Canadian Broadcasting Corporation
Special Examination Report
29 June 2000
Table of Contents
Page
Examination Objectives, Scope and Criteria 5
Previous Audits and Reviews of the CBC 6
Context 6 Background 6 The Challenges Facing the CBC 8 Findings 10 Introduction 10 Strategic Management 10 A balanced strategy for the CBC is needed 10 External accountability is diffused 12 The governance framework 13 A reporting framework would simplify requirements and improve efficiency 15 Strategic Planning, Stakeholder Relationships, Internal Accountability and Risk Management 15 The strategic planning system is well designed 15 Stakeholder relationships need greater attention 16 Internal accountability relationships are being clarified 17 Risk management provides an opportunity for the future 17 Service to Canadians 18 Distinctively Canadian programming 18 Meeting regional expectations 24 People Management 26 Internal culture needs additional attention 26 Safeguarding creative talent is important to the CBC 28 Management of industrial and talent relations has improved 29 Succession planning is being introduced to all levels 29 Quality, Productivity and Cost Control in Program Creation 30 Internal control of programming quality is well developed 30 Productivity improvement efforts are delivering benefits 30 Control of program costs 31 Facilities Utilization 32 Facilities utilization continues to be a problem 33 Support Services 34 Good progress has been made in improving support services 35 Opinion 37
Office of the Auditor General of Canada – June 2000 3 Page
Figures 1 Overview of CBC Expenditures and Outputs 1999–2000 8 2 Origin of Fiction Programming on CBC FTV and the Private French Networks 20 3 Canadian Programs on CBC ETV With an Above-Average “Quality Index” 21 4 Canadian Programs on CBC FTV With an Above-Average “Quality Index” 21 5 Distribution of CBC ETV’s Prime-Time Canadian Programs 22 6 Distribution of CBC FTV’s Prime-Time Canadian Programs 23 7 Regional vs. Network Spending and Production, All CBC Services 24 8 Regional Reflection and/or Production on CBC ETV 25 9 Support Services Resources Full-Time Equivalents 35 Appendix Systems and Practices Examined and Related Examination Criteria 38
4 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation
and measurement and reporting of Examination Objectives, performance. Scope and Criteria • Strategic planning and risk management. This involves an ongoing 1. Objectives. As required by Part process of identifying important factors III of the Broadcasting Act, we have and risks in the Corporation’s operating carried out a special examination of the environment, maintaining effective financial and management control and stakeholder relationships, balancing information systems and management expectations and resources, determining practices maintained by the Canadian long-term resource requirements, and Broadcasting Corporation (CBC or the translating the strategy into practice. Corporation). The Corporation is required by paragraphs 60(1)(b) and 60(2)(a) and • Service to Canadians. The primary (c) of the Broadcasting Act to maintain product of CBC is the programming these systems and practices in such delivered to Canadians. Critical success manner as will provide reasonable factors are distinctiveness, cost, assurance that: availability and audience reaction.
• the assets of the Corporation are • People management. CBC’s success safeguarded and controlled; depends primarily on the creativity, flexibility and motivation of its people. • the financial, human and physical We focussed on corporate culture; resources of the Corporation are managed developing and safeguarding of creative economically and efficiently; and talent; staff relations; and succession planning. • the operations of the Corporation are carried out effectively. • Capital assets. The CBC has extensive capital holdings that are costly 2. Our responsibility is to express an to acquire and maintain and are essential opinion on whether, during the period to operations. under examination from October 1999 to • Support services. Effective and April 2000, there was reasonable efficient operations are underpinned by assurance that there were no significant support services. deficiencies in the systems and practices examined. 4. Other systems and practices of the Corporation, although covered in the 3. Scope. A plan for the survey, were excluded from detailed examination, based on our survey of the examination because our analysis of the Corporation’s systems and practices, was significance and risks associated with submitted to the Audit Committee on them indicated that, during the period December 13, 1999. The plan identified under examination, they were not critical those systems and practices that we to providing the Corporation with the considered essential to providing the assurance required by paragraphs 60(2)(a) Corporation with reasonable assurance and (c) of the Broadcasting Act. with respect to its assets being safeguarded and controlled, its resources 5. Criteria. The plan included the being managed economically and criteria to be applied in the special efficiently, and its operations being carried examination. The criteria were selected out effectively. They are: specifically for this examination by our Office in consultation with the • Strategic management. This Corporation. They were selected based on includes CBC’s strategic direction, our knowledge and experience with accountability, the governance framework, value-for-money auditing by reference to
Office of the Auditor General of Canada – June 2000 5 Special Examination Report – Canadian Broadcasting Corporation
legislative and regulatory requirements, to 9. A number of common themes run standards and practices followed by the through these audits and reviews. There Corporation and by other organizations, has been ongoing concern about the need and to professional literature. These to clarify the role of the CBC and to put in criteria are listed in the Appendix. place the mechanisms to allow this to happen. The implications of budget 6. Audit standards. Our pressures, technology and competition examination was carried out in accordance have also been dominant concerns. In with the plan as well as the standards for conducting this special examination, we assurance engagements recommended by followed up on the deficiencies noted in the Canadian Institute of Chartered our previous audits, considered the Accountants. Accordingly, it included recommendations in other key reports, and such tests and other procedures as we incorporated many of the questions considered necessary in the circumstances. suggested to us by the Standing Committee. 7. Reliance on internal audit. In 10. Our 1995 special examination carrying out the special examination, we report identified opportunities to improve relied on internal audits carried out in the the effectiveness of the CBC’s following areas: the History of Canada management processes in six areas — project; Time Capture System (TCS) strategic planning, facilities management, French Network Implementation; TCS human resource management, program English Network Implementation; production, financial information and Corporate Payroll; Personal Services corporate culture. The work we have done Contracts and Local Payroll; Evaluation as part of this special examination of Buildings Following Industry Best indicates that the CBC has made Practices; Capital Planning; and the significant strides in addressing many of Canadian Television Fund. these concerns. Later in this report, we comment on its progress in strategic planning, staff relations and support Previous Audits and services. In some areas, there is room for further progress in the implementation of Reviews of the CBC support systems and, for a variety of reasons, the CBC continues to have more 8. The Office of the Auditor infrastructure than it needs. General has conducted two previous 11. Beyond these issues, however, value-for-money audits of the Canadian there continues to be a fundamental Broadcasting Corporation. The first, a question about the role and viability of comprehensive audit, was reported in Canada’s public broadcaster. This question 1984. The second, a special examination, has an important place in this special was reported in 1995. The CBC has been examination report. the subject of numerous studies and reviews by others in the same period. Also, the Standing Committee on Context Canadian Heritage frequently calls the CBC to appear as a witness and one of its Background reports, The Future of the Canadian Broadcasting Corporation in the 12. The CBC is a national symbol. It Multi-Channel Universe, proposed reaches most Canadians every week, and questions for the Auditor General to surveys carried out for the CBC indicate consider in his current special support for its existence. These surveys examination. indicate that 86 percent of Canadians
6 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation believe it is important or very important to two in French, which offer information have a public broadcaster; most believe and general interest programs as well as the funding provided to the CBC is about music and cultural programs; two all-news right or should be increased; and most and information television networks, one people rate the CBC highest of all in English and one in French, financed by Canadian broadcasters in terms of cable subscriptions and advertising credibility, quality and support to revenue; radio and television services to Canadian culture. the North in English, French and eight Native languages; and a digital pay audio 13. The Canadian Radio service offering 30 continuous music Broadcasting Commission was established channels 24 hours a day, without talk or in 1932 as a public broadcaster, at arm’s commercials. It also offers, under length from the government, operating agreement with the Government of under the principles that Canada’s Canada, an international radio service that airwaves are owned by the public, the broadcasts in seven languages. Recently, broadcasting system should be owned by CBC initiated innovative new media Canadians, service should be extended to services. CBC’s main service all Canadians, funding should come from programming is distributed through a combination of public and private satellite in combination with microwave sources, and programs should be of high and landline. It is financed through public standard and primarily Canadian. The funds, supplemented by advertising CBC was created in 1936 to replace it. It revenue on television and by other now operates under the Broadcasting Act revenue sources. of 1991, which sets out expectations for the Canadian broadcasting system and, within it, the CBC. In general terms, the 16. Under the 1991 Broadcasting expectations for the CBC mirror those of Act, the CBC’s radio and television most other public broadcasters around the services must “be available throughout world. Canada.” At present, about 99 percent of the Canadian population can access some 14. The CBC is Canada’s largest or all of the CBC’s broadcast services. cultural institution. Like other Crown Those services are delivered to Canadians corporations, it exists to serve a public across six time zones and some of the need that might not be met commercially most rugged and sparsely settled terrain — in this case, to support Canadian on earth. A complex and sophisticated cultural objectives through the production broadcast transmission and distribution and distribution of distinctively Canadian system feeds 95 CBC-owned stations, programming. Culture has been defined in 1,164 CBC rebroadcasters, 27 private government policy as “ways of living affiliated stations and 291 affiliated or together”, and embraces our symbols, community rebroadcasters. With 49 traditions and languages. The major forces English Radio (ER) stations, 24 French driving the government’s cultural strategy Radio (FR) stations, 14 English Television are globalization, technology and (ETV) stations, and 8 French Television demographics. These, along with (FTV) stations, the CBC’s services are competition, are major forces for the deeply rooted in the communities and future of broadcasting as well. regions of Canada.
15. The CBC’s program services include two main television networks, one 17. In 1999–2000, expenditures in English, one in French, which offer totalled $1.4 billion. Figure 1 shows how general and special interest programs; four these expenditures were distributed main radio networks, two in English and throughout the CBC.
