State of the Service Report 2006-07

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Commissioner’s overview

Challenges facing the APS

There are some specific issues which require attention to ensure the sustainability of the APS into the future. The most critical challenges are:

1. Agency health and agency culture

There is considerable evidence that agencies are taking on the challenge of achieving excellence in governance, and their employees generally seem to be satisfied with their efforts.

When agencies review their governance structures it is critical that they pay close attention to their corporate health. Corporate health is a measure of the effectiveness of governance in the areas of organisational direction, leadership, organisational capability, corporate governance processes, relationships and integrity, and agency culture.

The importance of monitoring corporate health is self-evident. High levels of corporate health are directly linked to high levels of overall performance. High levels of performance enable agencies to achieve their goals, realise their mission, and deliver the outcomes required by the Government. Poor corporate health can lay the foundations for poor performance or organisational failure. By paying close attention to corporate health, agencies can identify and address early warning signs of poor performance well before they start to affect the achievement of outcomes, and definitely before they develop into a national scandal.

It is especially important to monitor corporate health and to refocus corporate strategy when agencies are facing major changes, such as requirements to take on a range of new responsibilities, to absorb a large number of staff, or to significantly reorder their operations. The impact of the occasional serious lapses in performance that have occurred in the APS on perceptions of the quality of our agencies, reinforces the importance of taking a rigorous approach to corporate health.

Establishing an effective agency culture—one that encourages a focus on high-quality performance, continuous improvement, empowerment of staff and trust—is a critical contributor to corporate health. It is worrying that creating such a culture appears to be an issue in some APS agencies. This year’s State of the Service report has found relatively low rates of employee satisfaction regarding some aspects of agency culture, particularly the management of both change and underperformance; the extent to which employees feel valued for their contribution; and their level involvement in decision-making.

It is critically important that APS agencies put in place an institutionalised practice of continuous improvement in corporate health and agency culture across their organisations. The Commission’s publication, Agency Health: Monitoring Agency Health and Improving Performance,3 provides an important resource for agencies in developing the appropriate systems and culture.

2. New ways of doing business

It is a great time to be working in Australia’s public service. The economy is booming; our people are experiencing unparalleled levels of wealth, education and opportunity; and not only is there both willingness and excitement about trying new things and taking on tough challenges, but the opportunity to pursue them. All around us, we see evidence of this boom. Headway is being made on many longstanding social problems, many service provision needs have been met, and sizeable tax cuts have been delivered with more promised.

The expectations of Australians are now enormously high about what the Government can and should deliver next and how it should go about its business. For straightforward transactions, Australians want efficient and timely service. Where they need more comprehensive assistance, they want easily accessible, coordinated and seamless service delivery designed from their perspective. Businesses want a streamlined regulatory framework that lets them succeed on the world stage. The community wants us to respond in smarter ways to a wide range of complex policy problems from water shortages to social dysfunction.

The public service is also experiencing major societal and structural changes. The ICT revolution has facilitated an explosion in the pace and extent of change—it is driving change: making many new things possible, and increasing the APS’s responsiveness and accountability by enabling 24/7 coverage of government. The public service operates in a highly competitive and contestable environment, with the global dimension playing an ever increasing role in the way we do our business. We face demographic challenges, including the impact of an ageing workforce and the need to manage different generations with different expectations.

To meet these challenges, different ways of doing business are emerging. The APS is implementing a range of ‘whole of government’ approaches that provide more integrated and unified responses to major challenges. These include better coordinated approaches to international engagement and security; more streamlined approaches and more extensive engagement with the business community; greater cooperation in service delivery; and the development of policies aimed at addressing social disadvantage.

The APS is focusing on new approaches to engaging with the community in order to change behaviour and develop solutions to public policy problems. There is greater use of third parties in service delivery for services ranging from respite services for older carers to advisory services for small business. We are seeing tailored and differentiated approaches to service delivery designed around the needs of service users or to meet specific policy objectives.

There is no longer a presumption in the APS about how a particular policy issue should be addressed or what approach should be taken to its implementation. The business challenge now is to find the most appropriate form of implementation—whether that is direct delivery by APS agencies, delivery through other levels of government, self-regulation, or delivery by third parties, including both the not-for-profit and private sectors.

