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CITY AUDITOR 345
December 11, 2009
Mayor Patty Lent
Street, Suite 600, Bremerton, WA 98337-1873 & Phone (360) 473-5369
The Office of the City Auditor has completed a review of the Human Resources Division
and has issued the attached report. Two findings were noted. Several observations were
made of which most require assistance from outside the HR division to address.
The assistance provided by HR manager Carol Conley and HR analyst Charlotte Belmore
is greatly appreciated.
Sincerely,
Gary W. Nystul
cc: City Council
HR
REVIEW OF HUMAN RESOURCES DIVISION
Purpose
The Office of the City Auditor reviews various phases of city operations. This review of
the Human Resources Division was scheduled on the 2009 work plan.
Scope
This is a review of the procedures used by the Human Resources Division in the
administration of city personnel. Policies and procedures used in 2008 and through July
2009 were included.
Statement of Auditing Standards
This performance audit was conducted in accordance with Generally Accepted
Government Auditing Standards, except Standard 3.50 requiring an external quality
control review. Those standards require that the auditor plan and perform the audit to
obtain sufficient, appropriate evidence to provide a reasonable basis for findings and
conclusions based on audit objectives. The auditor believes that the evidence obtained
provides a reasonable basis for the findings and conclusions based on the audit
objectives.
Objective
The objective of this audit was to:
Review policies and procedures used for the administration of city personnel
Review record retention system
Summary of the Results
Performance evaluations are not being completed in a timely manner
The performance evaluation forms are not useful to public safety departments
HR policies have not been kept current
BACKGROUND
The Mission Statement for the Human Resources Division that is included in the annual
city budget states as follows: "To provide consistent and timely guidance and direction to
management and employees in all Human Resources functions including recruitment,
selection, orientation, development and training, labor relations and to ensure compliance
with established policies and procedures, labor contacts and employment laws." The
division was staffed by a HR Manager, Analyst, Payroll Clerk, and a Civil Service
Officer/HR Assistant. In December 2008 the Civil Service Officer/HR position was
eliminated. In May 2009 the payroll clerk and function was transferred to Financial
Services.
HR was a "department" until March 2006, when reorganization made it a division of the
Department of Financial Services. The division is responsible for recruitment, selection,
orientation, benefits administration, and maintenance of employee records for
approximately 367 regular employees plus seasonal and temporary employees. The HR
Manager is responsible for developing and preparing written labor contract proposals,
representing the city at the bargaining table and for contract administration of the four
bargaining units. The department is also responsible for grievances, arbitrations and
Unfair Labor Practice charges.
The division publishes and maintains the HR policies for the city. They should be
commended for being the only city division that maintains an electronic copy of their
directives on the city's intranet. This copy is available to all city employees.
The department's limited staff performs many functions to administer the city personnel
system. These include maintaining a personnel file and medical file for every current and
former employee. Entering in the computerized accounting system all new employee
data and updates. Every change in pay requires a form prepared by HR with approvals.
Leave forms are reviewed for potential Family Medical Leave Act issues. Year end leave
balances are reviewed and adjusted as required by ordinance or contract. Notices are
generated and sent to employees alerting them to their excess leave balances. Personnel
evaluation completions are monitored and entered in the computer records.
One measure of the division workload is the number of employees hired and/or separated
during the year. The following table reports the number of employees hired or separated
for the years indicated. "Other" employees include seasonal and temporary. The
separated fulltime column includes individuals retiring, leaving for jobs elsewhere or the
result of layoffs or reduction in force.
2
Emolovee Seaarations
Fulltime
Employees
Hired
23
Fulltime
Other
Total
2005
32
69
101
2006
19
38
57
2007
29
52
81
2008
11
61
72
Emolovee Seaarations
Fulltime
Other
Total
23
50
73
18
47
65
17
51
68
17
62
79
FINDINGS AND RECOMMENDATIONS
FINDING 1. A significant number of employee evaluations are past due.
CONDITION
All employees are required to have a formal written performance evaluation. On June 30,
2009, of the 343 employees who were required to have performance evaluations, 207 or
66% were past due. The number of performance evaluations overdue at June 30 is as
follows:
Period Overdue
Number
6 months or less
37
6 months to 1 year
39
1 year
61
2 years
34
3 years
17
4 years
15
5 or more years
4
Total
207
In the Department of Public Works & Utilities, the evaluations of all 11 employees who
are either division managers or other direct reports to the director were overdue 18 to 62
months. In the Engineering division, all 21 of their evaluations were overdue by 7
months to 3 years.
There were also many overdue evaluations from police and fire since the standard
evaluation forms used by the city do not provide criteria relevant to evaluating the work
of public safety employees. These departments have used other formal means to assess
the performance of their staff.
In October 2001, the city auditor did a review of employee evaluations. For the period
January 1, 2000 to July 31, 2001 the auditor found that 48% were past due.
