EXECUTIVE COMMITTEE OF THE HIGH COMMISSIONER S PROGRAMME. EC/59/SC/CRP.3 10 February 2008

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1 EXECUTIVE COMMITTEE OF THE HIGH COMMISSIONER S PROGRAMME Distr. RESTRICTED EC/59/SC/CRP.3 10 February 2008 STANDING COMMITTEE 41 st meeting Original: ENGLISH UPDATE ON THE STRUCTURAL AND MANAGEMENT CHANGE PROCESS: PROGRESS REPORT ON OUTPOSTING, REGIONALIZATION AND FIELD REVIEW I. INTRODUCTION 1. Within the framework of the Structural and Management Change Process launched in February 2006, UNHCR is reviewing and realigning its structures, processes, and operating arrangements, with a view to increasing its responsiveness to the needs of beneficiaries and to reducing expenditures on administration and headquarters costs. This conference room paper seeks to update the Standing Committee on progress under the reform process since the last report presented in EC/58/SC/CRP.24 in September It provides information on significant developments in relation to various structural and process reforms and outlines the next steps to be taken, notably in relation to the Field Review which will be the principal focus of UNHCR s change process in the first quarter of Progress II. OUTPOSTING 2. As part of the structural strand of its reform process, the Office took the decision in June 2007 to outpost a number of administrative and operational support functions to Budapest, thereby freeing up resources for field operations and beneficiaries, while at the same time providing scope for renewal in the services concerned. 3. The Global Service Centre in Budapest commenced operations on 1 January 2008, in accordance with the planned time line and budget. Premises in Budapest have been provided and furnished free of charge by the Hungarian authorities and, during the second semester of 2007, UNHCR equipped and prepared them for use. In January 2008, the advance team deployed to manage the establishment of the centre handed over responsibilities to the new centre management. At the time of reporting, a total of 90 local staff had been recruited and a consolidated plan for the training and general orientation of new staff was being implemented. As of 1 January 2008, with the first formal transfer of functions from Geneva to Budapest, parts of the Personnel Administration and Payroll Service and of the Recruitment and Postings Section began to operate out of Budapest. In January, the Finance Section transferred responsibility for the management of 2008 payment cycles and associated electronic workflows, followed by contributions receivable administration. Further transfers of functions are planned in March and June 2008, when the process will be completed. Mitigating the impact on staff 4. At the initiative of management, a number of measures were introduced at Headquarters to mitigate the impact on Geneva-based staff occupying the 93 general service posts discontinued as a result of outposting. These included a voluntary separation package, priority

2 Page 2 consideration for other vacant posts in the general service category, facilitated entry into the international professional category, enhanced career guidance and support with job searching. The mitigation measures left only three of the staff members affected by outposting without a solution.,together with nine other staff members without posts for unrelated reasons, their situations were the subject of a comparative review conducted in January 2008 with the purpose of aligning the number of general service staff at Headquarters with the number of available posts. The results of this process were awaited at the time of reporting. Strengthening supply management 5. Outposting is being accompanied by a strengthening of UNHCR s Supply Management Service (SMS). Reinforcement of SMS staffing has been approved both in Budapest and for the global supply platforms in Beijing, Dubai and Pretoria. On the basis of a number of audits and evaluations, it is estimated that improved global supply chain management will yield significant savings which, like those accruing from outposting, will be channelled into operations. Next steps 6. Next steps in the outposting process include the formal signing of an agreement with the Hungarian authorities and transfer of the remaining functions from Geneva to Budapest. While the establishment of the new centre is proceeding according to plan, close monitoring and support will be required until the services involved are fully transferred and stabilized. An additional important focus will be the finalization of ongoing work on the development of action plans and accountability frameworks for the strengthened Supply Management Service. Background III. DECENTRALIZATION, REGIONALIZATION AND FIELD REVIEW A. Phase one: decentralization and regionalization 7. The Terms of Reference (TORs) of the Structural and Management Change Process included a requirement to review the relationship between Headquarters and the Field and more specifically to: Identify areas that will benefit from decentralization, so as to maximize the resources available to support beneficiaries in the Field and to bring decision making and support as close as possible to the point of delivery. Review the configuration of UNHCR s field presence, including the rationale for country representations, with a view to determining the optimum balance between Headquarters, regional and country-level structures. 8. Through a process of consultation in a high-level task force established to support the change process, a recommendation was made to proceed with decentralization by means of strengthening regional structures. Related framework decisions on decentralization and regionalization were adopted by the High Commissioner in June 2007.

