Organisational renewal

MAC

The Management Advisory Committee (MAC) is a forum of Secretaries and Agency Heads established under the Public Service Act 1999 to advise the Australian Government on matters relating to the management of the Australian Public Service

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Media Release: New challenges for the Australian Public Service

The face of the Australian Public Service (APS) is changing. More than half of all new entrants are graduates. Low level classifications are disappearing. Movement in and out of the Service is increasing. Around 45% of graduates are uncertain whether they will make a career in the APS.

At the same time the APS is ageing, with an increasing proportion of employees aged more than 45 years. Nevertheless the Service is experiencing the relatively early departure through resignation or retirement of many of these older workers. Indeed almost a quarter of its workforce is likely to leave over the next five years.

It is in response to these significant trends that a report on organisational renewal was today released by the Management Advisory Committee (MAC). The Committee consists of APS agency heads chaired by Dr Peter Shergold. It is established under the Public Service Act to advise the Government on management issues across the Service.

The report calls for a more systematic and integrated approach to workforce planning and capability building across the APS. Recruitment and retention strategies need to be aligned. A more planned approach to people management is required in order to attract top entrants in a competitive labour market and to persuade highly skilled and experienced public servants to remain within the APS.

"We need to be able to organise and manage a more varied and demanding workforce, and to respond effectively to the changing attitudes and expectations of different groups of public servants at different stages of their lives and careers. Interesting work and job security are important but not sufficient. Surveys undertaken for the report indicate that both young and older employees see flexible working conditions as critical to their decision as to whether to join or stay in the APS" said Dr Shergold.

A key challenge is to persuade older public servants to remain in the Service. A particular focus of the report is the impact of the now-closed Commonwealth Superannuation Scheme (CSS) and the financial attraction it provides for older scheme members to leave just prior to their 55th birthday. However the report suggests the situation is manageable at the Service-wide level.

"The real challenge is to provide more flexible employment options for older workers. We should plan to include part-time work, variable and part-year employment, phased retirement and telecommuting as options to retain the skills of older public servants. We need to seek more creative solutions if we are to prevent the APS losing corporate knowledge and expertise. We should provide greater flexibility in working arrangements and offer older and more experienced employees new opportunities as coaches, mentors and team-leaders".

"It is not superannuation provisions that act as the main barrier to phased retirement but organisational inflexibility. We need to build APS capability to renew the public sector through transforming work organisation and culture".

"I anticipate that this important MAC report will help to raise awareness of the issues and stimulate innovative managerial practice across the APS".

Dr Peter Shergold, AM
Chair, Management Advisory Committee

20 March 2003

Contact numbers:

PSS/CSS Member Enquiries: 13 23 66
PSS/CSS Media Enquiries: 02 6263 6999
Australian Public Service Commission (media enquiries): 02 6202 3524
Australian Public Service Commission - Publication order line: 02 6293 8383

Websites:

www.pss.gov.au
www.css.gov.au
www.apsc.gov.au

Key findings

Overall APS demographics

The APS workforce has been undergoing substantial change in its size and nature, and is facing the likely departure of a significant proportion of its workforce (around 23%) over the next five years. Over the next couple of decades, agencies will be operating in a more competitive labour market, with greater pressure on attraction and retention of employees. These factors raise significant implications and challenges for agency capability development, workforce planning and knowledge management.
The APS has an ageing profile and projections indicate that the Service will continue to age over the next 10 years. Factors contributing to the ageing of the APS include the ageing of the baby boomer cohort, the decline in the employment of young people and higher levels of recruitment of older people.
Major shifts have occurred in the classification structure. The typical recruit is now an APS 4, and over half of all new entrants have tertiary qualifications. Retention rates for those engaged as part of a graduate program have shown some decline in recent years, and those graduates who stay are advancing more rapidly than graduates from past intakes. There is more movement into and out of the Service. Lateral recruitment throughout the classification structure has increased, with engagements at APS5 and above more than doubling over the last decade.
Most APS employees continue to be ongoing and full-time. Part-time employment continues to rise (while lagging behind rates in comparable private sector employment), and is particularly concentrated in the category of women aged 30-44.

