Audit of DHR and OBM Hiring Timeliness

The Office of Inspector General (OIG) conducted an audit of the City of Chicago’s hiring process. The audit reviewed hires completed in 2013.[1]

The objective of the audit was to determine if the City filled vacant positions in a timely manner.

Hiring a City employee involves two overlapping processes:

  • Budgetary Hiring Plan: The annual personnel budget for each City department includes a gross amount for all budgeted positions, reduced by an estimated personnel turnover amount calculated by the Office of Budget and Management (OBM).[2] The net of these two amounts is approved by the City Council in the annual appropriation ordinance, typically in November, for the fiscal year beginning January 1. Generally, during the last quarter of each year, OBM requires departments to submit a budgetary hiring plan—a proposed staggered schedule of hire dates for vacancies known or expected at January 1—that will ensure the department realizes its budgeted turnover amount. OBM then reviews and, as appropriate, revises and eventually approves each department’s budgetary hiring plan. OBM stated that some departments are not required to follow the budgetary hiring plan process. Those departments include the Office of the Mayor, City Treasurer, and City Clerk.
  • Hiring Process: Hiring departments request OBM’s approval to begin the hiring process for each position they seek to fill. OBM evaluates the request for, among other things, its compliance with the OBM-approved department budgetary hiring plan. OBM stated that the approval process may vary for departments with high turnover and/or recruiting difficulty. After OBM’s approval, the departments work with the Department of Human Resources (DHR) to post each job opening, identify and interview candidates, and fill vacancies.

OIG found that it took the City an average of 176 days to fill vacant positions. Further analysis revealed the following three factors contributed to the six-month average time-to-hire:

  1. The budgetary hiring plans required departments to delay hiring by an average of 100 days in order to ensure that they did not exceed their net personnel appropriations.
  2. Although the average hiring process took 101 days (see below), departments submitted hiring requests on average only 33 days prior to the scheduled hire date. As a result, employees were hired on average 78 days after the scheduled hire date. Neither DHR nor OBM provided guidance to departments regarding when to submit hiring requests in order to hire on or about the first allowable date for filling the position specified under the OBM-approved budgetary hiring plan.
  3. An average of 101 days elapsed between the hiring department’s request to hire and the new employee starting work. Nearly one-third of new hires started work more than 120 days after the department’s hiring request. DHR had no formal process to track actual hiring times and was unable to identify specific points and causes of delay.

OIG concluded that a significant portion of the six month time lapse to fill a vacancy, which was intended to keep annual personnel spending within City Council appropriations, in fact reduced personnel spending below City Council appropriation amounts to the potential operational detriment of City departments. In addition, the City has not set formal performance goals for the timeliness of the full hiring process and does not otherwise track the time-to-hire for the filling of departments’ vacancies. Finally, it does not have procedures in place to identify or measure delays and it has not established guidelines to assist departments in timing their hiring requests to meet the scheduled hiring dates set out in their respective OBM budgetary hiring plans.

To ensure transparency and provide clear communication to departments so that they may anticipate operational impact, OIG recommends that OBM formally and expressly communicate to hiring departments any denial of a hiring request and the reason for the denial, rather than allowing denied requests to remain in a status signifying they were still awaiting OBM approval. In addition, OIG recommends that OBM reconsider requiring departments to postpone filling vacancies until they have achieved their budgeted turnover amount. This practice forces departments to delay hiring into vacant positions and to operate with less than the turnover-adjusted net personnel budgets appropriated to them by the City Council. OBM should consider ways to adjust the process, allowing hiring to occur consistent with departments’ operational needs over the course of a fiscal year, and thereby reduce the adverse impact to the operational effectiveness of City departments that may result. OBM could also seek alternative ways to prevent departments from overspending on personnel, intervening only with those departments that are at risk of running over budget.

We also recommend that DHR work with OBM to define time-to-hire goals that include all relevant hiring process activities. DHR should develop procedures to measure hiring process steps in order to identify and remedy sources of delay. DHR should compare actual time-to-hire to the goal for each hire, analyze the results by department, and share its findings with the departments. If OBM continues to control departmental spending by enforcing scheduled hire dates, this guidance from DHR could assist departments in determining when to submit hiring requests in order to hire employees on the scheduled hire dates.

In response to our audit findings and recommendations, OBM disagreed and did not propose changes to the budgetary hiring plan process. OBM stated that its current methods for communicating with hiring departments are sufficient, and that it appropriately delays hiring into certain positions in order to control costs. Furthermore, OBM said that the dates used to calculate timeliness in the audit did not adequately capture the range of decisions made by OBM, DHR, and the hiring departments. OIG maintains that we used the appropriate dates, as confirmed by OBM during the course of the audit, and that it is important to measure the impact of the budgetary hiring plan on overall hiring timeliness. OIG had sought to identify specific points of hiring delays and speak with relevant hiring departments, but found it was not possible because the necessary information was not consistently documented. DHR partially agreed with OIG, stating that it would implement new methods for tracking milestones in the hiring process and identifying sources of delay. Such analysis would not, however, consider the amount of time the position was vacant with no action taken or from the time the hiring department submitted a hiring request until OBM approved it and forwarded it to DHR. DHR also committed to setting a time-to-hire goal for each hiring sequence in collaboration with the hiring department. The specific recommendations related to the finding, and management’s response, are described in the “Findings and Recommendations” section of this report.

[1] We excluded sworn police officers, Board of Elections staff, and other positions listed in the Scope section of this report from analysis because the hiring processes as described to OIG were not comparable.

[2] OBM uses each department’s hiring and vacancy history, as well as an assessment of the department’s operational needs, to estimate an expected employee turnover amount. The turnover amount represents the dollar value of the time between an employee leaving City employment and a new employee being hired—i.e., the time that the position is vacant and thus no salary or wages are paid. OBM reduces each department’s gross personnel budget by the turnover amount, resulting in a net personnel appropriation that is less than the total salaries and wages budgeted for all of a department’s positions.