3 Page 3 Rationale 9. Regionalization is being pursued for a number of specific purposes. Key amongst these is the need to bring decision making and support as close as possible to the point of delivery, thereby increasing operational responsiveness; to strengthen subregional strategy formulation, situational management and solutions planning; and to enhance UNHCR s ability to engage with regionally-based partners, institutions and processes. Principles and Approach 10. A number of principles have been adopted to frame the approach to regionalization. These include the requirement that regionalization should: Maximize opportunities to responsibly and progressively empower the Field through the devolution of decision-making and support functions. Add value to national presence by supporting and empowering country representatives in their role vis-à-vis national authorities. Facilitate field-based situational and solutions planning. Be responsive to different contexts, avoiding an approach of one size fits all, while ensuring a reasonable degree of global coherence. Models 11. Four framework models for regionalization where adopted in June Since that time, an additional model (Model E Field-based deputy bureau director) has been developed for potential application in contexts characterized by many cross-cutting operations, where it may be advisable to separate strategic direction and the actual management of any given country operation. The five models are summarized below: Models of regionalization Model A: Regional office covering host country, plus other countries where there is no UNHCR presence, or where presence takes the form of a national office or a national officer, honorary liaison,or other similar arrangement. Model B: Regional office covering host country, plus other countries where there is a UNHCR Representative. Model C: Regional coordinator covering host country, plus other countries for purposes of internal coordination and support only where there is a UNHCR representative. Model D: Situational coordinator under an informal and temporary arrangement, coordinating relevant aspects of country operations within a given situation, where there is a UNHCR representative. Model E: Field-based deputy bureau director managing a subregion, without responsibility for the direct management of any given country operation.

4 Page 4 Roles and Responsibilities 12. The key roles and responsibilities of a regional office are to provide: Strategic planning and direction ; Advice, support and services; Advocacy and partnerships at the regional level; Management of subregional resources; Quality control and oversight. 13. The guiding principles structuring the relationship between regional and country offices will be those of delegation, subsidiarity, and added value. The way in which a regional office performs its functions will depend, inter alia, on whether or not UNHCR has a full national presence in the country covered. A regional office will provide direct representation in countries where there is no UNHCR presence, or only presence of national staff. In countries where UNHCR has an international presence in the form of an accredited representative, the focus will be more broadly on subregional strategy formulation, coordination, support and oversight. Next steps 14. Regionalization plans will be implemented progressively up to Next steps will include completion of accountability frameworks for regional offices with the assistance of a Canadian consultancy (pilot regions are South-east Asia and southern Africa), and regionalization-related TORs, tools and instruments being developed through working groups. As regionalization proceeds, it is also foreseen that a further review of Headquarters will be undertaken to identify additional support functions that merit decentralization in the interests of operational effectiveness. B. Phase two: Field Review 15. In the course of the first quarter of 2008, the change process is embarking upon the next phase of its Field Review. As conceived in the TORs of the Structural and Management Change Process, the Field Review has the following additional aims: - Identifying those activities/functions that must be carried out directly by UNHCR, and those that could be transferred to implementing partners or could be better carried out by other agencies with their own resources; - Determining the appropriate balance between staff deployed to capitals and staff deployed to field locations; - Determining the appropriate balance between international staff members, national officers/general service staff members, and additional workforce such as United Nations Volunteers (UNVs) and secondees. 16. In an exercise to be undertaken with the assistance of Dalberg Global Development Advisors (Dalberg), the Office is reviewing the above aspects of its field operations in order to maximize efficiency and cost effectiveness, and to ensure that the organization has the flexibility and agility required to operate in environments characterized by rapid change. The review will focus on the following three inter-connected issues and formulate options and recommendations that will lay the basis for a set of policy orientations to guide future operational planning and implementation.

5 Page 5 Implementing arrangements 17. In its programmes worldwide, UNHCR implements some of its activities directly and also uses a methodology of indirect implementation through partners for others. Over time, the balance between these implementing modalities has been shifting in favour of more direct execution of activities by UNHCR. As a result, there has been a relative decline in the use of implementing partners. This may, to some extent, be the result of changes in the environment in which UNHCR operates and of an increased focus on the core mandate activities of protection in the types of programmes it implements. There is, nevertheless, a concern that the increased level of direct implementation is pushing up operating costs and detracting from the flexibility that UNHCR requires in order to be able to grow and shrink operations in response to changing needs. 18. In the period from 1994 to 2006, funds channelled through implementing partners decreased from 42.6 per cent of UNHCR s total annual expenditure to 31.5 per cent, with a corresponding increase in direct implementation by UNHCR staff. Since 2002, the percentage of expenditure related to direct implementation by UNHCR has overtaken that related to implementation through partners. While the trend itself is well documented, additional analysis is required to reach a better understanding of the reasons behind it, and to evaluate the scope for reverting to more indirect implementation in order to benefit from the flexibility and lower costs that this methodology may yield. Thus, the review to be undertaken with assistance from Dalberg will further analyse the balance between direct implementation of programmes and activities by UNHCR and indirect implementation through partners. This analysis will help the Office to identify those activities and functions that must be carried out directly by UNHCR as opposed to those that can be outsourced to partners or better carried out by other agencies with their own resources. It will also help to set related policy parameters to guide future operations. Workforce composition 19. UNHCR has a total of some 6,300 staff worldwide, around 85 per cent of whom are in the Field. Of the total number of field-based staff, 20 per cent are international professionals, 5 per cent national officers (NOs) and 75 per cent local general service staff. More than half the locations in which UNHCR works are classified as hardship duty stations by the United Nations, and UNHCR is the United Nations organization that has the highest number of staff working in hardship and security phase environments. It also has less NOs than organizations such as the United Nations Children s Fund (UNICEF) or the United Nations Development Programme (UNDP), and depends more on rotational international professional staff. In 2007, UNHCR employed around 300 NOs, as compared with some three or four times that number employed by UNDP and UNICEF respectively. This has implications for the level of local expertise available to the Office and also contributes to a continuing upward trend in staff costs in view of the level of financial entitlements attached to international staff. The Office also uses additional workforce arrangements, notably UNVs and a variety of supplementary deployment schemes. The review to be undertaken with assistance from Dalberg will examine the scope for UNHCR to increase its use of NOs, as well as additional workforce arrangements (such as UNVs and project staff), with a view to establishing recommendations for the future staffing of operations. Capital city versus field deployment 20. UNHCR works on all continents with a presence in 115 countries at over 268 locations covering a wide range of different physical and political environments, including zones of significant insecurity. UNHCR s field operations are thus not exclusively capital city-based.

