Chapter 8: Organisational capability

Abbreviations

A list of the abbreviations used in this report is available in the Glossary

Workforce planning

APS agencies are increasingly recognising the importance of workforce planning, with a trend to greater use of formal workforce planning over the last few years. This year, over half of agencies (58%) had in place policies, strategies and/or frameworks that aim to ensure they have the skills and capabilities needed for the next one to five years. Most other agencies (37%) had these strategies in development.

The proportion of agencies with formal strategies in place was substantially higher than in the previous two years (41% of agencies in 2003–04 and 43% in 2004–05), perhaps reflecting a renewed emphasis on workforce planning emerging from Managing and Sustaining the APS Workforce. The report calls on all APS agencies to undertake systematic workforce planning to identify emerging issues and challenges in relation to the recruitment, development, advancement and succession of their employees. Large agencies were slightly more likely than medium or small agencies to have these arrangements in place.

Workforce risk assessment in relation to organisational capability was also undertaken by almost half of all agencies (45%). As for formal workforce planning, large agencies were more likely than small or medium agencies to have undertaken such an assessment.

Agencies that had conducted a workforce risk assessment had addressed a range of issues (see Figure 8.1). These included the workforce implications of the strategic direction of the agency, the likelihood and consequences of staff shortages—both in terms of overall staff numbers and in relation to critical occupations or competencies for the agency—and the short-term and long-term consequences of staff shortages. The issue of shortages in critical occupations or competencies had been addressed by all but one agency conducting a workforce risk assessment.

Figure 8.1: Elements of workforce risk assessments (where assessment undertaken), by agency size, 2005–06

Source: Agency survey

Current workforce challenges

Consistent with the growing emphasis on workforce planning, agencies reported facing a range of workforce challenges (see Figure 8.2). The most common challenge faced by almost all agencies this year was recruiting experienced people with the required skills. The majority of agencies also reported the loss of valued mature-aged employees as a workforce challenge. Agencies were least likely to view the lack of sufficiently strong leadership skills at the SES level, and lower than acceptable employee turnover, as challenges.

There is evidence of increasing skill shortages for agencies over the last three years, with agencies reporting difficulty recruiting people (other than through a graduate programme) with required skills increasing from 62% in 2003–04 to 88% in 2005–06. Challenges with higher than acceptable employee turnover and difficulty recruiting to graduate programmes have also increased substantially, but they are still not widespread. These increases all point towards the effects of a tighter overall job market on the APS this year than in recent years.

Agencies were less likely to report that ensuring employees’ skills and/or knowledge meet the agency’s requirements was a challenge this year compared to previous years.

Figure 8.2: Workforce challenges faced by agencies, 2003–04 to 2005–06

Source: Agency survey⁴

A substantial minority of agencies are reporting that skill shortages are having a moderate to severe impact on organisational capability. Figure 8.3 shows the types of skills shortages reported by agencies and their impact on capability in 2005–06. Approximately one third of agencies reported that shortages in information technology, accounting, and financial management professionals were having a moderate or severe impact on their agency’s organisational capability. Skills shortages in the ‘other’ category that some agencies reported as having a severe impact on capability included medical specialists, technical, auditors, forensic auditors, investigators/compliance officers, social workers, and oil and gas safety professionals.

Agencies need to consider the best way to attract applicants from areas of skill shortage. This may include proactive recruitment strategies, developing individualised remuneration and employment conditions packages and marketing the advantages of an APS career. Agencies may also benefit by participating in the APS Communities of Accountants and Statisticians being developed by Finance and the ABS and the ICT Professional and Skills Development Group being developed by AGIMO to promote learning and development and career planning for professionals in these disciplines. The establishment of these communities flowed from the MAC publication Managing and Sustaining the APS Workforce. As a result of this report, the Commission is also redeveloping the online gazette as an APS employment and recruitment portal which will provide a more effective mechanism for marketing vacancies to potential applicants.

Figure 8.3: Skills shortages and their impact on agency capability, 2005–06

Source: Agency survey

Managing and Sustaining the APS Workforce identified particular concerns about the breadth and depth of experience in potential APS leaders in management, policy development and whole of government processes. It called on all APS agencies to invest in identifying and developing the future leaders of the APS.

