Agency Health: Monitoring agency health and improving performance

Introduction

Corporate health is about the ability of APS organisations to deliver high-quality and timely outcomes. It includes governance issues like how an organisation is managed, its corporate and other structures, its culture, its policies and strategies, and the way it deals with its various stakeholders.¹ High levels of corporate health are directly linked to high levels of overall performance.

In the APS context, a high-performing agency is one that is able to use available resources efficiently and effectively to deliver its goals, realise its mission and deliver the outcomes required of it by the Government.² High-performing agencies are flexible and adaptable, able to respond quickly to changes in Government direction or in their operating environment so as to continue to deliver effective outcomes. They are future focused, concentrating not only on immediate pressures and demands, but on strategies to ensure that they will continue to be able to deliver high-quality outcomes into the future.

There have been a range of improvement initiatives across government to track the achievement of business objectives. The work of the Cabinet Implementation Unit in the Department of the Prime Minister and Cabinet, in ensuring that major government projects are being planned, monitored and delivered effectively, and the introduction by the Department of Finance and Administration of the Gateway Review process, a project assurance methodology that involves short, intensive reviews at critical stages of a project, are recent examples.³ Other initiatives have concentrated on financial management, information and communications technology (ICT), and people management. At the agency level, agencies have increasingly become outcome-focused while taking into account the needs of a range of stakeholders. Individual performance management strategies are in place across the APS.

Conventional performance management frameworks, however, can have limitations. They tend to focus on measuring immediate past performance and are not always the best way of alerting agencies to warning signs of potential problems with future performance. This is a particular concern in the public sector where the consequences of a failure to achieve outcomes can be significant in terms of the economy, national security, the welfare of the community, and public confidence.

To address this issue, performance management in the APS has been increasingly supplemented by risk management approaches. Risk management encourages APS agencies to identify the risks that could potentially harm their business objectives, and provide the strategies, processes and tools to monitor, recognise and deal with these risks. One of the potential risks facing any APS agency is a failure in corporate health.

There has been a strong focus on the link between corporate health and performance in private sector management literature. As far back as the late 1980s work was undertaken in the management consultancy field to identify warning signals, categorise decline phases, and provide frameworks to help managers reverse the direction of decline in an organisation.⁴ Reflecting a series of high-profile corporate failures, there has been a recent resurgence of interest in the field of detecting warning signals of underperformance in the private sector.

In the public sector, work on the link between corporate health and agency performance is in its infancy. More information is generally available from audits, inquiries or reviews that examine incidents after they have occurred than work on identifying signs of impending problems. Nevertheless, the key elements of corporate health that emerge from the literature apply to both the public and private sectors.

This publication is designed as a resource for APS agencies to use to facilitate discussions about the corporate health of their agencies. Monitoring the health of an agency in each of the identified areas allows agencies to ‘take the pulse’ of their organisation, and to identify early warning signs that they may be at risk of poor performance.⁵

Corporate health is of course a relative concept which needs to take account of an agency’s operations and their context. It is not possible to provide definitive measures that will apply to all APS agencies, and which will allow agency heads to produce a comparable measure of their corporate health. Instead, we identify indicators that are likely to be relevant to a discussion about corporate health. It will be up to each agency to interpret its performance against these indicators in light of its own operational context, and to identify areas where it may need to concentrate to improve its corporate health.

This publication draws on articles from the academic and management consultancy literature, as well as specific examples of public service agencies where corporate health concerns have led to poor performance outcomes. It also reflects input from the Public Service Commissioners of the Australian states and territories, the New Zealand State Services Commissioner, and a range of Portfolio Secretaries. The Commission is grateful for their contribution.

The paper identifies:

key indicators of corporate health
the characteristics of high-performing organisations
the characteristics of organisations at risk of poor performance
strategies for monitoring and assessing corporate health.

The publication does not pretend to provide the solutions for agencies which discover that they need to improve their corporate health. Instead, the focus is on providing a resource to assist in identifying emerging problems so that they can be quickly addressed. It is up to agencies to identify suitable measures appropriate to their own operational context.

1 Australian National Audit Office, Public Sector Governance Vol. 1: Framework, Processes and Practices, Better Practice Guide (July 2003) <http://www.anao.gov.au>

2 Performance means the proficiency of an agency in using its resources efficiently and effectively to achieve its performance targets.

3 For the Cabinet Implementation Unit see http://www.pmc.gov.au/implementation/index.cfm and for the Gateway Review process see http://www.finance.gov.au/gateway.

4 P. S. Scherrer, ‘From Warning to Crisis: A Turnaround Primer’, Management Review, Vol. 77, No. 9, September 1988, p. 30. Scherrer was executive director of the Turnaround Management Association, based in Chapel Hill, North Carolina.

5 Poor performance refers to the inability of an APS agency to deliver its goals, its mission and the outcomes required of it by the government in a sustainable and efficient manner.

Downloads:

Contents:

Site help

Site menu

Agency Health: Monitoring agency health and improving performance

Introduction