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CRITERIA
City Policy 3-40-45 requires all city employees to be evaluated at various intervals. For
example, exempt employees are to be evaluated at an interval of six months for the first
two years of service and annually thereafter. Civil Service and Teamsters employees are
to be evaluated at the end of the first three months, six months, twelve months, and
annually thereafter.
CAUSE
There are no penalties for failing to do the performance evaluations. The Human
Resources Department does not have authority to require departments or managers to
complete evaluations. The HR Department sends a monthly reminder to each
department of evaluations due and those already overdue. The mayor, as the Chief
Executive of the City, is responsible for enforcing the evaluation policy.
EFFECT
Without performance evaluations management is not able to recognize employees with
outstanding job performance or note areas of job performance that need improvement.
Cost of labor is a significant city expense. Expenditures for salaries in 2008 totaled over
$24 million. With such a substantial deficiency in performance evaluations the
effectiveness of city staff cannot be assured.
RECOMMENDATIONS
• The mayor must set the tone for personnel evaluations to be performed on a
timely basis and thus be of benefit to both the employee and the city. Department
directors and managers should he held accountable for the timely execution of
their management duties.
• HR should work with the public safety departments to develop appropriate
evaluation forms.
• The city council should make periodic inquiry regarding the status of performance
evaluations.
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FINDING 2. HR policies have not been kept current.
CONDITION
HR policies are maintained electronically on the city intranet (COBWEB) and in paper
format in the Policies and Procedures Manual. These policies provide a guide for the
administration of city employees. They outline state and federal conduct policies with
which employees must comply. They also address policies and procedures for employee
assistance. Of the 47 HR policies in effect, 29 (62%) were last updated or revised over
10 years ago.
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Policies should reflect the current working conditions, laws and regulations that are not
duplicated by other policies. They should also reflect the policies of the current city
administration.
CAUSE
Responsibility for maintaining the human resource policies rests with the HR manager.
An update or review of existing policies has not been done in recent years.
EFFECT
Some policies present outdated information or procedures. There are also several
existing policies that could be eliminated because newer ones have been issued or the
information or requirements are now in other documents such as union contracts. These
include:
Modified Duty Policy 3-10-14
Temporary Hiring Policy 3-10-11
Downtown Parking 3-20-08
Unauthorized Absenteeism and Tardiness 3-50-04
RECOMMENDATIONS
• The HR department should undertake a periodic review of all of their policies and
make recommendations to city management for updating and/or changes.
Changes due to new laws or regulations, union contracts or agreements, should be
considered and incorporated as appropriate.
• To reduce cost and city staff time, the HR manager should give notice that the use
of paper copies of HR policies in the Policies and Procedures Manual is being
discontinued. The official source should be the city intranet (COBWEB). All
city departments should then dispose of their paper copies.
OTHER RECOMMENDATIONS AND POLICY ISSUES:
A. Two sections of the Bremerton Municipal Code relating to HR activities should
be reviewed and updated as appropriate.
Chapter 2.28 is entitled Equal Employment Opportunity Program. It
includes a provision that "all managers and supervisors will have an
EEO/AA element in their performance appraisal." It also requires the
mayor to appoint a city-wide Equal Employment Opportunity Officer and
establish an Equal Employment Opportunity Council. The City Attorney
should review this chapter and recommend changes to comply with state
law. If sections such as the requirement for an EEO/AA element of an
appraisal are not changed, they should be clarified.
• Chapter 2.46 is entitled Employee Award Program. The chapter creates an
award board but does not indicate who should appoint the members. It is
also a duplicate of HR Policy 3-40-09. The Policy should be repealed and
the BMC clarified.
B. In February 2008, nine new policies were issued by the Information Technology
Division relating to city computer use. Although these policies were not issued
by HR, each city employee who uses a city computer should acknowledge receipt
of the policies and the acknowledgement filed in their personnel record. The only
employees with IT policy acknowledgement forms in their personnel records are
those hired after the policy issue date. City management should coordinate the
issuance and documentation of receipt of these policies.
C. There are other policies that are important for all employees to know, observe and
acknowledge in the personnel records. Examples are the Sexual Harassment
Policy and Child Abuse or Neglect Prevention Policy. New employees do
acknowledge receipt of the policies during orientation. Employees who are
already employed when important new policies are issued do not always have a
record of receipt of the policy in their personnel files. City management
procedures should ensure that a mechanism is in place to have employees
acknowledge receipt of new policies.
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D. City policy 3-10-10 Workers Compensation has been included in the HR section.
The last revision was 12/15/1994. The new Risk Manager has updated it and
moved it to the Risk Management Section of the Policy and Procedures Manual.
E. There are five policies on COBWEB that are not included or listed in the table of
contents for the hard copy policy binders. There are also five different policies
listed in the table of contents in the manual that are not on the intranet. HR
should ensure that all current policies are on the intranet and give notice repealing
all hard copy policies.