Office of the Auditor General of Canada – June 2000 7 Special Examination Report – Canadian Broadcasting Corporation
The Challenges Facing the CBC especially English Canadians — are tuning in to CBC television less and less. 18. The CBC is a complex CBC radio, on the other hand, has organization operating in a very dynamic developed a loyal audience and has environment, and it faces many challenges maintained a relatively stable audience and risks. Three factors — competition, share. But this could change with the technology and resource pressures — introduction of Internet-available digital stand out, and are driving a change radio. process that is fundamentally altering the CBC. 20. Technology has been a constant driver, creating production efficiencies 19. Competition in radio has and new methods that have reshaped traditionally been strong, but in television broadcasters. But even more compelling it was initially very limited. In the early are its effects on distribution. In 1978, the 1960s, the BBG (the precursor of the Clyne Committee report concluded with CRTC) approved the establishment of an exhortation: “...with all the force at our CTV and Télémetropole. This began a command, we urge the government to take shift in the balance between the public and immediate action to alert the people of private sectors, and launched a debate that Canada to the perilous position of their has continued for the last four decades collective sovereignty that has resulted about their respective roles. As the from new technologies of broadcast market fragments, this debate telecommunications and informatics.” intensifies. Despite their apparent Today, multi-billion-dollar mergers satisfaction with the CBC, Canadians — between content providers and new and
Figure 1 Total CBC
Overview of CBC Expenditures 1,408.2 and Outputs 1999–2000 ($ millions) RCI 17.2 Newsworld 54.5 RDI 35.1 Galaxie 3.2 Headquarters 15.3 Amortization 154.9 T&D and Affiliates 76.3
Main Channels
1,051.7
English TV French TV English Radio French Radio
501.3 295.6 151.8 103.0
Hours of Programming
Information 1,620 2,445 6,253 9,605 Arts and Entertainment 4,025 4,370 9,256 6,421 Sports 800 316 –– –– Source: CBC Finance Regional 5,430 2,839 61,201 32,314
8 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation traditional media distributors seem increased, no stations were closed, and the commonplace. The digital, interactive, CBC remained highly regarded in terms of multi-channel, tailored broadcasting credibility, quality and support to environment is viewed by many as just Canadian culture. This is a tribute to the around the corner. And the Internet has the commitment to public broadcasting that capacity to turn the concerns of the Clyne was evident throughout this special Committee into reality by perforating examination. borders and bypassing regulators of both 24. The challenges facing the CBC radio and television. are far from stable. Over the next five to 21. The federal Budget of February ten years, competition will continue to 1995, coupled with previously announced grow, others will supply programming reductions and increased financial typically delivered by the CBC, resources pressures, marked the beginning of a will decline in real terms, and the four-year period that saw the traditional definition of broadcasting will Corporation’s operating budget reduced by be challenged as new technologies take almost one third. Reductions of over. Management believes there is a need $294 million in the parliamentary to rethink how the CBC delivers its appropriations from 1995–96 to 1998–99, mandate and to re-engineer its operations a structural shortfall, unfunded inflation accordingly. This has precipitated a and cost increases, projected commercial fundamental reassessment of the role of revenue loss and the discontinuation of the public broadcaster, whether services RCI funding required an overall budget must be reduced or dropped, and how reduction of $414 million. A series of flexibility and nimbleness can be measures, including restored funding to increased. RCI and to radio services as well as a 25. The new President has stated his lower than expected commercial revenue intention to set a new direction for the loss, resulted in an overall budget CBC, and to bring to it a new reduction of $354 million. During this management style. As he indicated to the period 3,000 positions were eliminated, Standing Committee on Heritage, headquarters staff was reduced by about 50 percent, and corporate expenses were Unfortunately, the CBC, conceived reduced to about two percent of total during a Great Depression, is still expected to operate with woefully expenditures. inadequate means, its budgets ever shrinking as more demands are placed 22. During this same period, the upon its various services. You can’t government introduced the Canadian shrink your way to greatness. You Television Fund to stimulate the can’t maintain the status quo and independent production sector. CBC hope that no one notices that you’re officials told us that this has had the effect not where the action is, indeed, that of moving production of programming you’re not in the action at all. That is outside the CBC, which in turn has caused why I have struck a Task Force the departure of some creative staff, loss charged with the re-engineering of of ownership of programming rights, and English Television, property reduced utilization of CBC studios. management, transmission and distribution, and sports. As I have 23. The last five years have been, mentioned before, everything is on the table at present. therefore, very difficult for both the management and the staff of the CBC. 26. We expect that this Despite uncertainties and budget re-engineering and the many other reductions, and the inevitable stress that changes now under way will have a major they create, Canadian content was impact on CBC programs and
Office of the Auditor General of Canada – June 2000 9 Special Examination Report – Canadian Broadcasting Corporation
administration. This report therefore 30. At a minimum, we would expect provides an assessment of the systems and a strategy for the CBC to define and practices of an organization very much in balance: transition. We acknowledge the • Expected results. These would importance of the change and include the type of programming CBC improvement initiatives but cannot judge should deliver (for example, distinctive whether, in the end, they will fully and Canadian), expectations for share of mitigate the key risks now facing the viewers and listeners, extent of ownership Corporation. and control of programming content, regional production and regional Findings reflection. It would also lay out objectives for support to such things as arts and Introduction culture, education, leadership and risk taking in programming. 27. We examined CBC’s systems and practices in the six key areas described in • Reach expectations. This would paragraph 3. This section describes our include target audience groups and findings in each of these areas. Our accessibility to programming in remote overall conclusion is that there are four areas or where cultural minorities are significant deficiencies in the small. Corporation’s systems and practices. • Resource strategies. These would These are described in the body of the identify the best ways to configure human, report and are summarized at the end. programming, technical, information and capital resources to promote flexibility, Strategic Management optimize shelf space, focus on core competencies and minimize costs. 28. Strategic management involves balancing the influences of strategic 31. Some external factors — such as planning, management of resources, the impact of new technologies on radio, organizational culture and operational Internet capacity to deliver TV and radio, reality, to define longer-term strategy and the government approach to digital direction. It is the responsibility of senior transmission, and the future of programs management, but to work well it requires that support production — present many close support from the Board and key unknowns in their timing and impact. government stakeholders. The governance Change, though inevitable, will also be framework and accountability structures somewhat unpredictable for all must be effective, particularly when communications organizations. This in organizations are under stress. turn means the CBC strategy must permit Results-oriented planning and reporting flexibility and nimbleness. provide the basis for strategy 32. Several attempts have been made determination and performance to initiate significant changes in CBC’s measurement. strategy, but for a variety of reasons they A balanced strategy for the CBC is have not succeeded. The 1999 needed Commitment to Canadians strategy contained a number of change proposals, 29. The CBC cannot operate in an including the introduction of the optimal manner without clarity, balance “Constellation Concept” for English TV. and stability in its strategy. It was apparent Attempts have been made to secure new during our special examination that this specialty channel licences but, since 1983, has been an area of concern for some only two of 64 new TV licences were time. awarded to the CBC. Last year, the CRTC
10 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation turned down CBC requests for new radio encountered during previous efforts, they and television licences, resulting in an also suggest that a better mechanism is appeal to the Federal Court of Appeal in needed to bring into focus, on a regular one case and to the Minister in the other. basis, the evolving role and funding of the One was dismissed, and the other is being public broadcaster. This is not a new idea; pursued through a new application to the for example, in 1995, the Heritage CRTC for a new specialty channel. The Committee suggested that a Memorandum CRTC recently released its decision on the of Understanding between the CBC and renewal of CBC’s licence, and in it laid government could be used to define out a number of conditions and strategy without compromising CBC’s expectations. The President of the CBC independence as a public broadcaster. The indicated that some of the requirements CBC Corporate Plan could equally were not affordable. In May 2000, CBC provide a basis for building support presented to the Heritage Committee a among key stakeholders inside and outside plan for the transformation of ETV. This government. plan involved closing down several regional ETV locations, which generated 35. Concerns about clarity of role, considerable debate across Canada. A rapid external change, and imbalances modified plan had been approved by the between expectations and resources have CBC Board at the time of the completion been part of CBC’s reality, and the reality of this special examination. of many public service broadcasters around the world, for several decades. Successive parliamentary committees, 33. This represents a very serious risk special task forces and external reviews to CBC’s effectiveness and efficiency. have called for clarification of the role of Later sections of this report describe the CBC, decisions on priorities, and problems that can be linked to the strategies for responding to profound and uncertainty of direction and the perceived accelerating change. The Corporation has imbalances between expectations and evolved continuously and considerably resources. These include declining staff over the years, but the same issues morale, a lack of focus of effort, reappear. successive rounds of cutbacks and layoffs, increasing workload for those who remain, 36. Section 3 of the Broadcasting Act threats to programming quality, excess defines the range of expectations for the facilities, and erosion of audience share CBC, but is written broadly to allow for and advertising revenues. In a business change in the broadcast industry. To where ownership of programming content operationalize these expectations, is critical, the CBC finds itself losing decisions are needed on such things as the control of programming rights to weight that should be applied to each independent producers. Also, ongoing expectation, and whether these investments in existing infrastructure may expectations should be met individually or be in conflict with the requirements of a collectively by the various CBC services. different strategy. Recently, these concerns Some argue that a cultural policy or an have grown to the point where some updated Act could provide the CBC with question the survival of the Corporation the precision it needs to settle on a course unless a balanced strategy can be found. of action. Others suggest that these instruments will always be broad and 34. We interviewed CBC officials somewhat vague, are difficult to update, and key stakeholders in government, and would not, therefore, be helpful in industry and cultural groups, and almost today’s environment of rapid change. The all agree it is time to update the CBC’s government’s response to the Heritage strategy. To help overcome the challenges Committee’s 1999 report A Sense of
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Place, A Sense of Being included works in, it needs a process through principles against which a cultural policy which the Corporation and its key might be framed. But Canadian Heritage stakeholders can periodically discuss officials have indicated that there are no the role and funding of the public plans at this time to begin the broadcaster and measure its success. development of a comprehensive cultural policy. There is also no appetite to reopen 39. This leads to our discussion of a the Broadcasting Act unless there are critical requirement — clear clearly defined shortcomings that need to accountability relationships. Later, in the be corrected. section Service to Canadians, we discuss two key results areas that would have to be part of a CBC strategy: the type of 37. It is important, therefore, that the programming CBC provides to Canadians; CBC initiate a dialogue with, and seek the and the role of the regions. appropriate support of, the Minister of Heritage, the CRTC, the Treasury Board External accountability is diffused Secretariat and other key stakeholders about the role and funding of the CBC. 40. No institution can successfully There has been a perception that the CBC launch a new strategy without the has tended to isolate itself to protect the resources and authority to carry it out. To arm’s-length relationship, but other public obtain resources and authority, the broadcasters have closer relationships with institution must have a reliable process for their government stakeholders. While negotiating terms with stakeholders who consultation is necessary to provide the control the resources and can supply the CBC with the foundation upon which it necessary authority. can build a balanced strategy, it will need to be done in a manner that respects the 41. At a minimum, one would expect arm’s-length relationship the CBC must such a process to define the job the CBC maintain with government. is expected to do, broadly enough not to interfere with its independence but specifically enough to define resource 38. The CBC cannot operate in an requirements; match the resources and optimal fashion without a strategy that authority available to the CBC with the balances the results it is expected to agreed expectations; and define deliver, expectations for audience reach, performance measures by which the CBC and how available resources can be could account for its use of these optimally configured to meet them. This resources. strategy would provide a basis for decisions affecting the effective and 42. The CBC has an abundance of efficient functioning of all aspects of the accountability relationships, but none of Corporation’s operations. Difficulties them meet these expectations. over the years in establishing a balanced strategy have resulted in prolonged • The Minister of Canadian Heritage discussions of the appropriate role of recommends resource levels. Officials of the public broadcaster. The current the Department of Canadian Heritage President launched a re-engineering believe that their ability to offer guidance effort intended to refocus priorities and on expectations for the CBC is limited by rebalance expectations with resources, the importance of the arm’s-length but it is apparent from the reactions to relationship with government that these proposals from across Canada underpins the independence of the CBC. that, like previous similar efforts, there Unlike those of most other Crown will be many challenges to overcome. In corporations, the CBC’s Corporate Plan is the volatile environment that CBC not approved by its responsible Minister.
