Enhancing productive capacity

examines the measures taken to improve our capability. It includes the following chapters:

4. Attracting, engaging and retaining the APS workforce

5. Leadership, learning and development in the APS

6. Increasing APS efficiency and effectiveness

Chapter 6: Increasing APS efficiency and effectiveness

Increasing efficiency and effectiveness is central to the Australian Public Service (APS) enhancing productive capacity. There are many drivers of productivity improvement and ways to increase labour productivity—through attracting and retaining the right people, productivity-based workplace agreements, effective leadership, and investing in learning and development. Agencies can also realise productivity gains through enhancing processes—better business processes, embracing up-to-date information and communications technology (ICT) systems and by reducing unnecessary levels of internal red tape.

Increasing productivity is something that the APS has focused on for a long time, with reforms such as new public management and the devolution of financial and people management responsibility to agencies all designed to increase the efficiency and effectiveness of the APS. Nevertheless, the transitioning for the APS from the previous government to the current government, and Government measures such as Razor Gang I and II (including an additional one-off efficiency dividend being applied to agencies’ operating budgets) have renewed the focus across the public service on ways to increase efficiency and effectiveness, including consideration of greater use of shared purchasing arrangements. Given the current global economic circumstances, it is clear that the focus on these issues for the APS will intensify.

At the same time, the impact on smaller agencies of the across the board measures such as the efficiency dividend is being considered by the Joint Committee of Public Accounts and Audit (JCPAA), through its inquiry into the effects of the ongoing efficiency dividend on smaller public sector agencies. The key issue is whether all APS agencies can continue to realise real productivity gains of the magnitude required under current funding arrangements, without this having an impact on the quantity and quality of services. Productivity improvements are linked very much to each agency’s circumstances and in particular, to the nature of their core functions.

This chapter begins by discussing some of the issues associated with measuring APS productivity, including the cumulative impact of the efficiency dividend and partial supplementation for remuneration increases and the specific impacts already being felt by agencies from the additional one-off 2% efficiency dividend. Broader APS-wide and agency-specific approaches over the last 12 months to improving efficiency and effectiveness are then considered as are APS employees’ views of their own productivity. The remainder of the chapter focuses on three key human resource (HR) influences on productivity—worklife balance, managing for improved performance, and leave management (including the management of unscheduled absence and annual leave).

Managing in a tighter fiscal environment

There is pressure on managers in the private and public sectors, both in Australia and internationally, to adopt approaches that realise efficiency and effectiveness gains for their organisation. This pressure was increased towards the end of 2007–08 in the APS, with an additional one-off 2% efficiency dividend applied to most APS agencies’ operating budgets (effective from 1 March 2008 to 30 June 2009). The first part of this section discusses the issue of measuring productivity in the APS, and the second examines developments in 2007–08 to improve efficiency and effectiveness in the APS.

Measuring APS productivity

One of the ongoing difficulties associated with assessing productivity increases in the APS is that there is no agreed methodology of how productivity in the APS should be measured. The main reason for this is that the APS operates overwhelmingly in a non-market sector, thus there are no market-determined price signals, and this means that there are difficulties in measuring the value of outputs.

Nevertheless, agencies have been able to demonstrate productivity gains by the cost savings they have been required to make due to the current funding arrangements and the efficiency dividend. Such arrangements have been an important driver of efficiency improvement in the APS over many years, although their sustainability for some agencies is discussed below (see ‘Cumulative Impact of the Efficiency Dividend and Partial Supplementation for Remuneration Increases’) and also in other sections of this report (see, for example, the remuneration section in Chapter 4).

In broad terms, the current funding arrangements provide agencies with indexation supplementation to existing funding, and additional funding for new policy. Supplementation requires agencies to find substantial cost savings every year in order to fund wage increases and the efficiency dividend.

Over the last decade average labour productivity has increased by 1.4% per annum in the Australian economy generally and by 1.7% per annum in the market sector.3 A direct comparison between the level of cost savings in the APS and labour productivity growth in the rest of the Australian economy is not possible because of difficulties in measuring the quality and quantity of inputs and outputs. It is also difficult to take into account the effect of funding injections for new policy and service initiatives, and the changes in the quantity and quality of outputs, on APS agencies’ ability to find cost savings necessary to fund the efficiency dividend and wage cost increases.

Nevertheless, the total cost savings that are required to be made each year by every agency in the APS are substantial, and compare very favourably with annual labour productivity growth in the economy more broadly.

Cumulative impact of the efficiency dividend and partial supplementation for remuneration increases

Efficiency dividends are not new to the APS, and have been in place for the last 20 years. Such cost savings are one concrete way in which agencies can demonstrate productivity gains, as long as the savings have not been made by reducing the quality or quantity of outputs produced by the agency. However, it has become clear that the pressure on agency budgets from the cumulative, combined effect of the efficiency dividend and the partial supplementation for wage increases has resulted in some agencies having to reduce the quality and/or quantity of their outputs. Submissions made to the current JCPAA inquiry into the ongoing effects of the efficiency dividend on smaller public service agencies, for example, have revealed that:

The size of an agency and/or the nature of an agency’s activities (including, for example, cultural institutions, smaller agencies, and those with a high proportion of fixed costs in their budgets) can limit their potential for generating cost saving productivity gains, year after year, of the magnitude required.

On the other hand, in some agencies it may be that quality and/or quantity of outputs increase over and above the levels explicitly funded by the Government (such as when minor new policy proposals are required to be absorbed into agencies’ activities with no additional funding) and productivity in these agencies could be even higher than the level of cost savings required to be realised each year.

Specific impacts of the additional 2% efficiency dividend

Previous State of the Service reports have raised concerns about the ongoing cumulative impact of the efficiency dividend and the partial supplementation for wage increases.4 This year’s agency survey included questions to assess specifically the initial impact the additional 2% efficiency dividend (effective from 1 March 2008 to 30 June 2009) was having on agencies, with some early patterns evident.

The majority of agencies reported that the additional efficiency dividend had already had an impact on their agency. Five agencies indicated that they were exempt from the additional efficiency dividend (CRS Australia, IP Australia, the Workplace Authority, the Australian Pesticides and Veterinary Medicines Authority (APVMA), and the Royal Australian Mint (RAM)).5 Of the remaining 85 agencies, the most common impacts were a reduction in staffing levels and increased working hours for existing employees (each reported by around 50% of agencies). Almost one-third of relevant agencies indicated that the additional efficiency dividend had already had other impacts, including increased workloads and/or pressure on staff, increased customer service waiting times, reduced service standards for some customer activities due to fewer staff, training being postponed and a reduction in some programmes. Smaller proportions of relevant agencies indicated that employees’ annual leave balances had increased due to staff being unable to take leave due to high workloads (18%) or that the agency’s ability to offer flexible working arrangements had been reduced (14%).

