up and development.
Corporate Services
Provides support across the department in the areas of finance, human resources, knowledge management, corporate governance and administrative services. Responsible for support to all the Branches as well as the controllership functions inherent in central administrative role. Such functions involve advising the Deputy on overall performance in key managerial areas, liaising with TCS on submissions and authorities and operating the central planning and budgeting systems of the Department.
Invest Westal
Promotes the Province as a globally competitive business location and increases business investment and employment levels. This operates somewhat independently of the Department, although it is part of the normal structure. It is seed as a promotional wing for economic development.
Departmental Resources
DIAD – Planned Spending and Staffing (Full-Time Equivalents)$ Millions
Branch / Staff Salaries / Other Operational / Capital / Transfers / Total / FTEs
Economic Policy and Planning / 10.2 / 5.6 / 0.5 / 1.2 / 17.5 / 85
Commercial Oversight and Development / 22.0 / 12.0 / 0.5 / 122.7 / 157.2 / 183
Invest Westfal / 6.5 / 3.5 / 1.0 / 13.9 / 24.9 / 54
Business Development / 3.0 / 1.6 / 02.5 / 0.1 / 7.3 / 25
Corporate Services / 9.7 / 5.3 / 8.5 / 0.0 / 23.6 / 81
55.5 / 28.0 / 13.0 / 137.9 / 234.4 / 428
Organization of the Commercial Oversight and Development Branch
Note: There is additonal information about the government of Westall in the Appendix.
Dan’s Whitewater Ride: Negotiating the Boulder Garden
So much for structure, now to context. DIAD, in which Dan was a relative newcomer of three months, having worked in other provincial departments and central agencies, was a bit of a battle field. It seemed to lunge from being a business booster to being a business basher – or regulator to use less colourful language. Nowhere was this more evident than in Dan’s operation – business licensing and business development. Dan seemed to arrive at a time of sea change when the government was taking consumer interests more seriously, often at the expense of business interests. Further, a series of incidents took place within a couple of week of Dan’s arrival that set the context for his wanting to, as he put, ‘stop this darned wavewheel[1] and stop being hole bate[2].”
Dan’s Office
Dan had inherited a rather loosely structured office. In fact, it was sparse. He had an Adminsitraitve Assistant and and Executive Assistant. Both had been there a while and the office seemed a sea of tranquility with lots going on around it. There was a tendency for important correspondence and breiifng material to go direclty to Directors and then up to the DMO. There was the minsiterial control system, but not internal to Dan’s branch. Dan was more concerned about knowing what was happening than is controlling things, but at the moment he just was not familiar enough with the issues to have either comfort or confidence.
Dan’s Admin Assistant kept active files on her credenza and would bring themup to date when informatin cross his desk. Dan had to go round to pick these up and take a look. Of course, whenever he met with the concerned individual, he had the file.
Of course, Dan lived in Blackberry land and found it quite useful. His shceudling, however, was still on the Department’s system and not linked. He also inhereited a situation where the Director’s had access options with respect to the ADMO – to Blckaberry or not.
Hearing from Staff
In his initial meetings with his staff, he learned a number of important facts about the state of his Branch:
- A serious backlog in commercial operation license applications had developed in several parts of the Province: the Director of Licensing did not offer a cogent reason for this, except to point to increased demands in certain urban areas and problems in filling staff positions. Small business representatives had already approached members of the legislature.
- He had two Director level vacancies and another one with the prospect of a retirement within the year – this left only two other Directors who appeared to be stable
- A major project to build an on-line license application system was foundering badly, behind its timeframes and already over its budget – major business organizations were already complaining,
- The Inspection Unit was seriously understaffed so that consumer complaints took up to 18 months to follow up and there was little or no feedback to the complainant.
- The regional development groups were operating with almost full independence even though DIAD was supposed, through Dan’s Branch, to create a “results-based framework” for decision-making. To date little had been done in this area, except for a draft policy statement created by a consultant and circulated for comment.
- To his surprise, Dan learned that his Directors had not meet on regular basis with the ADM, but tended to operate bilaterally. There was little or not co-ordination at headquarters between licensing and inspection.
- Forward budget planning was highly centralized in the Department and Dan’s Branch did little more than comply with the budget call instructions. Little was done in terms of workload measurement or planning submissions.
- There was an increase in staff grievances in both the licensing and inspections area from front-line staff. HR felt this was the result of workload pressures.
Dan had already begun to work within his Branch, to get to know it better. He saw all of issues that he had picked up date as “haystacks” – another whitewater reference that his staff were trying to adjust to. In this case, it was a good one: these are rocks hidden below the water that can do major damage if you do not know where they are. Dan found himself often buried in specific issues which were time consuming, given their political sensitivity. For example, when the Chamber of Commerce of one of Westal’s largest cities demanded a meeting with the minister on support to business through better licensing, Dan had to work with the DMO and MO for almost a week to prepare. He also left the process with a long list of follow-ups, all of which added up to: fix this situation and quickly.