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• The CRTC has a mandate to The governance framework comment on and influence the CBC’s 44. When an organization is under strategies, but it cannot grant the resources stress, its strategic management process to carry them out. The CRTC sets must be efficient and decisive. At the expectations for a seven-year licence heart of this is the governance framework term, a relatively long period in today’s that determines how the key players — rapidly changing environment. The the Board and its Chair, and senior expectations do not address such key management including the President — indicators as audience usage and a interact. measurement of the value the public obtains from the CBC’s services. 45. The CBC has placed priority on the development of its corporate • The CBC Board of Directors is governance framework, and over the last responsible for stewardship of the five years has substantially improved it. Corporation, examining its public policy The Corporation has closely monitored objectives and ensuring that the and adopted the advances and best Corporation communicates effectively practices advocated for private sector with the Crown and other stakeholders. As corporations, and has participated in and we discuss later in the section on contributed to various forums on corporate governance, the accountability governance, including the Public relationships with the Board are also a Enterprise Forum of the Conference Board source of difficulty. of Canada.
• The Governor in Council appoints 46. The CBC has institutionalized a the Chair and directors of the Board and framework for corporate governance that the President of the Corporation. appears to be comprehensive, systematic and organized. Its characteristics include a • The Treasury Board Secretariat formal structure that sets out roles and focusses on expenditure planning and responsibilities, regular Board and management, and can approve some committee meetings, an administrative financial flexibilities needed by the support system, and prescribed Corporation from time to time. governance practices including Board work plans. • The Standing Committee on Heritage 47. While the design of the regularly asks the CBC to appear as a governance framework meets most witness to explain its strategies and use of expectations, there are elements that resources. impede its effective operation. • The Canadian Television Fund 48. Responsibilities of the Chair supports programs that make up a good and the CEO. Separate positions of deal of the CBC’s television prime time Chairperson and CEO were created in schedules. Recent rule changes eliminate 1991 Broadcasting Act; previously, only the CBC’s guaranteed share of funding the position of President was stipulated in and require that programming meet strict legislation. Together, the Chair of the Canadian content requirements to ensure Board and the CEO should strive to build distinctiveness from U.S. programming. a productive working relationship of openness and trust. The CEO should be 43. Relationships with the CRTC, able to rely on the Board and its Chair as Canadian Heritage and the Heritage advisors and as a sounding board. portfolio entities have not produced a Normally the Chair manages the affairs of shared view of the role, funding and the Board while the CEO manages the strategy of the CBC. day-to-day operations of the Corporation.
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In the past, however, the relationship longer-term view of the Corporation’s between these important players was direction. The Board has resolved to described as very stressful. minimize its involvement in the day-to-day affairs of the Corporation. 49. The roles of these two key people are described in the Broadcasting Act, the • The Board should support the CEO’s terms of reference for these two positions, responsibility for leading the development and the Corporation’s bylaws. The terms of the CBC’s strategic direction. The of reference provide considerable detail Board’s deliberations and approval of the about responsibilities, and are valuable strategic direction and the corporate plan from an information and a continuity formulated by management are a perspective. Annually, the Governance cornerstone of the Board’s fiduciary Committee of the Board updates the terms responsibility for overseeing the of reference. This provides an opportunity management of the CBC. The Board for the CEO and the Chair to jointly should ensure that the principal risks to propose changes for review by the Board. the success of the CBC have been identified and assessed. 50. Another contributing factor in building a relationship of trust between a • The Board should assign the CEO CEO and a Chair is participation by the the responsibility for developing and Chair with the Board in the appointment implementing a plan to maintain effective of the CEO. While the Governor in relations and communications with key Council has ultimate responsibility for stakeholders. Communications should deal these appointments, for a number of other with the significant issues confronting the Crown corporations selection committees CBC, plans for and progress in responding comprising government and Corporation to them, and the risks and challenges to officials are used. For the CBC, this has fulfilling its mandate. The CEO should not been the case. regularly present a plan for stakeholder relations and communications and 51. Operations of the Board. The progress made in implementing them to CBC is a billion-dollar corporation, and the Board for review and discussion. requires a Board with a balance of skills and experience. The Board’s Governance • The Board and the CEO should work Committee has assessed the Board’s together to determine the nature of the performance and has identified needs in information the Board requires to arrive at areas such as previous Board experience, independent judgments and fulfill its broadcasting, change management and governance responsibilities, to participate accounting. There have been concerns in the formulation of CBC’s strategic that, when new members are appointed by direction, to hold management the Governor in Council, identified accountable for achieving objectives, to requirements are not met. participate in significant developments 52. Other opportunities related to the and upcoming decisions, and to evaluate effective functioning of the Board include progress. The Board should delegate the following: responsibility for this important project to its Governance Committee and should • In the past, the involvement by the discuss and settle with management the Board in the day-to-day affairs of the parameters — the quantity, timing, Corporation may have been required in frequency, and usefulness — of the exceptional circumstances. Involvement information the Board receives. This joint of this type can be inefficient, hinder good Board/management review of the Board’s management, and preclude the Board from information needs should be conducted discharging its obligation to take a annually.
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53. The following section discusses including the elements that would make the latter opportunity in more detail. up the longer-term strategy — programming results, reach expectations A reporting framework would simplify and resources used to deliver them. Other requirements and improve efficiency key features could be management strategies for key resource areas, key 54. Complex organizations like the risks, and significant shifts in the external CBC often develop an integrated environment. A structured approach could framework for planning and reporting to also be developed for the systematic simplify and organize internal and reporting on projects and key initiatives external information flows. There are a that require the Board’s approval or its number of indications that such a continuing attention. framework is needed within the CBC: 56. The information contained in • Concerns have been expressed by the external reports and reports to the Board Board that the information it receives is should mirror information used to manage not sufficiently strategic, while throughout the Corporation. An integrated management feels overwhelmed by the approach would involve layers of volume of information it must provide to information that cascade through the the Board and others. organization, with increasing levels of • Information about risks, stakeholder detail at lower levels and the capacity to relationships, performance against report upward in a cohesive way. The “Promises” made to Canadians, and many Corporation’s present financial other subjects is viewed as an opportunity information system should facilitate a for improved reporting to the Board and to more integrated approach. government. 57. There are shortcomings in the • There are many priorities, objectives Corporation’s external accountability and goals in place, creating confusion at structure, its governance relationships the operating level. Reports from the and its performance information. These various services are in different formats are critical to developing a balanced and do not always line up with corporate strategy, securing support for it, priorities. Linkages among regional, sustaining and updating it, and network and corporate priorities are reporting on performance. The absence complex, and the measurement of overall of a comprehensive, relatively simple performance is very difficult, if not performance reporting framework that impossible. links programming results to programming and non-programming • Performance reporting — from resources constrains accountability and individual programs to reporting to the oversight of key management initiatives. CRTC — tends to focus on measures used by the private sector, and places little Strategic Planning, Stakeholder emphasis on the factors that distinguish the CBC or reflect its contribution to other Relationships, Internal government objectives. Accountability and Risk Management 55. The Board and the CEO should work together to develop an information The strategic planning system is well framework that meets the needs of the designed Board and the Corporation. This framework could identify, for all business 58. The strategic planning process lines, the elements that would be a regular has been designed to integrate internal and feature of plans and performance reports, external reporting, and to consolidate
Office of the Auditor General of Canada – June 2000 15 Special Examination Report – Canadian Broadcasting Corporation
plans for the regions, services and their programming needs and to build functional areas. The process is in place alliances. There are many examples of and is functioning well in defining effective stakeholder relationships at the requirements under the current set of regional level. For example, French Radio operating assumptions. Capital in St. Boniface in Winnipeg has a strategy requirements are determined against for stakeholder relationships that involves existing infrastructure holdings, a human increasing the use of partnerships, the resources transformation process has been visibility of French Radio, and the sources developed, and steps are now being taken of radio content from Canada and abroad. to develop a business systems Similarly, French Television in Montreal architecture, building on the advances that recently instituted a strategy for have been made in implementing the new stakeholder relationships that will seek out financial information system. new partnerships and new talent in the community, increase presence in the 59. The strategic planning process community, and establish strategies for deals effectively with the requirements of meetings with government and private the various business lines under current sector organizations. However, each operating assumptions. The region has its own approach to stakeholder Re-engineering Task Force will likely relations. introduce a new set of assumptions for managing administrative, operational and 62. Network relationships. Each transmission and distribution network has extensive relationships, but infrastructure. once again each approaches them differently. The French Television Network is the only one with a plan for Stakeholder relationships need greater this area that stems from its business plan. attention An area for improvement is relationships with the other cultural institutions of the 60. CBC has an unusual number and Heritage portfolio. There would seem to variety of potential stakeholders, from all be a natural symbiosis between the sectors of the economy, with interests that networks and these other agencies, but range from technology to culture, spread many feel it has not been fully realized. across Canada and into other countries. These relationships are important, to build 63. Corporate relationships. grassroots support for the CBC and to Relations with government consolidate support for strategy. They also decision-makers are discussed in the can be used to identify opportunities for earlier section on external accountability. co-operation with others in government 64. Board relationships. The Board and the private sector, to benchmark has established an Advisory Committee on practices with others to find efficiencies, Stakeholders Relations, which is or to discover new talent or program considering alternative methods of opportunities. They also help the CBC to collecting stakeholder input at the learn what viewers and listeners want. grassroots level, while remaining Some relationships lend themselves to independent from CBC management. The local leadership, while others require Advisory Committee is assessing options corporate leadership. such as establishing advisory councils to 61. Regional relationships. The obtain ideas on programming regional locations we visited tend to align expectations. their relationships with local cultural, 65. Many of the people we professional and audience groups. They interviewed inside and outside the CBC use a wide array of instruments to reach feel that improvements are needed in out to their communities, to understand stakeholder relationships. Each region has
16 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation its own approach, and there is no years ago includes annual objectives corporate strategy, despite the fact that a setting and performance assessments. It is 1998 CBC Task Force report indicated now being extended throughout that corporate lessons could be learned management and beyond. This process from the regions. It noted that it is “simply supports results-oriented management and good business” and that other public will help align personal and corporate broadcasters are very proactive in this objectives, increase accountability, and area. There is a growing recognition in the increase oversight of key management CBC of the importance of well-managed initiatives. stakeholder relationships. There are many pockets of strength to build upon, and Risk management provides an excellent examples of appropriate opportunity for the future delegation and information exchange 68. The risk profile of the CBC practices. The CBC needs a more presents significant challenges because of systematic stakeholder consultation the magnitude and complexity of the risks process that defines, for different levels of and the limitations in the ability to control the organization, who the critical and influence them. CBC risk issues stakeholders are, the strategies that will be providing significant challenges include used to deal with them, lessons learned fulfilment of the mandate, stakeholder from previous attempts, and how progress relationships, rapid and dramatic will be measured. technology changes, costly infrastructure, and ongoing challenges of culture and Internal accountability relationships are workforce change. being clarified 69. Like many organizations, the 66. In 1995, we reported several CBC’s risk profile became prominent instances where internal accountability during the 1990s when downsizing, pace was diffused, causing some confusion and of change, global competitiveness and competition. Clear accountability is stakeholder expectations of transparency essential to the effective and efficient use and accountability came all at once. of resources. The CBC has a variety of Planning activities were strengthened to accountability approaches, ranging from consider risk more systematically. highly centralized to highly delegated, Strategies for most likely outcomes were depending on the nature of the function. augmented with contingency plans for Accountability relationships have gone worst- and best-case scenarios. More through a series of evolutions over the last continuous and integrated risk two decades, resulting in shifts in management was also put in place through responsibilities among headquarters, the discussion of planning options by senior networks, and the regions. Relationships management and at joint business-line among these groups have improved over meetings. the last five years and continue to evolve. There are a few areas where 70. The increased focus on risk, accountabilities are confusing to staff, but while very direct in many ways, has working arrangements have been made to mostly been as an enhancement of clarify them. In some cases, the planning, or as part of special task forces relationship among regional, network and or preparations for CRTC hearings. corporate priorities is weak, and the mix Specific management structures to of demands at the operating level is explicitly address risk, including adding confusing. more risk-related terminology to the Corporation’s common language and 67. The executive performance linking the management of risk to management system introduced three governance, have not been established.