Not surprisingly, most of the 85 agencies were already taking action to adjust to the additional efficiency dividend under the ‘Responsible Economic Management Package’ Budget measures. Seventy-two agencies (85%) reported taking a series of actions to respond to the Budget measures, although 13 agencies (15%) indicated that currently, they did not need to take any actions. Six themes emerged from the actions being taken by the 72 agencies to respond to the Budget measures:

The most common actions being taken were to place a tighter control over recruitment actions (51%), to decrease the number of employees (44%) and to reduce the amount (and type) of travel undertaken (38%) (see Table 6.1). When the proportions of relevant agencies taking some type of action relating to staff are combined, just over two-thirds (69%) of agencies reported that they are placing a tighter control over recruitment and/or reducing the number of staff.

Table 6.1: Most common actions already taken by relevant agencies to respond to the additional 2% efficiency dividend by agency size, 2007–08
Action Small (%) Medium (%) Large (%) All relevant agencies (%)
Source: Agency survey
Tighter control over recruitment 70 29 52 51
Decreasing the number of employees 37 42 57 44
Reducing travel 37 25 52 38
Reprioritising activities 26 29 19 25
Re-engineering approaches 4 13 29 14
Reducing the number of contractors and/or consultancies 11 21 24 18

The types of action taken varied by agency size, for example, relevant large agencies were more likely than medium and small agencies to reduce travel, whereas small agencies were most likely to place a tighter control over recruitment (see Table 6.1). Relevant small agencies (85%) were more likely than large (71%) or medium (50%) agencies to report that they are taking actions related to tightening recruitment and/or reducing staffing levels.

These differences based on agency size, may in part reflect agencies’ opportunity costs and/or substitution effects, for instance, their capacity to substitute less cost-effective approaches with more technologically cost-effective approaches. This may especially be the case in areas of discretionary spending, for example, larger agencies may have the ICT infrastructure that enables video conferencing rather than interstate travel to be used; whereas this may not be an option for smaller agencies due to the initial technology outlay needed to reap longer- term benefits. Larger agencies may also have been undertaking more discretionary travel and therefore be able to reduce the level of travel more easily. Of particular concern is the longer-term productivity impact such constraints could place on small agencies—if smaller agencies are not in a position to invest both in ICT and their people, they will be less well-placed to realise longer-term productivity gains (see Chapter 5 for a discussion of agencies’ investment in learning and development).

Differences between agencies’ approaches in responding to the additional 2% efficiency dividend may also be related to functional responsibilities of the agency. Those agencies where the range of outputs and services for which they are responsible is narrow and cannot be varied (e.g. where their functions are largely statutorily determined), may have to cut the quantity of the services they deliver as they have more limited scope to secure funding for new programmes and services. Similarly, agencies whose discretionary spending makes up a very low proportion of their operating expenses have less capacity to absorb ongoing efficiency measures, which may mean they need to reduce staffing numbers and the services they deliver. These issues have been raised in agency submissions to the JCPAA inquiry into the ongoing effects of the efficiency dividend on smaller public service agencies.

The additional efficiency dividend appears to have led to a tightening of recruitment activities and a need to manage carefully or reduce staffing levels across agencies. To assist agencies manage the redeployment of excess and potentially excess employees, the Commission is responsible for the Career Transition and Support Centre.

Career Transition and Support Centre

On 28 March 2008, Senator the Hon. John Faulkner announced the establishment of the Career Transition and Support Centre to assist with the redeployment of excess and potentially excess staff. The Centre was established with a view to minimising the personal impact of the Government’s efficiency measures and to ensure the retention of quality public servants with specialised skills sets.

The Centre opened for business on 1 May 2008 and has worked actively with agencies to provide best practice advice on redeployment, in particular, the set of redeployment principles promulgated by the Australian Public Service Commissioner.

The Centre is run on a partial cost recovery basis, with agencies required to pay a $2,200 referral fee per employee referred. A total of 75 employees were referred to the Centre between 1 May and 30 June 2008 for career transition support. Agencies appear to be handling redeployment issues internally without the need to refer large numbers of employees to the Centre.

Many agencies commented that at the time of the agency survey (in the field from 4 June to 16 July 2008) it was too early to assess the impact of the additional efficiency dividend. Nevertheless, most agencies have already begun to take action to deal specifically with the one-off increase in the efficiency dividend. This action is above and beyond previous approaches agencies have adopted over the last decade, partly in response to the ongoing efficiency dividend, to increase their efficiency and effectiveness. The key issue is the ongoing and cumulative impact of the efficiency dividend and the partial supplementation for wage increases, especially on smaller agencies’ core activities.

Developments in 2007–08 to improve efficiency and effectiveness in the APS

Notwithstanding the possible implications for small agencies arising from the efficiency dividend, current global economic circumstances and the need for fiscal rigour domestically will require an even greater focus on efficiency in the APS.

Broader APS-wide developments

Upon taking office, the current government announced that it would undertake a comprehensive review of government expenditure in two stages. The first stage—Razor Gang I—focused on realising cost savings by better targeting government assistance and cutting ineffective programmes, for example, introducing a means test on the baby bonus, ceasing the Commercial Ready Program, abolishing the Access Card project and imposing an additional 2% efficiency dividend on the public service.6

Razor Gang II, the second stage of this review, is focused on identifying areas of Government where there is potential to increase the efficiency and effectiveness of programmes and services.7 A taskforce has been established in Finance, and is working with agencies to analyse and advise the Government on opportunities where improvements in expenditure can be made.

As part of improving APS-wide efficiency and effectiveness, Finance is also examining potential whole of government procurement arrangements in areas where there is little diversity of requirement across agencies and that are substantial and in common use by all (or most) agencies. Coordinated arrangements would be directed at establishing whole of government contracts to better leverage the Government’s buying power. They would not involve a single agency purchasing all goods and services for the Government. These moves represent a sensible recalibration within the agency-based devolved environment towards new coordinated service arrangements that will harness cost reductions for agencies and savings to the Government.

Coordinated contracts are not new to the APS, and coordinated contracting arrangements for motor vehicle fleet management, telecommunications and central advertising have worked well for a number of years. Coordinated arrangements can result in a reduction in administration costs for both agencies and suppliers.

In addition to work being led by Finance, another key response by the Government in increasing efficiency and effectiveness across the APS was commissioning Sir Peter Gershon to undertake a review of the Australian Government’s Use of ICT. As part of the review Sir Peter conducted wide consultation within government, the ICT industry and other related representative organisations.

