12.2 Financial Management
12.3 Human Resources Management
12.4 Information Technology Services
12.5 Internal Auditing
12.7 Cost-Effective Use of Physical Facilities
ILRI's Director of Administration, posted at Nairobi, leads five divisions: Financial Management, Human Resources Management, Information Technology Services, and Administration in Nairobi and in Addis Ababa. Division heads are all internationally recruited staff and, except for the last named, operate from Nairobi. The work of these units is co-ordinated through quarterly meetings of the Administrative Management Committee (AMC). Three other international staff report to their respective Heads of Administration: the Head of Physical Plant and the Housing and Catering Manager, both in Addis, and the Head of Engineering, Nairobi. In addition, the Director serves as Secretary to the Board of Trustees and currently oversees the work of the Internal Auditor. The current Director of Administration will retire shortly after the completion of this review and will be replaced by a well-qualified person who has been hired from a similar position at ICRAF.
In general, administrative services are very efficiently provided, and there are now few issues of concern other than in human resources as discussed below. Problems have been experienced in past years in the Engineering Department, where evidence of severe corruption was uncovered and dealt with firmly, and in the security force. That, too, has been rectified; a relatively new security firm has been engaged and has agreed to a deduction in the fee should any items of value be discovered to be missing.
During the first year of ILRI's operation, the financial records were managed separately in Nairobi and Addis Ababa, with consolidated accounts prepared more or less by hand on a monthly basis. During the course of 1995, detailed planning took place to analyse the discrete systems and achieve full integration. The Chief Financial Officer (CFO) now oversees accounting units located in Nairobi and Addis Ababa and a corporate budget office located in Addis that also handles procurement for that site; locally-recruited staff of the three units number approximately 30. Operating manuals are in place at both sites. Financial management for ILRI staff posted elsewhere is handled by the respective host institution with reports sent to Nairobi monthly for incorporation into the Institute-level reports. These are normally issued by the 17th of the month to some 129 cost centre managers with consolidated reports sent to the several levels of upper management. After careful probing on the Panel's part, programme staff seem satisfied with the management reports and other financial services provided.
The CFO, who had been with ILRI from the outset and was previously with ILCA, left to join another part of the CGIAR System in November 1998. The recruitment process for his replacement is now nearing completion.
Panel members met with ILRI's current external auditors - Deloitte & Touche, who commenced work with the Institute in 1997 and will now proceed to audit the 1998 financial reports. The relevant partner and audit manager assured the Panel that ILRI's system is reliable from the perspective of controls and the accuracy of the financial information. They have uncovered no evidence of the mishandling of Institute assets. The auditors support the need for a common computer software system in both sites as a move toward greater efficiency, and this will soon be realised. In their 1997 management letter, they proposed that ILRI improve its procedures with regard to the verification of fixed assets. They suggest, in fact, that the Board consider a policy calling for full physical verification every three years and note that this could be done on a rotational basis. The external auditors regularly review the internal audit reports as well as the accounting records and procedures.
At the time of the establishment of ILRI, the two finance divisions were using different, but compatible, dos-based accounting packages. As they were considered adequate, and as a number of CGIAR Centres were then experimenting with various packages and the System considering standardisation. Management decided to retain the existing software until a satisfactory Windows-based system appeared on the market Several widely used systems have been reviewed over the past year, but a final decision has not yet been made. Plans are to install a new system before the end of 1999, but, in any event, the current accounting software is fully Y2K. compliant. It is expected that the system selected will incorporate procurement, fixed asset and stores controls and will interface with the Institute's human resources software.
The Finance Division issues budget guidelines, including the allocation of unrestricted core as determined by the IMC. in September of each year, immediately following the Annual Programme Meeting. Draft budgets are due back in mid-November, and an approved operating budget is normally in place by the end of December. Adjustments are made on an ad hoc basis as information on funding is received. The Budget Officer monitors realised income and expenditure throughout the year and sends out notices as needed. As is frequently the case, scientific staff have difficulty with the budget exercise and with financial control, and the Panel suggests that training in this area would be useful for them and a substantial benefit to Management.
