The Phoenix pay system that was supposed to save the federal government $70 million annually will end up costing $2.2 billion, according to a new Senate report released on Tuesday.

More than half of the government’s 290,000 public servants have suffered pay problems related to the problems surrounding Phoenix, says the Report of the Standing Senate Committee on National Finance. The report authors join Canada’s Auditor General in describing Phoenix as a failure.

Ferguson was one of 28 witnesses the committee met with. Other witnesses included union representatives, departments and agencies, and IBM officials. It also visited the Maramichi, N.B. Public Service Pay Centre office where Phoenix is administered.

Public Services and Procurement Canada began replacing a 40-year-old pay system with a commercial system in 2009 and hired IBM to customize it in 2011. (Previously, a CBC access to information request revealed that Oracle PeopleSoft was used to create the pay system.) In March 2014, the government took back responsibility for training design and execution for Phoenix, because it disagreed with IBM’s recommended approach.

Phoenix - investments cost
A chart shows the breakdown of Phoenix costs as of June 2017 based on Public Services and Procurement Canada data.

In February 2016, in anticipation of the start of the Phoenix system rolling out, the government laid off 2,700 payroll clerks serving 120,000 employees.

As soon as Phoenix was launched, problems began. By May 2018 there were 60,000 pay requests backlogged. Now the government has dedicated resources to explaining to affected employees the best way to avoid pay-related problems, and to file grievances related to the system.

“The causes of the failure are multiple, including, failing to manage the pay system in an integrated fashion with human resources processes, not conducting a pilot project, removing essential processing functions to stay on budget, laying off experienced compensation advisors, and implementing a pay system that wasn’t ready,” the Senate report states. “We are dismayed that this project proceeded with minimal independent oversight, including from central agencies, and that no one has accepted responsibility for the failure of Phoenix or has been held to account. We believe that there is an underlying cultural problem that needs to be addressed. The government needs to move away from a culture that plays down bad news and avoids responsibility, to one that encourages employee engagement, feedback and collaboration.”

The Senate delivers five recommendations to begin solving the problems related to Phoenix:

1. In the short term, we believe the government should support its employees by identifying priorities for processing outstanding pay requests and establishing targets for the time to process these requests.

2. The government should also assess whether it has sufficient compensation advisors and human resources staff, and whether they have adequate training.

3. To ensure continued accountability and transparency, the government should report annually on the costs associated with the Phoenix pay system.

4. In the medium term, the government should examine whether departments with complex pay requirements, such as shift work, might be better served by alternative solutions, rather than a centralized pay system.

5. In the longer term, the government should explain to Parliament the options it is considering to replace Phoenix, the costs of these options, and how it intends to avoid repeating the mistakes of the Phoenix pay system.



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