Office of the Auditor General of Canada – June 2000 17 Special Examination Report – Canadian Broadcasting Corporation
71. A risk management framework • “reflect Canada and its regions to would establish explicit management national and regional audiences, while structures to sustain an organization-wide serving the special needs of those approach and processes for analyzing, regions”; communicating and reporting risks • “actively contribute to the flow and consistently, efficiently and effectively. It exchange of cultural expression”; would tie in more directly to the Board’s needs for information on key risks. A • “contribute to shared national more structured approach to managing consciousness and identity”; and risk, building on existing practices, could • “reflect the multicultural and be implemented with minimal additional multiracial nature of Canada.” process. It could be put in place after the CBC completes its re-engineering process, 75. The CBC is to pursue these goals when things are more stable. through “a wide range of programming,” in both French and English, that “informs, enlightens and entertains” and is available Service to Canadians to all Canadians. 72. The CBC’s success is largely 76. Apart from linguistic and determined by the characteristics of the availability considerations, however, the programming it delivers to Canadians. As programming-related objectives set out for we describe earlier, the CBC’s processes the CBC are not fundamentally different to measure the effectiveness of its from those for the system as a whole. The programming do not reflect its distinctive major difference is that the language of mandate, although steps have been taken the Act implies higher standards for the in this direction. A reporting framework CBC. For example, while “each element that incorporated this dimension would of the Canadian broadcasting system” is contribute to strategy development, expected to “contribute in an appropriate governance and internal and external manner to the creation and presentation of accountability, and would help to shift the Canadian programming,” it is only the emphasis of performance measurement CBC that is required to be “predominantly away from ratings. ... Canadian.”
73. To help us assess the adequacy of 77. The presumption of systems and practices in this area, we distinctiveness. The CBC has sought to examined two dimensions that we believe define the characteristics of its would be part of such a framework: the programming that define its role as a distinctiveness of CBC’s programming; public broadcaster, and has tended to and regional operations. equate them with distinctiveness. Former CBC President Pierre Juneau told the Canadian Club in Toronto in 1983, Distinctively Canadian programming “Making the CBC more visible to Canadians will require a new and 74. The presumption of a higher reformed programming approach. standard. The Broadcasting Act was Underlying this approach, there should be written broadly to allow room for the two fundamental principles: make it broadcasting industry to evolve. It creates distinctive and make it Canadian.” The a set of expectations for both the current project to transform ETV is built broadcasting system in general and the on the dual requirements for Canadian national public broadcaster in particular, content and distinctiveness. but does not offer guidance on the relative weightings of the expectations. The CBC 78. Canadian content has been an is expected to, among other things: important priority for the CBC for many
18 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation years. CBC’s radio services have steps to address the problem of measuring historically delivered a high level of distinctiveness, but its efforts have not yet Canadian programming, and strategy reached fruition. documents since the mid–70s have proposed increases to Canadian content on 82. It is generally agreed that the the main television networks. CBC CBC’s French and English radio services suggested to us that Canadianization produce, for the most part, highly comes at a price, including possible loss distinctive programming that would not, of audience advertising revenues. In 1993, in their absence, be provided by private the CBC indicated its intention to deliver radio stations. However, the broadcast schedules that were distinctiveness of ETV and FTV overwhelmingly Canadian, to make it programming is often questioned. We stand out in the 500-channel universe. In therefore examined some key its 1999 Strategic Plan, the CBC reported characteristics that might be used to that ETV and FTV had almost completely define distinctiveness, both to assess the Canadianized their prime time and most adequacy of management systems and of their daytime schedules. A 10 percent practices and to test the feasibility of increase in Canadian content was developing measures for this very achieved by ETV between 1994 and 1998, complex area. during a period of budget cuts and downsizing. 83. Indicators of distinctiveness. Distinctiveness can embrace a number of 79. The Broadcasting Act sets an characteristics such as creativity, expectation for CBC’s programming to be innovation, risk taking in programming not only predominantly Canadian but also and quality. We carried out a variety of distinctively Canadian. The Act also tests, using data available within the CBC emphasizes the importance of quality in and from private organizations, to assess programming. To be distinctive, therefore, the distinctiveness of CBC’s television is not merely to be different. Also, the Act programming across three areas: diversity does not envisage the CBC as providing a of programming, quality, and share of narrow, highly specialized or merely Canadian programming. supplementary programming service. 84. It would be expected that CBC’s 80. As listening and viewing options high-quality Canadian programs would continue to grow worldwide, a number of cover a broad range of program countries have called into question the categories. In terms of diversity of need for their own public broadcaster. For programming we found the following: a large majority, the reasons for supporting public broadcasting remain • CBC FTV has a higher proportion of quite convincing, but there is also a information programming than the consensus that public broadcasters must private French broadcasters in prime time be distinctive if they are to warrant (about 35 percent compared with 20 continued public funding in the percent), largely because it has more multi-channel universe. public affairs programs. This differentiation is, however, relatively 81. Despite the importance of recent: in 1988 and 1992, CBC FTV had distinctiveness for public broadcasters, about the same amount of information however, reporting still tends to rely on programming as the others. The evening private sector indicators such as ratings programming of CBC ETV likewise has a and audience share, which are not greater proportion of information specifically designed for public programming than its commercial broadcasters. The CBC has taken some counterparts.
Office of the Auditor General of Canada – June 2000 19 Special Examination Report – Canadian Broadcasting Corporation
• CBC FTV fiction programming than the others (46 percent), had greater consists primarily of drama series diversity among its non-Canadian (téléromans and mini-series), while the children’s programs, and broadcast a private networks rely on films. Moreover, much higher proportion of recent viewers are more likely to find Quebec or productions. CBC FTV is also the only English-Canadian fiction on CBC FTV, French network carrying téléromans both during the day and in the evening. targeting a young audience. About 40 percent of fiction aired on CBC 85. In terms of programming quality, FTV consisted of Quebec or a CBC-funded survey asked viewers to English-Canadian productions. In prime pick the network with “the best” time, the proportion climbs to about 75 programming, from among all available percent, more than twice that of the Canadian and American stations. CBC private networks (see Figure 2). ETV ranked first in 4 of 16 categories • For the evening news, CBC FTV has (Canadian programs, national news, more international and Canadian news, current affairs, variety specials), the only a similar amount of Quebec news, and broadcaster to do so, and was second in less local news. It also carries more news another 6 (international news, local news, from reporters on location, especially for documentaries, sports, comedy programs, international stories, and makes less use of family dramas). the “talking head” format. 86. We also examined whether CBC • CBC FTV and ETV both place more has a higher proportion and diversity of emphasis on children’s programming high-quality, prime-time Canadian than other broadcasters. CBC FTV programs with significant audience share. devoted 16 percent of its schedule to The Quality Ratings Survey (QRS) children’s programs in the fall of 1997, developed by CBC’s research department compared with an average of 10 percent measures audience satisfaction (a broad for the other French networks. It also but reliable indicator of how audiences carried a higher proportion of wholly assess program quality), and makes these Canadian children’s programs (55 percent) comparisons possible. An international study of public service broadcasters stressed that for public service broadcasters to put “creative and market Figure 2 pressure” on commercial broadcasters “to achieve a society’s aims for its Origin of Fiction Programming on CBC FTV broadcasting market,” they must not only and the Private French Networks be distinctive but must also “maintain sufficient share.” The share required to exert market pressure varies from one FULL DAY PRIME TIME country to another, one type of Origin (1993–1997) % (1993–1997) % broadcaster to another (for example, Private Private conventional or specialty), and one CBC FTV Networks CBC FTV Networks program category to another.