In his report to the Government, Sir Peter highlighted seven key findings. Central to these findings was his conclusion that the high levels of agency autonomy involved with the current model of ICT are leading to sub-optimal outcomes for Government and that there is a need to rebalance agency autonomy and coordination across government. Sir Peter made a series of recommendations in six areas as to how the Australian Government could strengthen whole of government management of ICT: governance; capability; ICT spend; skills; data centres; and sustainable ICT.8

The findings of this review highlight the need for APS agencies to change their current approaches in many areas relating to ICT, and as part of this change process some agencies may be required to make more savings. At the time of publication of this report, the Government was considering the recommendations of Sir Peter’s review.

Agency approaches

At the same time as broader APS-wide approaches have been undertaken to identify efficiency and effectiveness improvements, APS agencies have focused on reviewing their own structures and processes to realise efficiency and/or effectiveness gains. Almost all agencies (97%) had taken specific actions to improve their efficiency and/or effectiveness in 2007–08. The four most common actions identified by agencies were:

These actions are already resulting in improved performance across agencies, with two-thirds of agencies reporting that the action they had taken had been successful in improving their efficiency and/or effectiveness. Around one-third of agencies reported that it was too early to tell whether or not the action(s) had been successful. For some small agencies, consistent with their submissions to the JCPAA, their capacity to invest in and implement solutions of this kind is being circumscribed by the ongoing impact of the efficiency dividend.

Employee perceptions of productivity

To gain an insight into employees’ perceptions of their own levels of productivity, employees were asked a series of questions that explored their perceptions of productivity improvement over the last year. These perceptions are not a direct measure of actual productivity improvement; however, they can assist agencies target areas that may boost productivity.

Improving personal productivity

Employees were fairly positive when it came to whether they thought their own productivity had increased in the last 12 months. Six in 10 employees reported that their productivity had increased markedly (26%) or somewhat (35%) in the last 12 months, while a further 19% indicated it had remained about the same. Only 7% of employees indicated that their productivity had declined in the last 12 months, and the remaining 14% reported that the question was not applicable (e.g. they had recently changed jobs). These results are consistent with those reported in 2004–05 and 2005–06 (when employees were last asked this question).

To identify what employees believed to be the important areas in improving or maintaining their personal productivity over the next 12 months, they were asked to rate the importance of several areas relating to productivity improvement (see Table 6.2). Over 90% of employees indicated that good working relationships, working to realistic performance expectations and access to the information, resources and/or technology they need to do their job were important in maintaining or improving their productivity in the next 12 months. Interestingly, only 47% of employees reported that greater levels of calculated risks being taken in their work area were important for their personal productivity. This area was, however, more important for SES employees, with almost two-thirds (64%) of SES employees rating greater levels of calculated risks being taken as being important.

Table 6.2: Employee views on areas as ‘important’ to improve or maintain productivity in the next 12 months, 2007–08
  ‘Important’ area in improving or maintaining productivity in next 12 months (%)
Source: Employee survey
Good working relationships with manager and colleagues 94
Working to realistic performance expectations 92
Access to the information, resources and/or technology needed to do the job 92
Effective feedback from manager 88
A manager that encourages and manages innovation 87
Clear work plans and timetables 87
Effective formal and informal communication within agency 84
Increased knowledge and/or experience in the job 81
Access to effective learning and development 77
Greater levels of calculated risks being taken in area 47

To identify how employees viewed their agency’s performance in each of these areas in the last 12 months, employees were asked to what extent they agreed with a series of statements relating to productivity. In highlighting key areas where agencies may be able to achieve the greatest levels of productivity improvement, Figure 6.1 shows the levels of agreement reported by employees who rated the area as ‘important’ in maintaining or improving their performance. Figure 6.1 suggests that, for example, agencies may be able to increase levels of productivity through better communication—of the 84% of employees who indicated that effective formal and informal communication was important to their future productivity, 57% of these employees were satisfied with their agency’s performance in this area in the last 12 months. Based on the results in Table 6.2 and Figure 6.1, other key areas for productivity improvement include:

Figure 6.1: Employees who rated area as ‘important’ in improving or maintaining their productivity by level of agreement with agency performance in last 12 months, 2007–08

Chart

Source: Employee survey

These results highlight the important role that the manager plays in assisting employees improve their productivity. The issue of employees’ views of their immediate manager and the manager’s role in enhancing employee productivity is discussed in more detail later in this chapter in the section ‘Managing for Improved Performance’ and an exploration of the issues associated with building a culture of innovation in the APS can be found in Chapter 11.

Improving efficiency and effectiveness

As senior leaders at an agency and whole-of-APS level, SES and EL 2 employees have an important responsibility to identify and shape initiatives that drive efficiency and effectiveness gains in their immediate work area as well as across their agency and the APS.

Consistent with the actions reported last year, SES and EL 2 employees were most likely to report that more streamlined administrative processes, the recruitment of high-quality staff and better internal communication were important in achieving greater efficiency and/or effectiveness (see Figure 6.2).

Figure 6.2: SES and EL 2 views about what actions would increase efficiency and/or effectiveness in their agency, 2006–07 and 2007–08

Chart

Source: Employee survey

SES and EL 2 employees also provided other ideas about how their agency could improve its efficiency and/or effectiveness. Many of their suggestions related to areas covered in Figure 6.2, although some employees commented on the need for more staff or recognition of more realistic workloads. Some examples of suggestions included:

Bringing back some administrative support, so there is room enough to breathe and consider improving things.

It is often assumed that improved effectiveness comes from junior staff. It requires not only that. SES staff need to do more to improve their effectiveness. If they are more effective it flows on and benefits others. As SES we don’t do enough to change ourselves, but expect others to change.

Establishing and fostering processes within the department for developing medium to longer-term strategic policies that cross traditional policy silos within the department ...

[G]reater use of scenario scanning techniques, and policy officers in the department should have access to policy modelling techniques (and be trained how to use them).

My agency’s efficiency is in decline simply because we have to spend too much time working out how to do what needs to be done without enough resources ... We try to maintain the mirage of increasing productivity, but it has passed the point of diminishing returns.

Last year’s State of the Service report highlighted the key role corporate areas play in streamlining administrative processes and reducing internal red tape. The results from this year’s employee survey indicate that there is still a way to go in this area. The comments provided by some employees also suggest that some agencies may be finding it difficult to increase efficiency without compromising effectiveness. Although such comments are of concern, they are consistent with submissions made by some agencies to the JCPAA inquiry into the ongoing effects of the efficiency dividend on smaller public service agencies.

