9.1. Budget and Finance
9.2. Human Resources
9.3. Administration
9.1.1. Financial Issues, 1989-1995
9.1.2. Financial Management
9.1.3. Cash and Investment Management
The review period was particularly difficult for CIAT as it coped with serious funding shortfalls. Table 9.1 below demonstrates the scope of the problem faced and the strategic decisions made, as discussed elsewhere in this report.
Table 9.1: Evolution of Resources Available to CIAT
|
EVOLUTION OF RESOURCES AVAILABLE TO CIAT |
|||||||
|
|
1989 |
1990 |
1991 |
1992 |
1993 |
19941 |
|
|
Total Resource |
44.3 |
43.5 |
44.0 |
38.7 |
35.1 |
34.6 |
|
|
Core Contributions |
37.5 |
36.3 |
35.8 |
30.9 |
27.4 |
28.2 |
|
|
Other Core Income |
1.1 |
1.1 |
1.7 |
1.4 |
2.5 |
1.6 |
|
|
Complementary |
5.7 |
6.1 |
6.5 |
6.4 |
5.2 |
4.8 |
|
|
Allocated to: |
|||||||
|
|
Capital |
3.7 |
2.3 |
1.2 |
0.3 |
0.2 |
0.8 |
|
Mgmt. & Admin. |
7.0 |
6.9 |
7.5 |
6.9 |
6.9 |
6.7 |
|
|
Instit. Develop. |
5.4 |
4.6 |
4.8 |
3.8 |
3.0 |
2.7 |
|
|
Research |
28.2 |
29.2 |
30.5 |
26.0 |
26.1 |
24.4 |
|
|
Beans |
8.8 |
9.6 |
9.4 |
7.7 |
6.7 |
5.0 |
|
|
Cassava |
3.6 |
4.3 |
5.0 |
4.5 |
4.3 |
3.9 |
|
|
Rice |
2.8 |
3.0 |
2.8 |
2.3 |
2.1 |
1.7 |
|
|
Trop. Forages |
5.6 |
5.6 |
5.8 |
3.5 |
3.4 |
2.4 |
|
|
Forest Margins |
- |
|
- |
0.2 |
0.3 |
- |
|
|
Hillsides |
- |
- |
- |
0.3 |
0.8 |
1.2 |
|
|
Trop. Lowlands |
- |
- |
- |
1.5 |
1.7 |
3.2 |
|
|
Research Support |
4.8 |
4.3 |
4.6 |
3.1 |
3.3 |
2.7 |
|
|
Research Units |
2.6 |
2.4 |
2.9 |
2.9 |
3.5 |
4.3 |
|
|
Operating Fund |
- |
0.5 |
- |
1.7 |
(1.1) |
- |
|
|
International Staff |
93 |
85 |
90 |
85 |
90 |
81 |
|
|
Local Staff |
1562 |
1632 |
1642 |
1453 |
1364 |
1038 |
|
1 Note: It is important to note that the accounting system changed in mid-1994 when many costs previously accounted for separately (e.g., laboratory services) were reallocated as direct costs to research programmes/projects. The 1994 allocation figures on the chart above deviate from the 1994 working budget in that they represent values prior to reallocation for purposes of better comparison with earlier years.
The reductions in income were largely due to a set of fluid financial circumstances in CIAT's host country. While the Colombian peso continued to decline in value vis-à-vis the U.S. dollar, from 1991 on the rate of inflation far outstripped currency gains. Adjusted to account for percentage of expenses incurred in Colombian pesos and U.S. dollars respectively, the inflation effect in the 1990-1994 period was 44%, and is expected to dictate a 7.0% increase in expenditures in 1995. The substantial costs involved in downsizing also added to the pressures experienced in this period.
CIAT recorded FY 1994 contributions of US$ 28.2 million and interest and other income of US$ 1.6 million for a total of US$ 29.8 million in core revenue. The books were closed in balance with US$ 29.8 million in core expenditures, including the addition of US$ 1.6 million to the Capital Fund. Complementary funds amounted to US$ 4.8 million, bringing CIAT's total 1994 resources to US$ 34.6 million. Reserve fund balances were unchanged at the end of 1994.