Quebec 36 13 71 23 87. Figures 3 and 4 show the results of this analysis. For ETV, the 1999 QRS English-Canada 33 41assessed 88 Canadian and American United States 46 78 23 75 programs, mostly in prime time (6 p.m. to midnight), on CBC, CTV, Global, and 62 2–– France TVO. Of these, 39 received quality Other 94–– –– indices (QIs) of 100 or above, indicating above-average satisfaction, while 49
20 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation
Figure 3 Figure 4
Canadian Programs on CBC ETV With an Above-Average Canadian Programs on CBC FTV With an Above-Average “Quality Index” “Quality Index” (Monday to Saturday, 6 p.m. to Midnight) (Monday to Saturday, 6 p.m. to Midnight)
Quality Quality Index Share Program Index Share Program
16 Découverte 145 5.4 (Other Broadcaster) 175 35 La facture 143 5.9 Nature of Things 165 49 Un gars, une fille 142 16.3 Hockey Night in Canada 155 55 4 et demi 140 0.9 (Other Broadcaster) 155 57 (Other Broadcaster) 133 1.6 (Other Broadcaster) 152 27 Enjeux 119 16.8 RCAF 151 43 (Other Broadcaster) 119 11.8 The National 145 22 Zone libre 119 7.9 HNIC Pregame 139 57 La petite vie 116 21.4 (Other Broadcaster) 137 28 Téléjournal/Le point 109 9.8 Sunday Report 126 44 Virginie 109 9.1 DaVinci’s Inquest 125 23 (Other Broadcaster) 108 9.2 (Other Broadcaster) 117 13 Christiane Charette 104 8.8 Fifth Estate 117 45 (Other Broadcaster) 104 16.9 (Other Broadcaster) 113 48 (Other Broadcaster) 100 10.0 Wind at My Back 111 31 La part des anges 100 9.0 National Magazine 111 108 40 (Other Broadcaster)
106 22 La soirée du hockey
101 42 (Other Broadcaster)
101 39 (Other Broadcaster)
Source: CBC Research (1999 QRS, Nielsen)
Office of the Auditor General of Canada – June 2000 21 Special Examination Report – Canadian Broadcasting Corporation
received QIs below 100, indicating information programming apart from news below-average satisfaction. Of the 39 and current affairs. Both networks have a programs with above-average satisfaction, number of programs with potential for only 16 were Canadian. While CBC ETV making it into the high-quality range. provides the highest proportion of Canadian programming in prime time 89. We also traced changes in the (about 90 percent as of January 2000), general level of satisfaction with CBC Figure 3 indicates that it also has the ETV programming by comparing the largest proportion of high-quality average QI for the same group of Canadian programs with a substantial programs in different years. The average audience share. The same approach was QI dropped from 110.8 in 1997 to 107.2 in used for CBC FTV, with similar results 1998 to 97.5 in 1999. Not only are some (see Figure 4). of CBC ETV’s current high-quality programs losing some of their audience 88. Figures 5 and 6 indicate that the appeal, but most of the programs within high-quality CBC programs of both ETV striking distance of high quality are also and FTV cover a wide range of genres. falling on the QI index. Many factors The only category without a high-quality could be contributing to this trend. For program is Arts & Culture for CBC ETV. example, people inside and outside the CBC FTV is somewhat stronger in CBC have asserted that the decline in
Figure 5
Distribution of CBC ETV’s Prime-Time Canadian Programs (Monday to Sunday, 6 p.m. to Midnight)
INFORMATION ENTERTAINMENT News Current Other Drama Comedy Arts & Sports Affairs Culture Nature of Things HNIC Quality Index Greater Than The National RCAF HNIC 100 Pregame Sunday Da Vinci’s (arranged top Report Fifth Estate Inquest to bottom in order of QI) National Magazine Wind At My Back Witness Life & Times Red Green Quality Index Venture Between 22 Minutes 80 and 99 Market Place
(arranged top Early to bottom in Evening Under- order of QI) News currents On the Road Late Local Country Again News Canada
Source: CBC Research (1999 QRS)
22 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation resources for CBC ETV has reduced broadcaster. It also suggests, for the program quality. factors we analyzed, that CBC programming is quite distinctive. Clearly, 90. In contrast, the survey indicates any framework for assessing the overall that high-quality programs on CBC FTV distinctiveness of CBC television can are generally improving. point only very generally to the 91. The need for a measurement programming values through which such framework. This is a very complex, but distinctiveness is being achieved. It can, extremely important, measurement area. however, help the CBC to define the Audiences may find Canadian programs values that best serve audience needs and “more satisfying” because they embody to create a programming philosophy based the kinds of values that best fulfil their on them. needs as members of a democratic society. An information program, for example, might be judged as high-quality by its 93. The measures we employed for viewers not simply because it helps to this analysis are intended as examples of empower them as citizens but because it how this might be done, and should not be presents its content in a meaningful and viewed as the only approach to measuring comprehensible way. the effectiveness of CBC programming. We strongly encourage the CBC to 92. The analysis we carried out develop a measurement framework that suggests that it is feasible to measure the includes distinctiveness. This would shift distinctiveness of CBC’s programming the emphasis away from ratings and would and, by extension, the extent to which it is give the public an important role to play delivering its mandate as a public service in programming policy.
Figure 6
Distribution of CBC FTV’s Prime-Time Canadian Programs (Monday to Sunday, 6 p.m. to Midnight)
INFORMATION ENTERTAINMENT News Current Other Drama Comedy Arts & Sports Affairs Culture Découverte La facture Un gars, une Quality Index fille 4 et demi Greater Than Enjeux 100 Zone libre La petite vie (arranged top Christiane Virginie to bottom in Charette Téléjournal/ order of QI) Le point Part des Soirée du anges hockey
Quality Index La fureur Between Bouscotte 80 and 99 Ce soir Caserne 24 (arranged top to bottom in Franc jeu order of QI)
Source: CBC Research (1999 QRS)
Office of the Auditor General of Canada – June 2000 23 Special Examination Report – Canadian Broadcasting Corporation
Meeting regional expectations to national and regional audiences, while serving the special needs of those 94. Canada’s geography, cultural regions”, through national network diversity and widely dispersed population programming with regional content create a unique set of challenges. Regional broadcast across the country, and through services have become a focal point of programming produced in each region for recent discussions about the CBC, and local or regional broadcast. CBC estimates will be a defining element of any new its spending either in the regions or in strategy. support of regional activities at approximately $420 million, or 38 percent 95. Stakeholder expectations for of total expenditures. CBC regional activities have included: 97. Regional production for all • delivering programming that reflects services amounts to about 2,000 hours the regional differences in language and weekly, excluding Newsworld and RDI. culture; This represents 79 percent of total CBC • building bridges between regions; production hours. Regional broadcasting accounts for such a high proportion • offering regional and local because individual programs are produced broadcasting to regional and local at multiple locations for insertion into the audiences; and same time period in the network schedule. On this schedule basis, regional • ensuring reasonable access by production across all of CBC’s services is communities to both regional and national about 328 hours per week, or 37 percent programming. of the total. 96. The CBC accomplishes its 98. Distinctiveness of regional mandate to “reflect Canada and its regions programming. In assessing the extent to
Figure 7
Regional vs. Network Corporate Spending and Production, Regions Networks Management All CBC Services É
38% 60%É 2 Spending $1,105.7M
$420.2M
É É Weekly 79% 21% Production Hrs 2,560 hrs. 2,107 hrs
Weekly 37% 63% 893 hrs. Schedule Hrs 328 hrs
Regional 50% 50% 893 hrs. Source: CBC Finance and Reflection Administration 446 hrs (Excluding Newsworld, RDI and New Media) 0% 20% 40% 60% 80% 100%
% of Schedules with Regional Reflection
24 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation which the CBC fulfils the expectations of different, and radio and television are very the Broadcasting Act for regional content, different media. ER, FR and FTV are very it is important to consider not only the secure about their regional roles, but both quantity of regional programming but also radio services recognize that technology its quality. As Figure 8 indicates, there is a will have a major impact in the next 10 large amount of regional content (in terms years. ETV is searching for role clarity in of both production and reflection) on CBC its very complex and dynamic ETV’s evening schedule. Two of these environment. programs are rated as high in quality, while the majority fall into the potential 101. Like employees across the CBC, high-quality range. regional staff and management are 99. Regional operations. We visited concerned about resource pressures, eight regional offices across Canada and uncertainty, overload and stress, and the carried out site visits, document reviews, impacts these might have on retention of and interviews with managers, support key skills and young talent and on staff and creative staff of English and programming quality. However, people French Radio and Television. CBC are committed to the CBC and their operates 95 stations across Canada, regional operation and its culture of housed in 80 buildings. As we point out creativity, and they believe it is an later, significant investments have been important force. They believe there are made in these operations. unique opportunities in the CBC to do things that cannot be done in private 100. Each service sees a unique role broadcasting, such as high-quality for itself. English-language and in-depth work. They feel there is a French-language markets are very prestige in working for CBC, the job itself
Figure 8
Regional Reflection and/or Production on CBC ETV (Monday to Sunday, 6 p.m. to Midnight)
Regional Production and Regional Reflection without Regional Production for Regional Reflection Regional Production National Distribution
Quality Index Da Vinci’s Inquest Wind At My Back Greater Than 100
Quality Index Life & Times 22 Minutes Between 80 and 99 Witness Undercurrents Country Canada On the Road Again
Quality Index Nothing Too Good For a Cowboy Just For Laughs Below 80 Pit Pony Made in Canada
No Quality Index Canadian Reflections Network specials Available Network specials produced in the regions
Excluding Regional News and Regional Program Inserts in Market Place, Venture, and Fifth Estate.
