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'Innovation with Integrity - the public sector leadership imperative to 2020'

Concurrent Session Address
Vision 2020
IPAA National Conference 2003
Brisbane, Australia

A.S. Podger
Australian Public Service Commissioner

27 November 2003

* I am grateful to Ana Strmota for her assistance in preparation of this paper. This paper includes some detailed material not used in the spoken version.

Good morning. I am pleased to be here today and to have the opportunity to discuss with you the future of the public service. As the Australian Public Service Commissioner under the Public Service Act 1999 I have a 'quality assurance role', evaluating how well the Service is maintaining its integrity in upholding the APS Values, and a 'Service of the future' role, working with people to make sure the APS is fit to meet the challenges of the future. Together these roles are aimed at ensuring the Service continues to fulfil its role as a cornerstone of Australia's democratic system of government, with the integrity, professionalism, commitment and high performance that have generally been its hallmarks through our nation's history. As a public servant of over thirty years my commitment to this job runs deep.

The theme of this conference is Vision 2020 and I have been asked to talk about the leadership challenges the public sector will face in 2020.

2020 is a very long time off. A hundred years ago, in the optimism that still surrounded our recent Federation, who would have foreseen the launch of the First World War, or the emerging role of air transport and radio in our post-war society? Major shocks such as wars cannot be foreseen decades in advance, but even more incremental change is hard to pick with any certainty. Indeed, there is evidence of accelerating rates of change, as new technologies feed off each other and as the impact is relayed almost instantaneously around the globe. If our antecedents could not, in 1903, have predicted how Australian society would operate in 1920, how likely is it today that we might predict Australian society in 2020?

While I will today touch on some of the changes I expect to take place, for the most part I want to focus on our capacity to adjust to change, whatever that change may be, acknowledging that the rate of change is likely to continue to increase.

In looking twenty years ahead I have therefore framed my presentation into four parts. The first part looks at known future challenges. Those things that are already evident as issues with long term implications the impact of which we can to some degree anticipate. The second looks at the unknown challenges: those issues and changes that we can anticipate will emerge but the consequences of which are hard to see, and those issues and changes we cannot even anticipate. The third part looks at what we might do to best prepare ourselves to meet, in particular, the challenges of the unknown. And in the fourth part I will present some of the work the Commission currently has underway to help prepare the Service to meet the challenges of the future.

With the invitation to present at today's conference came the request that I not take a retrospective, but a prospective view. But the future is always entwined with the past and by definition takes place in the present. Therefore, before I talk to you about what we know we can expect in the years to 2020, I want to briefly say a little bit about where we are today, why we are here and then talk about what that means for our future.

You'll be relieved to know, that in my brief retrospective, I don't intend to take you through a century of public sector reform, but to focus on more recent developments. I also intend to speak from a national perspective, although I note that most of the service delivery that happens in Australia's public sector is at the state, territory and local government levels, and hence most of our public sector employees work at these levels, and some of you here today represent these different jurisdictions.

However, I believe that the picture I paint today is equally applicable to jurisdictions beyond the Commonwealth public sector and that my state and local government colleagues will be able to relate them to their experience.

For those of you who might be interested in a detailed analysis of public sector reform in our three-tier governance system, I refer you to a recent Commission publication The Australian Experience of Public Sector Reform, which appeared in June this year and is available on the Commission's website.

A view of recent reforms

From a Commonwealth perspective, the introduction of the Public Service Act 1999 (the Act) represented the culmination of two decades of particularly intensive public sector reform, in a century of continuous incremental reform across the whole of the Australian public sector. One commentator has termed this experience 'a major reconceptualisation of the role of government' in comparison with what had gone before (Nethercote 2003:12). Behind this reshaping were:

Australia has grappled with such challenges in ways that are consistent with the 'New Public Management' (NPM) theory. The chief hallmarks of NPM are flexibility and agility, in recognition of the need to respond to an environment of increasing complexity and fluidity. Its most common themes have been:

Many of you will be intimately familiar with these aspects of NPM having worked and lived through this reform agenda. Some of you may also be cynical of, and feel jaded by, the rhetoric surrounding a lot of it. But I contend, and I think the evidence shows, that the reality today is a better performing public sector. The current term is "reinvented Government": we have the same underlying objectives viz social protection, the provision of public goods, and a stable legal framework within which individuals and organisations can confidently go about their own business - but we have much more dynamic, effective and efficient ways of achieving them.