Mature age employment

The APS workforce is ageing and, on average, is now some four years older than a decade ago. It is increasingly reliant on mature-aged workers (45 and over), and projections for 2012 show an increase in the age profile.
The APS tends to be somewhat older than the wider workforce, with a smaller share of both younger workers and employees over 55. A key feature of mature-aged employment in the APS is the relatively early departure through resignation or retirement of many of its older workers. This is reflected in an age profile that has 8% of the APS workforce aged 55 and over, compared to 12% in the employed labour force at large.
Mature-aged workers in the APS have extensive experience, with a median length of service of 14 years. They are also likely to be well represented in senior positions (69% of SES and 46% of Executive level employees were aged 45 years or over at June 2002). With the ageing of the workforce the APS will have to develop strategies aimed specifically at retaining and managing its mature aged employees.
A range of factors influence the retirement decisions of mature aged employees, most commonly financial security and superannuation. Results of surveys conducted for the project indicate that a high proportion of employees intend to work beyond 55: the median intended retirement age for current employees aged 50-54 years was 60 years and for those aged 55 years and above was 63 years.
While the impact on some agencies may be more significant, the '54/11 issue' is manageable overall. The effect is expected to peak in 2004/05 (at around 600 exits) and then fall away gradually to about 300 54/11 exits in 2016-17, on the basis of current trends. With the Commonwealth Superannuation Scheme closed, the issue will essentially die out as the remaining members age and leave the Service. In addition, there are options available to agencies to manage specific cases where the individual intends to leave and/or to re-engage on different arrangements former employees who have genuinely resigned. The report provides advice to agencies on these options.
There appears to be a relatively high incidence of retrenchments among mature-aged workers (thirty-five per cent of separations among employees 45 and over last year were retrenchments). Agencies should take steps to ensure that they are not creating expectations in this group that they will receive a redundancy payment as an incentive to depart.
Many mature age employees who have left the service intend to work in the APS again: 71% of current and 75% of former executive level and SES employees reported that they would consider rejoining the APS, or have rejoined. In fact, of those surveyed, 49% of former employees aged 50-54 and 31% of former employees aged 55 and above reported being employed either in the APS or in the wider workforce at the time of the MAC survey.
There is a strong desire on the part of many mature aged employees to work under more flexible arrangements. Of those executive level and SES who have rejoined or would consider rejoining the APS, 90% of current employees and 82% of former employees would prefer to work on a more flexible basis.

Graduate employment

Attraction and retention of graduate entrants will become more difficult as labour market competition increases for a reducing number of new entrants. Job security, interesting work and high quality training provision were key factors attracting graduate recruits to the APS.
Surveys rate access to favourable employment conditions as by far the most important factor encouraging graduates to remain in the APS. Other important factors are the same as those attracting them to the APS in the first place - job security and interesting work.
Although agencies perceive some challenges to retaining graduates and view themselves in competition with other agencies as well as the private sector, they prefer to retain decentralised recruitment. At the same time, they should take advantage of the capacity which the APS has to offer of providing a broad range of employment and skill development opportunities.
Graduate retention has been declining in recent years. Research into graduate employment indicates that although a high proportion of graduates were unsure whether or not they would stay in the APS long term (45%), there remains a significant core of graduates entering the APS with the intention to stay (31%). In addition, there is scope for the lateral recruitment of former APS graduates - 80% of all graduates who reported an intention to leave the APS in the next 10 years, stated they would also consider rejoining.
Most graduates are satisfied with the training they received.

Key implications

A more systematic approach to workforce planning is required across the Service, with a focus on a more integrated approach to ensure alignment with other people management initiatives and better use of demographic information by agencies to assist identification of current and future capability requirements and separation issues.
Agencies need to align their recruitment and retention strategies to meet changing demographics and capability requirements and to be in the best position to compete for skills in the tightening labour market. Both recruitment for graduate programs and lateral recruitment of graduates will become increasingly competitive and will require planned approaches. There may also be value for some agencies in reconsidering their classification structures to ensure they provide alternative pathways for attracting young people into the Service (eg traineeship arrangements).
Family friendly work practices will remain a key feature of agency recruitment and retention strategies.
In response to demographic changes and in recognition of the preferences of the ageing population, more flexibility is required in working patterns and arrangements. Agencies should develop flexible employment options for older workers including part-time work, variable and part-year employment, project and mentoring work, phased retirement and telecommuting, including through more innovative use of AWAs. There is also a need for a more strategic approach to be adopted to performance management for mature-aged employees.
While overall the 54/11 issue will result in a loss of corporate knowledge and expertise, and the impact for some agencies might be significant, it is, on the whole, manageable at the Service-wide level. Furthermore, the significance of the issue will diminish over the next few years. Agency awareness should be raised about the options available to retain key employees and agencies should be encouraged to actively manage potential 54/11 departures as part of workforce planning and succession management strategies.
Further consideration of the future appropriateness of current superannuation arrangements in the APS is recommended.
Awareness raising is also required for agencies and employees about superannuation and retirement planning. The misconception that superannuation provisions act as a barrier to working part-time and/or at a reduced level of employment, where members seek a phased retirement, should be dispelled.
There is need for a more strategic approach to learning and development as an integral element of organisational renewal and for dealing proactively with the changing environment. More structured career development for graduates and lateral recruits is encouraged, together with a focus on continuous learning and development for older workers.
Agencies also need to take a more active approach to knowledge management, particularly where organisations have a number of key people about to depart.