Although ILCA staff were accustomed to a system of time charging, the procedure was not carried over to the new Institute. ILRI now has cross-project, cross-programme budgeting but no mechanism to measure staff time usage after the fact. As it is, of course, important to know the real cost of a research project as future activities are planned, and as staff costs make up the bulk of expenses, the Panel suggests that ILRI review past experience and consider implementation of time charging.
The EPMR Panel that reviewed ILCA in 1993 recommended that the Personnel Division should improve its performance and image as a service office. In response, the new ILRI has taken a number of steps to upgrade the quality of its human resources management. In its first two years, a consultant was retained to address the establishment and implementation of procedures for performance appraisal and position classification as well as to develop salary scales for international and local staff. During this period, the role of the Nominating Committee of the Board was expanded to focus on human resource issues as they relate to staff as well as Board. Staff councils for both NRS and IRS were established in 1996, this in acknowledgement of a recommendation stemming from the final ILRAD review. Constitutions for both groups were formulated, and a subsequent Board/Management/Staff agreement provided for representatives to meet regularly with the Human Resources Committee of the Board, after first presenting issues for discussion with Management at the IMC.
ILRI's locally recruited staff now total 716 close to the 1995 figure. 282 are posted to Addis Ababa, 88 at the Debre Zeit station, and 346 in Nairobi.. Currently, there are 127 internationally recruited staff, a decrease from 137 at the end of 1995. There is a trend towards shorter-term appointments, and the figure 127 includes 12 post-doctoral fellows, 13 visiting scientists, and 12 consultants. The IRS represent 38 nationalities, with 38% originating in countries of the South, slightly lower than the CGIAR average of 41%. Women-number 26 of this group, still just 20 % of the total despite a recommendation in the last" ILRAD review that called for "actions to ensure that women become more than the current 17% of the international staff." ILRI's percentage is, however, above the CGIAR 1997 average of 16%. No women are in senior Management; two of 21 or 10% hold middle management positions.
In January 1997, a professional Human Resources Manager at an international level was hired. By general consent, the HR function has improved since then. The HR Manager attends meetings of the IMC when relevant issues are to be discussed. In the course of the same year, representatives of the CGIAR Gender Programme were brought in to conduct a diagnostic review of gender staffing that yielded a number of broadly beneficial recommendations. ILRI has chosen to consider the gender issues raised in the report from the broader context of diversity and to establish a Diversity Task Force to make recommendations to Management regarding the improvement of policy and practices that will enable the Institute to capitalise more effectively on the contributions of its diverse staff.
ILRI has recognised the need to upgrade the management skills of staff and has organized courses in supervisory development for IRS and NRS in the last two years. Importantly, the Institute also sponsored a week-long management development course for project co-ordinators, senior administrators and directors in 1998. The course, which included skill-building in conflict resolution, facilitation, and team-building, was enthusiastically received by participants. Another facilitated course for middle and senior managers is planned for mid-1999. This kind of staff training will grow in importance as ILRI continues to build its partnerships and as the outsourcing of research becomes increasingly the rule. In this event, it will be essential for current staff to acquire - or for ILRI to recruit staff who possess - well-honed research management skills.
Policies and procedures with respect to human resources are well documented. They include well-drafted personnel policy manuals for IRS and NRS, classification manuals for both groups, performance appraisal manuals for several staff levels, and IRS staffing procedures. Local staff who work with ILRI scientists at outreach sites are the employees of the respective host institution, with their status governed by its policies. As is frequently the case with respect to such practices as performance management and appraisal, supervisory staff could benefit from special training.
The Human Resources Division produces a weekly staff newsletter that includes news from the directorate; announcements of staff arrivals, departures, etc.; notice of seminars and news of relevant events in Addis, Nairobi, and the outpost sites, as well as the CGIAR System.
Human resources management in international organizations in developing countries presents special challenges. One must consider the very wide, although inevitable, differential in the compensation levels of IRS and NRS staff, the diverse cultural practices and personal behaviours of a multi-ethnic staff, differences in discipline paradigms as staff collaborate in research teams, all this in a climate of uncertain funding with the pressure to expand and to demonstrate impact ILRI has recognised the need for professionalism in this area of management but would probably benefit from additional skilled manpower. The Institute's staff is large, based at two main and a variety of smaller sites, and there are a number of issues that concern staff and demand attention. The delay in finding solutions to the concerns is a principal source of discontent in itself.
