Organisational & HRM Assessment of WasteServ Malta Limited ...… · Organisational & HRM...

Organisational & HRM Assessment

of WasteServ Malta Limited

June, 2013

IDEA Management Consulting Services Limited

15, Triq Tat-Torri, Rabat, RBT 2301

Organisational & HRM Assessment of WasteServ Malta Limited Page 1

Table of Contents

Details Page 1.0 Introduction 3 1.1 Current Findings 3 1.2 Current Recommendations 4 2.0 Terms of Reference 5 2.1 Key Deliverables 5 2.2 Assumptions & Risks 6 3.0 Methodology 7 4.0 The Company 8 5.0 General HR Company Information 9 5.1 Complement levels 9 5.2 Job Grades/ Positions 11 5.3 Employees on Loan 12 5.4 Age Groups 12 5.5 HR Costs 13 6.0 Organisation Structure 15 6.1 The Office of the Chief Executive Officer 15 6.2 The Office of the Chief Financial Officer Office 17 6.3 The Office of the Chief Project Manager 21 6.4 The Office of the Chief Operating Officer 25 6.5 The Office of the Chief Compliance and Communications Officer 28 7.0 Analysis of Company Business Matters 31 7.1 Board of Directors and Senior Management Governance Issues 31 7.2 Analysis of the Different Functional Operational Activities 34 7.3 Analysis of the General HR Practices 36 7.4 Brokerage of Waste Material 38 7.5 Health and Safety Issues 39 7.6 Tendering 40 7.7 Procurement 40 7.8 Accounting Procedures and Internal Control 40 8.0 Recommendations 46 8.1 Organisation Wide Overarching Objectives 46 8.2 HR Management Wide Overarching Objectives (Strategic, Structure & Systems) 52


Tables

No Details Page

1. WasteServ Malta Limited Complement Levels 10 2. WasteServ Malta Limited Job Clusters 11 3. List of Employees on Loan 12 4. Employees’ Age Clusters 12 5. Salaries & Wages for WasteServ Malta Limited Employees 12 6. Salaries & Wages for JF Security Employees to WasteServ Malta Limited 14 7. Board Members Remuneration 31 8. Senior Management Performance Bonus 32

Appendices

No

Details

1. Organisation Processes

The report is intended for the use of WasteServ Malta Limited only. It shall not be used, reproduced or circulate for any other purpose, whether in

whole or in part without the prior written consent without the prior written consent from IDEA Management Consulting Services Limited, which

consent will only be given after full consideration of circumstances at the time.


1.0 Introduction

This report is divided in three parts. The first part outlines the current situation within WasteServ Malta Limited. Data was gathered

through a series of meetings with senior management, analysis of primary & secondary data and, through other means of

investigation. The second part presents a number of recommendations, addressing areas of imminent improvement through

understanding the current issues that WasteServ Malta Limited has within the organisation. The final part of this report includes an

outline of the possible initiatives that could transpire through the implementation of these recommendations. The report will remain

in a draft format until approved by the Ministry and the Core Management Team.

1.1 Current Findings

Through the whole exercise IDEA Management Consulting Services Limited (IMCS) has identified urgent issues that need to be

addressed, mainly:

a) There is no valid Business Plan;

b) There is no Business Strategy Plan;

c) There are almost no processes that have been documented besides those that need to be ISO compliant;

d) There is no/ poor communication between the different units as they are clearly operating in functional silos;

e) There are no Key Performance Indicators in place;

f) There are no Management Tools in place;

g) There is no Corporate Governance;

h) There is no HR strategy;

i) There is no Succession Planning;

j) There is no Recruitment Plan;

k) There are a few educated and trained people in management roles;

l) There are almost no systems in HR;

m) There is no training and development; and

n) There are almost no HR policies that are being exercised;

o) There are no job standards with all respective managers; and

p) There are almost no employee incentive schemes.


1.2 Current Recommendations

IMCS has listed several recommendations to turn around the organisation. The recommendations are dual pronged: Organisational

wide and HR Management recommendations. The latter was tasked to us by the Ministry.

In terms of Organisational wide recommendations, the following should be crisply developed and executed:

a) To develop a Business Plan;

b) To develop a Business Strategy Plan;

c) To execute a Business Process Re-Engineering exercise;

d) To set-up a revised Organizational Structure;

e) To introduce management tools such as the Process Improvement Matrix, Process Failure Mode and Effect Analysis

(PFMEA) and the Layered Process (These tools are not exhaustive); and

f) To streamline Corporate Governance in terms of having frequent and consistent Senior Level Meetings, Brain

Storming sessions and most pertinently a company-wide Key Performance Indicators System that is realistic and

measurable (not subjective).

In terms of Human Resource Management wide recommendations, the following should be executed in phases to avert “shocking”

the organization as a whole. They are divided into 3 categories and they are Strategic, Structure and Systems.


2.0 Terms of Reference

The terms of reference that have been discussed with the Ministry are as follows:

a) To assess the current organizational structure and to assess whether it’s design is conducive in meeting goals set forth

in the business plan;

b) To assess the current manpower structures and competency framework within the organization and to identify

current and future plans;

c) To carry out a critical assessment of the HR strategy and its relevance in line with the organizational goals;

d) To study the different job related documentation; and

e) To look into the different organizational processes namely:

o To map the main critical processes and to identify areas for improvement and,

o To evaluate the cost implications of each process and identify how these could be re-engineered to achieve

higher efficiency.

2.1 Key Deliverables

The key deliverables expected for this assignment after the validation of this report include:

a) An in-depth analysis of the current Organisational and HR Issues;

b) A high level mapping of the current organisation business processes; and

c) A series of initiatives and recommendations to chart the way forward.


2.2 Assumptions & Risks

The success of the intervention is based on the following assumptions and conditions:

a) The accuracy of the relevant managers in presenting information/ data;

b) The level at which managers were willing to cooperate;

c) The time that managers take to give responses;

d) The analysis of conflicting data different from managers;

e) The understanding of the type of information that is needed for this report;

f) The absence/ availability of certain data/ information that is relevant for this report; and

g) The limited timeframe to carry out this analysis.


3.0 Methodology

The creation of this report took us through 8 steps and was completed in 5 weeks.


4.0 The Company

WasteServ Malta Limited Malta Limited was established in November 2002 as limited liability company responsible for organizing,

managing and operating integrated systems for waste management including integrated systems for minimisation, collection,

transport, sorting, re-use, utilisation, recycling, treatment and the disposal of solid hazardous waste.

As a provider of waste management facilities, the main functional responsibilities of WasteServ Malta Limited are to:

Provide Waste Management facilities and services;

Finance as much as possible waste management facilities and services;

Retain ultimate responsibility; and

Serve as an operator of last resort.

In the course of these years, WasteServ Malta Limited has been instrumental in the setting up of a number of waste management

facilities and services. Among the main activities carried out over the last years one can mention the closure of the former dump

sites, the establishment of the Ghallis engineered landfill, the ongoing upgrading of the Sant’Antnin solid waste treatment facility,

the takeover and upgrading of the Marsa Thermal Treatment Facility (TTF), the network of bring-in-sites and the educational

campaigns undertaken among various publics.

The organisation’s mission statement is:

“To organize, supervise and control the provision of major waste management facilities and related services throughout the Maltese

Islands. To develop sites and facilities in accordance to local and international legislation in order to ensure sustainable waste

management.” (http://www.WasteServ Malta Limitedmalta.com)

http://www.wasteservmalta.com/


5.0 General HR Company Information

5.1 Complement Levels

5.1.1 According to figures obtained from the Finance Office there are currently 103 employees directly employed by the company

and a further 306 employees employed by JF Security on behalf of WasteServ Malta Limited, thus reaching a total complement of

409 employees. The contract with JF Security expires in September 2014. The original contract was signed in September 2010 for a

period of one year. This was further extended for another three years. According to the contact the value of this agreement amounts

to 1.6 million Euros excluding VAT, (commission paid at 5.8% of the remuneration payable).

5.1.2 To date the organisation has no strict policy as to when to recruit directly or when to employ people through the appointed

contractor, which in this case is JF Security. During various meetings with the CEO, the CFO and the Head Human Resources, it was

claimed that there were policies (which were not traced in any management meetings and/or board meetings) that lower grades are

to be employed through the contractor. However, this assertion did not follow suit since looking into the organisation deeper it

transpired that there are senior staff employed by the contractor and deployed to WasteServ Malta Limited.

5.1.3 Once again, the CEO, CFO and the Head Human Resources have claimed that this practice was adopted because the process

to obtain direct permission to employ people was too bureaucratic and the capacity building process was too long. In this case,

Senior Management claimed that direct employment through a contractor was a good option, albeit the fact that this was turning out

to be a more expensive option since employees are given the same pay package as their WasteServ Malta Limited counterparts and

an extra commission is paid to the contractor as stated above.