6 Page 6 They are, however, often characterized by a relatively high concentration of staff in capitals, with staff at field locations close to beneficiaries being less numerous and often more junior. The review will examine patterns of deployment in different types of operations with a view to determining staffing parameters, including the appropriate balance between staff based in capital cities and in field locations, and how deployment can best ensure optimal coordination with partners and improved services to beneficiaries. It will recommend parameters for deployment in relation to different types of operations. Methodology 21. Quantitative and qualitative data on the above three issues (implementing arrangements, workforce composition, and deployment between capital cities and field locations), will be captured through a survey prepared in consultation with an internal focus group and an external stakeholder reference group of NGO partners. The survey will be administered to a representative sample of one-third of UNHCR country operations selected in consultation with UNHCR s headquarters-based Regional Bureaux. The sample will cover different types of situations, including countries where UNHCR plays a strong operational role in relation to refugees and/or internally displaced persons, as well as those where its role relates more to institution building and advocacy on asylum issues. Output 22. The review, which is expected to deliver its results in April 2008, will develop a typology of situations and propose options and parameters for (i) partnerships and implementing arrangements; (ii) the staffing profile of operations, giving particular attention to the ratio between national staff, international staff and additional workforce; and (iii) workforce deployment between capital cities and field locations. IV. RESOURCE ALLOCATION AND BUDGET STRUCTURE A. Resource allocation framework 23. In parallel with its work on structural reform, the Office has set itself the goal of streamlining and simplifying processes with a view to reducing bureaucracy and making decision making more efficient, empowering managers, and ensuring effective and efficient control and accountability mechanisms. Progress 24. In response to concerns raised in a number of internal and external reviews, a redesign of UNHCR s resource allocation process has been undertaken as part of the change initiative, resulting in the introduction of a Revised Framework for Resource Allocation and Management by the High Commissioner in July The new framework clarifies the division of responsibilities between the operational wing of the Office, which oversees the content and management of operations, and the finance and control wing, which oversees the financial aspects of programmes. It also brings authority

7 Page 7 over the use of approved resources closer to the point of delivery by empowering representatives, bureau directors and the Assistant High Commissioner (Operations) to reallocate approved financial and staffing resources in response to changing operational needs. 26. Since the report made to the Standing Committee in September 2007, the new resource allocation process has been complemented through the publication, in November 2007, of a Budgetary Internal Control Framework. The purpose of this is to ensure that UNHCR implements effective budgetary controls while applying the principles of the resource allocation framework. A related enhancement of UNHCR's MSRP IT system has also been implemented in order to support the procedural changes introduced by the two frameworks a development which is expected to yield additional workforce economies over time. To ensure that the new, more decentralized process of resource management is accompanied by the requisite degree of monitoring and control, a consolidated Programme Budget Service (PBS) has been created within the Division of Financial and Administrative Management and, at the time of reporting, was in the process of being staffed. Next steps 27. As part of the next steps towards operationalizing the resource allocation framework, work will continue on the delineation of responsibilities between PBS, bureaux, divisions and regional offices and the further elaboration of supporting procedures. B. Budget structure 28. UNHCR has put forward a proposal which involves structuring the budget into four distinct components (i) the Global Refugee Programme; (ii) the Global Statelessness Programme; (iii) Global IDP Projects; and (iv) Global Reintegration Projects. This proposal is the subject of ongoing discussions with the membership of the Executive Committee and, it is hoped, will be ripe for adoption at the March 2008 Standing Committee meeting. V. CONCLUSION 29. In April 2008, UNHCR will merge the office of the Director for Structural and Management Change with the existing Organizational Development and Management Service (ODMS). This merger will consolidate units responsible for organizational change and development into one entity reporting to the Deputy High Commissioner, and will ensure that reforms are systematically consolidated through the development of related tools, systems and processes. To ensure that ongoing reforms remain high on UNHCR s institutional agenda, the new entity will be headed by a Director for Organizational Development and Management who will be a member of the Senior Management Committee. 30. UNHCR is committed to providing the Standing Committee with regular updates on different aspects of the Structural and Management Change Process as work with implementation proceeds.