At the time of this review, the Centre is projecting 1995 core revenues at US$ 27.5 million and self-generated income of US$ 1.0 million. Complementary funds are expected to total US$ 4.9 million. This latter figure is reduced from an initially projected figure of US$ 7.0 million due to the transfer of several complementary projects to restricted core as approved by the CGIAR.
If CIAT's core funding in 1995 is not adjusted for the inflation experienced in 1994, the Centre will need to introduce downward adjustments in its core programme equivalent to 12.5% of its core budget, or some US$ 3.4 million.
Staff were instructed to budget 1995 expenditures at the 1994 level plus 4%, thus leaving a projected shortfall of approximately US$ 1.0 million. To bring core expenditures into line, the CIAT Board and Management have determined on several courses of action. Some US$ 0.3 million will be saved via an expected core substitution effect of new special projects, and up to US$ 0.7 million is possible via delays in recruitment of local staff and postponement of other expenditures.
As reported elsewhere, in early 1994 Centre Management initiated an intensive effort to attract additional complementary funds that would enable CIAT both to realize fully its Strategic Plan and to capitalize on the sizeable infrastructure already in place. Over the last years, complementary funds have amounted to a percentage of overall revenue ranging from 12.7% to 16.5%. The Board has clearly stipulated that projects proposed for complementary funding must adhere strictly to CIAT's Strategic Plan, a policy that warrants Management's close attention.
The Operating Fund stood at US$ 2.9 million or 35 days of core-operating costs at the end of 1994, although no funds were added at year end. The level of this particular reserve has fluctuated as indicated below, reflecting net operating deficits during the period in question.
Table 9.2: Status of Operating Fund (in current US$ million)
|
Year end |
1989 |
1990 |
1991 |
1992 |
1993 |
1994 |
|
Balance |
1.5 |
2.4 |
2.4 |
3.9 |
2.9 |
2.9 |
|
# days core |
14 |
23 |
24 |
44 |
36 |
35 |
In addition to the Operating Fund, CIAT ended 1994 with a Repatriation and Severance Pay Fund of US$ 3.0 million, and thus with a total of US$ 5.9 million in untied and loosely tied reserves. Despite the fact that the Operating Fund per se is smaller than the recently revised CGIAR guidelines (90 days of operating expenses), CIAT's total reserves, held in negotiable instruments with high liquidity, would cover roughly 70 days of core operations.
There is every evidence that financial management at CIAT is in competent hands. The external auditors have found little to comment on in the last years; the few recommendations of the last EMR have been attended to. Of special note is the manual to guide outposted staff in handling administrative issues, prepared following extensive consultation with them. With the manual now in its second edition, headquarters staff report a substantial reduction in problems.
Effective financial reports, now including commitments as well as expenditures, are distributed in hard copy monthly to Programme Leaders and other staff with management responsibility in various configurations (projects, project clusters, programmes; core, non-core) and quarterly to members of the Board. Staff in Cali can also access the information on line, with updates entered daily. Staff of the Project Support Office assist researchers in managing relations with project donors by assembling financial data, monitoring cash flow, arranging for audits, and soliciting written reports to meet contract requirements.
A qualified Internal Auditor and her staff keep Management and the Board informed with respect to overall administrative efficiency and compliance with policies. The Board approves her annual plan of review and Board members receive the final report. The Auditor presents periodic reports throughout the year to the DG and to other relevant staff. Emphasis is on the areas deemed of highest risk: personnel, finance, and project management. The Internal Auditor has headed the committee responsible for designing and implementing the new system of project budgeting and accounting described earlier.
Like other Centres CIAT considers the prudent management of its funds to be an important responsibility. Investment can generate financial resources in furtherance of the Centre's mandate. Cash flow is monitored on a daily basis, so that investment opportunities can be seized at short notice. Staff of the Treasurer's office, where the responsibility lies, take advantage of a variety of sophisticated investment techniques, including arbitrage between different financial markets and instruments, occasionally using CIAT's several lines of bank credit totalling US$ 20 million. CIAT also engages in currency hedging, based on an analysis of the exchange rate environment in relation to anticipated in- and outflows of monetary resources.
