Improved resource management

BUDGETARY FACTORS

The reform process has been implemented during a period of very tight financial constraints for the Organization. The approved Programme of Work and Budget for 1994-95, amounting to US$673.1 million, was already a "no growth" budget, and it was subsequently reduced owing to a substantial shortfall both in the payment of assessed contributions and in the receipt of arrears, which were supposed to fund the budget for that biennium up to an amount of US$38 million. Under the circumstances, there was no alternative but to reduce expenditure.

In the light of this negative experience, arising from the Organization's reliance on the payment of arrears for funding its budget, in 1995 the FAO Conference agreed to return to the normal financial practice of funding the budget only with assessed contributions for future biennia. For the 1996-97 biennium, the Conference approved a budget of US$650 million only, nearly US$60 million less than the sum requested to retain a zero-growth level. The Organization had to adjust to this lower level through efficiency improvements as well as through a substantial reduction of programmes.

For the 1998-99 biennium, the Conference approved a zero nominal budget of only US$650 million, representing a reduction of 3.7 percent in real terms. This required a further cost-cutting exercise to protect priority activities to the extent possible. In 1999, the Conference approved a US$650 million budget for the third time. Again it was necessary for FAO to absorb increased costs, estimated to be more than US$4 million for the 2000-2001 biennium. This relatively minor amount of necessary cost absorption was principally due to favourable developments on currency exchange markets, i.e. the strengthening of the US dollar against the Euro and the Italian lira, currencies in which FAO incurs a substantial share of its total expenditures.

The Programme of Work and Budget for the 2000-2001 biennium embodied the first attempt to apply an enhanced programming methodology to FAO's technical activities, a move endorsed by the Conference in 1997. Planned activities are now presented more clearly and in line with results-based budgeting principles, including a more precise definition of objectives, time frames and intended outcomes.

GAINING FROM EFFICIENCY

Given the above financial constraints, the pressing need to achieve savings naturally influenced the choices made in the reform process. This was not the only consideration in the search for greater effectiveness, as the major proposals for change had already been submitted to and approved by the Council in June 1994. It can be said, however, that the reform process and the need to identify savings were in fact mutually reinforcing.

Other savings have been achieved in a more indirect way or are difficult to estimate because the amount actually saved is dependent on a number of assumptions or external factors. This is particularly the case for the savings achieved by divisions or projects by substituting international consultants with TCDC/TCCT experts or with visiting or retired experts under the respective partnership programmes (the average monthly cost of an international consultant is at least twice that of experts employed under these arrangements). The number of experts recruited under these programmes has grown to more than 3 600. The fact that the number has increased siginificantly can be attributed to the growing conviction of Member Nations and institutions that there are benefits to be derived from the Organization's partnership programmes.

In order to reduce the financial commitments extending beyond the period covered by FAO's approved Programme of Work and Budget, a new policy was introduced in 1996 whereby staff members holding a fixed-term appointment and assigned to posts included in the programme would have their contracts extended up to the end of the biennium, unless there were specific reasons to consider a shorter extension. Besides contributing to sound financial management, this measure also facilitated the streamlining of procedures for the consideration of proposed extensions of fixed-term appointments, since all such proposals are prepared before the biennial Conference and decisions are taken as soon as the Programme of Work and Budget for the following biennium is approved. Staff members' basic benefits are also protected under the new system because contracts are normally extended for at least one year.

Other cost reductions have been made possible through the use of headquarters teleconferencing facilities, inaugurated at the end of 1996, for meetings with staff and/or partners in other locations or for interviewing candidates for appointments. In 1998, 62 interviews were conducted using these facilities, at a total cost of US$7 438. Had all the candidates been brought to headquarters, the Organization would have spent about US$120 000 in travel costs.

Overall, the savings achieved through reform measures are estimated to be about US$50 million per year, which corresponds to 15 percent of FAO's current annual budget of US$325 million. It is evident that the reform process also incurred costs - for instance, through the transfer of about 100 staff members to a new duty station, the expansion or establishment of decentralized offices, the improvements in communication services and the procurement of computer hardware and necessary software. However, these are one-time costs, which have been quickly offset by the savings achieved, most of which are recurrent.

HUMAN RESOURCES

For a technical organization such as FAO, there is no doubt that its staff are its most valuable resource. The reform process, combined with the need to achieve substantial savings, has had a major impact on staff, who have had to face a period of uncertainty and increased pressure. However, by involving staff in the decision-making processes and through regular and open communication about the problems that have had to be resolved, the Organization has succeeded in mobilizing significant staff commitment to the reform. At the same time, it has taken the opportunity to begin the complex exercise of improving its personnel administration practices.