Source: CBC Research (1999 QRS)
Office of the Auditor General of Canada – June 2000 25 Special Examination Report – Canadian Broadcasting Corporation
is satisfying, and positive feedback from People Management peers and the audience is an incentive. 106. The CBC’s success depends on 102. Regional operations are key the creativity, flexibility and motivation of elements of any shared strategy. its people. In 1995, we raised concerns Re-engineering options that have been about human resources management considered include reduction of ETV (HRM) systems, especially in the area of local/regional programming and shedding industrial and talent relations. Over the and/or rationalizing infrastructure. last five years, the HRM function has been 103. Many, including regional staff transformed in its orientation, organization themselves, believe the regions are and key processes. A strategic orientation important players in identifying audience has been introduced that links HR expectations and developing stakeholder priorities to corporate goals and priorities. relationships. In its 6 January 2000 Focus has been shifted from decision on the CBC licence renewal the administrative functions and toward CRTC stated, “The Commission considers strategic HR planning, consultation and that the highest priority for development. Critical HR processes, such English-language television must be to as annual objectives and performance increase the quantity of programming, assessments for staff, have been particularly in the priority programming introduced or reinforced. Training was categories, that is produced in and consistently highlighted as an excellent reflective of the regions of Canada. It is as service. a national public broadcaster, firmly 107. The last five years have also rooted in the regions, that the CBC will introduced considerable stress for the create the television audience loyalty it CBC and its staff. Budget cuts, staff will need to thrive in the coming years.” reductions and uncertainty on the scale The Commission’s orientation is toward encountered by the CBC, combined with greater independence for, programming decreased creative opportunities for staff, from and reflection of the regions. will affect an organization’s staff morale 104. Recent experience demonstrates and commitment. This contributed to our the many potential risks involved in identification of people management as a changing regional operations, including risk area to be included in this special public reaction, audience loss, revenue examination. We looked at four aspects of loss, union resistance, loss of talented people management: CBC’s internal staff, further debate with key stakeholders, culture; support to creative talent; and political sensitivity. At the same time, industrial and talent relations; and achieving agreement on how to deliver succession planning. CBC’s regional responsibilities is fundamental to balancing expectations and Internal culture needs additional resources, and to developing a viable attention strategy. 108. An organization’s culture deals 105. It is not our role to suggest which with the way its people interact internally path is best. Our examination of regional and with others. In the 1995 special activities reinforces our main conclusion examination we noted some concerns about the need for a balanced strategy for about the CBC’s culture. These concerns the CBC. More than any of the other areas were echoed recently by CBC of possible re-engineering, this area management, who identified a number of continues to generate debate and will major risks, including the lack of a require stakeholder support to be corporate ethic or cultural identity; “silo” successful. operations that dampened synergy
26 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation between business lines; and an overly compromised. There is concern, for bureaucratic environment. example, that staff have lost their experimental spirit, sense of mission and 109. In its 1999 Strategic Plan, the enthusiasm. These concerns are not CBC recognized that it must rethink its surprising given the magnitude of change culture to respond to a new environment, that has occurred. building on the values and creativity of its people. The Plan notes the need to be 112. Support and administrative performance-driven, to improve services, for their part, have been driven productivity, encourage partnerships, for many years by the very real imperative change the legal and financial of putting in place basic systems and frameworks, and increase accountability. practices, ensuring consistency throughout We believe there is a need to reinforce the Corporation where warranted, and these efforts and to also focus attention on promoting productivity gains to help make the needs of creative staff. Budget cuts ends meet. We were provided with a list and uncertainty have shaken the of 60 “Initiatives to Change the Corporate traditional values that CBC thrived on in Culture” that were undertaken over the the past. There have been serious last few years. They relate to a wide range initiatives in this area, but management of corporate expectations, including and staff indicate that there is still work to management of downsizing, contracting do to realize the benefits of these efforts out of support services, project and that the culture change initiative management, cost allocation and financial requires further visibility and support from control. senior management. 113. It is important to preserve the cultural characteristics that are unique to a 110. CBC embodies many cultures. particular part of the Corporation. But CBC legitimately contains many different where different cultures interact, people internal cultures that reflect the varying must understand the needs and roles, operational requirements, traditions perspectives of the others, and work and histories of the regions, services, toward achieving the broader objectives of networks and headquarters. the Corporation as a whole. While there is a sense within the CBC that the culture 111. For staff delivering programs, has opened up and co-operation and culture is driven by creativity, innovation teamwork are growing (for example, the and programming quality. Differences integration of some English and French exist between regions, languages and radio and television news operations at the services in the extent and quality of regional level), there are areas where internal or external communications. Staff progress has been slow and co-operation value the independence, the opportunity to less than desired. be creative and the recognition that comes from good work. The creative staff we 114. Involvement of staff. Positive interviewed demonstrated a belief in the culture and continuous improvement importance and value of the CBC’s role as depend on staff involvement and public broadcaster. They expressed a commitment. Perceptions by staff we dedication to the shows they produce and interviewed varied on the opportunities to tend to identify more strongly with them be involved in identifying opportunities than with the organization as a whole. A for improvement. Some cited openness to major concern at the operational level is employee input, and described working that budget reductions, downsizing and groups, specific requests for input, and a productivity measures have preoccupied general receptivity to new ideas. Others the organization for so many years that the were less positive and cited a lack of trust operational culture has been of employees on the part of management,
Office of the Auditor General of Canada – June 2000 27 Special Examination Report – Canadian Broadcasting Corporation
coupled with a top-down approach to networks and in regional locations, about management. culture, creativity and satisfaction.
115. Many different approaches are 119. In radio, the consensus was that used in different parts of the Corporation, creativity is encouraged and facilitated but their extent and impact vary among through a variety of mechanisms. In regions, services, and networks. Examples television, there is a belief that creativity in individual regions include an in-house is still fostered, but not to the same degree mentoring program to deal with as in the past. Training — in terms of both technological needs; a committee to create quality and availability — was highly a mandate for weekend programs; a staff praised and viewed as a positive factor. survey; regular meetings with all staff to 120. The main source of satisfaction is discuss issues and opportunities; and a in doing good work and being recognized workload committee to examine workload by peers, management and the industry in issues and suggest ways of relieving general. Staff also indicated that a positive overload. work environment, a climate of mutual respect and an opportunity to influence the 116. Most told us that, despite the on-air product are key to satisfaction. variety of initiatives in place, this area Most people we interviewed believe that needs improvement. There is no corporate product quality continues to differentiate strategy or guidance, even though the CBC from other broadcasters. modernizing corporate culture has been identified as a corporate priority. 121. Lack of resources was cited as a Management believed it had a general creativity damper. In particular, there is sense of staff concerns but had not concern that emphasis on the “daily grind” conducted a corporate-wide employee of getting shows out has left little of the survey to more formally identify them. thinking time needed to foster greater CBC has been planning such a survey for creativity. There is also concern that many years but has delayed it due to the insufficient effort is being placed on turbulence of recent years. It is now identifying and developing new talent. scheduled to commence in fall/winter Uncertainty was the most frequently cited 2000, and should provide useful input for cause of stress. There is also broad people management. concern about a lack of clear corporate direction and continuing budget 117. CBC senior management has reductions. While there was a general recognized the importance of cultural perception that change was a major change as a long-term initiative. Each contributor to stress, it was recognized vice-president has culture change as an that change is inevitable. objective. Cross-corporate leadership training and the use of common language 122. CBC has gone through a around corporate culture and change prolonged period of stress, and it support this. However, these have not appears that this will continue. Our been managed under a broad-based examination indicates that this has had approach. an effect on the creative staff who are critical to the success of the CBC. At the same time, it continues to be important Safeguarding creative talent is that the Corporation reinforce efforts to important to the CBC introduce a more businesslike culture. People management efforts, therefore, 118. Since CBC’s success depends on need to be reinforced in two areas: the creativity of its staff, we interviewed a number of its creative staff in a variety of • A creative organization survives on functions, in the French and English the basis of its ability to attract, retain
28 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation and motivate its creative talent, and to use of technical staff. Both Toronto and foster the development of young talent. Montreal report significant reductions in This can be promoted by encouraging staff waiting time. More flexible staff participation and recognizing their collective agreements have contributed to creative contributions and excellence. this improvement. Our discussions with CBC staff and management indicate that cultural 124. While there have been significant change in this area requires further improvements in the last two rounds of visibility and support from senior collective bargaining, differences in management. contract clauses remain among the various units. The CBC believes there are • The CBC has made good progress opportunities for further flexibility, in introducing a more businesslike efficiency and economy by applying culture, but this priority needs to be technology and merging functions. To this re-emphasized. It should be supported end, it has applied to the Canada by clear objectives and plans, visible Industrial Relations Board to amalgamate initiatives and communication with staff the three main English units, in response about the importance of cultural to a union application to merge two of change. them. A similar application is being considered for the French network. Critical to the success of cultural 125. Another concern is the effect change is recognition of the need to successive downsizings will have on the manage change proactively and attraction and retention of younger staff. positively in an environment of The CBC’s regular complement has continuing budget pressures, decreased by approximately 2,000 since technological change and changing our last special examination, and this management processes and structures. reduction was achieved mainly through buy-outs and early retirement. Senior Management of industrial and talent management is concerned that this relations has improved approach may have reached its limits, and that seniority clauses in the collective 123. Ninety percent of CBC’s agreements will result in the bumping of employees are unionized and, in the past, younger staff, should further layoffs be collective agreements placed significant necessary. restrictions on the CBC’s ability to operate efficiently. In 1995 we raised concern Succession planning is being introduced about the number of collective at all levels agreements. Over the last five years the number has been reduced to eight 126. The succession planning process, industrial agreements and seven talent which applies to the CBC management agreements. Five years ago ETV alone cadre, is generally consistent with good had 17 industrial agreements, compared management practice. Specifically, the with the current four. The main CBC has a documented succession jurisdictional barriers and most penalty planning process that assesses risk, payments have been removed. Industrial influences staff development decisions and talent relations are now being and addresses the implications of business managed in a manner that recognizes the planning and staff performance importance of collective agreements that management. The process has been in suit the operational requirements and place since 1997 and there is evidence of facilitate and encourage efficiency and its usefulness in practice. Efforts are now economy. The Corporation’s productivity being made to extend it to staff at all reports indicate significant progress in the levels.