Investment decisions are made by a staff committee of five persons with financial
expertise. Decisions are bound by a Board policy stipulating that CIAT "manage
its financial resources within a conservative, non-speculative cash management
strategy". It further defines acceptable investments as being "readily
convertible fixed-yield instruments whose value to the redeemer at maturity
is clearly defined". Additionally, it states that "Borrowing of financial
resources shall only be undertaken when cash flow needs demand it, and/or when
the Centre can safely and prudently arbitrage between different financial markets/instruments".
CIAT's cash and investment management activities have been successful in generating additional revenue for the Centre. They are monitored by the Board's Audit and Operations Committee and by the Board itself. They have been examined by both the Internal and the External Auditors. Advice is regularly sought, mainly from the banking sector in Colombia and abroad, on the general environment affecting currencies, interest rates and investment generally.
The last two years have seen unusual opportunities arising out of the relationship between the Colombian peso and the dollar, combined with wide differentials in interest rates. This situation will certainly not continue indefinitely. In the face of volatile world markets, the Panel suggests that the Board review its guidelines and definitions, with a view to ensuring that prudence is applied.
9.2.1.1. Staff Reductions and Critical Mass
9.2.1.2. Assessment and Recommendations
During the past 5 years, CIAT has reduced its total work force by about 28% (from 1,644 employees in 1989 to 1,177 Dec. 1994). The relative proportions of research and administrative staff have remained constant, with administrative staff averaging about 30% of total staff. However, 'senior staff have been reduced by 14% (from 93 to 80); scientific and supervisory staff by 7.5% (from 295 to 273); clerical staff by 33% (from 221 to 148); and other support staff by 35% (from 1,044 to 676). The staff reduction has been undertaken in phases - in line with the cuts in funding - and as the requirements of the Medium-Term and Action Plans have become clearer over the years. The last major reduction took place in 1994. We consider this strategy of gradual downsizing appropriate.
To minimize the impact of staff reductions on the Centre's research activities, these cuts have not been uniform across the board: the research programmes have suffered a smaller percentage cut than other activities. From 1989-94, the total research staff was cut by 24% (from 855 to 647); while research support was cut by 40% (from 159 to 96), institutional development support by 54% (from 127 to 58), and management and administration by 25% (from 503 to 376). Nevertheless, it is obvious that staff cuts have been substantial in most work areas.
In terms of 'critical mass', because there are 10 fewer scientists in the research
complex than in 1989, and because the number and scope of programmes and projects
are largely increased, most research programmes can no longer afford to be self-sufficient
in terms of full-time scientists assigned to them. Furthermore, since CIAT's
mandate is broad, the Centre needs scientists from a wide range of disciplines,
and this inevitably means low numbers in some programmes and disciplines. The
staffing data bears this out: in late 1994, only five disciplines (genetics,
agronomy, breeding, pathology and entomology) had five or more scientists; while
the remaining 20 or so disciplines had only one or two scientists each. The
staffing data also show that the Centre has trimmed its commodity programmes
relative to the share of scientists in natural resource management research
and the research Units.
In the Panel's view, these adjustments have been in accordance with CIAT's strategy document. Major cuts were unavoidable, given the funding crisis, and many of the specific cuts were deliberate, to alter gradually the balance among commodity and other programmes. However, because the Centre decided to keep the 'skeletal framework' of research relatively intact (i.e. that no programme was cut in its entirety), the remaining scientific staff have naturally been stretched more thinly than before. This risks the possibility that the lack of critical mass in key programmes could compromise the quality and quantity of future research.
We also note that Management is already aware of these issues, and is intending to limit the number of projects assigned to any one individual to a maximum of 3-4; and the number of projects undertaken would also be smaller. These measures would help provide the needed senior staff - in terms of staff-years (SYs), not persons - in each programme and project. However, to reduce the possibility of dysfunctional fragmentation of research (and falling below "critical mass" in any particular project), it would be useful for the various programme leaders to ensure that too many projects do not chase too few scientists.
