Audit of Select Management Issues Impacting the City’s Ability to Effectively Hire and Sustain Its Workforce

from Honolulu County Auditor, June 30, 2023  (excerpts)

In adopting Resolution 22-43, CD1, the Honolulu City Council expressed concern about the 2,000+ vacancies that existed in the city and the need to fill them. Additionally, many of the theses vacancies have remained vacant for long periods of time, and the council received complaints from city residents about slow service from government agencies as a consequence of staff reductions and unfilled vacancies.

The Department of Human Resources (DHR) is the central personnel staff agency for the City and County of Honolulu….

Audit Results

One of our primary objectives was to analyze and assess the city’s 2,458 vacancies to determine the actual number of position vacancies, how long positions were vacant, which positions were or were not being posted to fill, and potential cost savings from long-term vacancies. Due to unreliable and incomplete data, we were unable to perform this important analysis. More importantly, we found that DHR does not maintain sufficient data to accurately identify and report on the city’s staff vacancies.

We also found that DHR and other city agencies did not meet four key hiring and processing objectives established by the mayor, but improvements were made. For example, based on the Bloomberg Harvard initiative report, the mayor established a benchmark for DHR and requesting agencies to fill a vacancy within 90 days; DHR reported that the average time to fill vacancies during our review period was 139 days. While this fell short of the benchmark, it was an improvement over the 181-day average it took the city to fill a vacancy in a prior evaluation.

In addition, we identified other risk areas to improve DHR’s management of the city’s vacancies. We found that the city does not have formal policies or procedures to abolish long-term, obsolete positions which may be skewing the city’s vacancy rate and tying up city funds. Also, the department’s reliance on four separate, stand-alone databases for managing the city’s hiring and selection processes is inefficient and raises the risk of error because staff have to manually transfer data from one system to another. Finally, although we found that the state civil service system does not pose significant impacts to selection, the voting requirements for collective bargaining prevents the city from unilaterally implementing wage and benefit incentives…

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…we conducted a data reliability test on a sample of 24 BF-130 forms. The BF-130 forms, which became effective in 2008, are used by DHR and city agencies to create positions and are the basis for reporting on current vacancies. We found that the department’s vacancy data did not meet reliability standards because of significant missing or erroneous data in our sample review.

We selected a random sample of 24 source documents (BF-130s) to determine if internal controls are in place to ensure that the data DHR provided is accurate. We tested a total of 14 fields for each sample. On February 7, 2023, we submitted a request to DHR to review the 24 BF-130s in our sample review and was only able to furnish 1 sample. Staff directed the audit team to the Department of Budget and Fiscal Services (BFS) and the Department of Information Technology (DIT) to determine whether those departments had the information we were seeking. DIT was able to provide some of the data; however, most of the data was either incomplete or erroneous.  Exhibit 2.1 depicts the errors noted in our sample review.

Exhibit 2.1 Sample Data Reliability Test Results on 24 BF-130 Forms, March 2023

Based on the high error rates, we concluded that DHR’s data was unreliable and insufficient to conduct further analysis. We discussed these error rates with DHR staff who, at the time, confirmed that the department did not have complete, verifiable personnel data.

Conducting a Comprehensive Analysis of the City’s Vacancies Within the Specified Timeframe Proved Unfeasible

During the course of our fieldwork, it took DHR and DIT over three months to locate certain requested documents for 22 samples out of the 24 vacancies in the review file. Exhibit 2.2 below details the timeline for our data request, which ranged from February 7, 2023 to May 11, 2023. Due to the untimely submission of the data, we did not have time to conduct our audit analyses within the time constraints for issuing this report.

As a result, an analysis of the city’s estimated 2,458 vacancies could not be conducted because DHR was initially unable to provide data in a form we could utilize. Furthermore, the data that DHR did provide was inconsistent and contained errors that rendered the data potentially unreliable. Even if complete data was received for the 2,458 vacancies, it would have been too late for us to conduct meaningful analysis given the audit’s time constraints. Based on the length of time it took for DHR to provide data for 22 position vacancies, we conclude that the department does not maintain historical personnel data that is readily available to conduct meaningful analyses nor use it to effectively manage the city’s workforce.