The recruitment with WasteServ Malta Limited is controlled and the selection process is more transparent but, the recruitment

through the contractor is more opaque albeit that it was claimed that people are adequately recruited. It should be noted that JF

Security seems to be running WasteServ Malta Limited rather than WasteServ Malta Limited running its own entity. This can be

noted in table 1.


Table 1: WasteServ Malta Limited Complement Levels

WasteServ Malta Limited Employees

Full - Time 90

Promoters 11

Part – Time 2

Total 103 (25%)

JF Security 306 (75%)

Grand Total: 409

Source: WasteServ Malta Limited (Some of the promoters also fall into the part-time category)

Security Company

In addition, the company has a number of period contracts with a Security Company for the provision of security services to overlook its sites in different places in Malta and Gozo. The number of security personnel varies from time to time according to the exigencies of the company.

While it is an accepted practice that most of the security personnel are employed with a contractor, it is critical to note that WasteServ Malta Limited also employs a limited number of security/watchmen for similar duties.

Leading Contracting Firm

The Organisation has also signed contracts with a leading contracting firm to supply Wheel Shovels, to the Sant’ Antnin plant. However, these Wheel Shovels are not up to standard because they do not have air-conditioning and the emissions from them are very high considering the fact that they operate in an enclosed area which means, there is little ventilation.


5.2 Job Grades / Positions

5.2.1 The organisation has 106 different positions. It is quite astonishing to note that for less than four employees (on average)

there is a unique job position. Looking into these positions in detail is transpires that these were created to meet personal needs

rather than in meeting the organizational requirements.

This idea is highly corroborated by the fact that most the job descriptions which have been prepared are similar in their content

despite that they have a different job position. The anomaly is further aggravated by the fact that the personal specifications required

for different positions tend to give the impression that these are tailor-made to meet the personal specifications of the

respective/potential applicant.

These job grades are divided into eight different job clusters (categories) namely:

Table 2: WasteServ Malta Limited Job Clusters

Job Category Total

Managerial 36

Officers 14

Administrative 58

Technical a& Supervisory 63

Operators/ Sorters 206

Drivers 32

Support Staff 3

Apprentice/ Students 3 Source: WasteServ Malta Limited (It should be noted that some employees have 2 job positions/ roles)

This table clearly shows that the majority of employees are employed in the operators’ grades with a substantial other number of

employees who are carrying out administrative and technical duties.


5.3 Employees on Loan

5.3.1 According to latest company records, there are a total of 9 employees who are on loan from Government. These employees are

in the following job grades:

Table 3: List of Employees on Loan

Job Category Total

Heavy Plant Driver 1

Cleaner 1

Landfill Tip Face Control 2

Gozo Manager 1

Watchmen 3

CA Site Operator 1 Source: WasteServ Malta Limited

5.4 Age Groups

5.4.1 The age clusters of employees working at WasteServ Malta Limited vary considerably though it must be pointed out that

there are a substantial amount of employees who are over 45 years of age with very limited competencies. It is quite surprising, that

this is even more evident with the contractor where the number of older employees is higher.

Table 4: Employees’ Age Clusters

Age WasteServ Malta Limited

JF & Govt

18-24 6 50

25-34 38 88

35-44 15 64

45-54 22 71

55 and over 22 33 Source: WasteServ Malta Limited


5.5 HR Costs

5.5.1 Tables 5 and 6 clearly show that over the past three years there has been an increase in payroll costs. It is critical to point that

the organisation does not have any recruitment policy or a manpower plan. To this effect, Senior Management claimed that

employees were employed according to the needs of the organisation and in line with the capacity building exercise, which was

presented in 2011. This laborious exercise was not updated. In addition, on several occasions Senior Management reiterated that due

to the bureaucratic processes employed by PAHRO, they resorted to JF Security to speed-up the recruitment process.

Table 5: Salaries and Wages for WasteServ Malta Limited Employees

Source: WasteServ Malta Limited

In Euros 2013 2012 2011 2010

Basic 564,215 1,552,487 1,560,079 1,492,510

Overtime 86,630 194,153 154,456 124,992

Disturbance Allowances/ Shift 13,189 43,992 74,324 90,227

Government Bonus 11,056 43,268

Allowance 161,153 311,897 278,752 155,752

Co. share NI 49,768 142,825 113,396 106,496

Grand Total 886,011 2,288,622 2,185,006 1,969,977


Table 6: Salaries and Wages for JF Security Employees to WasteServ Malta Limited

Source: WasteServ Malta Limited

Note: The above salaries and wages exclude the CEO and the CFO but include the Government Bonuses and allowances.

5.5.2 Between January 2012 and March 2013 the complement levels increased by 108 other employees. A total of 70 of them were

employed by JF Security while a further 29 were directly employed by WasteServ Malta Limited. Another 9 employees were

deployed from other Government Departments.

In Euros 2013 2012 2011 2010

Basic 1,214,677 3,382,054.44 3,085,028.06 2,239,993.73

Overtime 173,095 575,894.64 657,805.94 667,291.70

Disturbance Allowances/ Shift 30,789.19

Government Bonus 35,657 262,551.22 180,853.31

Allowance 95,050 138,350.94 115,408.39 330,359.02

Co. share NI 119,083 351,474.26 321,731.17 200,693.19

Grand Total 1,637,562 4,710,325.50 4,391,612.07 3,438,337.64


6.0 Organisation Structure

6.1 The Office of the Chief Executive Officer

Chief Executive Officer

Chief Officer Compliance &

Communications Chief Projects Manager Chief Operations Officer Chief Financial Officer

Principal Secretary

Management Representatives

WasteServ Malta Limited Top Level Organisation Chart.

6.1.1 The organisation is divided in four functional pillars namely the (a) Financial matters which includes all financial and

corporate matters, (b) Operations Office which is the core unit of the organisation and thus manages all operations (c) the Projects

Office which in an nut shell is responsible to design and build the organisation and (d) the Compliance and Communications Office

which focuses more on regulatory, PR and educational matters. All Chief Officers are WasteServ Malta Limited Employees. There

are no Chief Officers directly employed by the contractor.

In general, all departments are highly functional and answerable to the Chief Officer in the respective area.

The Office of the Chief Executive Officer is directly responsible for the following matters:

Policy making and liaising with the Board of Directors;

Strategy development;


Co-ordinating the different departments;

Overall management of the whole organization; and

Business planning.

6.1.2 Over the last years, the organisation has experienced a series of changes which were all intended in introducing a series of

procedures, which were completely missing. Albeit efforts and improvements registered over the past few years, the organisation

still lacks key management practices such as strategic and business planning, setting and measurement of key performance

indicators and sound operational management practices.


6.2 The Office of the Chief Financial Officer

Chief Financial Officer

Second Secretary

HR

Department

Procurement

Department

Finance

DepartmentIT

DepartmentT.R.E.E.

Centre

Gozo

Office

HR Manager

HR Payroll Officer

Clerk

Senior Clerk

Senior Clerk

Clerk

Clerk

Assistant Senior Clerk

Accounts Clerk x 4

Accounts Clerk Junior Accountant

Financial Controller

Data Fee Collector Assistant Financial

Manager Tariff Fee Collector

Credit ControlFinance Function

Local Funds EU Funds

IT Administrator

IT / CCTV Footage

Technician IT Technicians x 2 Computer Hardware

Technician Solutions

Consultant

Executive Officer

(in scale 12)

Weighbridge

Operators x 4 Weighbridge

Operators x 2 Weighbridge

Operators x 3

Senior Clerk

Clerk

Supervisor Inspector x 4

Senior

Management

Officer

Inspectors

Marsa SAWTPMaghtab

Weighbridges

Project Coordinator

Organizer

(P/T)

Driver

Messenger

Waste

Separation

Promoters x 3

Assistant Principal

Sub-Contracted Employees

WasteServ Employees

IT

Department

Data

Department

T.R.E.E.

Centre

Apprentice

ReceptionEstate & Admin

Department

Procurement Officer Estate &

Administration

Officer

Registry

Technical Supervisor

(Acting as a Driver Messenger)

Driver Messenger

Drivers (Battery Collection) x 2

Clerk


6.2.1 The Office of the CFO includes an array of functions and departments that are usually under the direct responsibility of a

Corporate Office. A total of 55% of employees at different levels working within the Finance Department who are directly employed

by the contractor as against 45% who are directly employed by WasteServ. Looking into the Department’s overall organisation

structure, it transpires that this Department is directly responsible for the following functional areas namely:

Human Resources;

Reception;

Procurement Department;

Finance Department;

Estate and Administration Department;

Registry;

IT Department;

Data Department;

T.R.E.E. Centre;

Gozo Office; and

Health and Safety (now moved under Operations).

6.2.1.1 The HR Function

The current practices overlooked by the HR Section are more or less related to personnel functions, though it is quite alarming that

the unit keeps control of its employee data base on a number of excel spreadsheets rather than proper HR software.