Work-life balance

A key challenge for the APS is the need to increase efficiency and effectiveness, but not at the expense of its reputation as an employer that enables employees to achieve a good work-life balance. In its broadest sense, work-life balance is a person’s satisfaction with their ability to manage the interactions between the multiple roles and activities in their life. Adopting policies and practices that support employees in balancing their work and life commitments makes good business sense—benefits to the agency can include increased levels of productivity, organisational commitment, improved morale and job satisfaction, and reduced levels of unscheduled absences and staff turnover. An agency’s reputation for good work practices (including work-life balance) can also be an important attractor for potential job candidates—61% of APS employees rated this as important in attracting them to their current job.

Managing excessive workloads

Managing priorities and workloads is an area that managers in both the public and private sectors must be skilled in. However, recent anecdotal evidence suggests that managing excessive workloads is something that has intensified for the APS. To assess the extent to which this issue has an impact on the APS, this year—for the first time—the agency survey asked agencies a series of questions relating to excessive workloads.

Managing excessive workloads appears to be an issue for many APS agencies. Just over half (54%) of agencies indicated that managing excessive workloads was an issue that had intensified for them in the last 12 months. Similar proportions of small, medium and large agencies reported that this was the case.

One of the difficulties in identifying the extent and impact of excessive workloads across the APS is the limited information available about who in the workforce is affected. Of those agencies that indicated the management of excessive workloads had intensified in 2007–08, under half (41%) were able to estimate the proportion of the workforce affected. Where agencies could estimate the proportion of staff affected, 55% reported that at least half of their workforce was affected by excessive workloads. When it came to which segments of the workforce are particularly affected, the most common response (given by around one-quarter of relevant agencies) was that all areas and/or levels were affected. Other commonly reported segments of the workforce affected included corporate support areas, the SES and EL staff.

When it came to what those agencies affected were doing to address the issue of excessive workloads, around one-third of agencies were reprioritising work, reviewing existing workloads and/or examining ways to improve their organisational structure. Smaller proportions of agencies were actively promoting work-life balance (e.g. through well-being strategies and regular reports to senior management about additional hours being worked) and/or deferring some work programmes or discretionary work. Not surprisingly, these approaches are consistent with the actions agencies are taking to respond to the additional 2% efficiency dividend. This does not imply cause and effect, and agencies may be experiencing higher workloads due to reasons other than the additional efficiency dividend, for example, being responsible for the delivery of key Government priorities.

It is important that agencies continue to monitor workload levels, especially ‘hot spots’ in the agency, and that they implement flexible strategies to assist both employees and managers to deal with excessive workloads. Where possible, existing workforce metrics, for example, unscheduled absence, high levels of flex leave and/or annual leave being accrued (but not taken) and high turnover levels should be regularly monitored in order to identify any early warning signs that excessive workloads could adversely be affecting employee well-being.

In addition to the strategies outlined above, other options suggested by agencies for assisting the APS to manage excessive workloads include:

Early indications, as measured through the agency survey, suggest that agencies are taking reasonable steps to manage excessive workloads; however, one of the key ways to test the effectiveness of such strategies is to examine employees’ perceptions of their work-life balance.

Employee satisfaction with work-life balance

Despite some evidence of increasing workloads in the APS, levels of employee satisfaction in relation to work-life balance declined only slightly this year compared to last year’s. Two- thirds of employees agreed that their workplace culture supports people to achieve a good work-life balance, which is down from the 71% recorded in 2006–07, but slightly above the 63% recorded in 2005–06.

Employees working in small agencies continue to be more likely than their colleagues in medium and large agencies to report that their workplace culture supports people to achieve a good work-life balance (77% compared to around 67% in other agencies). The results for the SES continue to be below those for employees at other classification levels, with 54% of SES agreeing that their workplace culture supports people to achieve a good work-life balance (compared to 61% of EL and 69% of APS 1–6 employees). There was also wide variation in levels of employee agreement for agencies with individual agency-specific results, with agreement levels ranging from 35% to 84%.

Employees were slightly more positive when asked about their perceptions of their current work-life balance. In 2007–08, 71% of employees were satisfied with the work-life balance in their current job, which is midway between the 74% recorded last year and the 68% recorded in 2005–06.

Unlike the results for workplace culture, employees in small agencies reported similar levels of satisfaction with their work-life balance to those of employees in other agencies. However, levels of satisfaction with personal work-life balance were again lowest for SES employees (45% compared to 67% for EL and 73% for APS 1–6 employees). There was also wide variation in employee satisfaction levels for agencies with individual agency-specific results (50% to 83%). These results coupled with those above suggest that work-life balance is an area where some agencies can improve their performance.

Average hours worked in the last fortnight

One area that can have a significant impact on employees’ perceptions of their work-life balance is the amount of time they dedicate to work activities. Previous State of the Service reports have suggested that many employees work more or significantly more than their standard or agreed hours. However, the actual number of hours worked has not previously been quantified. To gain a better understanding of the hours worked by full-time APS employees, this year’s employee survey took a snapshot approach and asked employees how many hours they had worked in their current job in the last fortnight.

Notwithstanding the slight differences that exist between agencies in what constitutes a standard day for full-time employees (e.g. 7 hours and 21 minutes or 7 hours and 30 minutes), the employee survey results suggest that about one-third (35%) of full-time employees are working around standard hours (i.e. they reported that they had worked 75 hours or less in the last fortnight).9 This is similar to the 37% of all employees last year who reported working over the last six months, on average, around their standard or agreed hours. This year, 32% of full-time employees reported working more than 75 hours but less than 80 hours; 21% between 80 hours and less than 90 hours; 6% between 90 hours and less than 100 hours; and 3% worked more than 100 hours in the last fortnight.10

The likelihood of working extra hours varied for different segments of the full-time workforce. Classification had the most significant impact, with 87% of SES employees working 80 hours or more in the last fortnight (compared to 52% of EL and 22% of APS 1–6 employees).11 Almost half (45%) of SES employees worked 100 hours or more in the last fortnight. These results help to explain the poorer perceptions SES employees have about work-life balance.

Other segments of the full-time workforce more likely to report working 80 hours or more included: employees in small agencies (45% compared to 36% in medium and 30% in large agencies); employees working in departments (38% compared to 25% in non-departments); and employees working inside the ACT (39% compared to 25% outside the ACT). There was also significant variation across agencies in the likelihood that employees worked 80 hours or more in the last fortnight (18% to 71%). This variation may be due to the differences reported above (e.g. a higher proportion of EL and SES employees) and/or it may reflect high workloads in that agency at the time the employee survey was in the field.

Although many issues can impact on employees’ levels of satisfaction with their work-life balance, there was a strong negative relationship between hours worked and levels of satisfaction with work-life balance. Over three-quarters (79%) of employees who reported that they had worked 75 hours or less in the last fortnight were satisfied with the work-life balance in their current job, compared to only one-third of employees who worked 100 or more hours in the last fortnight. The decline in satisfaction levels was particularly marked at the 100 hours level, with 54% of employees working between 90 and less than 100 hours satisfied with the work-life balance in their current job compared to only 33% working 100 or more hours. Working longer hours had a similar negative impact on employees’ agreement levels that their workplace culture supports people in achieving a good work-life balance.