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When it comes to abolishing a classification, there are no formal policy documents. Abolishing a classification is solely between the departments and BFS. As the appointing authorities, individual departments are responsible for reviewing and assessing the need for a position and for submitting a memo to the Mayor via BFS to request approval to abolish positions. DHR’s role, via the Classification and Pay Division, is to record the abolishment of positions in the AdvHRM system. However, by not having a formal process for abolishing a classification, it keeps classifications on the books with a potential to skew vacancies.

For example, the city is starting to use smart meters for parking. As a result, staff whose duties used to include patrolling the meters are being phased out. The union is fighting for them to keep their classification, so DHR has to keep the classification until all related staff retire. This skews the vacancy rate, as there is no intent to fill these positions.

While there is a sufficient and formal process to create and fill positions, there is no process to abolish older, obsolete positions that will not be filled in the foreseeable future. A formal process to abolish unneeded positions and periodic review of long-term vacant positions would help right-size government and portray a more accurate vacancy rate for the city.

As part of our audit work, we had intended to analyze long-term vacancies and identify positions that may no longer be necessary. However, we were unable to conduct this task due to the lack of usable, historical personnel data. We would encourage DHR to assemble an accurate, historical database of personnel actions so that it can analyze, monitor, and identify obsolete vacant positions….

Conclusion

When the city council adopted Resolution 22-43, CD1, Directing the City Auditor to Conduct a Performance Audit of the Department of Human Resources’ Selection and Hiring Processes in July 2022, the Bloomberg Harvard report on the city’s recruitment timelines and practices had not yet been published. Once it was published in August, we found that the comprehensive report addressed many of the concerns identified in Resolution 22-43, CD1. An audit in accordance with the resolution would have likely reported similar findings to the Bloomberg Harvard report. To ensure that we did not duplicate the effort of the Bloomberg Harvard report and still provided value to the city council and taxpayers, we conducted a risk assessment to identify other areas within the city’s hiring and selection process that could be improved. One of our primary objectives was to analyze and assess the city’s 2,458 vacancies to determine the actual number of position vacancies, how long positions were vacant, which position were or were not being posted to fill, and potential cost savings from long-term vacancies. Due to unreliable and incomplete data, we were unable to perform this important analysis. In our opinion, the Department of Human Resources (DHR) should prioritize establishing an accurate, historical personnel database in order to effectively manage the city’s personnel requirements, including vacancies. Even the Bloomberg Harvard report suggested that the city should shift from an anecdotal understanding of the source and magnitude of bottlenecks in the existing system to an empirically-grounded approach substantiated by hard data.

In addition, we identified other risk areas to improve DHR’s management of the city’s vacancies. The mayor should establish a formal policy to eliminate long-term, obsolete positions which may be skewing the city’s vacancy rate and tying up city funds. The department should establish a formal process for city agencies to abolish vacancies when they are warranted. To ensure transparency and accountability, the Honolulu City Council should adopt a resolution requesting the department to produce an annual report of long-term vacancies and other important information needed for stakeholders to effectively manage the city’s workforce. The department’s reliance on four separate, stand-alone databases for managing the city’s workflow processes is inefficient and raises the risk of error because staff have to manually transfer data from one system to another. Finally, although we found that the state civil service system does not pose significant impacts to hiring or selection, the voting requirements for collective bargaining prevents the city from unilaterally implementing wage and benefit incentives. As a result, the city cannot quickly respond to competing labor market forces. This can adversely affect the city’s ability to fill competitive, hard-to-fill positions.

Sustaining thousands of staff vacancies would set off alarm bells for any organization. It is little wonder that the city council expressed concerns over the 2,000+ vacancies that were identified during our audit review. However, we question the validity of those numbers, the fiscal impact it may have on the city’s finances, and the ability for city agencies to fill key staff positions and serve the people of the City and County of Honolulu. We believe that if DHR, the mayor, and the city council adopt this report’s recommendations, it will go a long way toward right-sizing the city’s workforce, save on personnel costs, and allow the city to compete with other jurisdictions for qualified candidates to fill key staff positions….

read … Full Report

PDF: Bloomberg-Harvard report on Honolulu Hiring Process

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