Performance management in the APS: A strategic framework

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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Executive summary

Performance management fundamental in the APS

Performance management is an essential tool that is relevant at all levels in all Australian Public Service (APS) agencies. It provides a means to improve organisational performance by linking and aligning individual, team and organisational objectives and results. It also provides a means to recognise and reward good performance and to manage under-performance.

Application consistent with legislation and APS values

The APS Values, legislated through the Public Service Act 1999, make clear that achieving results and managing performance are central to the work of the APS. The ways in which agencies give effect to this value must also take into account, and should be consistent with, the other values and the broader legislative framework of the APS. The new public service management framework is not prescriptive and provides agencies with the flexibility to adopt approaches to performance management that are tailored to best serve the diverse needs of the organisations that make up the APS.

An integrated framework

Performance management in the APS is the use of interrelated strategies and activities to improve the performance of individuals, teams and organisations. Its purpose is to enhance the achievement of agency organisational goals and outcomes for the government. Effective performance management requires a framework that integrates organisational, business and individual planning and performance. It can involve:

clarifying performance objectives (this could include tasks, outcomes, behaviours and values based systems or a combination of these) and linking these with organisational business plans;
periodic performance appraisal of individuals or teams against the achievement of these objectives;
feedback from this appraisal;
recognition or reward for performance, including performance pay, salary progression guided by performance or non-pay reward systems;
team and individual development to build capabilities;
counselling, or other action to deal with poor performance;
establishing a link between the development of capabilities with organisational and business planning (i.e. not only cascading down from corporate and business planning outcomes but also having a system that feeds back up); and
evaluating the contribution of individual, team and organisational performance.

This definition has a focus on managing performance to meet the Government's required outcomes.

A generalised performance management network

Effective performance management enables employees and teams to understand the goals of the organisation and to identify how individual and team outputs contribute to the achievement of organisational objectives in line with APS values.

Integrating people, planning and performance with organisational objectives develops individual and organisational capability and leads to higher performance The performance appraisal process articulates the standards of work expected and the values and behaviours employees are expected to uphold in meeting their job requirements and in communicating and working with others Performance management should focus efforts more closely on the objective and needs of the organisation. Performance appraisal and feedback assists employees to understand what work they do well, where their development needs are and how they can improve their performance.

CEOs have significant capacity and flexibility

The Financial Management and Accountability Act 1997, Commonwealth Authorities and Companies Act 1997, the Workplace Relations Act 1996, and the Public Service Act 1999comprise a legislative framework that focuses on effectiveness and the achievement of organisational objectives. The framework provides Agency Heads with significant flexibility to pursue results and to tailor their approaches to managing performance to best suit the needs of their own organisations.

Although there may be many common elements, performance management frameworks are diverse and what works best in a particular organisation will depend on a range of environmental factors - CEO leadership, nature of business and culture, organisational history, the maturity of performance management systems and the workplace relation's climate.

These environmental issues can influence and guide the development of performance management approaches in particular agencies. However, cultures are not immutable and the application of performance management techniques will in turn influence the direction and development of changes in organisational culture.

Key elements of good practice identified

Key elements of good practice in the design and implementation of effective performance management systems in public sector agencies can be summarised as:

Alignment

Designing performance management based on a detailed understanding of the outcomes sought by government and stakeholders, the nature of the business, its goals, clients, and performance measures, as well as its culture, history and where a CEO wishes to take the organisation.

Credibility

Engaging and winning the support and confidence of staff through transparency, fairness, simplicity, progressive implementation, CEO and management commitment, reducing the gap between rhetoric and reality and by addressing poor performance.

Integration

Ensuring that performance management is part of the overall corporate management structure of the organisation, that there is a clear ‘line of sight' for staff between their responsibilities and the objectives of the organisation and that implementation is planned carefully and with an adequate training component.

Alignment	Credibility	Integration
Outcomes sought by government Consistency with APS values and legislative framework Nature of the business Client and stakeholder expectations History with performance management Maturity of systems Organisational values Industrial climate	CEO and Executive commitment Review and simplicity Fairness and trust Multi-source feedback Addressing the rhetoric - reality gap Dealing with underperformance Reporting of outcomes Staff ownership of the system	Line of sight between corporate and individual goals Embedded in a system of organisational performance management Link to training and career development On-line delivery

A checklist for design/review

These factors constitute a good practice checklist for agencies designing or reviewing their performance management systems.

Significant progress but challenges remain

Performance management in the APS can be described as ‘work in progress'. Significant progress has been made but major challenges remain, especially on the issues of credibility and staff engagement. In addition to this framework for good practice in performance management, MAC has identified a number of issues for further attention.

Need to understand contribution to organisational performance

Performance review and feedback

Approaches to assessing organisational performance are still being developed, with implications for a range of management responsibilities, including understanding the contribution of performance management to organisations. Better measures of both individual and organisational performance will continue to be developed.

Performance remuneration only one component of performance management

Reward and recognition strategies

All APS agencies apply performance-linked remuneration in line with the appropriate legislative and policy frameworks - the Commissioner's Directions under the Public Service Act 1999and the Government's Policy Parameters for Agreement Making in the APS.

The various approaches to performance management build on and complement these frameworks by linking other systems of recognition and reward, ranging from positive feedback through to performance bonus or other performance related rewards. However, it is important to keep performance-related remuneration in perspective as only one component of performance management and of broader approaches to reward and recognition, and to acknowledge the diversity of views and approaches on this subject.

Important to manage both ‘what' and ‘how'

APS environment and values

An appropriate balance needs to be struck between managing resources and achieving outcomes on one hand, and managing individual behaviour through a values based system on the other.

Within an environment of devolution and diversity, the APS values and Code of Conduct are an essential cohering force for concepts of a single service. The Public Service Act requires that Agency Heads uphold and promote the APS values and, similarly, APS employees are bound to uphold the APS values. The balance between greater flexibility on the one hand and accountability on the other hand should continue to be monitored.

Management philosophy vital

The management approach and philosophy of Agency Heads

The devolution of responsibility to Agency Heads has had a marked positive impact on stimulating innovative approaches to performance management.

It is important that CEOs continue to have the ability to implement flexible performance management regimes, including as appropriate, performance remuneration schemes, which are tailored to the particular needs of the agency they head.

Management of poor performance a key challenge

Handling under-performance

The challenge of handling under-performance is a key one for the overall credibility of performance management. Managers in the APS are conscious of this need and are starting to respond. Nonetheless, leaders need to give the management of under-performance high priority and ensure that results are achieved.