Our recent reform experience has recognised that the rapid pace of technological advance and its ensuing social, political and economic impacts have created an environment of unprecedented complexity and fluidity and that our national institutions need to be agile, flexible and innovative, but also resilient, if they are to continue to perform their functions effectively.

That is not to say that this is the end of reform, or that the very process we undertook to improve our capability hasn't created new obstacles to be overcome. It has been my experience over the years, that even the best of our solutions have unintended consequences and create a new set of circumstances that require our attention.

At this point I would like to herald a warning that I'm sure will resonate with many of you. I think one of the real tensions of growing importance, and reflected in the reform process, is how we balance the need to respond effectively to our very real immediate challenges with the need to maintain long-term sustainability in our social, economic and political systems. The task of the public service is not only to be responsive to the immediate agendas of the government and the community, but also to look to the future benefit of society to ensure that governments can also address longer-term issues. We must be conscious of the balancing act we need to play between the imperative to innovate and the imperative to ensure sustainability.

I propose to you that this is one of our greatest challenges and will be an increasingly difficult one as the pace of technological advance continues to accelerate and the pressure for instantaneous decisions increases.

The free market provides the main means for flexible management of change, and it should not come as a surprise that governments around the world are including in their reforms more use of markets and quasi-markets. But there is a unique role for the public sector to develop, sustain and refine various frameworks which facilitate the operation of free markets and provide stability for people to go about their business and daily lives with confidence. Those frameworks are also needed to give government the capacity to consider longer-term issues, and to continue to be able to do so into the future.

I will come back to this point a little later when I explore how we might position ourselves in a more rapidly changing environment. But now I want talk about some of our known challenges to 2020.

Known future challenges

Whole of Government

Throughout democratic nations governments are searching for new ways to find solutions to problems that cross governments (both national and international), cross jurisdictions, cross sectors and cross portfolios. The terminology used to describe this concept varies. You will have heard reference to 'whole of government', 'joined up government', 'networked government' and 'connected government'.

Although this differing terminology might reflect slightly different interpretations of the breadth of boundaries across which government has to work, the essential challenge is the same. How do we develop the structures and cultures that enable us to work across these boundaries, and what are the systemic treatments we might have to make.

The Prime Minister, John Howard, noted in his address marking the centenary of the APS:

We live in an increasingly complex and interdependent environment and there is no doubt that, in recent years, issues have more consistently reached across traditional portfolio boundaries. This trend will continue. Whole of government approaches, collectively owned by several Ministers, will increasingly become a common response.

Senior Public Servants and their staff will need to find ways to minimise any limitations associated with what could be described as the 'Silo Effect'.

The importance of this challenge is evidently increasing. Again, the drivers are new technology extending and accelerating connections around the world, and increasing community expectations whether for seamless services or for greater capacity to influence government.

At a Commission lunchtime seminar in June, Dr Peter Shergold, Secretary of the Department of Prime Minister and Cabinet, mentioned four examples of public policy issues that transcend existing Commonwealth and state structures as an illustration of this emerging trend. They were:

A decade or two ago our initial response to such policy challenges, would be to consider machinery of government changes - a new welfare department, or children's commission or energy agency or homeland security department. That might still be part of our solution. But I think these days we have a greater appreciation of the complexity of systems and the need for systemic responses that go beyond structures. Therefore, I agree with Peter that meeting the challenge of co-ordinating a successful whole of government approach has a significant cultural change aspect. Certainly not the only aspect but I believe an important one.

In recognition of the growing emphasis of a whole of government approach and the significant challenge it poses, the Management Advisory Committee is currently finalising a research project on the issue. The project is adopting a systemic view and looks to address six particular aspects:

In a devolved environment that structurally emphasises vertical alignment rather than horizontal alignment the challenge to whole of government is magnified. But I would not suggest a structural return to the centre. I think the reform process has left us with the seeds of an infrastructure to facilitate better horizontal alignment through the 1999 Act which incorporates obligations for agency heads, senior executives and the Commissioner to uphold and promote the APS Values. These values include 'leadership of the highest quality' and 'a career based service to enhance the effectiveness and cohesion of Australia's democratic system of government'. Members of the senior executive service of the APS also have a statutory obligation to 'promote co-operation with other agencies'.