Two weeks after Dan’s arrival, the Deputy Minister who recruited him was appointed to another Department. This was part of yet another DM shuffle across government. The departing DM had spent a lot of time with Dan. Dan felt he would be good to work with and possibly, given his solid reputation, help Dan move along in his career as well. He also had a sense that the now former DM would let Dan ease in and guide him through what Dan clearly saw as a thick maze of dealing with a sector that he was not familiar with. The new Deputy, Rebecca Chernofsky, was in her first posting as a DM. She arrived having just finished a stint at the Cabinet Office with prior experience in the education and health departments as well as a term at the TCS. A real corporate type, highly focused and energetic, she was not unlike Dan. However, he was already part of the Department and, hence, part of her challenge. The first shift was certainly one of knowledge. She did not know the sector, especially the business associations or the issues. She did know government and moved around central agencies with considerable skill. This was not a trivial asset for a department.
In her first one-on-one with Dan, the DM asked for an overview of his Branch. While Dan was pretty good at giving a general description (similar to above) and also identifying some of the hot spots which might flare up at any moment, Rebecca wanted more. She wanted to know how the Branch was performing in relation to its Key Performance Indicators (KPIs) as outlined in last year’s planning document. She noted that they were pretty flimsy KPIs, such as high quality service, timely responses and adequate inspection. “Surely, there is something behind this high level stuff.” She said. Dan found himself starting to use a phrase that proved increasingly embarrassing, “I’ll have to get back to you on that.”
At the same time, the Provincial Auditor forwarded a draft report on the business licensing and inspection system for comment. The Department had several weeks to reply prior to publication of the report in six weeks. The language was certainly going to cause difficulties for Dan, the DM and the Minister. It outlined the backlogs and the slowness in responses to complaints. It used strong language like: “The Government seems to have created the worst of both worlds – slow to respond to new and emerging business needs and slow to respond to consumer concerns.” It outlined the staffing issues, poor training of staff, no strong data bases and little or no electronic processing. It also pointed out some concerns about lack of co-ordination between the licensing and inspection groups and pointed out a total absence of risk analysis of business that had been subject to inspection, found not in compliance, but still got an easy renewal of licenses. Once again, the headline wordsmiths at the Provincial Auditor made life easy for the media by using phrases like “left hand ignores right hand” to make their point. Dan had to react to the draft, but, more significantly, come up with a plan to respond. This was a DM red flag.
An old colleague of Dan’s from the Treasury Committee Secretariat called him to give him a heads-up. He said that HRA (Human Resource Agency) staff had identified the staffing issues in the inspection area as a cause for concern and asked TCS staff if the funding model permitted and whether the Department (read Dan) had been playing within the rules. It appeared that the Inspection group had been hiring more employees than permitted by the FTE limit but offering a lower classification to reduce costs and stay within their budget. . There was not basis for the current staffing system, no common model and certainly no agreed-to costing formula for making any changes. They suggested this had to be addressed. Dan’s friend asked what was being done to get the staffing model on a firmer footing. “I’ll get back to you on that.” Dan said, as he wondered what the answer was. He also knew that he had to solve this one if he was going to be able to move forward on the Auditor’s report.
The Minister received and took a call from the chair of the Southeastern Region Economic Development Council She told him that the Council had decided to cease operations and not distribute any of the $250,000 in economic development funds as a protest against what it saw as government indifference. She said the sums were too little and that the Department had hamstrung their decision-making with so many rules that they could not, in good faith, impose so many requirements on upstart businesses. She said something had to be done or nothing would be done except to make the media aware of it.. This issue rapidly got transferred to Dan with a firm order to sit down with this person and work it out.
At the same time, the Council for the Province’s largest city complained publicly that there was a major disadvantage in the distribution of development funds. The current ratio clearly favored the rural areas and the money was being wasted on meaningless make-work projects while key small business development in the cities was being ‘nickled and dimed” in relation to the needs. This was reported in the major provincial newspaper. The editorial comment that followed focused on the politicization of economic development funds, how they were little more than a political hand-out, with little in terms of results or outcomes to show for all the money spent.
As a result of this, the Opposition announced that it wanted a debate on economic development funds in the Public Accounts Committee. It wanted to know how the Minister (read Department) measured success in this area, what studies had been done and what the evaluation system looked like. The Department would have little to bring to the table on any of these fronts.
A major newspaper reported that the provincial commercial licensing authority (that’s DIAD) was ignoring the fact that Somali businesses were using their shops and services as fronts for money laundering. In the report, it cited the fact that many Somali immigrant families send money home through these small firms, which set up special accounts and charge a fee to the families. The paper contends that this violates the reason for which they received their license. This was clearly the responsibility of DIAD to enforce, although it was often hard to establish. It is also a security breech as this money could fall into the wrong hands, especially terrorist groups. The paper quoted an unnamed source contending that the Department had been aware of this, but had done nothing. In a quick discussion with his Director of Licensing, Dan learned that this practice was known to the Department, but that the so-called security concerns were not founded, as far as they knew, and not their job anyway. In fact, there seemed to be a real gap here between DIAD and the Ministry of Safety and Justice and the federal agencies responsible for criminal justice.. Later that day, Cabinet Office called to get a briefing. The Director had not seen this as “anything political or needing a brieifng note or anything” so did not inform the ADM or anyone else for that matter.