There has been significant progress in implementing more innovative ways of working over the last few years, but there remain areas that require attention and action if their potential is to be maximised.

It is time for the APS to step back and take a more strategic look at what these challenges and environmental changes mean for the public service—how we define ourselves, what the implications are for our governance frameworks, and what skills and organisational capacity we need to develop. The fundamentals of our system—merit, accountability, professionalism, leadership, capability and performance—are as relevant as ever. How these fundamentals are supported and delivered, however, should be open to challenge and debate.

At the governance level, agencies are still looking at the best way to marry vertical and horizontal responsibilities in whole of government work; how to obtain the right balance between accountability, and flexibility and responsiveness on the ground; how governance structures can minimise barriers to innovation and collaboration; and how services can be better coordinated in a devolved environment.

At a more practical level, there is a need for a more sophisticated understanding of the application of the financial framework to whole of government work, and for more effective arrangements for cross-agency taskforces. There is potential to develop better incentive structures that foster cross-government interaction. There are also ongoing concerns about ICT interoperability.

There are signs that the new ways of working are not yet deeply embedded within the APS. It is important that senior leaders take the lead in encouraging collaboration and innovation. They must proactively look for opportunities where working more closely with their stakeholders—whether business, the public, or the international community—can add value.

There are also capability challenges. New ways of working put an increasing emphasis on developing the public service’s capacity for strategic thinking, innovation, and creativity. We require people with strong communication skills, the willingness and ability to listen to the views of others, and conflict resolution and negotiation skills.

At an organisational level, we need to develop genuine insight mechanisms within and across agencies to help us understand the experience of those who use our services—whether individuals, families, businesses, or other organisations. To do this we need to focus on areas where services interact and on design principles that untangle the maze that our service users and employees are sometimes expected to work through.

In implementing new ways of working it is important that APS agencies do more than simply respond to the changes that are occurring around them. A proactive approach—one that leverages new technology and harnesses it to engage with citizens and do business in new ways, for example—will allow the APS to demonstrate its relevance in an increasingly contestable world, and to continually improve its performance.

Finding new ways of working will be both challenging and rewarding for APS employees. By maintaining a strong focus on developing our organisational capacity at the systems, culture and capability level, the APS will be well-placed to take advantage of the opportunities that are emerging in this area. This should be seen as a necessary investment in the future.

3. Modernising APS employment

An important part of the APS’s organisational capacity is modern employment arrangements that allow agencies to attract and develop people with the skills to implement these new approaches.

More than ever before, the public service needs a diversity of skills and capabilities—the right people in the right jobs at the right time. Skills shortages in many areas, but particularly in ICT, finance and accounting, are having a noticeable impact on agencies’ ability to achieve outcomes. Combined with the ongoing impact of an ageing workforce, the highly competitive employment market makes positioning the APS as a modern, flexible and attractive employer an imperative.

The Public Service Act 1999 requires regular review to ensure that it provides the best possible employment arrangements for the APS, especially when the labour market is as tight as it is now. It is hard to get the balance “just right”. The Act, for example, allows agency heads and their delegates the flexibility to employ non-Australian citizens to meet skills shortages. A number of agencies have actively recruited overseas for specialist skills in short supply in Australia. However, the general expectation, as articulated in the Act, is that APS employees will be Australian citizens, and this inevitably limits the recruitment pool.

There is further scope to better position the APS in the labour market. Hurdles remain which may no longer be relevant in today’s labour environment. It is still not always possible, for example, to make an immediate offer of ongoing employment to highly-skilled, in-demand non-ongoing employees. There are restrictions on the duration of non-ongoing employment and on grounds for termination that do not apply in the private sector. These affect the APS’s ability to compete equally with the private sector for the best staff.

Current legislative requirements give agencies considerable flexibility, and do not prescribe lengthy or complex processes. Given this, the findings in this year’s State of the Service report about the excessive length of many recruitment processes are disappointing, if not surprising. In too many agencies, there is confusion between internal processes and the application of merit as required by legislation. In today’s competitive labour market, high-quality candidates will not, nor should they be expected to, wait for three months or more while a recruitment process is finalised. The APS needs streamlined, well-organised processes that are timely and efficient. The answer is not simply to recruit the way we have always done, but to do it better and faster. Agencies need to explore and embrace new approaches to recruitment if the APS is to compete effectively for talent.