The challenge for us then is to create the culture, that will enable the structure, whatever the structure might be. In his June speech Peter captured this tension between structure and culture in a nice example when he said:

'… Too often the pursuit of seamless government is articulated through the bureaucratic vehicle - the Inter-Departmental Committee (IDC) or the Task Force - rather than through the behaviours of those who steer it. Just as a group of employees is not necessarily a team, so a meeting of agencies is not necessarily a cooperative.'

The seeds that our reform process has planted and that we have to nurture and grow to create this enabling culture are the Values and the nature of our leadership. These are key statutory obligations for me under the Act and define a significant role for the Commission.

The emphasis on values in our Public Service Act 1999 is to provide an integrity framework without the central prescriptive rules that have previously been seen as getting in the way of organisational flexibility and agility. Values are about relationships and behaviours. The Commission has put a lot of effort recently into clarifying the APS Values and in helping agencies understand what they need to do to embed them into their culture and get beyond rhetoric.

Leadership is also concerned with relationships, and is another vital ingredient in the capacity to manage across boundaries.

At the Commission we are currently initiating some work in this area via the Integrated Leadership Strategy, which includes the development of a framework that articulates the key leadership behaviours that enable high performance in a whole of government role, and the provision of support services for task forces and IDC's, amongst other things. I'll speak about the Integrated Leadership Strategy a little later.

I want to now move to the other known significant challenge facing us in the years to 2020 - the ageing demographic challenge facing the Australian workforce including the APS.

The ageing workforce

The APS is facing the likely departure of a significant proportion of its workforce over the next five years. It is estimated at approximately 23%. About 47% of our SES are now over 50 and therefore could retire in the next five years. These figures are extracted from the MAC Organisational Renewal Report (Management Advisory Committee, Organisational Renewal 2003:2) published earlier this year, and my State of the Service Report being tabled this week. This makes workforce planning an important issue for the APS and considering this is a reflection of a broader trend across the Australian workforce I'm sure this is an issue for our colleagues from the states and territories.

A recent report we commissioned from the National Institute of Governance, on emerging public service leadership issues, noted that in the Victorian public service the age profile for the feeder group to the senior executive cohort was the same as the age of the cohort itself. We have a somewhat similar picture, suggesting that the standard approach of people moving up steadily to fill emerging vanacies may not work in the coming decade. A more active management strategy is needed.

The MAC report emphasised the need for agencies to adopt systemic workforce planning as part of 'organisational renewal'. The report analyses our aging workforce, trends in recruitment and retention of graduates and trends in mobility generally, and identifies major challenges facing the APS.

The impending 'changing of the guard' with a large cohort nearing retirement will require careful management, both to avoid a sudden loss of essential corporate knowledge and expertise, and to more carefully develop our younger emerging leaders. We also need to consider our longer-term sustainability by focussing on developing our younger recruits and ensuring we retain (or regain) the best of them in our more mobile workforce.

The report identifies a number of areas agencies need to focus upon, in the context of better workforce planning. These include more flexible employment options for those approaching retirement age, more careful succession management to position younger employees for leadership positions; and more structured learning and development particularly for young graduates and other recruits.

Since the report, a lot more work has been done including a paper by the Commission on Succession Management, highlighting that this is not inconsistent with merit but, indeed can reinforce the merit principle. A suite of other support materials is being released right now to help agencies and employees to address the ageing issue, covering such matters as superannuation, flexible employment options and occupational health and safety.

I would not say that the APS is facing a crisis in its workforce demographic but unless we start acting now to put in measures to ensure the sustainability of our workforce we might just find ourselves in the middle of one in 5 - 10 years. Again the Commission is undertaking some additional work in this area through its Integrated Leadership Strategy.

Unknown challenges

I want to now move to the unknown challenges, particularly, the ongoing impact of the rapid pace of technological advance and the possibility of major shocks, or changes in society whose impacts are impossible to assess accurately in advance.

