In Canada, Thousands of Government Workers are Saying, “Hey, Hey, Where’s My Pay?”

As a professor, most times you are teaching, you can more or less enthusiastically talk about theories in your field that just make sense – theories that are built on years, decades, and maybe even centuries of solid research findings. Yet, there are times when you just have to suck it up and try to defend the seemingly indefensible – all because it is in the book (and yes, if you have to ask, it will be on the test!).

When I am teaching management classes, the one concept that I really have a problem presenting – with a straight face – to business students is a theory of motivation. However, this particular theory is a guaranteed discussion starter. In fact, a couple of times, when talking about the theory with business majors – most of whom picture themselves working toward a successful career, but accumulating some degree of wealth – has nearly incited a riot in the classroom. Well, maybe not true incivility with name calling, fists flying, chair throwing, etc., but certainly – in the civil college classroom environment of 2016, one can safely say that “a spirited discussion ensued…”

The theory in question is now almost fifty years old, and it comes from one of the leading names in workplace psychology, Fredrick Herzberg. While he taught for decades at Harvard, he achieved academic immortality in that his name will be forever linked with a theory – namely Herzberg’s Two Factor Theory. Springing from his 1968 article (“One More Time: How Do You Motivate Employees?“) that appeared in the Harvard Business Review, his Motivation-Hygiene Theory states that if you look at the workplace, all the elements that make-up our “jobs” can be classified into two broad categories. These are: Motivators – which are factors that promote job satisfaction, but do not prevent dissatisfaction; and Hygiene Factors – elements that prevent dissatisfaction, but do not promote job satisfaction. They are not two sides of the same coin, but rather two distinct groups of job factors.

From Herzberg’s perspective then, how should you best manage for performance, according to his Motivation-Hygiene Theory? His answer is surprisingly simple – and perhaps that accounts for the strength of his theory over time: Help your workers be more satisfied by maximizing their opportunities to pursue the factors on the left side of the table, while at the same time, eliminate – or minimize – the factors on the right side of the table to prevent dissatisfaction.

Having that overview of Herzberg’s theory, take a look at the table below. If you were a 21 year-old business student or a 37-year old Executive MBA student today – or a decade ago, which one factor seems to be out of place?

Adapted from Frederick Herzberg, “One More Time: How do You Motivate Employees?” Harvard Business Review, January 2003.

Notice where Herzberg placed any mention of money, pay, scratch, income..? Yes, rather than saying that money was a motivator, Herzberg put “salary” as a factor that could only prevent one from being dissatisfied with the job, rather than being motivated to perform better and be satisfied with one’s work. Yes, Herzberg said that you – you reading this article while sitting in your cubicle, commuting on the 5:30 a.m. train to your office, or out in the field – you’re not being motivated by money to be doing your job. Rather, according to Motivation-Hygiene Theory, your pay is not a motivator, but instead it plays a major role in preventing you from being dissatisfied with the work you are doing. Like poor supervision, bad relationships with the people with whom you work, and insecurity with your job, the absence of pay can trigger major job dissatisfaction.

The money factor has caused Herzberg’s theory to be perhaps the most discussed, most researched, and yes, most criticized of all the core theories of management. And yes, both myself and my students over the years have fallen in the “doubters” camp.

Yet, if you want to see a case study that shows Herzberg’s theory indeed “works” (for better or worse), just look to our neighbor to the North. Over the past few months, thousands of Canadian government workers are unfortunately coping with an absence of pay at present. Tens of thousands more civil servants have had to deal with major pay disruptions, underpayments, overpayments – along with those pesky banks, credit cards and other entities that do expect regular payments from their customers, no matter who they are employed by! And thus unfortunately, we have a living, breathing test of Herzberg’s theory, being lived out by Canadian civil servants, all brought about by a Phoenix that does not fly.

The Case of the Phoenix

When one thinks of politics north of the border, lots of positives come to mind these days (especially for those in the “Blue Camp”). One image that particularly comes to mind is that of its young, change-minded Prime Minister Justin Trudeau. The youthful PM has been popularly received not just across Canada, but on the world stage as well, leading The Guardian to apply the label “Tru Love” to the Canadian leader. And yet, the controversy over Phoenix – which is a new payroll system for most public servants in Canada’s national government – has been roiling Canadian politics for much of 2016. Indeed, the National Post has cited the “botched” launch as one of the key factors that has caused the popularity of PM Trudeau to fall from his early “rock star” levels – particularly amongst public sector workers.

“When the hell are we going to get to paid?” That’s the question the young woman in the video recently asked of Canadian Prime Minister Justin Trudeau. While we typically don’t hear heads of state addressed in such a manner (well, not until 2016…), approximately 80,000 of Canadian public servants have been left wondering that exact problem. And yes, they are now definitely experiencing varying degrees of job dissatisfaction! This is because they are suffering through the rise – and fall – of Phoenix, which may go down as one of the greatest IT implementation failures anywhere in the global public sector.

No one disputes that the system used to pay Canadian public servants needed a modern upgrade. The existing system was like that found in many public sector agencies around the world. It was a decades-old (40-plus years in this instance) patchwork of programs that admittedly had many holes, many problems, and many shortcomings when compared to the state of the art systems of today. Thus, in 2009, then-Conservative Prime Minister Stephen Harper negotiated with IBM Canada to create a replacement system that was based on a commercial platform (Oracle’s PeopleSoft). The Transformation of Pay Administration (TPA) Initiative was thus launched in 2009, with goals being:

• to transform the GC’s pay administration system,
• to renew business processes, and
• to consolidate pay services.

