Building Better Governance

Part Three—Departmental Case Studies

Department of Foreign Affairs and Trade

Moving back to a centralised staffing system—why the Department of Foreign Affairs and Trade moved away from a devolved approach and, in order to meet the department’s specific needs, established a centrally-controlled staff placement and performance management system. The new system demonstrates strong leadership, consistency, transparency and accountability.

The department

The aim of the Department of Foreign Affairs and Trade (DFAT) is to advance the interests of Australia and Australians internationally. The department’s goals are to enhance Australia’s security; contribute to growth in Australia’s economy, employment and standard of living; assist Australian travellers and Australians overseas; strengthen global cooperation in ways that advance Australia’s interests; foster public understanding of Australia’s foreign and trade policy and project a positive image of Australia internationally; and manage the Commonwealth’s overseas-owned estate.

The department’s work is carried out by more than 3 400 people employed in Canberra, in state and territory offices and in a network of overseas posts.

The challenge

In the late 1990s, several factors combined to prompt DFAT to change the way it handled placements of existing staff within the department and overseas. In 1998, the department had to manage significant funding cuts and an associated reduction of around 150 staff.

The department also had an inconsistent and, staff were saying, inequitable system for giving staff opportunities to develop their skills and experience by moving to other positions both within the department and to overseas postings. Division heads made most decisions about staff mobility so that staff applications for a move were usually determined largely on the opinion of one or perhaps two senior managers to whom they reported.

As a result of division heads picking the ‘best and brightest’ staff returning from overseas posts, DFAT also found that the devolved system left a pool of staff, paid centrally, who were not in high demand and who were not attached to any specific programme. At the same time, some critical areas were under-resourced.

Finally, some work areas had developed a reputation for being ‘sexy’ and high profile and attracted the most talented staff while other work areas had difficulty attracting good quality staff.

This situation resulted in uneven staff resourcing of both quantity and quality across divisions and across the department. It was also incompatible with any effective strategy to reduce staff numbers while continuing to meet the Government objectives.

The system

In DFAT, the Corporate Management Division (CMD) is now essentially responsible for the placement of all existing Australia-based DFAT staff into internal (including overseas post) vacancies. When divisions or posts have vacancies, they must be submitted to CMD which then arranges for the vacancies to be advertised in administrative circulars.

CMD operates placement advisory committees that meet to consider vacancies and applicants. For placements within Australia, the committees meet approximately every six to eight weeks. For postings overseas, the committees meet twice yearly. Where necessary, committees also meet on an ad hoc basis.

The placement advisory committees consist of staff selected from across the department by CMD on the basis of their experience and skills. One member is from CMD to ensure the process is robust.

Selection and placement decisions are based on operational requirements and the placements/posting preferences of staff. Each division is required to take an even share of staff needing placement. The department no longer has a pool of staff not attributed to a programme.

Another advantage of the centralised system is that it allows the department to respond more effectively to surges in activity or sudden crises. The department can now deploy staff more quickly and more strategically to deal with increased workloads.

CMD also controls the staffing budget allocated to each division. Previously, divisions could use unspent salaries funds for operating expenses. Now divisions have control of administrative and programme budgets, but not their staffing budget.

The introduction of a more robust staff performance management system helped to underpin the success of the centralised staffing system.

Previously, performance ratings were decided entirely by managers. There was no moderating system used across divisions or the department. As a result, 85 per cent of staff were rated as superior or outstanding, rendering ratings meaningless as guides to comparative performance.

DFAT introduced a performance management system which is designed to ensure consistency of approach and fairness through the use of a moderating tool (at present 10 per cent outstanding, 25 per cent superior, with the remaining staff assessed as fully effective, effective or unsatisfactory). It is applied not only across the department but across divisions and broadbands. Because it is applied equally across all divisions, there are no longer ‘sexy’ or high-profile divisions. All divisions now provide staff the opportunity to ‘shine’ and be rewarded. For example, corporate divisions which previously had difficulty attracting talented staff now offer staff opportunities to gain experience and move upwards.

In addition, placement advisory committees use performance ratings to help assess the merit of applicants. Ensuring that performance ratings and referee reports are consistent with each other is a useful mechanism of quality control.

What was done

In 1998 the Secretary had a vision for a more effective, efficient, accountable and equitable staffing system within the department.

The new approach was developed by CMD in consultation with the senior executive. The system works because it has consistent support from the Secretary and the senior executive.

Monitoring

DFAT considers that the system is effectively reviewed by staff each time DFAT’s Collective Agreement (CA) is renegotiated. Minor modifications to the performance management system, for example, have occurred as a result of CA processes.

There is also an established system of regular reporting to both DFAT’s senior executive (quarterly) and division heads (fortnightly) on the operation and outcomes of staff selection processes.

Benefits

The centralised system may not be an effective approach for all agencies, but it meets DFAT’s key needs. One of these needs is characteristic of only a few APS agencies, that is, the ability to deal with staff coming back from overseas postings and an equitable system of giving staff the opportunity to work in posts.

However, DFAT’s other key needs are shared by other departments:

the capacity to live within its budget
an effective system for ensuring the quantity and quality of staff are evenly spread. DFAT’s divisions have an even share of both talented staff and staff needing further development.

DFAT believes that staff have much more confidence in the current system and that it results in just and equitable outcomes. No longer do one or two managers ‘control a person’s fate’. Opportunities in the department are based on fairly applied and consistent performance-based measures.

In summary, DFAT believes the centralised staffing system is more open, accountable and effective in meeting its needs.

Key messages

A basic and essential requirement is a sound information management system. It is essential to know exactly how many staff you have, their level and where they are at any time. DFAT believes that without such a system their particular staffing arrangements would be unsuccessful.
A staff placement system, supported by a strong, consistently applied performance management approach across the department, can address perceived problems such as inconsistency and inequality of development opportunities and staff placement, popular and less popular divisions and placement of returning overseas staff.
Corporate management divisions must have the highest reputation in terms of integrity and impartiality. Otherwise staff, division heads and senior executives will not trust and support the system.
There must be undiluted support from the top. Information management, performance management and staff placement systems cannot work without the full support of the senior executive and the ability of appropriate senior management committees to operate with authority on a day-to-day basis.

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