Precisely because they are not known, I cannot deal with them at any length. But they are vitally important.

Looking back over the last 20 years or so, technology has clearly been the single most important cause of structural change in the APS. For example, the proportion of APS employees at the two lowest level (APS 1-2) has fallen from nearly 50%, to under 7% and is still falling. While outsourcing and commercialisation have contributed to this, by far the most important factor has been ICT, which led to multi-skilling in the 1980's and the loss of demand for low skilled and certain technical jobs, such as typing, compiling, data entry and so on.

On the other hand new areas of expertise have emerged along with increased demand for 'generalist' skills such as in gathering, synthesising and assessing information and in shaping strategic directions.

In preparing for future technological change, we need a workforce that has sufficient intellectual and adaptive skills, and an attitude that thirsts for continued learning. Mobility and diversity will be important, and I suspect most elements of the NPM approach I have referred to earlier, will remain relevant. In particular, the use of market mechanisms and outsourcing to help us retain flexibility and provide particular technical expertise as it is needed.

Yet I do not predict the 'hollow government' others have warned we face. We will not be a small group of generalists and purchasers, in my view. Technology may make some skills redundant, but it has always led to a deepening of skills in other areas. At the very least we need to be informed buyers of expertise and to have the capacity for strategic use of expertise.

Personally I suspect the APS will need to maintain expert capabilities inside, and to have people who can develop new areas of technical expertise as new technology demands this.

The other unknown challenge concerns big shocks, and big societal changes. It is almost impossible to distinguish tides and eddies when looking to the future. Over the last century, the shocks of world wars, depression, the 1970's oil crisis, the 1990's demise of communism, had some of the biggest impacts on the world, but there were few who accurately forecast any of them and their wisdom was only acknowledged by most authorities in hindsight. Terrorism is clearly having a major impact since September 11, though for how long and with what effect is still unclear.

Societal changes are usually more predictable than such big shocks, but not necessarily their scale. Women's participation in the workforce is an example from the last half century. Ageing, we have already spoken about for the next half century. But other big changes may emerge, say around population movement around the globe.

Can we at least protect ourselves from some of the adverse impacts of unexpected change? Certainly risk management is generally getting more attention, and people involved in defence and in economics put a lot of effort into strategies such as appropriate levels of redundancy, and sufficient degrees of freedom in the economy to help make necessary adjustment.

Preparing for the unknown future

In entering this phase of the discussion I want to reflect again on the objectives of the last decades of reform, namely, to move the public sector from being a rather brittle and cumbersome system, to an agile and flexible system. I want you to think about the modern public service as a complex adaptive system with a specific role to play within a still grander complex adaptive system.

In his book The Clock of the Long Now - Time and responsibility, Stewart Brand discusses how complex adaptive systems manage change - how they incorporate and absorb shocks. The answer he suggests lies in the relationship between the components in a system that have different change rates and different scales of size. Brand's model is derived from ecology and applied to civilisation and has six layers which I will list in order from fast moving to slow moving.

Brand says that in a healthy society each level is allowed to operate at its own pace safely sustained by the slower levels below and kept invigorated by the livelier levels above. Each layer must respect the different pace of the others. Brand uses the example that if commerce is allowed by governance and culture to push nature at a commercial pace all supporting natural forests and fisheries will be lost. Those of you working in the environmental fields will appreciate this example I imagine.

Within this model the public service sits in the governance layer with the role to balance the drive for change with the need for continuity. I would like to cascade this model down a couple of levels and to simplify it for the sake of the brevity of this discussion.

First, if we adopt a three layered system approach consisting of innovation at the top, governance in the middle and culture at the bottom we present a pretty good picture of the end product of the reform process, namely we have a service where innovation is fostered by leadership, the values underpin the culture of the system and governance balances the tension between the two to produce long term sustainability.

As I mentioned earlier, I believe that the reform process has left us with the seeds to grow an infrastructure that will create a public service system that is robust and sustainable because of the agility and flexibility that has been allowed, and even encouraged, by the transition to a devolved values based environment.

But we have some way to go. We are in the middle of a change yet to be completed and it is the responsibility of our public sector leadership to take the baton forward. On that note I want to talk about the role of leadership in all this and the leadership challenge.

