MPI management blasted in organizational review

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This article was published 26/01/2024 (640 days ago), so information in it may no longer be current.

A government-ordered review of Manitoba Public Insurance has found the Crown corporation was plagued by an inflated and inefficient management structure, in which senior leaders lacked defined roles and deflected responsibility to steer the provincial auto insurer.

The findings of an organizational review by consulting firm Ernst & Young are scheduled to be released publicly today. An advance copy of the 114-page report was provided to the Free Press.

The document pulls back the curtain on MPI’s corporate headquarters as it wrangled with Project Nova — its overbudget $290-million technology modernization program — and numerous, disruptive organizational changes, including the sacking of chief executive officer Eric Herbelin in May 2023.

“While the changes were done with positive intentions, it has often brought about some unintended impacts, namely confusion amongst leadership,” the report’s authors state.

The review was ordered by Progressive Conservative justice minister Kelvin Goertzen in April 2023, following a series of controversies at MPI and the Public Utilities Board publishing a laundry list of issues with the Crown corporation’s management of Project Nova and its financial reporting.

EY conducted more than 30 interviews with MPI executives and senior leaders in early October 2023, and reviewed more than 260 documents as part of its analysis, which was submitted to MPI in mid-December.

It contains five high-level recommendations to help MPI improve its processes and address gaps and shortcomings in its structure.

“The report puts a fine point on many of the problems that Manitobans had already heard about at MPI: that MPI was rudderless, it’s been mired in bad management decisions, and it ultimately lacked a clear focus on providing good services and affordable rates,” said NDP Justice Minister Matt Wiebe, also minister responsible for MPI.

“I see this report as both a post-mortem review of the dysfunction created by the Stefanson PC government, but also a road map for the new board to work from going forward to fix some of the issues.”

After winning the October election, the NDP appointed a new board chairperson and replaced all but one of the Crown corporation’s directors as one of its first acts in government, with the aim of bringing a then-nine-week strike by MPI employees to an end.

MPI deferred questions about the organizational review to board chairperson Carmen Nedohin, who is scheduled to address media today.

With the EY review concluded and the board preparing to select a new CEO to lead MPI in the coming weeks, Wiebe said it is time to deal “with the structural challenges that have existed” for years.

“We need good leadership from the board, but we do need to see a shake-up,” he said. “We need to see that, ultimately, MPI returns to a customer-focused, customer service strategy.”

The review found MPI has a relatively high number of management layers for an organization of its size and complexity, with 349 employees holding managerial titles. Of those managers, 20 did not have anyone reporting to them directly and another 84 had fewer than four people reporting to them.

The ratio of managers to “direct reports” is not consistent with other organizations, is considered “less than optimal” and warrants further investigation, said the report, which recommends reducing managerial layers and widening spans of control.

Significant turnover between May 2021 and June 2023, including 20 high-level organizational changes, has also caused instability at MPI and impacted the sustainability of ongoing programs, alongside a lack of solid strategic, financial and human resources planning, the report found.

It also noted “friction” between MPI divisions, owing to split accountability at the executive level and mandates that are not clearly outlined.

In a survey of MPI’s executives, none indicated having significant responsibility for finance and cost management; governance and reporting; or quality and output management, among other executive functions.

The report also found directors, senior directors and executives do not have key objectives or measures of success in their roles, and key performance indicators for the corporation either do not exist, are not actively monitored or a not acted upon.

“There is an overall risk-averse culture at MPI with an over-reliance on committees (and) collective decision making and a lack of individual accountability,” the report stated.

“While most executives seem to understand their individual responsibilities, there is a mixed level of understanding of the roles of other executives in the organization, particularly when there is confusion as to which executive has a lead role for a particular responsibility.”

Wiebe laid blame with the former PC government and MPI past-president Herbelin, who he said was “an abject failure,” for the current turmoil within the corporation.

“A lot of the disruption that you’ve seen at the top of MPI has affected the management and moved down through the corporation,” Wiebe said.

“We want to be able to elevate the right people to the right positions, but that all starts at the top — and what we’ve seen is that hasn’t happened.”

PC MLA Doyle Piwniuk dismissed the criticisms, saying the NDP inherited a strong Crown corporation from the former government, as demonstrated by a recent PUB decision to cut Autopac rates by five per cent.

“Despite the NDP trying to scare Manitobans about the financial well-being of MPI, recent results confirm MPI remains fiscally strong with stable rates,” said the Opposition critic for MPI. “The external review was important as the former government reviewed management structure to keep MPI on a path to success.”

danielle.dasilva@freepress.mb.ca