It is important in a time where there is increasing pressure on agencies to do more with less, that extra efficiency is not gained at the expense of impacting adversely on employees’ ability to achieve a work-life balance. One of the advantages the APS has in a tight labour market is its reputation as an employer that enables people to balance their work and personal commitments. Given remuneration in the APS at most classification levels is not on par with that in the private sector, agencies need to manage excessive workloads in a strategic, yet practical, manner to ensure that the APS can maintain its competitive advantage in the employment market as an employer that supports work and life balance.

Managing for improved performance

Systematic approaches to performance management are an integral element in improving individual and organisational productivity. However, developing the most effective approaches to managing performance continues to pose challenges both in Australia and internationally. A study on public sector performance found that public service managers in Australia, Canada, Germany, the UK and the USA view problems with the management of people, funds and technology as significant barriers to improving performance.12 A House of Commons report in the UK also concluded that performance management was an area in need of urgent attention.13 In examining drivers of improved performance in the APS context, the following sections explore employees’ views of their immediate manager and agencies’ performance management systems.

Employees’ views of immediate managers

An immediate manager plays an influential role in assisting employees improve their performance and productivity. A manager’s effectiveness can also influence a range of other issues that can motivate employees to maximise their contribution to the organisation, for example, job satisfaction, employee engagement, and retention. Good manager, featured yet again this year as one of the most important workplace attributes that impact on employees’ overall levels of job satisfaction—42% of employees rated it as important and of these employees, 76% were satisfied (see Chapter 4 for a detailed discussion on job satisfaction).

Employees generally held positive perceptions about their immediate manager’s performance. Almost two-thirds of employees were satisfied with the Immediate Manager factor, which is derived from the factor analysis14 of satisfaction with issues related to employee engagement discussed in Chapter 4 and provides a summary of employees’ views about their immediate manager (see Table 6.3).

Table 6.3: satisfaction/agreement with questions comprising the Immediate manager factor, 2007–08
  Satisfied/agreed (%)
Source: Employee survey
My manager shows concern for the welfare of his/her staff 77
My manager demonstrates honesty and integrity 77
There were good working relationships with my manager and colleagues 76
My manager works effectively and sensitively with people from diverse backgrounds 75
My manager ensures fair access to developmental opportunities for employees in my work group 72
My manager stands up for his/her staff when necessary 69
My manager encourages me to build capabilities and/or skills required for new job roles 69
My immediate supervisor is effective in managing people 66
My manager delegates work effectively 65
I receive adequate feedback on my performance to enable me to deliver required results 64
I receive support from my manager when I suggest new ideas 64
I received effective feedback from my manager 63
I was working to realistic performance expectations 60
My team had clear work plans and timetables 58
My manager draws the best out of his/her staff 57
My manager encouraged and managed innovation 55
I am satisfied with the recognition I receive for doing a good job 52
The people in my work group feel they are valued for their contribution 50
My manager appropriately deals with employees that perform poorly 39

Satisfaction with the Immediate Manager factor varied for some segments of the workforce, with younger employees, SES employees and employees in legal roles most satisfied with their immediate manager. The wide variation in employee satisfaction with the Immediate Manager factor for agencies with individual agency-specific results, 49% to 77%, suggests that some agencies have a problem which needs to be addressed. Given the important role immediate managers play in improving productivity, improving management capability in agencies where employee perceptions are relatively low, may be one immediate step these agencies can take to improve their productivity.

Consistent with last year’s results, employees tend to rate their immediate manager as strong in areas related to their general behaviour and ethics, but not as strong when it comes to addressing issues that impact on work performance. Employees, for example, continue to report lower levels of satisfaction with the way their manager deals with poor performance, recognises good performance and makes people feel valued for their contribution (see Table 6.3). These more negative results are of concern given the importance of managers providing effective feedback in keeping employees productive. The Commission’s publication, Leading Productive People: A Manager’s Seven Steps to Success,15 outlines the three elements and seven steps of the employee life cycle that managers invariably take with staff. The three key elements of the cycle are: finding people; getting productive; and keeping productive. The guide provides practical advice for managers in the APS to enhance their people management skills, and in turn, build the productivity and effectiveness of their staff.

Enhancing performance

The broad framework for performance management in the APS is established by the Public Service Act 1999 (the Act) and the Public Service Commissioner’s Directions 1999 (the Commissioner’s Directions). Agencies, however, have flexibility within this framework to develop and implement performance management systems that meet their business needs and the needs of their staff.

At a minimum, the Commissioner’s Directions indicate that a fair and open performance management system should provide each employee with a clear statement of performance expectations and an opportunity to comment on these expectations. Most APS agencies continue to report that they have a formal, systematic process in place for managing employee performance, with 93% of agencies requiring all staff to have a formal performance agreement (Chapter 7 discusses the role of the APS Values (the Values) in the performance management process).

It is important also for agencies to build performance management cultures, where performance discussions are common practice in ongoing work behaviour. Research in the

USA suggests that agencies need to lay the groundwork for changing culture and involving employees in defining performance management and successful performance. This also involves managers taking a more comprehensive and forward-looking approach to enhancing employees’ job performance and not relying solely on annual evaluations.16

There is room for improvement in developing a more integrated performance management culture in the APS. Nine out of 10 employees indicated that they had received formal individual performance feedback in the last 12 months, but only six out of 10 employees reported that they receive adequate feedback on their performance to enable them to deliver required results.

Of the employees who reported that they had received formal performance feedback in the last 12 months, the majority (87%) indicated that their performance was assessed against a formal performance agreement or work plan as previously agreed on with their supervisor. This means that seven out of 10 APS employees had their performance assessed against an agreed plan—this is similar to last year’s result.

Employees who had received formal feedback in the last 12 months were generally positive about the experience, although levels of satisfaction across all areas were down on those reported last year, for example:

Most agencies have a suite of measures in place to support managers in implementing the agency’s performance management system. Almost 90% of agencies reported that they had three or more measures in place to support line managers, with the most common measures being advice from corporate area (99% of agencies), providing consistent guidelines and forms for establishing performance agreements (96%) and self-nominating training on the performance management system (82%). These results are generally consistent with those reported last year, although the use of self-nominating training increased slightly this year.

A large proportion of agencies (82%) also had two or more mechanisms in place to ensure that line managers are accountable for implementing the agency’s performance management system. Consistent with last year’s results, the most common approaches taken by agencies were including mechanisms in senior managers’ and line managers’ performance agreements (73% and 60% respectively). Forty-two percent of agencies tested compliance in their staff survey and 49% used other mechanisms (e.g. central monitoring that agreements are complete, internal audits and compliance monitored by SES and/or agency’s Executive).