The organisation does not have any HR strategy to meet the business plan requirements and thus the main function of the personnel

is highly reactive, mostly responding to the daily needs of personnel. It was also overtly clear that there are no other HR practices in

place except for personnel maintenance function. It has also been noted that Attendance Sheets from HR are only reported

sporadically.


6.2.1.2 Reception Duties: The reception is manned by one person.

6.2.1.3 Procurement Duties: The procurement function is currently being set up and a new Procurement Procedures Manual

incorporating the Governments newly launched e-Procurement initiative has also been drawn up though not yet implemented. This

detailed manual is in line with the Government procurement procedures. This section is currently manned by one person and it is

critical that more qualified personnel will be deployed to assume all procurement processes taking place within the organisation.

6.2.1.4 Finance Duties: The Finance Section is responsible for all accounting of the company. The section carries out normal

accounting duties but does not verge into auditing, accounting processes and hardly goes beyond statutory requirements. In

meeting these obligations the Section manages accounts receivable and payable, VAT issues and other daily ledgers.

6.2.1.5 Estate and Administration Duties: The main functions of the Estate and Administration Section circles round the

management of all administrative issues directly related to drivers, insurances, uniforms and other related matters.

6.2.1.6 The Registry Section controls all incoming and outgoing files. The section is currently undergoing a project in scanning all

files and in the process of implementing a Data Management System (DMS) to facilitate archiving and retrieving processes.

6.2.1.7 The IT Section has also been set up since the inception of the organisation and today has developed itself into one of the

critical components in the organisation since it manages most of the internal software and manages the hardware section. Although

the scope of an IT audit was beyond the scope of this assignment, it is well understood that the section holds a lot of sensitive

information which is accessed by few identified personnel. In addition the IT Section also hold highly sensitive information obtained

through CCTV equipment. From our primary investigation it was also claimed that the Section holds all movements around the site

and on a number of occasions actions were taken by management.

6.2.1.8 The Data Section is a critical function since it collects all data of waste material at various sites including Maghtab, Marsa and

SAWTP. Although the data section carries information for the weighbridge of all the sites, it has been noted that the Facility

Managers do not get transparent information from them.

6.2.1.9 The T.R.E.E. Centre, which stand for Training and Development of Resources for Environmental Employment was set up

few years ago to manage two ESF Projects which have now been completed. It was claimed that the Centre has now taken the role as

an internal training department. However, when delving deeper into the functions of this Centre, it was claimed that this function is

still being developed and nothing concrete has yet been presented.


6.2.1.10 The Gozo Office manages a call centre and deals with all Local Council queries. In addition a limited number of inspectors

are also employed in this Unit. Upon investigation it transpires that the role of the Gozo Office is not so well defined.

6.2.1.11 Health and Safety Office is currently manned by one person and has claimed to be responsible for all Health and Safety

measures. Few weeks before this assignment, the responsibility of the Health and Safety Function was transferred under the

responsibility the Chief Operating Officer.


6.3 The Office of the Chief Projects Manager

Chief Projects Manager

Project Leaders & Officer in Charge Projects Contracting Unit Project Support Services

Project Leader 1 Project Leader

(Taken care by CPM)

MTTF

Master plan

Autoclave PU ProjectsMarsaskala

Family Park Qortin

Contracting Executive

Senior Contracting

Officer

Senior Clerk

Contracting Officer


WasteServ Employees

Project Leader 2

FulijaMaghtab

CF119

Siggiewi

SAWTP

Pitkalija

CA SiteGozo MTP

Project Leader 3 Senior Projects

Coordinator

Principal Project

Manager Quantity Surveyor

Bring In Sites

Lands Issues

Gallies / Maghtab Surveys

Senior Project Leader

Architect 1

(by tender)

Inert Waste Manager

Senior Operative


6.3.1 The Office of the Chief Projects Manager is directly responsible for the design, development and implementation of the

various projects that are funded by the European Union and other international & national agencies. It is interesting enough to note

that two key personnel within the Department are directly employed by the Contractor. A further analysis shows that almost 35% of

the complement is directly employed by the Contractor and a further 65% is employed by WasteServ Malta Limited.

6.3.1.1 The Projects Section, which operates more or less in matrix structure, is led by a number of Project Leaders who are directly

responsible in managing a number projects which are funded by National and/or European funds. Their main functional areas

responsibilities include the following:

Main project champion (coordinating the project from conception to delivery);

Liaisioning with Project Managers (subcontracted to third parties);

Liaisoning with internal parties with project related issues and administrative issues;

Liaisoning with PPCD for European funded projects;

Tender development, writing adjudication and evaluation;

Development in new projects initiative; and

Administrative work related to projects and project management.

6.3.1.2 The Projects Contracting Section is directly responsible in developing and managing the contracting process of all projects.

The main functional responsibilities of the Projects Contracting Unit include the following:

Co-ordination and preparation of tender documents and estimates;

Management of tenders;

Monitoring the tender adjudication process;

Liaisoning and co-ordinating with other departments regarding contracts documentation;

Follow up objection(s) resulting from contract awards;

Quantity Surveying duties including but not limited to drawing, estimates, tender specification; and

Project management.

6.3.1.3 The Projects Support Services Section was set up with the specific aim to offer specialized support to all Project Leaders in

the execution of their project/s under responsibility. The idea behind this unit is to ensure that there are specialised and

complimentary competencies within the Unit to offer support and guidance and to act as a professional link between the internal and


external stakeholders. The main functional responsibilities of the Projects Support Services Unit are therefore more varied and

include the following:

Project Conceptual and detailed design;

Structural calculations;

Liaising with internal and external stakeholders including legal, financial and statutory bodies;

Assist Project Leaders in their execution of Project Management responsibilities including but not limited to:

o Updating Project Management software;

o Setting up Project Management Standards and Templates for Project Leaders;

o Setting up processes and procedures for effective supervision and reporting of projects;

o Managing associated costs including cash float and end value analysis;

o Research on project related EU related issues;

o Administrative matters on EU Funding;

o Managing ad hoc initiatives for and behalf of the Unit; and

o Health and Safety matters within the organization and various sites.

6.3.2 Current Project and Initiatives

CF 123 - The main works tender CT 3004/2010, Works Tender for the Design, Build and Operate of the Gozo Waste Treatment and

Transfer Facility at tal-Kus L/O Xewkija, Gozo has been awarded to BS Environment Joint Venture on the 11th January 2013 for a

value of 8.2M Euros including VAT. Excavation works were planned to start in April 2013. The implementation shall be carried out

in eighteen months.

Local Funds - CT2131/2012 Tender for the Re-surfacing of Maghtab Roads, Phase 1 has been awarded on the 7th February 2013 for a

value of 576,000 Euros including VAT - works began in April/May - implementation 3 months (Phase 1). Good Neighbourhood

scheme for Maghtab Area - Resurfacing and reconstruction of roads in Maghtab Village initiative.


Current initiatives/projects

1. Rehabilitation of Closed Landfills (Maghtab, Qortin and Marsascala);

2. Development of a Family Park (Marsascala Family Park);

3. Setting up of the Malta North Waste Treatment Plant;

4. Construction of a Civic Amenity Site at Ta’ Qali;

5. Hazardous Waste Storage and Treatment Facility (This initiative is being totally driven by the EMS Manager in the

Operations Unit);

6. Autoclave (Marsa Thermal Treatment. This initiative is currently being driven by the TTF Facility Manager);

7. Setting up of the Gozo Waste Treatment and Transfer Facility; and

8. Maghtab Roads Resurfacing.

Planned initiatives/project (to commence at a later date)

1. Waste-to-Energy Treatment Facility;

2. Rehabilitation of the Wied Fulija Landfill;

3. Embellishment of the former Maghtab and Qortin Landfills into Environmental Parks;

4. Upgrading of the Marsa Thermal Treatment Facility (This initiative is being driven by the TTF Facility Manager);

5. Cultivation of Biofuel Plants at the Zwejra Landfill;

6. Utilisation of Rubber in Asphalt; 7. Defining the Mixture for the Application of Glass in Concrete; and

8. Processing Wood into Compost through Vermicomposting.


6.4 The Office of the Chief Operating Officer

Second Secretary

(Assisting also CFO)

Chief Operations Officer

Management Complex WMC - Ghallies / Zwejra

(OBU 1)

Qortin

(OBU 2)

CA Sites

(OBU 3A)

Incinerator (TTF)

(OBU 4)

Operations

Clerks Electrician

EMS

(OBU 8)

Contracting

(OBU 13)

Management of Gas

(OBU 14)

Pitkali / Ta’ Qali (OBU 16)

Works Manager

Tradesman x 2 Heavy Plant

Driver x 6 Landfill Tip-Face Control x 2

Supervisor

Gardener x 2

Clerk

Cleaner / Sorter x 3

Gozo Manger /

Supervisor

(Senior Technical Officer)