Both IRS and NRS Councils will bring to the forthcoming meeting of the Board's Human Resources Committee their positions with respect to compensation. At the IRS level, there has been some turmoil over the past year or so on the question of classification levels and related salaries. The number of levels has been reduced so that there are no longer clear definitions of positions of growing authority and responsibility for IRS staff, nor are there published salary schedules. Without such transparent criteria, staff legitimately fear salaries are determined on an ad hoc basis, without principles to preclude gender or nationality bias. ILRI Management speaks of determining IRS salaries on the basis of market value. This is a valid concept insofar as it takes into account discipline scarcity, qualifications, and experience. In an international organization, however, the Panel contends that it is not valid to consider the prior or future job market of candidates or staff insofar as it might differ by reason of gender or nationality. Equity, a concept to which the entire CGIAR System subscribes in all aspects of its work, surely prescribes equal pay for equal work of its human resources.
Because ILRI does not have an adequately defined and transparent system with which to classify internationally recruited staff (IRS), determine salaries, and ensure equity in compensation, the Panel recommends that:
i) the categories of scientist, programme specialist, and administrator be expanded to differentiate positions with differing levels of responsibility, authority, knowledge, and skills;
ii) a salary range for each IRS level be developed and applied in all cases;
iii) where, in infrequent instances, market values for particular skills necessitate payment of a salary higher than that of equivalent positions, a market supplement be given to attract and retain suitable candidates; and
iv) information on the policies and procedures of the classification and compensation system be provided to all IRS staff.
NRS Staff in both Kenya and Ethiopia are faced with difficult economic conditions and a deteriorating job market that presents them with few options. Advancement for them at a CGIAR Centre is limited, and this is a legitimate source of discontent. They bring to the table a number of concerns about the benefit package, but the most serious relates to a stipulation in the compensation plan developed in ILRI's first year. While each of the classification levels has ten pay steps, staff cannot progress beyond step six without three consecutive annual ratings of "superior," nor beyond step eight without three consecutive annual ratings of "outstanding." Since in any well-managed appraisal scheme, these ratings should be given sparingly, the great majority of staff are locked in at step six. In concert with a market that constrains salaries because of high unemployment yet with rising living costs, such a restraint on salary increases can create a serious morale problem. It may also result in staff seeking second and third sources of income with a negative effect on their productivity at ILRI - or in taking unacceptable steps to assure they can provide for their families. Issues of NRS compensation are far too complex for the Panel to provide specific recommendations. Rather, the Panel suggests that Management make review of the entire package a priority over the next year.
A separate NRS compensation issue relates to the large number of casual staff (some 200 in Ethiopia, about 20 in Kenya) who have worked essentially full time for ILRI over many years. Many, of course, were inherited from ILRAD and ILCA. These staff work side by side with regular employees and carry out the same tasks, but receive far less compensation and few benefits. Administration is in the process of investigating the status of these workers, identifying those that need to be retained for a reasonable length of time, and determining the costs of regularising their employment. The Panel urges a prompt and an equitable resolution of this situation.
As noted elsewhere, relations between IRS and NRS are a sensitive matter in all international institutions. ILRI's Diversity Task Force will consider ways to strengthen relationships both from a social and work-related perspective. New plans for the dining services that will promote more interaction will have an impact on the former. Other actions might include: a thorough review of benefits to determine if they can be more analogous, where there is no transparent reason for a differential; production of a single personnel manual - albeit with the needed distinctions clear - that could send the message that ILRI has one staff; participation of the Director General in periodic meetings of both staff councils.
Finally, there is a legitimate concern about the Institute's ability to recruit highly qualified scientific staff. Questions of personal and family security and worry about funding and thus job security come into play here. ILRI attracts some 21 scientist applicants per post on average, compared to a CGIAR figure of 42. To counteract these realities, the Institute needs to cast its net much more widely and reach out to specific discipline journals as well as count on its current staff to help spread the word as they travel and attend professional meetings. The extra expense involved is well justified.