Leadership

As mentioned earlier one of the characteristics of NPM is a growing emphasis on leadership which parallels the interest in values-based management. This is a logical evolution and as a colleague from New Zealand observed the increasing focus on leadership appears to be a natural evolution of the growing knowledge economy, and the challenge of managing more rapid change and increased uncertainty.

Leadership has a somewhat similar 'feel' to values-based management, entailing less emphasis on direction and more on 'nurturing', 'empowering' and 'persuading'; less reliance on rules and more with relationships and judgement. It has less reliance on structures, and more on the here and now; and finally, a greater stress on the strategic and organisational issues of the future.

In discussing how to successfully bring about organisational change John Kotter argues in his book, The Heart of Change, that the central challenge is changing people's behaviour - what people do, and the need for significant shifts in what people do. Changing behaviour, he suggests is less about influencing their thoughts than about helping them to see a truth to influence their feelings. Both thinking and feeling are essential, but he argues, the heart of change is in the emotions.

People change what they do less because they are given analysis that shifts their thinking than because they are shown a truth that influences their feelings (Kotter & Cohen 2002:1)

In 1998 the Commission developed a Senior Executive Leadership Capability Framework (the SELC Framework). The SELC Framework identifies in quite rich details the skills, capabilities and attitudes we expect of leaders in the Service and reflects the kind of emotional intelligence that Kotter describes as essential to leadership if it is to successfully drive change.

But I want to herald another warning here. Like values-based-management, 'leadership' also runs the risk of being too rhetorical, rather than hard-nosed, and of being 'faddish' rather than real. Therefore, recently we have tried to emphasise the hard management skills such as financial management, project management, corporate planning and risk management, that are built into the Framework. Again we are trying to strike a balance, and to emphasise that leadership is absolutely essential - but alone is not enough.

I recently met an Irishman from the Kennedy School of Government, Hugh O'Doherty, who spoke powerfully about leadership, with extraordinary examples from Northern Ireland. He was concerned about the trivialisation of the term, and about leadership being glorified in current rhetoric. For him leadership is about addressing messy, ill-defined problems, about taking risks by pursuing possible solutions that go beyond your authority, about forcing people to move outside their comfort zones in order to address ingrained problems.

His concerns were slightly different to my own, but resonated strongly with me. We must get beyond the rhetoric and ensure our focus on leadership is tangible and genuinely contributes to good decision-making in government.

In our current work in the Commission we are trying to create a picture of leadership that reflects a symbiotic relationship between leadership, management and technical skills. One enables and influences the others and all need to be demonstrated at different times and to different degrees.

The picture I have been trying to paint for you about our future is essentially a positive one. The reform process we have experienced over the last last two decades has generally left us with a more robust and adaptable Service. We have a devolved environment to give us agility, a set of values, as opposed to tombs of rules, to give us flexibility, and leadership to encourage innovation. No doubt, there are also negatives about our recent experience, each change having weaknesses as well as strengths.

But now we have to build on our new foundations and make them solid. We have to integrate devolution with coherence so that we can move effectively as a whole as well as in parts. Our leadership and our Values together represent the components of the cement. Now we need to integrate them effectively to get the right consistency that will enable the system to deliver innovation with integrity and maintain long-term sustainability.

On that note I would like to end this presentation by briefly talking about an initiative that the Commission is currently developing to facilitate a systemic approach to APS wide leadership capability development. We've called it the Integrated Leadership Strategy. I don't want to go into too much of the detail of the strategy, really just to give you an indicator of what we are trying to achieve, how we intend to go about it and where we're at.

Integrated Leadership Strategy

Aim

The Integrated Leadership Strategy aims to enhance the capacity of the APS to adopt a systemic approach to APS wide leadership capability development in the short and medium term, encompassing the key leadership challenges facing public sector leaders and the critical demographic issues that confront the Australian workforce, including the APS.

The strategy is to create an infrastructure that will facilitate a collaborative approach between the Commission and agencies to building sustainable APS leadership that delivers innovative solutions to current and emerging government priorities, and inculcates the APS Values to strengthen the long term integrity of the APS as a cornerstone of Australia's democratic system of government.