Waste Sorters x 9 Supervisor Van Drivers x 2 Heavy Plant Driver

Fitter CA Site Operators x 3

Security Assistant Technical Officer

Kus CA Site

Qortin Landfill

Watchman

Watchman

JF Security -

Tender

Senior Operator

CA Site

Supervisor

Senior Operator

Senior Operator Senior Operator

Senior Operator

CA Site Officers x 2

Senior Operator

CA Site Operator

Senior Operator

Supervisor

CA Site Operator CA Site Operator

CA Site Operator

CA Site

Operators x 4

CA Site

Operators x 4

Watchman

Watchman

JF Security -

Tender

CA Site

Operators x 2 Watchman

CA Site

Operators x 2 Watchman

Waste Sorters x 2

Hal- Far CA Site Maghtab CA Site Mriehel CA Site Luqa CA Site Drivers CA Sites

Shift A

Shift B

Shift A

Shift B

Shift A

Shift B

Shift A

Shift B

Fitters x 2

Ass Fitter x 3

Handyman x 1

Heavy Plant

Drivers x 3

Sorters x 7

Heavy Plant

Drivers x 3

Sorters x 7

Fitters x2

Ass Fitter x 2

Shift A Shift B

Shift Supervisor

Sorters x 29

Health Attendant B

Heavy Plant

Driver

Baler Operator

Sorters x 29

Heavy Plant

Drivers x 2

Baler Operator

Sorter x 8

Waste Sorters /

Operators x 5

Day Duty

Sorters x 8

Shift A Shift B

Shift AShift B

Gozo DIDO Shift A

Handyman x 5

Technical Officer

Handyman x 6

Principal Technical Officer

Plant Engineer

Operations Facilities

Manager

MTP/AD (OBU 6) Maintenance / Projects (OBU 15B)

Laboratory

Technician Technical Officer

Manager EMS

EMS Officer Operations Officer

(Hazardous Waste) Laboratory

Technician

Junior

Contracting

Officer

Senior Clerk Quantity Surveyor Senior Accounts

Officer

Contracting

(OBU 13)

MRF (OBU 15)

Senior Technical

Officer – Gas

Technician

Fitter

Technical Officer -

Gas Technician x 2

Supervisor

Operators x 11


WasteServ Employees

Sales Officer

Clerk

Sales Department

Clerk

CA Sites / MTP / MRF / Ta’ Qali

(OBUs 3 / 6 / 15 / 16)

CA Sites / Batterina / Fulija / MTP /

MRF / Ta’ Qali

(OBUs 3 / 6 / 15 / 16)

General Hand

(Bin Loader 1)

Operator

(Bin Loader 2)

Operator

(Bin Loader 3)

Health Attendant B

(Bin Loader 4)

Senior Operator Plast

& Painter

(Bin Loader 5)

Operator

(Bin Loader 6)

General Hand

(Bin Loader 7)

Operator 3 Operator 4 Operator 1 Operator 2 Operator 5 Operator 6

Operator 9 Operator 11 Operator 10 Operator 12 Supervisor Supervisor Senior Tradesman

Panel Beater

(Welder 1)

Senior Tradesman

Welder Burner

(Welder 2)

Senior Tradesman

Mechanical Fitter

(Mechanical Fitter 1)

Mechanical Fitter Electrician

Senior Tradesman

Fitter

(Store Keeper 1)

Supervisor

(Store Keeper 2)

Scientist Head of Shift 7

Cleaner Inspector

Head of Shift 1 Head of Shift 2 Head of Shift 3 Head of Shift 4 Head of Shift 5 Head of Shift 6

Head of Plant and

Operations

Manager

Facility Manager

Day Night Rest Off

Day Duty

Day In Day Out

Sorters x 4

Day Duty

Incinerator (TTF)

(OBU 4)

Operator 7

DNRO

Fitter x 3

Fitter

Assistant Fitter x 2

Motor Vehicle

Mechanic

Handyman x 2

Apprentice

Head Of Shift

Shift A Shift B

Day Duty

Assistant Clerk

Operator 8

Shift Supervisor

Operator 13 Operator 14

Electrician

Health Attendant B

Clerk

Marsa Sorting Facility

Heavy Plant Driver

Light Plant Drivers x 3

Helpers x 3

Heavy Plant Drivers

x 4

Day Duty DIDO

Technical Officer

Store Keeper x 2 Clerk

Clerk

Assistant Fitter

Procurement / Stores

Gozo DIDO Shift B

Shift A Shift B

Senior Operator

(Reliever)

Health & Safety

Health & Safety

Officer


6.4.1 The Office of the Chief Operating Officer is undoubtedly the biggest Department of the whole organisation. Almost 90% of the

employees within this Department are employed by the Contractor. This Department includes all the facilities of the organisation as

follows:

Ghallies/ Zwejra (OBU 1)

Qortin (OBU 2)

CA Sites (OBU 3)

o Hal Far CA Site

o Maghtab CA Site

o Mriehel CA Site

o Luqa CA Site

o Marsa Sorting Facility

MTP/AD (OBU 6)

EMS (OBU 8)

Contracting (OBU 13)

Management of Gas (OBU 14)

MRF (OBU 15)

Maintenance/ Projects (OBU 15B)

Pitkali / Ta’ Qali (OBU 16)

Operations Clerk/ Technical

Sales Division

The organisation chart clearly shows that most of the operations are currently filled by personnel directly employed by the

contractor. There is very little doubt that this state of affairs is contrary to any good practice since all operational activity is directly

under the control of the contractor. The main function of the Operations Department is to oversee the day-to-day operations of all the

OBUs, to support all elements in the OBUs and, to support all the processes that are related to the relative OBUs.

6.4.2 The Operations Clerk/ Technical, aids the department in coordinating all administrative affairs for the relevant OBUs: 1, 2, 3, 4,

6, 8, 13, 14 and 15. It should be noted that this role does not function as an assistant/ aid to the Chief Operating Officer.


6.4.3 The role of the Sales Department is to identify brokers through tenders, liaise with them for the sale of recyclable material. They

however, do not deal with the method in how the sale of recyclable material is shipped overseas. This department consists of 2

employees.


6.5 The Office of Chief Compliance and Communications Officer

Chief Officer Compliance &

Communications

Legal Officers x 2

PR & Communications

Department Legal Office

Department

Communications &

Branding Coordinator

Senior Clerk PR & Communications

Manager

Education Officer x 2

Waste Separation

Promoters x 8

Customer Care


WasteServ Employees

Communications

Assistant

Support Stuff

Officer Custodian & Guide

Customer Care x 3

EU Affairs

Senior Project Leader R & D Executive

Research & Development


6.5.1 The Office of the Chief Officer Compliance and Communications is responsible for an array of functions ranging from Public

Relations and Communications to EU related issues as well as the Legal Office. It is evident that this Department has grown

organically and along the years it assumed a number of corporate functions. Once again, it is worth pointing out that there are a

number of key personnel who are employed through the contractor. A further analysis shows that almost 34% of the employees are

employed with the contractor.

6.5.1.1 The PR and Communications Office is directly responsible for the development of public relations campaigns as well as co-

coordinating various activities with different schools around Malta and Gozo. In addition this section also caters for the update and

maintenance of the Company’s image on the social media networks.

6.5.1.2 The Gozo Office is directly responsible for telephone customer care and telephone operating services. This Section caters for

the whole organisation and not solely for the Gozo Office.

6.5.1.3 The EU Affairs Section is often supported by the Ministry regarding updates and changes on the various EU legislation about

Waste Management, Renewable Energy and disposals of other waste. It was also claimed that this section looks into new EU

legislation and updates key stakeholders, being internal and external policy makers about different implications.

6.5.1.4 The Legal Office has two lawyers – one part-time Legal Advisor and a Legal Advisor on a reduced time basis. Inter alia, their

main functions are to provide legal advice to the company, deal with court matters, issue and reply as necessary official letters and

court applications, assist the Contracting Unit with the vetting of tender documents and contracts, assist in contract negotiations and

conclusion of contracts, draft new/ update existing contracts, provide legal opinions on claims directed to the company, conduct

searches of title to land and other property, assist in claims resulting from an objection for the award of any tender, give advice on

new legislation, liaise with external lawyers as necessary on specific legal issues etc.

In addition to that, WasteServ Malta Limited also has an agreement with leading legal firm to use their services. This business

relationship commenced around 2006. Between 2006 and 2008, various approvals amounting to 54,082 Euros were obtained from

MFEI, for the retainer fee, and a rate established for extra hours utilized over and above that contracted. Total expenditure to date is

154,937 Euros excluding VAT.