A substantial minority of agencies reported that they were currently experiencing at least one leadership skill set gap among their existing SES (36%). The most common skill set gap was in the area of people management (24% of agencies).This was followed by the capacity to think strategically (14%), the capacity to steer and implement change, and effective communication skills (both 13%). Agencies expressed fewer concerns about the ability of their SES to motivate, inspire and generate commitment to agency goals (12%), the capacity to work collaboratively across agency and jurisdictional boundaries (10%) and expertise in delivering outcomes (9%). Skill set gaps in the area of people management and the capacity to think strategically were more commonly identified by large agencies.

Skill set gaps were more common in the SES feeder group, with more than half of agencies (55%) reporting at least one gap. The relative incidence of the different skill set gaps was similar to the SES group, with agencies most likely to identify people management skills (40% of agencies), followed bythe capacity to think strategically (35%). The relatively high incidence of skill set gaps for this group supports the emphasis that MAC has placed on encouraging agencies to invest in developing future APS leaders.

Workforce planning challenges

Given the growing emphasis on workforce planning, agencies need to ensure that they have the internal capability that allows them to plan strategically for their future workforce needs. In this regard, it is significant that the majority of agencies (65%) report experiencing at least one workforce planning challenge.

The most common workforce planning challenge for agencies during 2005–06 was gaining adequate information to enable their agency to evaluate the effectiveness of learning and development (48%). This was followed by:

the ability to plan for changes that are likely to impact on their agency’s business (e.g. technological change, greater cross collaboration with other agencies) (42%)
adequate information on their agency’s workforce skills sets (e.g. qualifications) (38%)
identifying the capabilities required to deliver future workforce needs (36%).

Only a relatively small proportion of agencies indicated that adequate information on their agency’s workforce demographics and characteristics was a workplace planning challenge (12%).

The proportion of agencies that identified workforce planning challenges increased with agency size. This is likely to reflect the increasing complexity of workforce challenges in larger agencies.

Although workforce planning is still an area where agencies need to develop more capability, there is some evidence of improvement. In particular, almost all challenges were less frequent in 2006, than they had been in 2005.

Measures to deal with workforce challenges

Reflecting the growing use of strategic processes for workplace planning, agencies have a broad range of measures in place to deal with workforce challenges and there has been an increasing focus on these measures since 2004. Such measures were used by almost all agencies in 2006, including those who had not yet developed formal workforce plans—95% of agencies had at least one measure in place.

Table 8.1 shows the agency measures in place to deal with workforce challenges, ordered by the most common measures used in 2005–06.

Table 8.1: Agency measures in place to deal with workforce challenges, 2003–04 to 2005–06.
Measure	2003–04 %	2004–05 %	2005–06 %
Performance management systems aligned with identified workforce requirements	71	78	83
Measures to attract and retain people with critical skills (e.g. enhanced and/or more flexible pay and conditions, development opportunities)	69	76	81
Learning and development strategies aligned with identified workforce requirements	59	65	79
Recruitment strategies aligned with identified workforce requirements	60	63	68
Succession management strategy link to future workforce needs	22	24	24
Source: Agency survey

Performance management systems aligned with identified workforce requirements, measures to attract and retain people with critical skills, learning and development strategies aligned with identified workforce requirements, and recruitment strategies aligned with identified workforce requirements were all widely used. Reflecting the growing focus on workforce planning, the use of the first three measures has increased over the last three years. The use of recruitment strategies has not increased as dramatically, but a number of agencies have this measure in development.

The only measure not used by the majority of agencies was a succession management strategy linked to future workforce needs. This is of some concern, given that MAC has called on all APS agencies to invest in identifying and developing future leaders, albeit that almost half of agencies (48%) reported that they are currently developing formal succession management strategies and many other agencies appear to be adopting an informal approach to this issue.

Agencies that indicated they use measures to attract and retain people with critical skills did this in a variety of ways. Most commonly they used a higher base salary (90% of relevant agencies), followed by a performance-related bonus (68%), development opportunities (e.g. study awards, fellowships, secondments) (66%), recruitment/retention allowance/bonus (53%); work placements/rotation (47%), car parking space (40%) and enhanced conditions (e.g. leave, reunion fares) (40%).

The item ‘Lack of sufficiently strong leadership skills and/or potential within the SES feeder group’ was not included in the 2003–04 agency survey.

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