Dr. John Hollins, past chair, CACOR, reviews the civil service pay system.
It is clear from the report of the Senate Committee on National Finance that the Canadian federal pay system is a large and complex operation with many variables. The study of the control and management of complex systems, cybernetics, was launched in 1956 by W. Ross Ashby, an English mathematician. It provides insight into the failure of Phoenix and a basis for finding a way out of the trap into which the federal pay system has fallen.
The first law of Cybernetics, the Law of Requisite Variety, states that:
- If a system is to be stable the number of states of its control mechanism must be greater than or equal to the number of states in the system being controlled.
- Ross Ashby
A corollary to this law is:
- If something that you are doing isn’t producing results, do ANYTHING else. If what you’re doing isn’t working, ANYTHING else has more chance of success.
Goals for Phoenix
In 2009, two goals were announced:
- Replace the 40-year old federal pay system;
- Centralize (my emphasis) pay operations for 46 agencies and departments (70% of the public service).
The Soviet Union collapsed in 1991 in no small measure because its centralized command and control system lacked the flexibility of democratic systems of governance, weak though these may appear to be from place to place and from time to time.
The second goal for Phoenix is the fundamental reason for its collapse. This is passing strange because centralization is not normally a tenet of Canadian political ideology on either side of the aisle. It can, however, be a strong feature of bureaucratic desire.
Compare the thinking of German Field Marshall Helmuth von Moltke (1800-1891), the author of Auftragstaktik (mission command), a successful military strategy, adopted many decades later by other nations:
- Auftragstaktik blended strategic coherence and decentralised decision-making with a simple principle: commanders were to tell subordinates what their goal is but not how to achieve it.
Philip Tetlock and Dan Gardner, Superforecasting, p. 213
This approach is inherent in successful scientific research and dynamic 21st Century corporations such as Apple, Google, and Shopify.
Let’s examine this problem from first principles.
The GC InfoBase reports that there were 260,000 federal employees in 2017. According to Privy Council Clerk Michael Wernick (testimony to the Senate Committee on National Finance, 2018 June 20), these employees work in more than 300 departments and agencies. By way of comparison, J. D. Irving has 15,000 employees and the largest Canadian corporate employer, Loblaws, has 122,000.
The federal government has 80,000 pay rules for its 260,000 employees. That’s one rule for every 3.25 employees, an extraordinary ratio in my book.
If we apply the Law of Requisite Variety, the centralized approach adopted requires 80,000 factors to be entered into the software. Computers in 2018 can readily do the calculations at this scale, but the 80,000 factors have to be entered by human beings, a scale beyond their capacity. The approach adopted by the Government of Canada had very little chance of succeeding when it was launched, and has very little chance now or in the future. The limitations of the senior bureaucracy noted by the Auditor General are pertinent because they stand in the way of recognizing and addressing the fundamental problem; dealing with this matter is evidently a task for our Parliament. Let’s hope that the Senate Committee on National Finance, which is studying Phoenix, opens the door for Parliament.
The goal of the Government of Canada was reiterated by Peter Wallace, Secretary to the Treasury Board, during his testimony to a meeting of the Senate Committee on June 20:
- I think we fundamentally understand that we need to be able to pay our employees accurately and on time. That is absolutely the objective.
here are two methods that must be applied to actually secure a high probability of achieving this goal:
- Reduce the number of rules by a factor of at least 100;
- Decentralize the administration of the pay system in the spirit of Auftragstaktik.
The efforts to date amount to fiddling while the federal public service burns. It is time for the federal government to abandon the method that has failed and take a completely fresh approach to paying its employees accurately and on time.
- John Hollins, a generalist in the analysis of systems, is Past Chair of the Canadian Association for the Club of Rome.