It is important to reiterate here that both IRS and NRS say that ILRI is a good place to work The challenges are satisfying, the facilities excellent; they are offered the opportunity to bring their concerns to Management and Board. Still, this response is never to be taken for granted. Staff are, indeed, the Institute's most valuable resource.
IT services are handled by an internationally recruited Head of Information and Technology in Nairobi assisted by a local Computer Manager in Addis and approximately seven local staff. The Head, a relatively new recruit to ILRI, plans to develop a staff user group to help out with application support to their colleagues and a supplement to his staff. The division lacks personnel to adjust applications, and staff try to procure off-the-shelf packages that include adjustment services. Some software design is outsourced. A common hardware/software acquisition programme is in place, and controls ensure that appropriate licenses are obtained. New servers are on order that will speed access to the Internet as well as ILRI's Intranet and that will, of course, be Y2K compliant.
The Institute's computers are 80% Y2K compliant; the remainder can be manually adjusted. However, with the computers currently on order, ILRI will be 95% compliant by July 1999. The laboratory equipment has been checked for compliance as well. The principal concern is for the custom software used by some staff, often obtained from a variety of partners some time ago and likely not regularly maintained.
The IT division also handles the Institute's communications that, to a considerable extent, continue to be problematic. Although Nairobi is on the CGNET IVDN, Addis is not, and communications between the two sites is often difficult. Management is seeking permission to install microwave connections from the two principal offices to the central exchanges in the host cities; if approved, this should greatly reduce the interruptions experienced.
ILRI's experienced internal auditor, who normally works with one assistant and one secretary, is based in Ethiopia but spends on average two months each year in Nairobi. Another assistant auditor position in Kenya is currently vacant. The auditor also visited several ILRI outposts more than two years ago and would like to increase the frequency, especially since these offices are not covered by the external auditors.
The team prepares an annual audit plan for review by, and sends very detailed and thorough reports to, the Director of Administration. As specific issues arise during the year, however, the auditor adjusts the team's work schedules accordingly. He makes a point of following up on implementation of all of the recommendations made in his reports.
The audit reports reviewed focus mainly on financial policies and procedures and might usefully expand to consider other operational processes and take a broader approach that would look beyond compliance to the improvement of management systems. Of equal importance, the Panel believes the internal auditor should report to higher authority rather than to the office whose assignment he is principally auditing and suggests that he regularly present his workplan and the resulting reports to both the Director General and the Finance Committee of the Board.
The respective Heads of Administration in Nairobi and Addis are responsible for procurement and stores, housing and food services, international travel, legal and liaison services, security and a range of services connected to the physical plants including local transportation. Operating manuals are in place for most of these activities.
The Addis campus is something of a green oasis, highlighted by profusely flowering borders, courtesy of the wife of a former DG. Its facilities include 24 staff residences; 57 hostel rooms, a cafeteria and dining rooms, training rooms and auditoriums; a clinic; offices and laboratories. It is used as a training site both by ILRI and by CGIAR and other sister organizations, and is well suited - and especially well managed - for this purpose. Although it has been meticulously maintained over the years, some of the underlying infrastructure on the campus, such as laboratory roofing, may need replacement in the relatively short term. The Physical Plant Department in Addis also takes care of the research station at Debre Zeit and provides services to staff living off campus that are not readily available through the municipality. It has recently increased water storage capacity on the compound and, as a result of the 1996 installation of a 450 kw generator, can provide emergency electrical power when the local supply is disrupted.
The headquarters campus at Kabete, outside Nairobi, is equally attractive. The campus includes offices, labs, recreation and dining facilities, 19 hostel rooms and 28 housing units of varying sizes. All the facilities at this site have also been very well maintained but, again, because of the age of the infrastructure, some adjustments are now needed, specifically with respect to the water piping, part of the sewage system, and campus roads. New technology was recently installed to ensure the safe discharge of run-off from the filtration lagoons that. Management suggests, could be an example to small municipalities and businesses in Kenya.
