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Linking our people and our business: The challenge for the APS

The Hon Dr David Kemp MP
Minister Assisting the Prime Minister for the Public Service
Strategic People Management Conference
Canberra 22 September 1997

I want to talk to you today about two themes:

Public administration is a major industry, Government is a major employer, and delivering public services is a business. Part of what you do, particularly the role played by the APS in our system of democratic form of governance, is unique. Much of what you do, including the manner in which you manage your people, is subject to the same economic, social and technological pressures that face other Australian businesses.

The Government is committed to achieving significant micro-economic reform. That involves removing unnecessary red-tape from business, providing greater workplace flexibility, encouraging a direct relationship between employers and employees and providing the incentives necessary to encourage improved industry performance.

Achieving change in the Commonwealth public service is a key element of that process of structural reform. It means removing the monopoly that the APS has had in delivering services to the public on behalf of government. It means acknowledging that the provision of policy advice to governments is now contestable. At the same time it places an obligation on government to provide the APS with the freedom to lift its performance so that it can compete on the basis of cost, quality and effectiveness.

This is not just a matter of legislative reform, important though this is. It is about changing the workplace systems, structures and - most important - culture of the APS. It means building on the finest traditions of Australian public service, its non-partisan professionalism and high ethical standards, in order to meet better the demands of the Australian public, namely the provision of high quality services at least cost to the taxpayer.

Like other Australian businesses it is incumbent on the APS to review performance. It is necessary to recognise that over the last century a number of institutions - including public service - have become inward looking, in part because of legislative constraints. There is a danger of becoming sclerotic with age. Institutions too often become process driven with detailed rules and regulations. Meeting all the process requirements does not always mean that they are doing a good job.

The key to organisational health is whether institutions are delivering outcomes effectively. Every institution - including the APS - needs to review itself periodically, dismantle the accretion of unnecessary rules and regulations and reinvigorate the culture of the institution.

The role of government is changing. This will affect what services are delivered and how they are delivered. Public sector organisations need to be competitive in an environment in which they will be held accountable for the manner in which they deliver services.

Over the last decade the APS response to this challenge has been professional. The foundations of reform have already been laid. The APS has moved to a devolved environment, focused more on results and embraced program budgeting. You more than any other group understand the impact of these changes on organisations and the people in them.

My message for the future is simple. As we prepare Australia to meet the challenges of the 21st Century the pace and scale of reform has to be increased.

The changes flowing from new government objectives, from economic reform and from the periodic need to review performance are all going to continue. The globalisation of economies will place sustained and strong pressure on Governments to improve Australia's competitiveness, including the cost and relevance of Government. The community pressure for better access to improved services at lower cost will grow. So, too, will demand for less regulation.

In this environment I believe that it is vital that we learn how to build high performing organisations within the APS. This means investing in our people even as we downsize.

The challenge for me as Minister for the Public Service and for you as HR experts is: how can we help create APS organisations that are capable of responding creatively to changing public demands?

I believe that there are three things we have to focus on:

These challenges are not peculiar to the public sector. Almost all industries here and overseas are faced with a similar rate of change, similar challenges and high levels of dislocation and structural adjustment.

This conference provides an opportunity for you to help improve your agency's ability to predict, prepare for and manage these challenges. It will help you to lead performance improvement in your agency so that it can better achieve the Government's objectives.

Let me be clear.

When I talk about high performing organisations in the APS I mean organisations that:

I am not saying we don't have lots of highly skilled and committed staff right now. I know that we do. To criticise inefficiencies in the APS is not to criticise public servants: rather it is to recognise the constraints within which they work. Change requires us to invest in their continued development, to provide a more rewarding work environment and to recognise individual and team performance.

The fact is that the pressure for and the rate of change are so great that the APS needs to make sure that it is geared up to deal with tomorrow's challenges in tomorrow's way.

How does this conference fit into the need to align our people and our business?

I understand that this conference is built around the model or theory of human resources developed by David Ulrich at the University of Michigan Business School. The model highlights the need to focus on:

I believe this model is highly relevant to people management in the APS now.

Firstly we have to reposition our thinking squarely into the context of business strategy.

We have to focus on how our people can deliver our strategies. We can't afford approaches that involve doing things that are good to do - we have to focus on the business outcomes.

Second we have to be better at comprehending the changes that have to be made if the Government's objectives are to be met.

These changes have to embody the directions for reform that the Government has set. Some of these changes are structural. However the biggest changes are cultural:

Third we need to understand that the intellectual capital in our organisations is critical.

We have to provide an environment that is motivating and respects the contribution of all of our people. We have to understand that diversity can contribute to productivity. We also have to develop our skill base in a disciplined way. The skills we need in the future will in part be different from the skills we have needed in the past. However we must also recognise that the understanding that the APS has of current and former Government policies is a major national asset. That is where the role of the career public servant remains crucial.

Finally we have to be efficient in the delivery of all our services. This is strategically important. Presently we are not cost competitive in the delivery of HR services ... and I remind you, salaries represents about 70% of the cost of running the public service.

Running a system that ties up too much of your valuable time in non value-added day-to-day activities is a huge opportunity cost to the APS.

We need you to be advising and supporting your organisations and line managers about how to prepare for the changes that are going to continue to happen. We need you to be driving HR strategy not handling personnel crises.

I know that many of you and your agency heads are working actively to find ways of improving the performance of your organisations.

What can the government do to create an environment in which the APS can establish itself as a model of good practice for Australian business?

To remain relevant to Australia's future the key challenge for the APS - and for you - is to find ways to link your people development and your distinctive business goals.

We believe that we have created, through the Workplace Relations Act and the Public Service Bill, the capacity for agencies to adapt their employment practices to better meet their business objectives.

The challenge is now to seize hold of the opportunities for change that are available. It requires an Agenda for Public Service Reform comprising six key elements:

This is an agenda for a high performance APS that I will be developing in more detail over the next three months. It is an agenda on which I seek your active participation.

With that in mind I have set up a direct Email link 'Let the Minister know your high performance innovations in the APS' (apscasestudies@apsc.gov.au) so that you can tell me about the things you have done that are making a real difference to the public service or the things you could achieve if I and the Government were to provide the opportunity. I will be publicly acknowledging all innovations that pass a simple test - that they have helped us better align our people with our business and, consequently, have allowed us to improve the services we provide to the public.

I want to assure you that the purpose of this initiative is to encourage, and provide you with opportunities to learn about how other people in other systems are responding to similar challenges.

Measuring performance is important. All parts of Government, including HR, have to be delivering value for money . The Government has now created the environment in which you can shift the focus of people management toward business outcomes. People management is not a 'soft' issue. It lies at the heart of the reform agenda.

There is of course a challenge. Some speak about a "middle of the pack" syndrome in the APS. There is a natural tendency to be part of the change process but not to draw attention by leading reform. I don't believe that is the right approach at the moment. The cutting-edge is the place to be. Value-for-money for your 'employers', 'shareholders' and 'customers' - i.e. the Australian public - demands a strategic but prudent embrace of risk-taking.

Change has to be driven. Action is required. At its heart lies leadership of people.

The Australian Public Service must adapt to a new set of roles and to provide not only value for money to the community but also high quality service. The challenge for organisations and individuals into the future will be to adapt to change.

So I encourage you to enjoy this conference and use it as an opportunity to reflect on and learn more about how we can link our people and business. In a real sense the future lies in your hands.