As a result of the abrupt reduction in the Organization's budget for the 1994-95 biennium, followed by the zero nominal growth budget for 1996-97, there was a global net reduction of 584 posts. However, as explained in the section Global impact of decentralization, p. 18, 756 posts (26 percent of the total) were abolished at headquarters while, in the Regional, Subregional and Liaison Offices, 172 posts were established. These changes, combined with several transfers of functions and posts between different headquarters units, meant that almost every post in the Organization was affected in some way by the restructuring and decentralization process. In addition, the functional statements and staffing levels of all units have been reviewed, as have the job description and classification of many posts. The result is an improved organizational and grading structure in which:

• substantive and technical functions have been preserved to the maximum extent possible, following the guidance of the governing bodies - the net post reduction in the General Service was 512 compared with 72 posts in the Professional category, taking into account the creation of 65 NPO posts;
• the average grade has been reduced by the downgrading of vacant posts where appropriate, particularly at the highest levels of both Professional and General Service categories, and by the elimination of middle-level management positions.

Broadening geographic distribution

While the freeze on external recruitment is still in force for the General Service category at headquarters, except for temporary assistance or in cases when there are specific requirements that cannot be met by existing staff resources, recruitment in the Professional category had been resumed by the end of 1994. Since then, efforts have consistently been made to broaden the geographic distribution and improve the gender balance among staff members in the Professional and higher categories. A number of initiatives have been taken to identify suitable candidates from Member Nations that are either non-represented or seriously underrepresented, as well as to identify more women for consideration in the normal selection process. In doing so, the Organization has naturally continued to give paramount importance to securing the highest standards of professional and technical competence, and selection has been restricted to short-listed candidates judged suitable to fill the relevant posts. For the last 100 Professional staff appointments made by the Director-General, the order of preference recommended by the Professional Staff Selection Committee has been followed in 80 percent of the cases, with internal staff being selected in 48 percent of the cases.

Good progress has been made in balancing geographic distribution: the proportion of non-represented Member Nations among the Professional staff dropped from 54 in January 1994 to 21 in November 1999. During the same period, the number of underrepresented Member Nations fell from 14 to 10. It should also be noted that, between the beginning of November 1993 and the end of November 1999, FAO's membership increased from 160 to 180 countries and one member organization.

Balancing gender representation

While overall progress made with regard to gender balance in the Professional and higher categories has been less evident, there have nevertheless been noticeable improvements in specific areas. Since January 1994, the proportion of women has increased from 4 to 11 percent in the Director category and from 23 to 26.5 percent in the Professional category. There is no doubt that further progress needs to be made, particularly in the decentralized offices. To push the process forward, each department has been requested to establish its own target regarding the proportion of female staff members to be attained within a reasonable time frame. At the same time, the Organization has sent all Permanent Representations in Rome a Note Verbale, soliciting female candidates for posts in the Professional and higher categories.

Streamlining recruitment

In 1998, a Task Force was established to review the selection and recruitment procedures for Professional staff. The aim was to make these procedures more effective while continuing to ensure that staff are selected through a competitive and transparent process. In the light of the recommendations made, a number of improvements have been introduced in order to shorten the recruitment time frames, particularly through appropriate vacancy management and forward planning, and procedures have consequently been streamlined.

HEADQUARTERS PREMISES

Building on the momentum created by the World Food Summit, the active policy of seeking external sponsorship for headquarters modernization and improvements has continued. Many Member Nations have generously financed the renovation of existing rooms or the installation of facilities. Other rooms have been equipped with upgraded technical facilities, such as new audiovisual and microphone systems.

Several other rooms will be built or renovated in 2000. Projects include the construction of a Conference Registration Centre, to be funded by the Government of Turkey, and improvements to the Japan Lounge, the Austria Room, the Nordic Lounge, the Georgia Room, the Mexico Room and the Cuba Room, to be funded by the respective governments. A new FAO Shop will also be built.

With generous support from the Government of Italy, major structural works have either been completed or are in progress, including the extension of the air-conditioning system to all headquarters premises, the installation of a centralized power generation system, the upgrading of the electrical system in one headquarters building and the fencing of the FAO compound. Among the projects planned for the immediate future is the restructuring of the David Lubin Memorial Library.