After years of planning, the scheduled launch of the system had to be delayed from mid-2015 to February of this year. Thus, it fell to the incoming Trudeau government – and specifically to Judy M. Foote, the PM’s choice to be minister of Public Services and Procurement – to oversee the actual implementation of what became known as the Phoenix system.

How did the implementation go of this system to administer Canada’s 20 billion dollar government payroll? To say the least, there were some significant and serious issues. Understand that there was not really a pilot test of any kind for the Phoenix system; no alpha test, no beta, just a launch in February. Since that time, tens of thousands of Canadian public servants have had pay issues of various kinds. Estimates are that more than 80,000 of the national government’s 300,000 employees had a compensation problem since the launch of the Phoenix system. Various Canadian media accounts have profiled:

• how employees have went weeks or months without being paid at all;
• how workers have received only a fraction of the salaries they are owed for their work (even with their pay stubs showing what they should have been paid!);
• how employees who have received some of their compensation due from automatic deposits be further harmed by the government withdrawing those same amounts – or  even more money – from their bank accounts;
• how government workers have been forced to take dramatic measures and incur additional expenses from their living on no – or partial – pay;
• how employees face tax penalties and liabilities from the government stemming from the mistakes the government made in paying government workers (wow!);
• how administrators and supervisors – even co-workers – have been lending money to their underlings and/or their peers to help them through the pay difficulties.

And yet, for each employee and his/her family, there have been real hardships due to the botched implementation of the Phoenix system. If you want to read a compelling piece that shows the very personal impact of all of this, The New York Times recently profiled the case of Bill Ryan, a seaman with the Canadian Coast Guard. For Mr. Ryan, who served long stretches at sea, he went through many frustrations trying to get answers as to when he would be getting his proper pay while at sea. But for his family at home in Newfoundland, the pay problems meant unpaid bills and having to put off necessary spending (like back-to-school clothes and supplies for his children). Of course, it is likely that his was far, far from the worst story to come out of this ordeal.

The Public Services and Procurement Ministry is now taking steps to handle what has become a pay crisis. The agency has set-up both a call center and a website (Phoenix Pay System Issues) to specifically deal with the payroll issues . The agency has even put in place programs for government workers to be able to request emergency salary advances, to seek advice to deal with tax issues, and to seek compensation for expenses (such as bank fees, utility charges, and other penalties) incurred due to the payroll issues. Public Services and Procurement-Canada is taking pride in that in its most recent weekly update to government employees, the backlog of pay cases has dropped from a high of over 50,000 at one point to now approximately 18,000. The Ministry of Public Services and Procurement is now taking proactive steps to vastly improve training, communication, and education regarding Phoenix, working in partnership with public sector union leaders, representatives from across the Canadian government, and the Canada School of Public Service to do so.  And over the long-term, the agency is hoping to have all outstanding cases in the “backlog” resolved and move toward a “steady state” of operations early in 2017.

While there will be many an autopsy performed on how the implementation of the new pay system went wrong, there appear to be several fundamental flaws in the way the shift to Phoenix went wrong. First, in a situation Americans can too well relate to, there is the political side of things – with intense partisan bickering. The Liberals blame the Conservatives for a lack of planning and proper training for the changeover during their time in power and how they oversaw the pre-launch phase of the system, while in turn, the Conservatives have criticized the current government for actually launching a system that they knew – or should have known – was not ready based on the preparation work done by, you guessed it, the Conservatives. And so, due to the timing of the launch of the Phoenix system just after a transition of power, all of the actual IT and personnel issues are clouded by partisan politics (and some think they can escape such matters by heading to Canada???).   

Next, the Canadian government seemed to place too high an emphasis on generating immediate cost savings through the changeover to the new system. Much of the projected 70 million Canadian dollars in savings that were to come from the switch from the old payroll system to the Phoenix platform were based on cutting – in one fell swoop – 2,700 payroll-related jobs in the government, mostly at the Public Service Pay Centre (located in Miramichi, New Brunswick). However, estimates now show that the botched implementation of Phoenix has not just wiped-out the projected savings, but the changeover has actually cost the Canadian taxpayers an additional $50 million Canadian, a figure which includes more than $6 million in additional fees paid to IBM Canada to help remediate the pay problems. And now, hundreds of the laid-off payroll workers whose jobs were eliminated – perhaps prematurely – have now been hired back by the government to help resolve the backlog of pay claims.

Finally, there certainly seems to have been a lack of foresight and vision throughout the entire process. As often happens in any large-scale IT implementation, what looked great in PowerPoint and appeared easy in flowcharts was, in reality, far, far harder to achieve in reality. With the changeover in governments and the finger-pointing between the contractor and agency officials, the answers that are determined after the fact as to why all of this happened may be political and nuanced.

And yet, after almost nine months, the problems of the Phoenix system continue to impact thousands of Canadian public servants today. At this moment, there are many, many Canadian government workers showing that Herzberg was indeed right to some extent, simply by doing their jobs. These dedicated men and women are working for the people of Canada in their respective areas, even as the government of Canada has not yet resolved the pay issues that negate the basic equation of trading time and effort for compensation. And so when we think of true civil servants, these folks embody that label. We can only hope that our agencies and our employees – and indeed ourselves – could respond with such patience and professionalism (though after years of teaching about Herzberg’s ideas, there may indeed be some who – like my business students – would reasonably react with the “when the hell are we going to get to paid?” line).

On a final note, this situation could – believe it or not – get worse, rather than better, in the near term. At the very least, it will become more challenging. This is because the Canadian military and the Royal Canadian Mounted Police will soon be added to the Phoenix system. Stay tuned!