The Panel also wishes to emphasize that each programme (and scientist) should be supported by adequate numbers of well-trained and qualified scientific, supervisory and other support staff. During the past five years, the ratio of scientific support staff to senior scientists has gone up slightly, from 1.97 in 1989 to 2.1 in 1994. Because the cuts in other support categories have had to be larger - in order have the required budgetary impact - this disproportionate reduction in locally-hired clerical and field workers is perceived to have reduced the productivity of some scientists. Furthermore, besides the scientific staff discussed above, the cuts in other services have also been very substantial since 1989. As noted earlier, staff cuts in research support have been about 40%, and in institutional development support about 54%. Since these services are essential for the efficient conduct of research and for its effective use and dissemination in national systems, it would be desirable that the Management review the overall staffing of research and institutional development services and, if necessary, initiate steps to gradually rebuild these services as additional funds become available.
Overall, regarding the strategy used for downsizing, the Panel commends CIAT's Board and Management for taking the difficult staffing decisions necessitated by the funding shortfalls, and for deliberately protecting senior research staff, to the extent possible. To ensure top Management attention to the potentially negative effects of downsizing on critical mass, we put forward the following recommendation:
14. The Panel recommends that the Operations and Programme Committee regularly monitor the adequacy of staff numbers in each research programme and discipline, and advise the DDG (Research) on any corrective measures needed. Such monitoring should cover not only the senior scientists but all other research staff as well.
We also suggest that further staffing cuts, if unavoidable, be accompanied by a more effective consultation and communication programme so that the negative impact on staff morale and productivity is minimized. The responsibility for this communication task should be shared by research leadership at all levels.
9.2.2.1. International Staff - Profile
9.2.2.2. International Staff - Performance Management
9.2.2.3. Locally-Recruited Staff - Accomplishments
9.2.2.4. Locally-Recruited Staff - Future Needs
The Director General (supported by a small international personnel administration office which reports to the DDG for Finance and Administration) is directly responsible for the personnel functions of recruitment, salary administration, performance assessment etc. for internationally recruited staff. He is assisted by ad hoc Selection Committees for staff recruitment, and by an Evaluation Committee composed of the four Directors (2 DDGs and 2 ADGs) who collectively review the international staff's annual assessments. The personnel management functions for locally recruited staff are undertaken by the Human Resources Department, led by the Executive Officer who reports to the DDG Finance and Administration.
Most CIAT staff are core-funded; and personnel costs as a percentage of core
expenditures have increased from 62% in 1991 to 67% in 1994, despite the staff
cuts discussed above, mostly due to the effects of the revaluation of the Colombian
peso, and partly due to significant reductions in other expenditure categories
(e.g, the cost of supplies and services has fallen from 26% of core expenditures
to 22% in the same period). Based on the data assembled periodically by CIAT
- mainly inter-Centre comparisons for senior staff and labour market surveys
for local staff - the unit costs of internationally- and locally-recruited staff
are in line with the prevailing market rates. Although the Centre has tightened
its belt in response to funding shortfalls, it remains an attractive employer
for most categories of staff.
In terms of the staff profile, although the total number of scientists has
gone down from 77 in 1989 to 67 in 1994, the number of scientists in the 'newer'
disciplines (e.g., genetics and biotechnology etc.) has gone up from 8 to 13,
and the number of specialists in resource management research has remained roughly
the same (though their relative proportions have gone up) - reflecting the changing
needs of the research programmes undertaken by CIAT. The Centre employs scientists
from 28 different disciplines or sub-specialties - many with only one or two
scientists in each. The 'international' character of the staff profile is also
evident: in 1994, the 96 'principal staff represented 31 nationalities, with
the following regional distribution: Latin America 30%, North America 27%, Europe
24%, Asia 8%, Africa 5%, and Others (Middle East, Australia etc.) 5%. The number
of out-posted senior staff is at present 19, fewer than the 25 in 1989 but still
a reasonable proportion of total senior staff (24%). In the future, this percentage
might need to increase, given the changing research agenda and the need to strengthen
collaboration with NARS and other CG Centres. Almost 50% of the 74 international
staff (excluding temporaries) have less than 5 years service at CIAT; about
25% have 6-10 years service; and the remaining 25% have served the Centre for
11 or more years. The gender mix of internationally recruited staff has improved
somewhat since 1989, and female staff seem not to have been disproportionately
targeted by the staff cuts. Voluntary turnover from CIAT has been low, despite
the considerable external and internal uncertainty due to funding and organizational
changes. This attests to the strong commitment of staff to the goals of the
Centre, and provides indirect evidence of the satisfactory conditions of employment
offered by CIAT.