The legal firm was originally sought and engaged to provide legal assistance to WasteServ Malta Limited on the Sant’ Antnin

upgrading project, re-habilitation of Maghtab, debt collection and other assistance as required. It was officially agreed by


management that the leading legal firm will have to be involved throughout those cases, until such closure (due to their legal

background gained by them throughout the cases mentioned – which they were fully conversant with).

In that way, they would be providing legal services needed, and can legally handle the cases. In light of the above, their services

were renewed through Purchase Orders on that basis, for continuation purposes, as originally agreed. It should be noted that the

original cases for which they were engaged in have not yet been closed.


7.0 Analysis of Company Business Matters

7.1 Board of Directors and Senior Management Governance Issues

From the onset it must be pointed out that notwithstanding that since 2009, the organisation has made noticeable improvement, there

are a number of wrong management practices which are in dire need to be addressed in order to ensure that the organisation will be

able to achieve its strategic goals as well as conform to European Union and International standards.

7.1.1 The Board Minutes for the last two to three years gives an idea that the Board was most of the time concerned into looking

into operational issues rather than into strategic issues of national importance. As a matter of fact, it transpired that Board Meetings

were an avenue to look into internal organisational issues rather than looking into strategic matters. In the absence of a strategic plan

and due to the fact that Senior Management was probably perceived to be rather weak, most of the time Board Members engaged

themselves in micro-management issues. In fact, there was no distinction between Board and Senior Management meetings.

WasteServ Malta Limited also paid remuneration to its Board Directors to the tune of over 340,000 Euros between 2008 and the first

three months of 2013. This remuneration has increased steadily between 2008 and the following years.

Table 7: Board Members’ Remuneration

Year In Euros

2008 49,859.99

2009 67,813.46

2010 71,389.57

2011 71,720.16

2012 66,109.54

2013 (till date) 21,333.37 Source: WasteServ Malta Limited


7.1.2 In addition to these salaries and wages WasteServ Malta Limited paid management bonuses of over a quarter of a million

Euros over a six year period. It was claimed that these performance bonuses were paid against Key Performance Indicators which

were not revealed by Senior Management. A complete yearly breakdown of the performance bonus paid along these six years can be

seen in table 7. Contrary to normal management practices, the performance bonus of the individual Senior Managers was decided by

the Chief Executive across lose and highly subjective targets. In the case of the Chief Executive Officer, the performance bonus was

presumably set by the Chairman, although there is very little trace on how this was achieved.

Table 8: Senior Management Performance Bonus

Year In Euros

2007 30,416

2008 33,534

2009 41,440

2010 45,364

2011 46,709

2012 55,725 Source: WasteServ Malta Limited

7.1.3 In addition to the previous point, Senior Management composed of the Chief Executive Officer and the four Chief Officers

namely the Chief Finance Officer, the Chief Operating Officer, the Chief Project Manager and the Chief Compliance and

Communications did not work towards developing a business plan beyond 2012. As a result the Senior Management Team is

currently guiding itself on an out-dated business plan. As a consequence, this business plan was never adequately communicated to

middle management and consequently the organisation does not have clear Key Performance Indicators or business targets to be

achieved.

7.1.4 Furthermore, although several Senior Managers have claimed that they hold regular management meetings, these were mostly

ad hoc without any clear agenda, no follow-up and little actions. Senior Managers failed to provide any substantial proof of these

meetings. It is interesting to note that from the period of 27th of February 2012 – 28th of September 2012, there were only six Senior

Management Meetings. Consequently, it is not surprising that lower middle management and other employees felt that they were

not consulted by Senior Management, while the Board of Directors were too much concerned about micro - management issues.


7.1.5 The above two points posits the idea that, although there has been some noticeable improvement along the years, both the

Board of Directors and Senior Management did not adhere to good corporate governance practices and consequently there was a

lack of management controls, some of which were also presented in the external auditors reports, as well as poorly demonstrated

pro-active management practices. A classic example of lack of proper good corporate governance practices was the lack of proper

standards in practices in answering the letter presented by the appointed auditors. All Board Meetings were attended by the Chief

Executive Officer and the Financial Officer and attended by other Chief Officers as the need be required from time to time.


7.2 Analysis of the Different Functional Operational Activities

It is overtly clear that the organisation structure has developed in a rather organic manner along the years and has developed into a

highly mechanistic structure with a series of silos managed by Chief Officers. Furthermore it can also be pointed that the organistion

is too hierarchical with over 106 job grades/positions for over 400 employees. Looking into the current structure as well as after

going through some of the documentation which was made available, one can probably draw the idea that some positions were

developed to meet the exigencies of individuals rather than the other way round. In addition, although the complement levels reach

more than 400 full time bodies, the organisation lacks professional people who are either not attracted enough or not recognized that

in order to move forward one needs to have the right competency framework in place.

In addition, the organisation does not have an internal audit department which in principle should be answerable to the Chairman of

the Board and not to any member of the Senior Management team. Immediate action is required to set up an internal audit team,

under the guidance of an internal audit professional. This Unit should be answerable to the Chairman of the Board.

7.2.1 The Finance Department, as already stated groups four main functions namely the human resources management function,

the Finance function, the IT function as well as an array of administrative functions which are haphazardly brought together under

the responsibility of the Chief Financial Officer. In this light, the Chief Finance Officer adopts a co-ordinating role rather than an

active hands-on approach. The only two professionally qualified personnel in this department, in addition to the Chief Financial

Officer are the Financial Controller and the IT Administrator, while all the other appointed managers and administrators of the

various functions have been promoted through the ranks, with very little knowledge and foresight of their respective area of

responsibility.

This part of the organisation structure needs to be re-organised under the leadership of a Corporate Services Senior Manager/ Chief

Corporate Services Officer with four main units namely HR Manager, Financial Manager (Controller) and Administration Manager

and IT Manager. Alternatively these four areas can also be under the responsibility two respective Senior Managers. The Finance

Senior Manager should also be directly responsible for Tendering and Contracting.

The new HR Section should encompass the following areas of responsibility namely the (i) Personnel Function, (ii) Personnel

Development function, (iii) Performance Management Function and (iv) Health and Safety.


The new Finance Section should encompass the (i) Accounting functions, (ii) Credit Control, (iii) Data Section.

The new Administration Section should include all re-organised administrative functions namely (i) Procurement, (ii) Estate

Management (iii) Internal Administration, (iv) Registry, (v) Reception and Customer Care.

The IT Section can keep its present form though it needs to be guided under the responsibility of and IT Manager.

7.2.2 The Projects Management Department is one of the back bones of the organisation, since it is still committed (a) to design

and build several other sites and (b) maintain the current sites and (c) constantly carry out alterations to the different sites across

Malta and Gozo in line with the national and European directives. It is estimated that the Department Project Budget for the period

2014 to 2020 amounts to average 84 million Euros. In view of the fact that most of the funds for capital projects are funded from the

EU, it is imperative that the structure should respect the mandatory obligations set by the EU.

The structure of the Department is well displayed and seems to be giving expected results, though it needs to be beefed up with

some more professionals namely Architect and Civil Engineers and Technical persons to adopt the role of foreman in order to meet

the challenges set ahead and ensure that all EU funded projects meet the set deadlines.

7.2.3 The Compliance and Communications Department is also in dire need to revise its raison d’etre since it currently

encompasses a number of unrelated functions. In principle this Department needs to be divided in two main functional areas namely

(a) Sales & Marketing and (b) Legal & Compliance to be headed by two different Senior Managers since the two functions are diverse

and cannot be converged.

The marketing function of the organisation should be two pronged namely (a) Export Oriented Marketing and (b) Educational &

Promotional Campaigns. The functions of the former should focus on attracting new customers and in promoting the services of the

organisation while the latter should focus in promoting further the organisation through the availability of EU funded projects.

The Legal and Compliance Section should encompass two main areas of responsibility namely (a) Compliance to EU regulations and

(b) Legal Issues and ensuring that the organisation is in line with the array of legal notices which have a direct and indirect impact on

the industry’s and more specifically the organisation’s affairs.


7.2.4 The Operations Department is generally well set, although more control on personnel is required to ensure that maximum

efficiency and effectiveness is reached. The Department however needs to be given the full financial, administrative and personnel

support which is currently missing. In addition, it is also recommended that an Assistant Manager/s is/are appointed to be able to

deputise for the current Senior Manager. This/These role/s should require Engineers. A Logistics division should also be

incorporated to manage the fleet.

7.3 Analysis of the General HR Practices

7.3.1 Throughout our study it was revealed that human resource management practices and HR strategy are all missing and the

HR office is mostly carrying out two functions namely payroll and general administration of recruitment. All HRM practices are

managed by the CEO and the CFO together with some other Senior Managers as the need arises from time to time. As one may

appreciate, in view that this is a labour intensive organisation, the value of having sound HRM practices is critical to the overall

success of the organisation.

7.3.2 The Organisation is not governed by a collective agreement yet though over the past months there have been a series of

discussion with the UHM and a draft has been concluded with the Collective Bargaining Unit (CBU). This has not been signed yet.