Strategic themes

Under the broad subtitle of 'Innovation with Integrity' are three themes:

  1. Fostering leadership that shows innovation not only to support agencies' business outcomes but also in working across organisational boundaries
  2. Fostering sustainability in APS leadership capability
  3. Protecting integrity by upholding and promoting the APS Values

The diagram below reflects the model for the ILS.

Chart: sustainable leadership framework

Objectives

These themes translate into some specific objectives for the ILS:

Under Innovation

Under Sustainability

Under Integrity

The infrastructure

Development and implementation of a broad infrastructure will provide the vehicle for delivering on the objectives. The infrastructure will include :

Other elements of the infrastructure are:

Specific initiatives

At this stage we have a number of strategic initiatives coming out of the ILS but I'll just list some of the key ones for your illustration. They are:

I want to take a few minutes now to talk about the APS Leadership Capability Development Pathway, a key initiative under the ILS.

APS Leadership Capability Development Pathway (the Pathway)

The purpose of the Pathway is to support building and sustaining strong APS wide leadership. It was primarily designed to inform and support leadership capability and career development for APS staff from Executive Level 1 to Senior Executive Band 3 level and to help develop a shared understanding of the type of leadership required by the APS at these different levels. The Pathway can also assist agencies as they address their particular requirements for leadership, management and technical skills by allowing them to draw on and adapt APS wide experience and expertise.

In developing the Pathway the Commission adopted the same rigorous methodology that was used to develop the SELC Framework. Through a process of interviews, and focus groups we drew on the knowledge and experience of over 250 APS representatives from Executive Level (EL)1 to Agency Heads. The draft of the Pathway was then sent out for further consultation and comment to all APS senior executives, a large portion of EL1's and 2's and a number of agency heads.

The Pathway is essentially an extension of the SELC Framework. It has the same five core capability clusters for defining high performance:

The difference between the levels appears in the behavioural indicators for each cluster. I don't intend to take you through all the differences that appear as you move through the pathway, except to say that some of them are understandably quite subtle and others are more distinctive. But just as an indicator, the general trend is that the greatest shifts are in the clusters of shapes strategic thinking, achieves results, and cultivates productive working relationship.

During the development and consultation process agencies expressed their interest in customising the Pathway for other applications such as; workforce planning, talent identification and performance management.

For those of you who are interested, the Pathway material is available from the Commission now and I'll provide contact details at the end. The material will be available in two formats.

The first is a Practitioners' Resource which is currently being finalised as an exposure draft in preparation for a consultation phase with agencies. We intend to use the consultation phase to refine the format and content of the Practitioners' Resource and to develop appropriate tools to assist agencies in customising the Pathway to meet their particular requirements.

The second format will be aimed at individual staff at the various levels EL1 - SES Band 3 and will come in the form of a series of capability development guides, which will include a profile of their level and the next level, and tools to help them assess their capability level and produce a development plan.

Next steps

During February and March next year the Commission will be undertaking extensive consultations with agencies to seek their input into finalisation of the Practitioners' Resource and the capability development guides to ensure we provide valuable products that meet agency needs.

For those of you who are interested in more information on the Integrated Leadership Strategy, the SELC Framework or the Pathway material I've included contact details for our Leadership Strategy Group in the next slide.

Conclusion

Just to sum up what I've said today. The future is hard to predict. Harder now than ever, because of more rapid change. We can expect that the whole of government focus will increase and we can do something toward that today. We can expect that the demographic challenges facing the broader Australian workforce are going to face us to and we can do something toward that today.

We can expect that technological advance will accelerate but we can't necessarily predict how this will impact on us. Nor can we predict other possible societal changes or major shocks. However the years of reform that we have gone through have left us in a pretty good position - we now need to take up the baton and grow the seeds those reforms planted. I think if we can build our capability to deliver innovation with integrity we will be better positioned to deal with the unknown.

Just in closing I'd like to thank you all for your interest and participation today. I regret I couldn't give you a checklist of the top ten challenges that will be facing you when you come to work on 27 November 2020. But I hope I've given you some food for thought and before we move to questions I'd like to leave you with one more thought.

Through the reform process we've spent a lot of time getting the structure right; we now need to spend time on helping our people to get the rest of it right.

 

Thank you.

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