Employee perceptions of performance management are somewhat at odds with agencies’ strong focus on performance management in the last 12 months. It may be, however, that despite agencies having measures in place to assist managers implement the performance management system, they are not being targeted and promoted to managers in need of most assistance. Employees stepping into management roles for the first time or managing in the APS environment for the first time, and longer-term managers who have not moved with the times to modern management practices in the APS may benefit most from targeted development in providing performance feedback.

Addressing underperformance

An important aspect of managing for improved performance is effectively addressing underperformance issues. Previous State of the Service reports have highlighted that this is an area where there is room for improvement.

It is disappointing that employees continue to report much less positive views about the handling of underperformance. One in four employees did not think that their manager deals appropriately with employees who perform poorly—this is up from one in five employees in 2006–07. Over one-third (37%) of employees did not think that their agency deals with underperformance effectively (a similar result to last year’s). Nevertheless, the variation in disagreement levels between employees in agencies with individual agency- specific results (10% to 36% for their manager dealing appropriately with underperformance and 14% to 51% for agency performance in this area) suggests that it is possible for agencies to improve employees’ perceptions of how underperformance is handled. These results also suggest that those agencies recording relatively high levels of disagreement have a substantial problem that they need to address.

Nevertheless, the continued poor results at an aggregate level are of concern, especially given that preventing and/or effectively managing underperformance are ways that the APS can increase its productivity. An underperformance issue that is not addressed can have a negative impact on productivity across the work group. Managers have an important balance to achieve in maintaining confidentiality and addressing underperformance issues and keeping other team members motivated—this can be especially difficult in the absence of sufficient guidance and/or support from HR areas. The Commission’s guide, Sharpening the Focus: Managing Performance in the APS,17 is designed to assist managers and agencies improve performance. It also provides guidance on handling underperformance.

Leave management

One of the key influences on enhancing the productive capacity of an agency is the effective management of leave. If not managed well at both a strategic and operational level, agencies can potentially reduce their productivity and their ability to deliver business outcomes. They are also at risk of being exposed to the increased costs associated with employment and accruing leave entitlements.

Reducing workplace absence (or unscheduled leave) can be one of the most effective ways that agencies can improve their productivity. Just as high levels of turnover and workplace injuries can sometimes be indicators of broader workplace problems, so too can high levels of workplace absence. Studies of unscheduled absence have found that for organisations with high levels of workplace absence, up to half may be avoidable.18 Agencies should be regularly monitoring and analysing workplace absences to identify potential problems.

Similarly, the effective management of annual leave can have a direct impact on improving the productivity and well-being of individual employees, as well as reducing the costs associated with agency leave liabilities. Given that the liabilities for employee leave and other entitlements for Australian Government entities at 30 June 2004 was approximately $6 billion and growing,19 agencies need to consider this as an area of priority.

The following section examines two areas of leave management—workplace absence or unscheduled leave and the management of annual leave.

Workplace absence

In response to growing concerns about the levels of workplace absence in the APS and the lack of a common definition, the Commission in consultation with a range of agencies developed the following definition for the purpose of APS-wide benchmarking and reporting through the State of the Service report:

Workplace absence refers to absence from work in recognition of circumstances that can generally arise irregularly or unexpectedly, making it difficult to plan, approve or budget for in advance, and which is inclusive of planned medical procedures.20

As part of the definition, workplace absence was also divided into five categories: sick leave; carer’s leave; compensation; specific types of miscellaneous leave; and unauthorised leave. This is the second year that this definition has been used by the Commission to collect information about unscheduled absence across the APS.

Despite the use of a common definition to monitor absence across the APS, the diversity and nature of APS work and the workforces of agencies means that no optimum or standard level of acceptable workplace absence is applicable APS-wide.

Measuring levels of absence

In an attempt to maximise data comparability across the APS, agencies were asked to provide data on an FTE basis if possible, although agencies who were unable to extract FTE counts from their Human Resources Information System (HRIS) were still able to report using the ‘headcount’ measure. Of the 90 agencies in the agency survey, 21 provided data on a ‘headcount’ basis.

Agencies were also asked, where data was available, to provide the number of absence days for each of the five workplace absence categories as defined below:

Where an agency’s HRIS did not allow reporting against each of the categories separately, it was asked to provide a total only—seven agencies indicated this to be the case.

Levels of absence

Aggregate rates of unscheduled absence in the APS continue to be at undesirable levels and rising. The median APS-wide absence rate this year was 10.1 days per employee, which is just over a half day more than the 9.4 days per employee reported in 2006–07. These aggregate results, however, hide the wide variation in agencies’ levels of unscheduled absence, which ranged from 2.9 days per employee to 16.2 days per employee (see Table 6.4).

Table 6.4: level of workplace absence(a) by agency, 2007–08
Absence per employee FTE or Headcount Agencies

(a) When the ratio of days of absence per employee is calculated using the FTE measure in an agency where some employees are working part-time, the ratio is higher than one that is calculated using the headcount measure. In most APS agencies this is likely to have a marginal effect but users need to be cautious in making direct comparisons between agencies.

Source: Agency survey
0.0 to 5.9 days FTE AOFM, ASADA, BoM, DCC, AFPCS, FFMA, GBRMPA, HREOC
Headcount Geoscience Australia, NOPSA, PSR
6.0 to 7.9 days FTE ANAO, AusAID, Cancer Australia, DEWHA, FSANZ, NCA, Productivity Commission, PM&C, Workplace Ombudsman
Headcount AIFS, ANMM, Austrade, Federal Court, ABCC, ONA
8.0 to 9.9 days FTE ACCC, AUSTRAC, AWM, CDPP, CRS Australia, DBCDE, Finance, NMA, Privacy Commissioner, RET
Headcount AIHW, CrimTrac, DFAT, FMC, NBA,NNTT
10.0 to 11.9 days FTE ACC, ACIAR, AGD, AEC, AIR, the Commission, APVMA, ARC, ARPANSA, ASIC, Comcare, Customs, Defence, DHA, DIISR, ITSA, Ombudsman, OPC, Treasury
Headcount CGC, DEEWR, DHS, Infrastructure
12.0 to 13.9 days FTE AAT, ABS, ACMA, AHL, Centrelink, ComSuper, CSA, DAFF, FaHCSIA, IP Australia, Medicare Australia, NAA, NHMRC, NLA, MRT/RRT
Headcount TSRA, Workplace Authority
14.0 to 17.0 days FTE AIATSIS, ATO, DIAC, DVA, Family Court, Health, RAM, SSAT

The rise in overall levels of absence in 2007–08 appears to be driven mainly by increases in rates of sick leave. This year the median sick leave rate was 7.7 days per employee, an increase on the previous year of 7.3 days.