Principal staff are recruited through a wide search process, which is transparent but not expeditious, partly due to the recent funding uncertainties. The annual performance review of principal staff is undertaken by the immediate supervisor and the latter's manager (normally the respective DDG), using a standard form. The supervisor's assessment is largely based on a review of the staff member's personal work plan; and the evaluation also covers such aspects as quality and quantity of output, publications, technical knowledge, scientific integrity, personal relations, leadership, team work etc (each of the 23 items is rated on a 7-point scale). Detailed qualitative assessments of achievements against the work plan and of overall performance are also written by the supervisor, and are commented upon by the DDG before submission of the form to the DG. These annual evaluations are then collectively reviewed by the Evaluation Committee before recommendations regarding merit-cum-annual salary increases are made. Thereafter, the DG writes to individual staff, informing them about the results of the performance review, including the annual salary increase granted.
In the Panel's view, the preparation and discussion of personal workplans provide a sound basis for the annual performance review exercise. However, some senior staff are apparently not aware of the forms used to evaluate their performance; and are thus not aware of the specific criteria used. The evaluation system also does not require the immediate supervisor to show the completed form to the staff member; and except for the general letter from the DG at the end of the process, there is little formal feedback to the employee on his/her strengths and weaknesses. Hence it appears that the performance review process is not used sufficiently for providing constructive feedback to the employee - or for receiving suggestions on how the supervisor him/herself could contribute to further improving the staff member's productivity.
The Panel believes that the clarification of performance expectations, and provision of adequate feedback to subordinates, are vital managerial tasks and, if properly carried out, can also serve as a powerful motivational tool. Adequate discussion of the work plan and accomplishments could become even more important in the future, as the proposed matrix and project management systems get established, and each staff member (and supervisor) is held even more strictly accountable for achieving results. In addition, the need for a more systematic performance assessment system would be acutely felt when planning and evaluating the work of staff reporting to more than one supervisor or leader/manager.
Similarly, the need for the DDGs to reconcile possible differences of opinion between two or more supervisors evaluating the same individual could increase in the future; as would the role of the Evaluation Committee in ensuring consistency of assessment standards and practices across programmes and departments. The Panel therefore puts forward the following recommendation:
15. The Panel recommends that the performance assessment system be suitably modified to improve the performance planning and feedback processes used by supervisors, and to strengthen the standard-setting and monitoring roles of the DDGs and Evaluation Committee.
As noted earlier, the personnel functions for locally recruited staff are undertaken by the Executive Officer and his team of specialists in the Human Resources Department (HRD). These staff have done a commendable job of avoiding major disruptions in CIAT's work while simultaneously reducing labour costs and improving the flexibility of assigning staff to various programmes and projects. In addition, major modifications in personnel policies and practices have been initiated to conform with new labour legislation - particularly Labour Law 50 and social security legislation - enacted by the Colombian Parliament in 1990.
In order to reduce costs and improve efficiency, the HRD has increased the contracting to outside agencies of such services as infrastructure maintenance and internal security, thereby eliminating many permanent positions. This elimination of jobs and downsizing of staff has been accomplished without significant legal challenge by the individuals affected or the labour Union, and at reasonable cost to the Centre in terms of retirement, severance and other payments. Furthermore, to facilitate internal mobility and selective outplacement, the HRD embarked on an intense educational programme for all staff, supplemented by special programmes targeted to staff who had voluntarily accepted early retirement or whose services were to be involuntarily terminated. These programmes included training and personal counselling in money management for those who wished to use the lump-sum payments for starting their own business; and appear to have been successful. Membership in the labour Union has dropped from 25% of the local workforce in 1989 to 15% in 1994. We have also heard many favourable comments about the staff's high regard for the efforts made by Management to soften the blow of the staff cuts.
The Panel therefore commends senior Management and the HRD staff for
managing this difficult period of downsizing rather well, and for the humane
approach adopted. We note especially the close partnership that developed in
recent years between the support staff and Management, and between the Director
General and the Board Chair.