ILRI is a partner of the United Nations Security System in both Ethiopia and Kenya. Security on the Addis campus is very competently managed by regular Institute employees. Externally, there is an issue of road safety and continuing concern over the relationship between Eritrea and Ethiopia. In Nairobi, a locally-recruited Chief Security Officer and ten ILRI staff officers manage a contracted guard force and, as noted, have brought about a significant reduction in the level of on-campus theft experienced in 1995 and 1996. The external situation in the city, where the crime rate has been increasing, is a much more serious problem. A number of staff have been victims, although, fortunately, none have sustained serious physical injury, and two Institute vehicles have been lost through hijacking. ILRI has taken a number of precautionary measures but still finds that the situation inhibits the Institute's ability to recruit international staff.
Over time ILRI has acquired a number of physical facilities and a considerable amount of equipment. As a result of the merging of the two institutes, ILRI inherited two major campuses. In addition, its stock of animals has grown in response to its research needs.
All evolving organizations face the challenge of adjustment so that their physical facilities and other assets match their needs. However, the decisions to be taken and the pattern for adjustment depend on a clear definition of mission and strategy for the organization as a whole and for the research programme in particular. These will lead to decisions for the purchase of new assets and for the disposal of some of the existing ones. Such decisions should be based on the real opportunity cost of selling versus the cost of maintenance, including losses in efficiency, and benefits accrued by current use.
The functions performed by an organization determine the need for specific physical facilities and equipment. In the case of an international agricultural research organization, its requirements depend on the functions of such facilities to support research for the provision of international public goods as well as on the mode used to undertake each specific function.
For example, if increased research is done in collaboration with NARS or other IARCs, the requirements will be different than if the research is done in a sole basis. Also, as the mandate, the priorities for research, and the structure of funding change, there will be a need to adjust the utilisation of physical facilities and equipment.
ILRI physical facilities can be grouped into two major categories: campuses and research stations, farms or ranches, each with their attendant offices, laboratories, barns, and housing. In addition, ILRI has acquired access to facilities at the campuses of the other IARCs, with whom it has joint programmes, i.e. IITA (Nigeria), ICRISAT (Niger and India), IRRI (Philippines), CIAT (Colombia), and CIP (Peru)..
An important asset for ILRI is also the cattle and other animals held at the research -stations and at the Kapiti Plains Estate ranch. Its value is far beyond market, as its primary purpose is producing animals for research.
The Institute's physical facilities include:
ILRI-Kenya - a modem complex of facilities on a 70-hectare site at Kabete, on the outskirts of Nairobi. In addition to eight laboratories, the facilities include electron microscopy; radioisotope and irradiation units; breeding units for animals, tsetse flies and ticks; a secure animal facility; facilities for administrative, computer, biostatistical, training, graphics and public awareness work; conference rooms; a library, dining room, and visitors' hostel; recreational facilities; and staff housing.
ILRI-Addis Ababa - an 30-hectare campus with laboratories; extensive forage genebank; offices for programme and administrative staff; library and information processing facilities; extensive training and meeting facilities, including hostels; computer and biostatistical facilities; editorial, writing and printing facilities; recreational and staff housing.
The Forage Genebank on the Addis campus conserves more than 13,000 accessions of forages from almost 900 species belonging to over 200 genera.
Kapiti Plains Estate Limited - a wholly owned subsidiary of ILRI, this 13,000 hectare ranch, 50 km south-east of Nairobi, comprises 1,200 Boran cows and followers, 40 dairy cows, a small herd of trypanotolerant N'Dama cattle, 400 Red Maasai ewes, and 400 Dorper ewes and followers.
Debre Zeit - a 210 hectare research station about 50 km south-east of Addis Ababa in the Ethiopian highlands, with barns, laboratories, milk processing, seed processing and training facilities, workshops, nine offices, two staff houses, 12 hostel rooms, and a cafeteria. The station's animal population includes almost 400 head of cattle, about 100 sheep, and 75 goats.
The Panel has been asked to examine the use of ILRI's research infrastructure in the light of its efforts to position itself as the CGIAR global livestock research Centre. Particular attention was to be given in this context to the continued maintenance of two major ILRI campuses in Eastern Africa.