Office of the Auditor General of Canada – June 2000 29 Special Examination Report – Canadian Broadcasting Corporation
Quality, Productivity and Cost responsible for evaluating compliance with journalistic policies. We noted Control in Program Creation positive results in this regard during the examination. We also noted a significant Internal control of programming increase in the number of complaints, quality is well developed from 560 in 1996–97 to 1,111 in 1998–99. 127. In an earlier section we describe According to the Ombudsmen, this is approaches that could be used to measure primarily the result of greater visibility and report on the distinctiveness of CBC’s and the use of the Internet, which has programming, based on a variety of increased audience response. factors, including public perceptions of • Other systems and practices that program quality. CBC employs a variety provide feedback on program quality of internal processes to control quality. include ratings, focus groups, outside For example: panels of evaluators, evaluation at the program unit and department level, and • The CBC program schedules are the Quality Rating Survey. Evaluation of aligned with overall corporate objectives, television programs could be improved by through a process of program selection a more systematic approach using that involves frequent informal discussion consistent criteria, so that overall results among senior managers. While the could be compiled on a service-wide basis process of selecting programs for and reported to senior management. schedules could be documented more systematically, using consistent criteria, 128. These quality control evaluation methods, and a stronger mechanisms generally met our connection to objectives, the risk that expectations, although, as noted above, programming will not meet the mandate is there are opportunities for improvement. limited. Productivity improvement efforts are delivering benefits • Management informed us that all CBC journalists are made aware of their 129. In our 1995 special examination obligation to comply with the CBC report we identified opportunities on handbook on journalistic standards and several fronts to better co-ordinate practices. The handbook has required program delivery and reduce duplication updating for about two years to reflect of costs and effort. Since then, important important changes in the broadcasting steps have been taken in this direction. environment. Updated versions of the 130. We suggested that the CBC study practices are in use in the form of internal the consolidation of newsgathering guidelines, but an updated handbook has operations (to avoid separate organizations not yet been approved. Given its for radio, television, English, French, and significance, priority should be given to dedicated news channels), and examine this approval. Also, it would be useful for the experiences of other broadcasters’ the Corporation to assess whether the consolidations. Management has informed French Radio practice of requiring new us that it examined BBC and CNN and journalists to certify that they have concluded that consolidation within received the handbook should be a television components was desirable but a national policy. full structural integration of all news was • The Ombudsmen for French and not, since radio managers believe that the English services act as appeal authorities needs of radio would come second in a for complainants who are dissatisfied with combined structure. responses from CBC programmers or 131. The CBC has taken significant management. The Ombudsmen are also steps to eliminate duplication, ensuring
30 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation that coverage, facilities, and reporters are performers are recorded once in each shared wherever workloads make it language. It is hoped that this series will possible — for example, in almost all achieve high audiences in both languages foreign bureaus. News resources are and become a cultural beacon for pooled among all four media and some communication between the two language private broadcasters on Parliament Hill. groups. Newsworld and RDI share almost all live feeds of breaking events, and meet several Control of program costs times each day to co-ordinate coverage. 135. We found that the systems and These extensive working relationships are practices for cost control of both internally felt by management to produce the same produced and acquired programs are improvements in efficiencies and sufficient to ensure the economical programming quality that a formalized management of operations, with due structure would. regard to limited financial resources. The 132. Both the French and the English use of item-level budgeting and control television networks are taking steps to within programs, and other incentives for integrate their information programming internal and external producers to be on operations. In Montreal, the transition to time and within or below budget, are digital equipment for newsgathering will examples of good control practices. be accompanied by consolidation of all Internal audit reports on the management television news operations in space to be of outside productions financed by the constructed at La Maison Radio-Canada. Canadian Television Fund concluded that effective controls and systems were in 133. ETV plans to achieve efficiencies place, but found that practices may need and better programming by reorganizing to be changed as the Fund rules change. news and current affairs into units based Management informed us that it has on expertise rather than programs. A improved its practices in this area. resource utilization study of the 136. Internal and external information area (including regions) benchmarking of costs. The importance highlighted opportunities to break down and necessity of benchmarking as a areas of “silo” mentality and reduce regular management practice was stressed annual costs by almost $4 million by in the last special examination report. The integrating services. CBC has carried out some benchmarking 134. Other examples of co-operation but it has been limited, in part due to the between English and French lack of required financial information programming, achieved through informal from previous information systems. mechanisms, include the following: 137. To test the effectiveness in • Radio networks have long shared all practice of program cost controls, and to recordings of live classical music. In examine the feasibility of benchmarking addition, it is standard practice on the in the complex broadcasting environment, French network to interview bilingual we carried out our own cost comparisons subjects in both languages so that the for the News and the Current Affairs English network can use the material. genres. We compared data from two private Canadian broadcasting networks, • “Culture Shock/Culture Choc”, a one English, one French, with data Newsworld/RDI co-production, uses video provided to us by the CBC. journalists from across the country, all of them bilingual. 138. Television production costs vary widely as a result of quality and market • The History Project is using a demand considerations. We focussed on “double-shoot” concept, in which the cost-per-hour of programs offered on a
Office of the Auditor General of Canada – June 2000 31 Special Examination Report – Canadian Broadcasting Corporation
regular basis, and limited our attention to travel needed to ensure that ETV’s stories direct cost of original programming only, have a geographical mix appropriate to its ignoring overheads, repeat programs, audience. There are also areas where costs specials and the dedicated news channels. can be reduced through better staff Even so, costs per hour vary greatly utilization. Here again, the reasons for within these genres. The ratio between these differences should be carefully highest and lowest cost per hour is large, examined by management. by as much as a factor of 30. Thus, in assessing these programs, we looked 141. We then compared CBC news beyond individual numbers and made costs with those of the private sector, comparisons between activities that are using information supplied to us by each. properly comparable, both within the From this we concluded that the Corporation and between the Corporation production costs of ETV’s The National and private broadcasters. and its regional supper hour and late news, and FTV’s local news in Quebec outside 139. For network news, we found that Montreal, were comparable with the costs the cost of the premium evening news and of similar private broadcasters’ programs. magazine hour, including all network 142. The recent implementation of a newsgathering, was 30 percent higher for new financial system should facilitate the English network than the French benchmarking within the Corporation and network. Management explained that The with private Canadian broadcasters. National is routinely produced three times Furthermore, the Australian Broadcasting a night, that the news stories of interest to Corporation recently approached the CBC English Canadians originate to a larger and the BBC with a proposal that it degree from outside Ontario and Quebec, champion benchmarking among the three and that there are differences between the organizations. ETV and FTV collective agreements. The reasons for these differences should be 143. Our experience with carefully examined by management. benchmarking of program costs demonstrated the difficulty of finding true 140. Comparing the average cost of like-to-like comparisons. Very large network current affairs programs was variances of cost can be acceptable if they more problematic, because the English reflect the quality desired by the network produces fewer original hours broadcaster, anticipated use of the than the French network (111 hours in program, or cost of on-air talent. One 1999–2000, compared with 207), but must therefore be careful that cost repeats them more often (2.26 plays of comparisons are not misrepresented as each original hour, compared with 1.56). measures of relative efficiency in these We therefore measured both the cost per circumstances. Used carefully, hour produced and the cost per hour benchmarking can encourage sharing broadcast. On a production basis, the within an organization and can be a source English network’s current affairs programs of new ideas based on the experiences of cost 90 percent more per hour than the others. French network’s, while on a broadcast-hour basis the difference is 30 Facilities Utilization percent. For series produced for prime time, which are expected to have better 144. CBC has capital assets with a net production values, the ETV’s cost per book value of $1.1 billion. Approximately production hour is 50 percent greater than one third of this is for the Toronto FTV’s. Management again attributes these Broadcast Centre, while technical to differences in collective agreements, equipment represents the major portion of and to the additional costs incurred for the rest. The Re-engineering Task Force is
32 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation determining the cost of maintaining these 148. Network television studios. We assets, but it would be reasonable to assessed utilization based on the conclude that it represents a significant percentage of available days a studio was portion of the CBC’s total expenditures. in use for any part of the day. This is a As total expenditures decline, the costs of very generous definition of use, since the these facilities gradually increase as a two major broadcast centres were percentage of the total. This reflects the designed on the assumption that many non-discretionary nature of a great portion programs would use the same studio. of these costs, given current infrastructure practices. 149. At all facilities, news studios continue to be well utilized. For instance, in Toronto, news studios are used on Facilities utilization continues to be a 91 percent of available days, and in problem Montreal they are used 97 percent of available days. Usage of production 145. The CBC has two large studios in Toronto and Montreal remains production facilities — the Toronto quite low at about 60 percent. Usage of Broadcasting Centre and La Maison in rehearsal halls at the Toronto Broadcasting Montreal — and regional and local Centre has declined significantly, from 80 facilities across Canada. They house percent five years ago to about 14 percent administration operations, studios and today. This is due to the elimination of post-production facilities for television in-house studio drama production. and radio, master control and transmission and distribution facilities, and storage for 150. Management has sought to things like costumes and sets. increase utilization by renting out studio space. In Toronto, utilization of non-news studios would have been half the current 146. Our 1995 special examination level without rentals. Rental of CBC report noted that CBC television studios in studios to external parties was negligible both the Toronto Broadcasting Centre and at the time of our previous special La Maison were underutilized. For the examination. current special examination we repeated the analysis of utilization of television 151. The decline in studio utilization studios and post-production facilities. We reflects the move from in-house did not look at radio studio utilization, but production to independent production we understand that management in both companies. The Canadian Television Fund Toronto and Montreal have closed or are has changed the production model, closing radio studios to reflect reduced making it less attractive to produce drama requirements. We also reviewed facility in-house. configuration and use in the regions. 152. Network television 147. In our 1984 comprehensive audit post-production facilities. We also of the Canadian Broadcasting Corporation examined the utilization of edit suites and we noted that the Corporation’s facilities other post-production facilities. Use of mix led to “too many fixed costs chasing edit suites in the Toronto Broadcasting too few flexible programming dollars.” Centre has declined, in part because of the While a lot has changed in the intervening introduction of the non-linear edit suites years, the same situation exists now. The which do not readily allow multiple users. two main broadcast centres continue to Montreal utilization of post-production have low utilization rates, and planned facilities was not analyzed for our last re-engineering will have an impact on special examination, but their current rates regional utilization rates. are similar to those in Toronto.