We also note that due to the significant downsizing the Centre has paid a heavy psychological price in terms of reduced motivation and increased job stress and insecurity of individual staff. There remains a discernible level of anxiety regarding the possibility of further cuts in funding and staff. In some programme areas, there is reportedly a shortage of skills; and senior scientists are complaining of having to do routine work better suited for less qualified (and less expensive) support staff. In October 1994 a high level of dissatisfaction among support staff was expressed to the Panel in a well-attended meeting with locally-recruited staff, but it is possible that the position has improved since then. To overcome some of these continuing problems, an intensified programme for rebuilding staff morale, including a systematic programme of communication, skills-upgrading, job mobility and career advancement for locally recruited staff, is desirable. This is already under consideration by the HRD staff.
The general administrative functions that provide goods and services to CIAT's research operations include procurement/supplies, maintenance, food and housing, general services, legal services, field operations, and outstations - all managed by the Executive Officer (EO), reporting to the DDG Finance and Administration. In 1994, the total budget for the Sections reporting to the EO (including Human Resources) was US$ 4.35 million. In constant 1994 dollars, this budget was 38.8% lower than the 1989 budget; and reflected a cut in staff of about 29% (from 373 staff in 1989 to 266 in 1994). In addition, as a general strategy for cost reduction and efficiency improvement, many of the administrative services previously provided in-house are now being contracted out; and service costs are being charged directly to internal consumers, thus providing incentives for greater cost control and accountability.
The Executive Officer has also initiated programmes for re-engineering procurement, information and human resources services. This includes using new equipment and software to help improve the information and paper flow between the purchasing section, stores and the controllers office; as well as several new initiatives in the human resources area. The Panel's general assessment is that the various administrative functions are performed well at CIAT; and that the additional measures already planned will further improve the cost-effectiveness of service provision.
The CIAT five-year strategic plan, published in 1991, emphasizes the critical role information systems play in managing internal operations, supporting research activities, and communicating with research partners internationally. That plan envisages the creation of an Information Systems unit with a Director responsible for planning and coordinating information systems and services.
In October 1992 the University of Georgia in its Report on Information Management and Computer Services documented problems flowing from the "absence of established effective leadership and management of information processing technology" and recommended "that a very senior level position must be established to perform all duties related to information management, computer support services, network management, and training." Other portions of the report recommend technical upgrades and standardization most of which have been recently completed. These include the installation of a CIAT-wide fibre optic network, standardization of most hardware and software, and the establishment of a satellite link to the US that permits efficient phone, fax and Internet access.
Although the Centre has done well in the installation of hardware and software it has not yet tackled the issues of leadership and coherence. Each work domain within CIAT (GIS, finance and administration, library, genetic research, commodity improvement, to mention only a few) maintains data bases uniquely structured to its needs. There is no central listing of what CIAT has (or has access to). The Panel finds there is a need for standards that would promote easy interconnection allowing a scientist, for instance, either within or outside the system, to get a range of information from all the domains.
The Panel also believes that information policy should be clearly defined. Although 'Policies and Procedures for Senior Staff are distributed to every staff member some scientists have expressed concern about ownership of research data, with some believing that it belongs to the scientist while others believe it belongs to the Centre.
The Panel puts forward the following recommendation:
16. The Panel recommends that a strategic plan for the development and organization of information systems in CIAT should be formulated as soon as possible, for consideration by Management and Board. The emphasis should be on establishing a coherent Centrewide system, rather than on hardware and software problems.
In preparing the plan, the University of Georgia report should be drawn upon, and other outside expertise should be sought if necessary.
Once the plan is available, and system development needs have been established, rational decisions can be taken on how far to meet CIAT's future programming requirements through contracting out, through purchasing services or off-the-shelf packages from the market, or through maintaining in-house skills for programming and systems analysis.
The Panel believes that the idea in both the 1991 strategy and the University of Georgia report of an Information Systems Unit with senior leadership is valid and should be implemented. Over the medium term, the initial cost of establishing such a unit should be more than compensated by the savings that would result from internal rationalization. In CIAT as in many other institutions the balance of interest in information systems is shifting from administrative to scientific users, and this should be appropriately recognized in the terms of reference of the unit and the reporting arrangements for its head. The Panel's recommended new structure (Chapter 7.5.1) foresees the unit reporting to the Associate Director for Research Support and Information Services. The Panel also suggests that the composition, terms of reference and reporting procedures of the Information Services Committee should be reviewed in the light of the same considerations.