Sick leave continues to be the most common type of unscheduled leave used by employees. Where agencies could break down their total absence by absence type, over three-quarters (77%) was taken as sick leave. The next most common absence type was carer’s leave (12%) followed by compensation leave (6%) and specific types of miscellaneous leave (4%). Unauthorised absence made up less than one per cent of all unscheduled absence.

Although sick and carer’s leave make up almost 90% of all absence, it must be remembered that a certain level of workplace absence is an unavoidable element of working life. Supporting employees with genuine illness and caring responsibilities underpins the APS as a model employer that promotes family-friendly and flexible working arrangements.

Levels of absence also continue to vary by agency size; however, in 2007–08 there was not a uniform increase in absence rates across the three agency size bands. Consistent with last year’s results, small agencies generally report lower levels of absence than medium and large agencies. In 2007–08, rates of absence increased in small (from a median of 7.2 days per employee in 2006–07 to 8.3 days per employee this year) and large (from a median of 11.0 days per employee in 2006–07 to 11.9 days per employee this year) agencies. In contrast, absence levels in medium agencies were down slightly this year compared to last year (medians of 9.4 days per employee and 9.8 days per employee respectively).

Some agencies have been successful at sustaining lower rates of workplace absence and, as reported last year, this seems to be a result of strong employee job interest and alignment to their work. There appears to be a strong relationship between creating a culture where employees are engaged and committed to the organisation and its leadership and reduced levels of absence. The results from the employee and agency surveys (see Table 6.5) show that employees who have more positive views on aspects of employee engagement are less likely to be working in an agency with a high level of unscheduled absence, for example, 67% of employees who were dissatisfied with the Current Job factor were working in an agency with a high level of unscheduled absence.

Table 6.5: views on selected employee engagement attributes and level of unscheduled absence in agency, 2007–08
Factor/index(a) % working in agency with high levels of unscheduled absence (i.e. 12 or more days) % working in agency with average or low levels of unscheduled absence (i.e. less than 12 days)
  Agree/ satisfied with factor/ index Disagree/ dissatisfied with factor/ index Agree/ satisfied with factor/ index Disagree/ dissatisfied with factor/ index
Current Job factor 59 67 41 33
Merit and Career Progression factor 57 66 43 34
Innovation Culture factor 56 64 44 36
Loyalty/commitment to agency index 57 67 43 33
Loyalty/commitment to APS index 60 69 40 31

(a) Full details of the factor analysis and indices, including details of methodology and questions used, are set out in Appendix 3.

Source: Employee and agency surveys

Comparisons with other jurisdictions

Workplace absence rates are often one of the key HR indicators used to benchmark people management performance across agencies, industry sectors and internationally. Nevertheless, care should be taken in making such comparisons given that overall results can be influenced by several issues, including variations in definition, leave provisions, reporting periods and monitoring and recording practices.

Comparisons of absence levels with international and other Australian public sector jurisdictions are limited because of differences in definitions of absence type. Where comparable data are available, however, rates of absence due to sick leave in the APS are on par with those in other public sector jurisdictions (see Table 6.6).

Table 6.6: sick leave levels for selected jurisdictions, 2006–07 and 2007–08
Public sector jurisdiction Annual sick leave rate per employee

(a) Data for Inland Revenue, a department accounting for around a fifth of all staff covered, was not available and not included in this rate. Calculations based on previous years’ suggest that the 2006–07 rate is an underestimate of the true rate.

(b) Based on full-time permanent employees.

Source: Red Scientific Limited 2007, Analysis of Sickness Absence in the Civil Service, FY2006–07, Report Version 1.0, <http://www.civilservice.gov.uk>; State Services Commission 2007, Human Resource Capability Survey of Public Service Departments, as at 30 June 2007, <http://www.ssc.govt.nz>; Department of the Premier and Cabinet 2007, The South Australian Public Sector Workforce Information—June 2007: Summary Report, <http://www.premcab.sa.gov.au>; Department of the Premier and Cabinet 2007, Profile of the Western Australian State Government Workforce, June 2007, <http://www.dpc.wa.gov.au>; Agency survey
UK Civil Service, 2006–07 9.3 days(a)
NZ Public Service, 2006–07 6.5 days of sick and domestic leave(b)
SA, 2006–07 8.2 days per FTE
WA, 2006–07 54 hours per FTE (approx. 7.2 days)
APS, 2007–08 7.7 days

Fostering an attendance culture

Fostering an attendance culture where employees are engaged with the organisation and its business has been shown to result directly in reduced levels of absence. While absence management strategies should emphasise the prevention of avoidable absence, they should also provide support to those who are unavoidably absent such as employees who are ill or returning to work after a long period of absence.

A clear, fair and well-communicated policy supported by senior and line management is one of the most effective strategies for addressing workplace absence. All except two small agencies were using strategies to manage workplace absence in 2007–08, with most (87%) using at least four strategies—in general, the larger the agency, the more strategies they used.

The most common strategies used by agencies were raising awareness of health and safety issues, healthy lifestyle promotion and other prevention mechanisms (97%), and providing flexible working arrangements to enable employees to manage work-life balance (94%) (see Table 6.7).

Table 6.7: strategies used to manage workplace absence by agency size, 2007–08
Strategy to manage workplace absence Agency size
Source: Agency survey
  Small (%) Medium (%) Large (%) Total agencies (%)
Raise awareness of health and safety issues, healthy lifestyle promotion and other prevention mechanisms (e.g. flu vaccinations) 92 100 100 97
Provide flexible working arrangements so that employees can manage work-life balance 87 96 100 94
Establish and/or communicate attendance expectations (e.g. specific policies, procedures and/or people management practices) 61 79 88 73
A reporting framework to assist management to monitor absences, identify patterns and trends and highlight areas for further investigation 55 71 96 71
Initiatives to build a positive workplace culture that encourages employees to want to come to work 45 64 71 59
Provide support and training to line managers to build their confidence and capability in managing workplace absence 47 61 67 57
Workplace absence included as a regular agenda item at senior management meetings 21 46 83 46

Given the widespread adoption of strategies to foster attendance by agencies, it is of concern that levels of unscheduled absence are still increasing. Some of this could, however, be a result of increased workplace pressures and demands on employees.

Agencies should examine whether individual managers within the organisation have the appropriate skills, and whether they are taking responsibility for absence management. Part of the approach in ensuring managers take responsibility for fostering an attendance culture, and in turn reducing levels of unscheduled absence, could be to include this as a key management outcome in performance agreements.