7.3.3 Not-withstanding the fact that this is a Government Company, a substantial amount of the grades are not in line with the

Government grading structure. This needs to be looked into, particularly when it comes to salary and conditions of employment for

employees who are employed by the company through the contractor and to ensure that employees on loan from Government are in

analogous grades.

7.3.4 It is quite alarming to note that records are kept on a number of independent databases with unique spreadsheets which are

not in any way aligned to each other. In fact, any change in one spreadsheet requires amendments in other spreadsheets. In addition

employee records are kept in paper files. Further to legal requirements, there are no additional files and HR does not carry out a

HRM analysis such as manpower planning by age, grade, post and competencies, amongst others. From our analysis it was learned

that there are very limited, mostly reactive, HR controls. It was revealed in some instances, that the HR office started examining the

invoice sent by JF Security. This process is completely flawed since HR personnel are directed to send to the contractor, raw data of

attendance and then it is up to the contractor to draw up an invoice. To date there has not been any audit trail about this matter.


7.3.5 The recruitment process is partially guided by PAHRO (OPM Agency) and partially carried out by the organisation through

JF Security as the contractor who was awarded the tender for one year and extended for a further three years. The lack of control

over the recruitment process carried out through JF Security, can lead to abuse in the final selection process.

7.3.6 The promotions processes are once again not governed by any internal policies and procedures and it has been pointed by

various interviewees that the selection criteria varies according to different exigencies. However, when examining the job

descriptions, which were provided by the HR Department, it was clarified that the personal criteria varies considerably, thus raising

serious doubts about the promotion process.

7.3.7 The training and development function is completely absent. Notwithstanding that the TREE Unit has been transformed into

a Training and Development Department, there is no trace of any learning activity. A list of training courses was presented, but it

was also revealed that no training courses were delivered. The HR Department does not have a skills and competency framework

matrix and employees are not assessed for their respective level of competence. Consequently, most employees are only constrained

to do their job within a defined Unit and cannot be deployed into other areas unless this is a non-skilled job.

From an initial survey carried out among all employees, which was answered by over 80% of all potential respondents, it transpired

that 75% of employees have obtained secondary or trade as their highest level of education, while 9% have obtained post-secondary

(including Technical Institute or MCAST) as their highest level of education. As expected, only around 6% of respondents are

graduates or post-graduates in different areas of science and management. In view of the nature of work, it was expected that the

majority of employees have a limited level of education, though one would have expected to have more people who have completed

some sort of post-secondary education. Needless to say, that in such an environment it is perennial that all employees, even those at

lower levels of the organisation are trained in order to enhance their personal potential within the organisation and simultaneously

increase their employability potential.

7.3.8 With the exception of few Senior Management officials, employees’ performance is not assessed and consequently there are

only few instances when employees are collectively measured against set Key Performance Indicators. In addition, the organisation

does not have any operational systems to objectively reward or reprimand high/ low performers. To further accentuate this reality

happening within the organisation, by and large management does not differentiate between hard working employees and others


who have the ability to skive off work in pursuit of other personal activities. All other employees do not qualify for performance

bonuses.

7.3.9 The organisation is not proactive enough in planning out future manpower requirements and their respective competencies

albeit the fact that they have repeatedly claimed that the recruitment process is a lengthy and a laborious task. The only recent

manpower exercise was carried out as part of the Government Capacity Building national exercise among all Government entities. It

is therefore not surprising that the Organisation ends up recruiting people at different positions in the organisation through JF

Security, which, as already discussed, can be carried out with less stringent regulations and transparency.

7.3.10 In general the organisation lacks order and control. A number of examples could be placed to the fore such as (a) alcohol

abuse at the place of work, (b) smoking in restricted and enclosed areas, (c) masking of CCTVs, (v) irregular and inconsistent

attendance recording including, leave and sick leave submissions, excessive amount of over-time and sick leave by a few employees.

HR does not give attendance sheets to the respective departments in a consistent manner.

7.4 Brokerage of Waste Material

7.4.1 In addition to Government subvention, another major source of income is brokering waste material to overseas markets.

According to figures gathered from the Organisation is transpires that during 2010 the sales of waste material amounted to 1,050,658

Euros. This figure increased to 2,025,806 Euros in 2011 but dropped to 1,510,852 Euros in 2012. Previously, all this material was

landfilled, thus creating further environmental and financial difficulties to the country.

In analysing deeper into these figures it transpired that the brokerage process is rather erratic and does not follow the same cyclical

pattern. It was reported that the organisation sells its waste to licensed brokers after an expression of interest is issued. In view that

WasteServ Malta Limited was funded by EU funds; it cannot become a broker on its own right but requires the services of an

intermediary.

When questioned about the sharp drop in sales in 2012, the CFO claimed that there are a series of reasons for this result including but

not limited to drop in price and less material to sell. The results from the weighbridge in Sant’ Antonin did not particularly show a

drop in waste during 2012.


7.5 Health & Safety Issues

7.5.3 In the course of the past years, the function was not given its due importance, although an external Health and Safety Agency

was commissioned to carry out most of the work involved. Some of the work which was claimed to be (haphazardly) carried out

includes generic risk assessments, training in fire prevention and first aid and general health and safety inspections. As already

noted when looking into the organisation part of the report, there are a number of deficiencies including but not limited to issues of

negligence such as lack of proper adherence to inspect health and safety reports as well delays in setting up health and safety

committee and appoint health and safety representatives, which are both a critical legal requirement. It has been noted that the

Thermal Treatment Facility (TTF), as of date, does not have a fundamental emergency response plan in place.

Through Board Minutes it was also revealed that the job holder has been found guilty of health and safety negligence by the Courts

of Malta and is currently undergoing a suspended sentence. Notwithstanding the Board of Directors has exempted him to keep his

job although he is unable to sign certain documentation and, the service of a third party is hired in this regards.

7.5.4 The current incumbent claimed that his role within the company is rather wide. While stating that his primary function is to

carry out health and safety work, he also claimed that his job also demands a series of administrative duties, which he believes are

limiting his availability in carrying out his job.

7.5.5 It was also identified that injury reports are hardly ever verified and/or inspected. It is understood that this is an essential

requirement in fulfilling proper health and safety management practices. While some generic risk assessments are done on regular

intervals, there are no specific assessments. Rules at the plants are not adhered too. There are no consistencies in using helmets,

gloves, masks, safety boots and other safety equipment.

7.5.4 Throughout our assessment it also transpired that there is poor communication between the Health and Safety Manager and

the majority of other employees within the organisation. In addition, the level of reporting is graded as poor and a series of accidents

such as a fire that broke out at the Maghtab Landfill on the 17th May 2013, which took around 10 hours to be put to rest by the

Firemen of the Civil Protection Department, was not reported.


7.6 Tendering

In view that most of WasteServ Malta Limited Projects are funded by EU, the tendering processes are highly bureaucratic, resulting

in lengthy procedures which are generally made more complex with numerous appeals and rectifications required. It must be

pointed that while the tendering processes are observed, most of the projects experience huge over–runs. (Further investigation is

required since this was not part of our exercise)

7.7 Procurement

The procurement processes are so far, haphazardly managed by the Finance Department. Over the past months, efforts have been

made to develop a procurement policy manual, which also though completed has not been endorsed by Senior Management and the

Board of Directors and this it has not been implemented yet.

7.8 Accounting Procedures and Internal Control

Financial management is a critical activity that helps an organisation assess the cost of achieving its objectives, manage its financial

risks, identify accountabilities, and support strategic and operational decision making. In a government context, financial

management includes the following components:

Compliance with legislation, regulations, policies, and procedures; Financial planning and budgetary controls; Systems and internal controls; Delegation of authorities and responsibilities; Adherence to standards; Accountability of individuals and organizations for performance; and Management of risks.

The purpose of internal controls is to provide management with greater assurance regarding the integrity of the accounting

environment. Internal controls can be defined as the whole system of controls, financial and otherwise, established by management

in order to carry on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policies,

safeguard the assets and secure as far as possible the completeness and accuracy of the records.


Management’s responsibility in this regard is defined in the Statement of Directors’ Responsibilities which forms part of the

Company’s Financial Statements as follows: “The directors are responsible for ensuring that the financial statements have been drawn up in

accordance with International Financial Reporting Standards and are prepared on a going concern basis. They are also responsible to select and

apply appropriate accounting policies and make accounting estimates that are reasonable in the circumstances.”

In view of the limited time available, we have limited our evaluation to review of the audited accounts for the four years ending 31st

December 2011, the management accounts for the year ended 31 December 2012, the management letters prepared and issued by the

external auditors Internal Audit Reports prepared by Grant Thornton and the Report of the Auditor General for the Public Accounts

2011.