F. The Policies and Procedures Manual kept in three ring binders by city
departments also contains policies for Finance and General Administration. The
city administration should require all city policies to be maintained in electronic
form on COBWEB following the example set by the HR division.
G. During a review of building keys testing of who has access to the HR personnel
records file room, a key held by a city official was discovered to be a building
master key. The official did not know it was a building master key. The building
management did not have a record of or knowledge of the key. Such a master key
could open almost every door in the building. The security of other tenants'
spaces could have been compromised. These keys should be strictly accounted
for. The building manager has destroyed the key. The building association
should keep accurate records of master keys.
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Memo
To: Gary Nystul, City Auditor
From: Carol S. Conley, Manager Orle—d
CC: Audit Committee Members;
Andy Parks, Financial Services Director
Date: December 9, 2009
Re: HR response to HR Audit Report
This memo has been prepared in response to the Human Resources Division audit performed by City Auditor,
Gary Nystul.
I have read the audit report and findings and will respond below accordingly:
BACKGROUND:
Under labor relations, the HR Manager is responsible for developing and preparing written contract
proposals for successor contracts with input from affected departments, representing city management at
the bargaining table and for contract administration, interpretation and compliance for the City's four (4)
bargaining units. This also includes attending all Joint Labor Management Committee meetings to resolve
contract or work-related issues; handling of all grievances, arbitrations and Unfair Labor Practice charges in
concert with the affected department, City Attorney's office and outside labor counsel.
FINDING: Employee Evaluations
• The HR Analyst sends out notice to all departments on a monthly basis as a reminder of evaluations due
and those already overdue. This is not required because each department should be tracking when their
employee evaluations are due; HR does it as a courtesy.
• Police and Fire evaluations cannot be changed unilaterally without impact bargaining the effects of any
proposed change with the BPOG and IAFF. This has come up several times over the years in labor
negotiations and/or JLMC meetings.
• HR concurs with the Auditor's finding and would welcome the Mayor's support in holding management and
supervisory personnel accountable for completing evaluations on a timely basis.
1. Finding: HR Policies have not been kept current
M -HR response to HR Audit Report
November 2009
Page 1 of 3
• CONDITION: The report does not indicate that 18 HR policies were revised and five (5) new policies were
developed and added during this same period of time.
• CAUSE: As previously stated above, the report indicates that an update or review of existing policies has
not been done in recent years; this is simply not true. As stated above under CONDITION, 18 policies have
been revised and 5 new ones developed and added.
• EFFECT: Those policies listed in the report as no longer applicable have been rescinded and removed from
Cobweb.
• RECOMMENDATIONS: HR has reviewed all the policies and drafted new and revised policies to comply
with Federal, State or local laws and regulations as they are modified or added and there are several
policies that are still in compliance and require no up -dating. All policy revisions or new policies require
review and approval from the City Attorney's office including Risk Management, and the Financial Services
Director prior to going to the Mayor for approval. Unfortunately, this may take anywhere from 3-9 months
or longer depending on their workload and priorities.
2. Other Recommendations/Policy Issues
A. Regarding the two sections of the Bremerton Municipal Code relating to HR activities,
both these sections require review and changes recommended as appropriate by the
City Attorney's office.
B. Regarding the IT policies relating to city computer usage, it should be the issuing
department's responsibility to ensure all employees receive a copy of the new policy
and sign an acknowledgement. These acknowledgements should then be transmitted
to HR for filing in employees' personnel files. HR will continue to review these policies
with all new hires and have them sign off on the acknowledgement form.
C. Training on the Child Abuse or Neglect Prevention Policy was undertaken last year for
those employees who were in a position that may require contact with children on the
job (Parks, Recreation, Fire and Police).
D. Worker's comp is now included under the Risk Management Section of the Policies
where it has always belonged.
E. HR will insure that all current HR policies are on the City's intranet and ask that
departments no longer refer to those in the Manual.
F. HR agrees that all city policies besides those in HR should be on the Intranet only and
hardcopies discarded.
G. Although discovered during the HR Audit, I still do not believe the Master Key situation
belongs in this report.
M -HR response to HR Audit Report
November 2009
Page 2 of 3
OVERALL REMARKS ON AUDIT FROM HUMAN RESOURCES MANAGER:
I would like to see a more in-depth type of audit performed that covers more than merely policies and
procedures, but all the various processes and functions within HR or any other department/division being
audited. It would also be nice to see both positive and negative findings, rather than focusing on primarily what
didn't get done or what needs improvement. This approach would give a better picture of overall performance
and would result in a greater acceptance of what could be done better or needs to improve. I have attached a
copy of the HR Narrative for the 2010 budget, and as you will note, HR encompasses so much more than just
following City policies and procedures.
I sincerely appreciate the opportunity to share my response to the audit with Gary and the Audit Committee.
M -HR response to HR Audit Report
November 2009
Page 3 of 3