There is also potential for the public service to better identify and actively market the distinctive factors that attract people to the APS. Results from this year’s employee survey suggest there are a range of attraction factors common to many APS agencies and employees. These include a strong interest in the broad range of work in the APS, the career opportunities offered by APS agencies, and a desire to gain experience that is unique to the APS, as well as more traditional factors such as job security. What keeps people in their APS jobs is a mixture of: an effective work-life balance, job satisfaction, career and development opportunities, good working relationships, high-quality senior leaders, recognition for work well done, and at least moderately competitive remuneration.

Within these broad attraction factors there is substantial variation for different groups of employees and agencies. The ability to contribute to making a difference to the lives of Australians, for example, is a key attractor for employees in the SES and for those who aspire to it. Agencies can build on these differences, by developing tailored attraction and recruitment strategies that clearly market the set of organisational and job attributes valued by the candidates they wish to attract, and by broadcasting this information widely.

The Commonwealth Government already has a high profile as a potential employer of university graduates. The Universum 2007 Graduate Survey, for example, rated the Commonwealth Government as the place where students would most like to work.4 It is important that we continue to build on this high profile and look at new ways of targeting groups with high potential to add to the APS labour pool. The Commission’s new online job portal APSjobs, for example, includes a register for ex-APS employees—those who may have retired or left the APS for other reasons but who wish to return on a temporary (non-ongoing) basis. These employees are already highly-skilled and experienced and can ‘hit the ground running’, providing excellent value to the APS workforce. Innovative approaches like this need to become much more widespread.

In looking at more modern approaches to employment, it is important that we recognise the value that targeted cross-service initiatives can play in supporting agency-based approaches. In the last few years we have seen some successful examples of cross-agency initiatives, including the recruitment of Indigenous graduates and, more recently, the recruitment of accountants. There is potential to explore the use of such approaches more broadly, especially in addressing skills shortages. Partnering with other APS agencies to undertake a collective recruitment exercise can have powerful advantages in terms of branding, messaging, streamlining and cost-effectiveness. What we require is a fundamental rethink of our recruitment processes and the way we market ourselves.

An important theme coming through the State of the Service report this year is the role that the corporate areas of agencies play in supporting line areas to achieve their goals. This relates to the establishment of effective employment arrangements within agencies, but also encompasses the full range of corporate issues, including setting strategic directions for each agency, HR management, succession planning and talent management, financial management, learning and development and recordkeeping. It is important that corporate areas see themselves as drivers and supporters of business improvement.

Employees in corporate areas also need to make an effort to understand their agency’s business, and work to support it in a strategic way. Part of this will involve an emphasis on the development of more streamlined administrative processes to improve agency efficiency and effectiveness and to facilitate work across government.

Putting a priority on developing the quality and depth of corporate areas will allow agencies to better support line areas in adopting more modern approaches to employment. It will also support the more effective development of organisational strategy and the achievement of business outcomes.

4. Interactions with Government

Consistent with changes in our operating environment, there have also been changes in the way that the public service interacts with and supports the Government. The former Premier of Western Australia—now Director of the University of Sydney’s Graduate School of Government—Professor Geoff Gallop, believes that the doctrine of ministerial responsibility is in decline.5 Others would not go this far, but there are calls for greater clarification of public service and ministerial accountabilities. Many also believe that the significant role that ministerial advisers play in the relationship between Ministers and public servants should be recognised. It may be desirable to see some standards of behaviour codified for this group as a means of protecting the integrity and non-partisan nature of the public service.

It is timely to look more closely at the interaction between public servants and Ministers. This year, continuing attention has been paid to the way in which the public service manages its requirements under the APS Values to be both apolitical and responsive to the Government. Occasions will arise where APS employees’ requirements to be both apolitical and responsive create some tension (especially in direct dealings with some ministerial staff)—this is the nature of the game of government, with its different players. There should be an open debate about whether the appropriate balance is being struck and how to manage digressions.

Such debate on the interaction between public servants and the Government needs to be based on an informed understanding of what being apolitical and responsive mean for the APS. Suggestions that the public service should act as an independent arbiter of the public interest do not reflect either the framework in which we currently operate or our longstanding traditions, and are inconsistent with the foundations of a democratic society. By the same token, the public service needs to evolve in a way that allows it to manage contemporary circumstances and serve governments of whatever political colour effectively. Sound government should be based on a strong partnership between public servants, Ministers and their advisers underpinned by a clear understanding of their respective roles and open communication.