Office of the Auditor General of Canada – June 2000 33 Special Examination Report – Canadian Broadcasting Corporation
153. Regional facilities. Regional achieve acceptable utilization levels. The facilities for radio and television serve as situation can only become worse under transmission and distribution centres, current planning assumptions of studios for network production, local and constrained resources, increased regional news, and other regional productivity and reduced in-house programming. They were initially programming. These facilities symbolize established under level of service notions, both the strengths of the CBC (local such as a facility in every provincial presence, community relationships, capital or region. Others were added in production capacity, sophisticated response to local pressures and special technology) and the weaknesses circumstances. At this time, there does not (inflexibility, ongoing resource drain). appear to be an overall rationale for the 156. At the time of our examination, current constellation of regional facilities. CBC had not completed an analysis that Regional facilities are generally in good would indicate the cost (taking into condition. A strategic decision was taken account revenue potential) of alternative during the downsizing process to invest in facility arrangements and hence the true new technology to increase efficiency. cost of remaining in its current facilities Utilization in the regions is not generally such as the Toronto Broadcasting Centre. tracked, but it seemed reasonable in the locations we visited, given the regional 157. CBC infrastructure excesses news schedule, which is driven by the impose an ongoing drain on resources early evening and late evening time slots. and divert management attention from Utilization of regional non-news studios core responsibilities. This area requires varies, depending on the extent of network immediate attention and resolution, and programs, regional shows and rental use we support the efforts of the of facilities. Initiatives have been taken to Re-engineering Task Force in this area. increase utilization, including rentals to Efforts should focus not just on private organizations and use of facilities solutions to CBC’s current situation but for CBC specials and network programs. also on recommending optional approaches to better manage CBC’s 154. Other facilities. The real estate assets in the future. This will Re-engineering Task Force is currently be a key element of the balanced looking at the utilization of space for strategy discussed earlier in this report, offices, with a view to rationalizing it and and must be based on notions of service increasing opportunities for rental. For to Canadians and delivery of CBC’s regional facilities, reduced needs for space mandate. This issue is linked to other may result in consolidation or increased strategic issues, such as the future of rental opportunities. Consideration is also regional news, use of regional facilities being given to moving storage of sets and for network programming, and the props to less expensive locations. We future of in-house production by the understand that there are significant CBC. opportunities in these areas. Master control and transmission and distribution Support Services are an integral part of facilities, and we 158. In 1995, we assessed the did not assess whether there were operational efficiency of the finance, opportunities to improve utilization in human resource and management these operations. information services and concluded that they were expensive. Since then, 155. Overall, the CBC continues to management has evaluated, restructured have more facilities than it needs, and and downsized support services. This area initiatives to date have been insufficient to has been examined extensively, and a
34 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation variety of mechanisms are used for system and improved personnel, payroll continuous improvement: and time reporting systems, promise greater efficiency, cost control, and • Studies and reviews include a 1995 support to decision making. study, subsequent benchmarking studies of the human resources and information 160. A few opportunities for continued technology management services, a improvement remain. For example: review of the efficiency of building • The new financial system has helped maintenance services as part of the improve efficiencies and overall financial analysis of the benefit of outsourcing this control but is still at an early stage of function, and an engineering services development. Users require improved internal benchmarking study of reporting mechanisms and more training. transmission and distribution activities. Leadership is needed to ensure that costs • Most services have assessed the costs are recorded in a consistent manner across and benefits of outsourcing part of their services, to allow proper cost control and activities. Outsourced services now internal benchmarking. Some “side include insurance, mailroom, shipping and books” still exist and some financial receiving, some tax functions, internal audit, certain IT support and project Figure 9 development activities, and building management services. Support Services Resources Full-Time Equivalents 1 • Each of the support services holds regular meetings between corporate and network personnel and between network Support Service March 31 March 31 Variance 1995 2000 and regional personnel. • The annual planning process gives Finance 2 565 254 (311) support service managers the opportunity Human Resources 3 296 219 (77) to clarify their priorities for the year and to document targets and deadlines. Information Technology 343 248 (95) Transmitter Maintenance 257 165 (92) • In 1999, a vendor satisfaction survey rated the corporate finance group between Building Maintenance 4 130 61 (69) good and excellent. The information Capital Projects 109 69 (40) technology and engineering groups monitor service level agreements Engineering Administration and Planning 63 26 (37) established with their internal clients as a Toronto Broadcast Centre 50 0 (50) way to gauge user satisfaction. Communications 31 21 (10) Good progress has been made in Promotion of Program 284 233 (51) improving support services 159. Considerable progress has been Total 2,128 1,296 (832) made in the delivery of support services Source: Finance CBC over the last five years. A more strategic 1 approach has been taken to align support Full-time equivalent (FTEs) includes permanent, temporary and contract staff. Staff on long-term disability are excluded. services with corporate goals. These services consume significantly fewer 2 Includes shared services (38 FTEs). The 1995 figures have been adjusted to resources than in the past (see Figure 9) exclude services outsourced and/or transferred to other areas. and the level of service provided has been 3 Excludes services funded by the Pension Board. maintained or improved. New information systems, most notably the new financial 4 Excludes 158 FTE reductions from outsourcing building services to Profac.
Office of the Auditor General of Canada – June 2000 35 Special Examination Report – Canadian Broadcasting Corporation
record-keeping systems remain in and action plans have been established to operation outside the official finance deal with them. system. A new module and added • Downsizing and a more strategic reporting functions should improve the orientation have reduced the ability of the reporting capability of the new system and human resources function to offer all of help to eliminate these other systems. the services it has in the past, such as pay and benefits services and consulting • Most regional managers we services to deal with matters such as interviewed were dissatisfied with the new problem employees. Staff in French- language services in the regions are Totally Integrated Personnel/Payroll concerned about the absence of HR System and the new Time Capture services in French. System, noting problems such as inflexibility, limited reporting capabilities, 161. Overall, however, the CBC has manual interfaces, and increasing made substantial improvements to its demands for pay administration. A task support services since the last special force has identified many of these issues examination.
36 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation
Opinion
We examined the systems and practices we considered essential to providing the Corporation with reasonable assurance with respect to its assets being safeguarded and controlled, its resources being managed economically and efficiently, and its operations being carried out effectively. In our opinion, with respect to the criteria established, there is reasonable assurance that, with the exceptions noted below, there are no significant deficiencies in the systems and practices examined.
1. The CBC cannot operate in an optimal fashion without a strategy that balances the results it is expected to deliver, expectations for audience reach, and how available resources can be optimally configured to meet them. This strategy would provide a basis for decisions affecting the effective and efficient functioning of all aspects of the Corporation’s operations. Difficulties over the years in establishing a balanced strategy have resulted in prolonged discussions of the appropriate role of the public broadcaster. The current President launched a re-engineering effort intended to refocus priorities and rebalance expectations with resources, but it is apparent from the reactions to these proposals from across Canada that, like previous similar efforts, there will be many challenges to overcome. In the volatile environment that CBC works in, it needs a process through which the Corporation and its key stakeholders can periodically discuss the role and funding of the public broadcaster and measure its success.
2. There are shortcomings in the Corporation’s external accountability structure, its governance relationships and its performance information. These are critical to developing a balanced strategy, securing support for it, sustaining and updating it, and reporting on performance. The absence of a comprehensive, relatively simple performance reporting framework that links programming results to programming and non-programming resources constrains accountability and oversight of key management initiatives.
3. CBC has gone through a prolonged period of stress, and it appears that this will continue. Our examination indicates that this has had an effect on the creative staff who are critical to the success of the CBC. At the same time, it continues to be important that the Corporation reinforce efforts to introduce a more business like culture. People management efforts, therefore, need to be reinforced in two areas:
• A creative organization survives on the basis of its ability to attract, retain and motivate its creative talent, and to foster the development of young talent. This can be promoted by encouraging staff participation and recognizing their creative contributions and excellence. Our discussions with CBC staff and management indicate that cultural change in this area requires further visibility and support from senior management.
• The CBC has made good progress in introducing a more business like culture, but this priority needs to be re-emphasized. It should be supported by clear objectives and plans, visible initiatives and communication with staff about the importance of cultural change.
Critical to the success of cultural change is recognition of the need to manage change proactively and positively in an environment of continuing budget pressures, technological change and changing management processes and structures.
4. CBC infrastructure excesses impose an ongoing drain on resources and divert management attention from core responsibilities. This area requires immediate attention and resolution, and we support the efforts of the Re-engineering Task Force in this area. Efforts should focus not just on solutions to CBC’s current situation, but also on recommending optional approaches to better manage CBC’s real estate assets in the future. This will be a key element of the balanced strategy discussed earlier in this report, and must be based on notions of service to Canadians and delivery of CBC’s mandate. This issue is linked to other strategic issues, such as the future of regional news, use of regional facilities for network programming, and the future of in-house production by the CBC.
L. Denis Desautels, FCA Auditor General of Canada
Ottawa, Canada 12 May 2000
Office of the Auditor General of Canada – June 2000 37 Special Examination Report – Canadian Broadcasting Corporation
Appendix
Systems and Practices Examined and Related Examination Criteria Examination criteria define the standards against which systems and practices are assessed. They are expressed in terms of reasonable expectations for these systems and practices to achieve corporate results. The criteria were selected by our Office specifically for this examination, in consultation with the Corporation. They were selected based on our knowledge and experience with value for money auditing by reference to legislative and regulatory requirements, to standards and practices followed by the Corporation and by other organizations and to professional literature. The criteria for each key area selected for examination are as follows.
For the six key areas, CBC’s management systems should be: ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
•
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Á designed to include the elements described below;
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á• appropriately documented and communicated;
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Á• consistently applied; and
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• continuously improved.
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
1. Strategic Management
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
•
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Á Approved legislative mandate for all activities
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á• A clear and shared strategy supported by a practicable corporate strategy with measurable, results-oriented goals
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Á• A well-performing governance framework that meets best-practice expectations for roles, relationships, timely
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Á decisions, reporting and renewal
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Á• A positive internal culture, with clear accountabilities, an appropriate balance between centralized and delegated
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Á responsibilities, and sharing across services
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Á• Effective stakeholder relationships
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• Results-oriented reporting to assess performance
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2. Strategic Planning and Risk Management
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•
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Á Identification of important internal and external factors and risks
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Á• A practicable corporate strategy that balances reach, results and resources
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Á• Definition of long term requirements for human, physical, financial and information resources, and plans to
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á support the delivery of the overall corporate strategy
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á• Timely decision making
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
• Productivity improvement measures to reduce costs without compromising service ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
38 Office of the Auditor General of Canada – June 2000 Special Examination Report – Canadian Broadcasting Corporation
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ3. Service to Canadians
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
• Plans, linked to resources, for programming that supports the corporate strategy
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
•
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á Measurement and benchmarking of value, cost, quality and availability of programming and audience
reaction to it
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á• Measures to optimize co-operation and minimize unnecessary duplication between services
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á• Processes to control costs and improve productivity
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á• Processes for client feedback
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
• Adequate information for decision making
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
4. People Management
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
•
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á Measures to develop a positive corporate culture
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á• Measures to attract, retain and motivate creative talent
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á• Processes to understand employee satisfaction and sources of stress, and to respond appropriately
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
• Participation by staff in the continuous improvement of operations and support
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
•
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á Collective agreements and conditions of employment that balance employee and organizational needs and
expectations
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
5. Capital Assets
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
•
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á Definition of long term requirements for capital, built upon level of service considerations, to respond to reach
and results expectations, key factors and risks such as digital technology, and new media and transmission
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á alternatives
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
• Viable capital investment strategies
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
•
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á Mechanisms to optimize usage of and revenues from studios and other facilities ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ6. Support Services
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á• Development and use of benchmarks for cost and level of service
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á• Periodic assessment of alternatives
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
• Good information for decision making, including costs and user satisfaction
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Á
•
ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Á Evidence of improvement based on the above ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ
Office of the Auditor General of Canada – June 2000 39