February 28, 2018
Gerald Grant, Ph.D.

I read with interest that the Government of Canada, in its 2018 budget projection, expects to spend almost $1 billion to fix the much-maligned Phoenix pay system by 2023. There is also a plan to replace Phoenix with a new system that is supposed to be better. The proposed new system won’t be better if the same thinking that led to the current problems continues to guide the process. Phoenix has an information problem. Until that information problem is rectified, tinkering with the current system or replacing it altogether will not help. It’s the information, stupid!

Most organizations, when investing in new information technology systems, give an inordinate amount of focus to the deployment of the technology system part but much less focus on streamlining the information that is necessary for the organization to function effectively. This is because changing entrenched processes is hard and politically difficult. However, organizational effectiveness and prosperity are dependent on the smooth and fluid flow of information across a variety of interconnected and interdependent processes. Anything that gets in the way of this smooth flow will cause a breakdown in the entire system. In the case of Phoenix, pay information needs to flow smoothly from the HR systems to the pay system. However, the correct pay information is not getting to the pay system for a variety of technical and non-technical reasons. With more than 80,000 pay rules and more than 105 collective agreements, along with other types of contracts to deal with, it is not difficult to see why the problems are occurring. On top of all of this, there are the cultural and political issues that helped create the problem in the first place and now stand in the way of fixing it.

The idea that a new and different system will make the problems go away is both wishful and wasteful thinking. It is not the technical system that is the biggest part of the problem. It is the disjointed and problematic flow of information between the HR and pay processes. Until these information flows are streamlined no amount of investment in sophisticated technology will help. Asymmetric information generated by 80,000 pay rules and 105 collective agreements is clearly beneficial to some groups. Consequently, there will be significant resistance to changing the way things are currently done. However, if radical change is not made to streamline and smooth information flows across the integrated processes of HR and pay, the nightmare of Phoenix and its successors will continue to haunt the employees, executives, and political masters of the Canadian Federal public service. My advice, fix the information flow problem first!