5. Leadership

The need to improve the capability of APS leaders has been a challenge highlighted in a number of State of the Service reports. This year, there have been positive developments in public service leadership, including improvements in employees’ assessments of the leadership capabilities of their supervisors, a particular improvement in views about strategic thinking capability, and some improvements in perceptions of senior leaders more generally.

Employees’ perceptions of their senior leaders, however, continue to be less favourable than those of their immediate managers. This outcome is consistent with the findings of other surveys, and is likely to reflect the greater distance between the main body of employees and their most senior managers. Nevertheless, the results suggest that agencies could benefit from focusing more on improving the effectiveness of communication between senior leaders and other employees.

The findings of this year’s report also continue to support the need for a greater investment in the leadership capability of the EL 2 group. The results suggest that there is significant potential to involve EL 2s more actively in the leadership of their agency, and to increase their sense of being part of the leadership group. There is also potential for more strategic approaches to talent management that prepare high-potential EL 2s for more senior roles. Each agency will need to adopt the right mix of strategies for its EL 2 employees.

A strong and effective leadership team is essential in addressing each of the challenges identified in this report. Leaders play an important role in establishing and promulgating agency culture, and in monitoring and improving the corporate health of their organisations. Effective leadership is itself an indicator of a healthy organisation. It is critical in enabling agencies to embrace new and more innovative approaches to working in the APS, and to adopt the benefits of a more modern approach to employment.

The role of our leaders is changing, with greater emphasis on connecting, guiding, directing and coordinating, as more government services are provided collaboratively or through third parties, and more emphasis is placed on working with the community to address complex policy issues.

The skills required of APS leaders in this new environment are also changing. They go beyond traditional high-level analytical, conceptual and project management skills. These remain important, but APS leaders are increasingly required to adopt a new style of management consistent with creating a learning organisation—a style that is characterised by a willingness to think and work in new, innovative and more entrepreneurial ways, and that rewards flexibility and creativity. This new leadership style is marked by holistic, rather than partial or linear, thinking and by collaboration across organisational boundaries. It puts a greater emphasis on relationship management, demanding both high-level stakeholder management skills and respectful engagement with staff and stakeholders alike. The new leadership style tolerates uncertainty, and accepts the need for a long-term focus in dealing with many of the complex policy problems that the APS faces. The wider adoption of these sorts of approaches to leadership requires support—both from within agencies, and at a whole-of-APS level—including through the development opportunities offered by the Commission and ANZSOG.

In adopting new approaches to leadership, it is important that we continue to encourage our senior leaders to see themselves as part of a broader APS-wide leadership group. This year’s results suggest that there are still some SES employees who do not clearly have this sense of identity. Portfolio secretaries and agency heads have a specific role to play in instilling in their SES a sense of being part of a broader APS-wide leadership cadre. Participation in whole-of-APS training and activities can be an important part of fostering a broader SES identity.

Leadership, however, is not something that should be seen as solely the preserve of senior managers. The demands on the modern APS require that all employees focus on developing their capabilities so that they can both appreciate how their work fits into the bigger picture, and contribute to setting directions within their agency based on their experience on the ground.

In this election year, there are significant opportunities for the APS to play a leading role in developing new policies and new and more effective approaches to government business. How we respond to these opportunities will have major implications for our relevance. It will help to determine whether Australia can reap the long-term benefits of a period of unprecedented economic boom, make real headway in addressing some of our intractable policy problems and position us for continued success into the future.

If we embrace the new opportunities and harness the leadership potential of all our employees, the APS will be well-placed to meet the challenges of the future. If we do not, we will be left behind.

 

3. Australian Public Service Commission 2007, Agency Health: Monitoring Agency Health and Improving Performance, Commonwealth of Australia, Canberra, <http://www.apsc.gov.au>

4 B. Hatch, ‘The Graduates’, AFR Boss Magazine, November 2007, p. 62.

5 G. Gallop, ‘Towards a New Era of Strategic Government’ (ANZSOG Lecture, ANU, Canberra, 25 October 2006), <http://www.anzsog-research.anu.edu.au>