7.8.1 The external auditors made it clear in the management letters to the Board of Directors dated 26 November 2011 that: “The responsibility for the preparation of the financial statements and the maintenance of an appropriate system of internal control and

accounting procedures in accordance with Financial Regulations and Procedures, as well as for the prevention and detection of irregularities and

fraud rests with the directors and management of the Company.”

7.8.2 A scrutiny of the three management letters issued since 2009 has revealed that although a number of areas of weaknesses

have been addressed, a number of others had not been appropriately seen to conclusion. The 2009 management letter was

not replied to whilst the 2010 was replied by the Chief Executive Officer and Chief Financial Officer with a covering letter

from the board of directors. The latest management letter for the financial year ending 31 December 2011 was replied to by

the Chief Financial Officer. We recommend that the Management Letter is formally replied to by the Board as it would make

it accountable through its reply to the external auditors.

7.8.3 Accounting Procedures: The Company should have an accounting system that ensures that all transactions and other

accounting information which should be recorded have in fact been recorded and that assets and liabilities are recorded in the

accounting system at the correct amounts. Furthermore, errors or irregularities in processing accounting information will become

apparent.

Despite the external auditors highlighted the issue of late recording of invoices in the Company’s accounting system, WasteServ

Malta Limited is still booking invoice late into the proper accounting VAT period. This could result in the VAT Department not


allowing such credits since they fall outside their VAT period and further penalise the Company with penalties. We strongly

recommend that the posting cycle of invoices is shortened and streamlined in order to avoid such occurrences in the future.

7.8.4 The Internal Audit: The Institute of Internal Auditors define internal audit as “an independent, objective assurance and consulting

activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a

systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes”. WasteServ

Malta Limited has for the past years contracted Grant Thornton to perform this function with the assignments mostly being carried

out upon request of the board of directors.

We strongly recommend that an Internal Audit Department is set as the Board’s watchdog to act as a catalyst for improving the

Company’s governance, risk management and management controls by providing insight and recommendations based on analyses

and assessments of data and business processes. In addition, the internal auditor should also conduct proactive audits to identify

control breakdowns and financial loss. In view of WasteServ Malta Limited’s numerous sites and potential risks, we also recommend

that a sub-committee of the board of directors, the Audit Committee, is set so that the Internal Audit Department would report

directly to him. The Institute of Internal Auditors defines the audit committee as “the governance body that is charged with oversight of

the organization’s audit and control functions."

7.8.5 Fixed Assets: Following repetitive highlights by the external auditors to implement a fixed asset register, WasteServ Malta

Limited have registered its assets in 2011. A fixed asset register allows a company to keep track of each fixed asset, ensuring control

and preventing misappropriation of assets. It also keeps track of the correct value of assets, which allows for computation of

depreciation and for tax and insurance purposes. During the exercise of integrating all fixed assets in the plant register, the external

auditors highlighted that all assets which were not physically identified were written off with management remarking that in view

most of these assets related to prior to 2004, their net book value was immaterial. This procedure allowed any previous irregularities

to be by-passed without being properly checked. We strongly recommend that the fixed asset register is maintained and that any

write offs of fixed assets would only be made following proper authorisations.

7.8.6 Debtors: The main area of concern here is the excessively long credit period taken by the Company to collect its dues. This

problem does not seem to have been seriously addressed by the Board. This has led to an increase in the amounts being provided as

doubtful debts. The amounts due from WasteServ Malta Limited clients’ after more than 120 days have been increasing year after

year from € 75k in 2009 to € 1.5 million in 2010 to € 3.1 million in 2011.


7.8.7 Cash in hand: The external auditors have repeatedly highlighted that the balance of cash and cheques were substantially

higher than the Company’s insurance policy limit of liability of €8,200. Although management in their reply to the management

letter for the financial year 2011 advised that they are to update their insurance policy to cover for higher limits, the insurance policy

dated 3rd May 2013 remained unchanged.

7.8.8 Inventories: Although a number of deficiencies in the internal controls of stock were addressed by the management of the

Company, Grant Thornton in their Inventory Control System Report dated 25 June 2012 remarked that although it had

recommended in September 2010 for a standardised stock coding system indicating clearly between raw materials, stocks of finished

products and repairs and maintenance stocks, this was not addressed.

7.8.9 Payables: Despite the external auditors had repeatedly recommended in their management letters to management to look into

amounts in dispute dating back to 2005 amounting to € 104,746 “no movement was made in this account” We strongly recommend

that all pending issues are tackled immediately so that the Company’s records would show a realistic picture of the assets and

liabilities at any particular time.

7.8.10 Insurance Cover: Although the net book value of the tangible fixed assets as at 31 December 2012 excluding motor vehicles

amounted to € 53 million, the total sum insured as per the insurance policy dated 3rd May 2013 amounts to € 28 million. For the

Company to assume a risk, the exposure has to be such that it is either not insurable, or the loss is sustainable as this would not

adversely affect the Company. As outlined above, the insured limit of cash in hand on the premises have to be increased to reflect the

normal trading activity amounts. We recommend that the Insurance Policy should at all-time hold an insurance policy which

provides an adequate cover for all stocks held.

7.8.11 Audited Financial Statements for the year ended 31 December 2011. The latest audited financial statements of the Company

for the year ended 31 December 2011 stated that “the company’s current liabilities exceeded its current assets by € 299,297. The

going concern basis underlying the preparation of these financial statements, assumes that the Government of Malta, as sole

shareholder of the company, will continue to provide the financial support necessary to enable it to finance its operations and to

meet its liabilities as they fall due.” During the years 2009 to 2011, the income from Government for Recurrent expenditure increased

each year from € 5.5 million in 2009 to almost € 8.5 million in 2011.


7.8.12 Cost Control. The Company’s current financial situation necessitates a complete new mentality in order to cut down on

increasing expenditure. In the short time available, the following items were identified of urgent attention:

(a) Government Employees Secondments and Subcontracted Labour: The annual cost of government employees’ secondment

and subcontracted labour has increased drastically over the past three years from € 2 million for the fiscal year 2009 to € 3.8

million in 2010 to € 5 million in 2011. Although the original tender was for a period of 6 months, the agreement was signed (dated

June 2010) for one year with JF Consultancy & Security Services Limited for € 2.375 million, double the tender quote in view that the

duration was increased from six months to one year. As reported by the Auditor General, the DG (Budget Affairs) had advised

WasteServ Malta Limited to re-consider the duration of the tender to be longer than six months so that more favourable offers would

be received. However the duration for the tender was kept at six months. The Auditor General continued that through an

Addendum to the contract, the duration was increased from six months to four years, the value increased from € 1.1 million to € 29.2

million and the maximum personnel increased from 101 to 350. The Auditor General also highlighted that the actual operation of the

contract was substantially different from the Contractual Conditions namely that absenteeism were being charged, credit terms were

not taken advantage of and the subcontracted employees continued whilst the contract had expired.

(b) Capital Projects: The National Audit Office Report for 2011 issued in December 2012, highlighted WasteServ Malta Limited’s

lack of transparency and non-compliance with procurement procedures and regulations as well as long delays. In addition, there

were substantial variations in capital projects when compared to budgeted figures. The Auditor General examined a number of

capital expenditure projects as outlined below. The Auditor General highlighted a number of irregularities in the Sant’Antnin Waste

Treatment Plant including extension of contract for supervision consultant not provided for in the contract, cost variations,

additional claim by contractor and lack of transparency in the procurement to hire stand-by generator. The Auditor General

remarked that whilst going through the agreement for the Clearing of Top Soil at Tal-Kus, limits of Xewkija Gozo he noted that the

30 day forecasted works were carried out over five months. In addition the budgeted amount was not substantiated, MEPA was

notified after the commencement of works and the tender conditions namely daily reports and penalties were not observed. Whilst

examining the Rock Excavation at Ghallis Landfill, the Auditor General reported that the contracted period was extended by five

months, there was a disparity in the quantity of rocks required, no bank guarantee was made for two years and thus any potential

claims imposed on the contractor cannot be entertained, the verification of invoices was not properly carried out and the extension of

agreement was not formalised. The National Audit Office reported that the tender for the Fun Park in Marsascala experienced delays

and variations in completion of the project, claim for compensation for additional costs due to damaged cables and there was no

insurance cover for the extended period.


7.8.13 Financial Ratio Analysis: Apart from the internal reports and financial information which were scrutinised, we have reviewed

the Company’s financial performance with the purpose of performing a financial ratio analysis. This was based mainly on audited

financial statements. Ratios are a very important management tool to make a quick analysis of the monetary terms expressed in the

Financial Statements which, in reality, reflect the performance, of the Company at different levels through its decisions, actions and

results achieved. Therefore an improvement (or otherwise) in ratios can only be achieved through good management and work

practices at all levels of the Company. In view that the Government yearly allocation is mainly equal to the re-current expenditure of

the Company, the Liquidity analysis is not considered and only the Income & Expenditure are performed.