The Panel offers its position with regard to this important aspect below.
ILRI is the result of the integration of two autonomous CGIAR Centres, which, over a period of about 20 years, independently developed their programmatic agendas, and established physical structures at their respective principal sites.
In late 1994, the ILRI Board of Trustees decided to make the Nairobi facilities, developed by ILRAD, the headquarters of the unified institute and to continue using the Addis Ababa facilities, developed by ILCA, as a second principal site of the new institute.
Assuming rational use of the facilities in the independent Centres before the integration, the above Board decision implied the expectation that the unified Institute would; operate at least at the aggregate funding level of the combined institutes before they were-affected by the heavy resource decline in the early 90s, in order to continue using these facilities at the necessary level of efficiency.
The experience of the institute since its inception in January 1995 has shown, however, that total funding of the Institute has constantly fallen short of this expected and also TAC recommended level. By implication, therefore, costs related to the maintenance of the institute's facilities were constantly above desirable thresholds, and the infrastructure thus remained under-utilised.
ILRI was, in addition, challenged with (a) the expectation of programmatic integration of its livestock production (ILCA) and disease control (ILRAD) dimensions by exploiting apparent synergies - which requires core elements of these dimensions to be in frequent contact with each other at the same operational base, and (b) with the expansion of ILRI's mandate beyond Africa with concomitant resource requirements.
The Ethiopia based ILRI facilities have been particularly seriously affected by this development which has led to substantial under-utilisation of ILRI's Ethiopia-based infrastructure and resulted in high maintenance costs relative to the research programme supported by this infrastructure.
The Panel considers the continued maintenance of two large campuses for ILRI's research alone in East Africa as an untenable situation, which could seriously impair the Centre's further evolution into a vigorous research institution with a global livestock research mandate.
The Panel recognises, on the other hand, that Ethiopia, having the largest cattle population and second largest human population in Africa, with a great variety of agroecological, socio-cultural and socio-economic conditions, is a natural focal point for strategic international livestock research.
However, given the decision of the ILRI Board of Trustees to establish the ILRI headquarters at Nairobi, and given the global mandate of the institute, the Panel questions whether ILRI will be in a position to reassemble an Ethiopia-based research programme of a size commensurate with the size of the available infrastructure in Ethiopia.
While the Panel - on the basis of its critical analysis of ILRI's research programme since its inception - recommends termination and/or transfer of some of the field and laboratory research currently undertaken at the Ethiopia principal site (see Chapters 6 and 7), it does not recommend closure of this site but submits the considerations below for the further utilisation of these facilities under ILRI's responsibility and within the ILRI -Government of Ethiopia host country agreement
ILRI's Ethiopia facilities are a very well maintained, versatile complex of housing, office, laboratory, field and barn, conference, training, hostel and support components which lends itself ideally for use by members of the CGIAR network of International Agricultural Research Centres in their efforts to increase their research and training emphasis on Africa as per the recommendations of the CGIAR Systems Review. Similarly, non-CGIAR international agricultural research Centres, as well as other institutions mandated with research and research training may also take advantage of these facilities, which represent a most valuable CGIAR System asset.
To ensure implementation of the proposed restructuring and integration of ILRI's research programme, and to utilise cost-effectively the valuable research infrastructure, the Panel recommends the following action plan for achieving proper utilisation of ILRI's facilities in Ethiopia:
i) in close consultation with the Government of Ethiopia, ILRI redoubles its efforts to accommodate international agricultural research and training oriented programmes on its Ethiopian premises; the conditions of such accommodation, which may also include technical and administrative support, are to be guided by the ILRI-GoE host country agreement and to be based on full cost-recovery,
ii) with respect to its Ethiopia-based research programme, ILRI emphasise strategic research aspects, with international scope, in the context of restructuring ILRI's research programme, as recommended in the programme-related Chapters of this report,
iii) by the end of the year 2001 an external evaluation will establish progress in implementing this recommendation and propose further steps needed.
The Panel assumes that the CGIAR will closely monitor and support this important process.