7.8.14 Income & Expenditure Ratios: The Reliance on Government Funding Ratio outlines the risk in both reliance and autonomy

especially in limited cost allocations and flexibility. Although, WasteServ Malta Limited have managed to reduce the Reliance on

Government Funding during the years 2009 to 2011 from 78% to 64%, the Income from Central Government to cover re-current

expenditure had increased considerably during the said three year period from € 5.5 million in 2009 to € 8.5 million in 2011. The

Percentage of Budget for Personnel Ratio demonstrates the proportion of total wages including Government employees seconded to

WasteServ Malta Limited and subcontracted labour as a percentage of budgeted costs. During the three years 2009 to 2011, the

percentage of personnel costs of the Company’s budget increased from 19.9% to 25.5%. The increase was a resultant in an increase in

personnel cost over the three years from € 3 million in 2009 to € 6.9 million in 2011.


8.0 Recommendations

IMCS through the methodology of having meetings with Senior Managers, collection of data/ information, validating both the data

and information and, through receiving responses from an administered questionnaire, have identified several recommendations

that are put forward for serious consideration:

8.1 Organisation Wide Overarching Objectives

8.1.1 To develop a clear and documented Business Plan incorporating 5 – 10 year plans. This is imperative for 6 basic reasons:

a. It will force the organization to summarise it’s business model;

b. It will establish goals, direction, gaps and action plans;

c. It will force alignment between all the units;

d. It will establish performances metrics and accountabilities;

e. It will help priorities budgets and hiring decisions; and

f. It will create core content that can be referred to when clarifications need to be made.

8.1.2 To develop a clear and documented Business Strategy Plan which requires a series of management drills. This will

benefit the company in terms of:

g. It will create a sense of common focus and a sense of motivation and ownership;

h. It will establish a common language and commitment;

i. It will establish operating challenges and obstacles;

j. It will define specific operating and staff development initiatives that are essential for growth;

k. It will focus all employees on serving both the internal and external customer;

l. It will establish financial operating goals;

m. It will define operating priorities;

n. It will benchmark the Marketing and Sales strategies; and

o. It will create a definition for success and longevity.


8.1.3 To carry out a comprehensive Business Process Re-Engineering exercise. This will be a radical redesigning of the business

processes of the whole organisation in order to achieve remarkable improvements in critical measures of performance like cost,

service, quality, return on investment and speed.

a) It will increase effectiveness because employees will be aware of the processes for which the belong to and this will

empower them to have a greater sense of responsibility;

b) It will reduce cost because with proper management process in place, there will be an improvement in efficiency and

the quick delivery of products (waste) to the buyers;

c) It will increase enthusiasm from the employees because the organisation will not be operating in silos anymore and

there will be more meaningful tasks to be done rather than have time spent on “chasing”;

d) It will improve the organisational approach because there will be more flexibility and adaptability for change as

WasteServ Malta Limited will be leaner; and

e) It will provide improved growth because it would enable WasteServ Malta Limited to grow more revenue streams.

8.1.4 To set-up a new organisation structure in line with the business requirements. This will benefit the company in the

following ways:

a) It will align the company’s business goals and objectives;

b) It will be the foundation of the company’s culture;

c) It will affect employee behavior, performance, motivation and cooperation;

d) It will adopt to process requirements and changes;

e) It will optimize the input of human resources;

f) It will allow for flexibility;

g) It will encourage creativity from the employees; and

h) It will effectively utilize the skills and abilities of the human resources.

8.1.5 Setting up a Professional Internal Audit Department. The organisation is in dire need to set up an Internal Audit

Department directly answerable to the Chairman of the Board who in turn may also appoint a Committee to ensure that all internal

processes are continuously verified and audited in line with international best practices.


8.1.5 To introduce tools such as the Process Improvement Matrix, Process Failure Mode an Efficient Analysis (PFMEA),

Brainstorming Sessions, Layered Process Audit and a Continuous Improvement System coupled with more consistent/

frequent Senior Management and Board Meetings to seal the Corporate Governance Gap.

8.1.6 To introduce company-wide Key Performance Indicators. This is a fundamental requirement for any company. The

benefits of this would be the following:

a) It will keep employees focused on doing the right things especially if it is related to benefits and consequences;

b) It will clarify expectations because managers will be able to communicate in a clear and concise manner;


c) It will provide objectivity in the sense that managers will know what did their really their sub-ordinates actually

achieve;

d) It will improve the crisp execution of tasks;

e) It will promote consistency because activities and outcomes will be measured properly;

f) It will provide clear feedback because it will hold employees accountable for their target levels of performance every

week/ month; and

g) It will improve decision-making as there will be the proper use of data.

8.2 Human Resource Management Wide Overarching Objectives (Strategic, Structure & Systems)

8.2.1 Strategic

8.2.1.1 To set up a new HR office incorporating the main HR functions namely HR Strategy and Organisational Development,

Personnel, People Management, Industrial Relations, Employee Communication ,Training & Development and Health and Safety in

line with a new HR strategy.

8.2.1.2 To streamline the current grades, posts and positions into a more manageable organisation whereby a clear number of job

grades and positions would be set in specific job clusters/families and in line with the current government practices.

8.2.1.3 To create a dual employee progression system whereby employees can be promoted in their respective units and/or technical

field and/or in a managerial post. Different career progression paths and training programmes will be set accordingly.

8.2.1.4 To ensure that WasteServ Malta Limited will have a proper and professional, strong and pro-active HRM and HRD function

across the whole organisation which is supported by adequate administrative systems and procedures.

8.2.1.5 To develop and implement the training & development function, CPD programmes together with mentoring and coaching

programmes across all grades within the whole organization and to ensure that this function is strategically placed within the

sector’s HR structure. This will provide for a holistic training programme to all Managers and Administrators to ensure a common

understanding and execution of HR work practices in line with the new strategy, structure and systems.


8.2.1.6 To create an intra-WasteServ Malta Limited Manpower company especially when a solid HR Strategy will be in place. This

initiative should also tackle the issue when the JF Security contract expires in 2014. This will not be renewed because it currently

costs the company 1.6 million Euros annually.

8.2.1.7 To recruit more qualified/ competent/ experienced workers to increase the current potential of knowledge within the

shortest possible time-frame.

8.2.1.8 To develop a health and safety function for the benefit of the employees and the organisation as a whole.

8.2.1.9 To immediately set up an Employee Grievances Unit to study all current issues resulting from lack of HR standard employee

policies.

8.2.2 Structure

8.2.2.1 To enhance and/or set-up HR structures at different sites in line with the new HR strategic plan.

8.2.2.2 To remove/ relocate “show stoppers”.

8.2.2.3 To re-engineer the current processes of every department. This can be taken either by departmental approach or

organisational approach. In this case of WasteServ Malta Limited the first approach is highly preferred. This exercise needs to be

enforced by a Business Process Re-Engineering Exercise to streamline processes framework and a Job Evaluation Exercise to

streamline the job grades. The result of this project will be a refined organisation framework with updated processes and standard of

performance.

8.2.2.4 To introduce Post Structure across middle management and supervisory management

8.2.2.5 To ensure that the jobs within their respective department are shadowed by another employee. In reaching this goal, the

organization needs to embrace an intra-departmental and inter-departmental deployment policy based on continuous qualitative

career progression studies.


8.2.3 Systems

8.2.3.1 To implement a comprehensive HRIS for the whole organisation and integrating it with the current Time and Attendance

system which includes but is not limited to overtime controlling.

8.2.3.2 To develop a “Lessons Learnt” database.

8.2.3.3 To develop a comprehensive job documentation including clear job descriptions with Key Performance Indicators and post

specifications in line with the new structure.

8.2.3.4 To develop HR policies and procedures e.g. a disciplinary manual, systems and strategies that support employees at work.

8.2.3.5 To develop a series of HR tools in order to ensure homogenous HR practice across the different units, agencies and units

including but not limited to sourcing employees, retaining employees to high levels of organisational commitment,

performance management as well as training and development practices. The contract with JF Security that expires in 2014

should also be taken into account.

8.2.3.6 To ensure that the required sector-wide core competencies and values are continually communicated and understood by all

stakeholders.

8.2.3.7 To introduce Two Year Performance Contracts across managerial grades to ensure higher levels of accountability.

8.2.3.8 To look into further opportunities of automation in order to enhance efficiency and effectiveness of HR processes.

8.2.3.9 To introduce a Performance Management Programme, whereby all functions and processes (both intra-departmental and

inter-departmental) will ensure that clear Key Performance Indicators are set and cascaded. This will eventually be the basis

for a more objective and clear personnel assessment.

Organisational & HRM Assessment of WasteServ Malta Limited ...… · Organisational & HRM...

Documents

Transcript of Organisational & HRM Assessment of WasteServ Malta Limited ...… · Organisational & HRM...