It is also important that agencies continue to monitor absence trends, as it is only by doing this that agencies will be able to understand and develop strategies to address the underlying issues impacting on work attendance. The Commission has developed a better practice guide, Fostering an Attendance Culture: A Guide for APS Agencies21 to assist agencies to identify workplace absences and their possible causes, and improve their capacity to address problems through the implementation of better practice strategies. As discussed above, managers play a pivotal role in managing absence and it is critical that they have the appropriate training, support and advice to enable them to do so effectively. To assist line managers, the Commission has also released a companion guide, Turned Up and Tuned In—A Manager’s Guide to Maximising Staff Attendance.22

Presenteeism

An issue related to unscheduled absence and fostering an attendance culture is presenteeism. Presenteeism is a term used to describe the loss of productivity that occurs when employees come to work, but are not fully functioning because of illness, injury, or lack of motivation. When compared to absenteeism, presenteeism is considerably less visible in the workplace and harder to monitor. It is estimated that on average six working days of productivity are lost for each employee annually as a result of presenteeism. This is nearly four times the estimated cost of absenteeism.23 The causes range from health-related issues to a lack of work-life balance and job-related stress. Minimising the impact of presenteeism is yet another reason for APS agencies to remain focused on performing well in the area of work-life balance. Agencies also need to be careful that in their efforts to reduce levels of workplace absence, they do not create inflexible workplace practices that encourage presenteeism.

Management of annual leave

Annual leave is a benefit that entitles employees to a paid break from their work each year. One of the reasons for annual leave is to allow employees to refresh and recharge in order to remain fully productive. If agencies make it difficult for employees to take annual leave, they run the risk of inadvertently encouraging employees to access other types of leave, thereby increasing rates of unscheduled absence. The 2006 ANAO report, The Management and Processing of Leave,24 identified a need for agencies to establish appropriate arrangements in relation to the management of annual leave and effective internal controls over leave processing. The report recommended that agencies adopt certain practices to capture, process, review and monitor staff attendance and their leave entitlements. In light of the earlier discussion in this chapter where the impact of the recent additional 2% efficiency dividend has meant that employees in a number of agencies have been unable to take leave due to high workloads, it is timely to examine the recommendations of the ANAO report and the extent to which agencies have implemented them.

Most agencies appear to be using a series of strategies, consistent with the recommendations in the ANAO report to manage employees’ levels of annual leave. All except two small agencies reported that they had at least one measure in place to manage annual leave, with around 80% of agencies having at least four measures in place. All medium and large agencies had at least four measures in place, as did around two-thirds of small agencies. The most popular measures used were: leave arrangements as outlined in the agency’s collective agreement (CA) are fully implemented; agency’s CA outlines a threshold where an employee can be directed to take annual leave or is deemed on leave; excess leave balances are monitored on a regular basis and appropriate follow-up action is taken when required; and line managers are provided with information to assist in the proactive management of annual leave (see Table 6.8).

Table 6.8: actions taken by agencies to manage employees’ levels of annual leave by agency size, 2007–08
Action to manage employees’ level of annual leave Number of agencies (N=90)
Yes Being developed No Not applicable

(a) Includes one agency that did not provide a response.

(b) Includes two agencies that did not provide a response.

Source: Agency survey
Excess leave balances are monitored on a regular basis and appropriate follow..up action is taken when required 80 5 5 0
Leave arrangements as outlined in the agency’s collective agreement are fully implemented 79 1 1 9
Line managers are provided with information to assist in the proactive management of annual leave 78 6 5 1
Agency’s collective agreement outlines a threshold where an employee can be directed to take annual leave or is deemed on leave (e.g. 60 days) 72 1 8 9
Control measures to manage unactioned leave applications in Employee Self-Service system 63 7 11 9
Risks associated with the management and processing of leave are included in relevant fraud control plans 56 9 22 3(a)
Excessive leave balances and leave liabilities included as a regular agenda item at senior management meetings 43 8 36 3(a)
Agency’s collective agreement outlines a threshold where an employee cannot be denied leave (e.g. 40 days) 11 1 67 11
Risks associated with the management and processing of leave are included in relevant risk management plans 42 13 30 5(b)

Key chapter findings

The APS has continued to achieve significant improvements in productivity which compare favourably with those in the private sector. In achieving greater efficiency and effectiveness APS agencies have relied on a range of approaches, for example, enhancing ICT capacity, using productivity-based workplace agreements and investing in employees’ learning and development. Employees also continue to report high levels of productivity improvement, with the most important drivers being good working relationships, working to realistic performance expectations and access to the information, resources and/or technology needed to do the job.

The use of an annual efficiency dividend and partial supplementation for wage increases was an integral part of shifting an APS culture to one that focused on efficiency and effectiveness. However, it may be time to consider whether uniform across the board approaches are impacting adversely on smaller agencies and resulting in undesirable output impacts as well as poor investment choices for the future. It seems timely that the existing funding arrangements be reviewed, and any recommendations made by the JCPAA in relation to smaller agencies will be a welcome development.

As a starting point, some possible options to alleviate the adverse consequences of the efficiency dividend for categories of agencies (e.g. agencies whose functions are largely statutory) or small agencies include:

Nevertheless, in an increasingly tight fiscal context, it is critical for the APS to continue to focus on ways to achieve further productivity gains. There are clearly some areas where more savings can be made, for example, through greater use of whole of government contracting arrangements, and a continued strong emphasis on improving all aspects of an agency’s operations.

Managing excessive workloads is an issue that has intensified for many agencies in the last 12 months. An important part of managing excessive workloads is identifying ‘hot spots’ in the organisation or areas most at risk. A full appreciation of workforce pressures across the agency is essential in developing flexible strategies to assist employees and managers deal with excessive workloads. At this stage it appears that agencies are taking a sensible approach to managing excessive workloads, although employee perceptions about satisfying work-life balance are lower than those reported last year. Nevertheless, employee satisfaction with work-life balance continues to be an area of strength for the APS, and agencies need to ensure that they continue to provide flexible working practices that uphold the reputation of the APS as an employer which assists employees achieve a good work-life balance.

An employee’s immediate manager is one of the key drivers of productivity improvement, and many employees continue to be satisfied with their manager’s performance. There are also positive signs in the area of performance management, although the APS does not appear to have yet developed an integrated performance management culture. Although most employees are receiving formal individual feedback, fewer believed that they receive adequate feedback on their performance to enable them to deliver the required results.

Addressing underperformance is an integral part of an integrated performance management culture, yet this is an area where many agencies continue to struggle. The wide variation in agency results from the employee survey suggest that this is not an impossible issue to address and that agencies can take steps to improve employee perceptions in this area.

Of particular concern is the rising level of unscheduled absence across the APS. Although a certain level of workplace absence is a normal feature of a healthy workplace, managers must take responsibility and be held accountable for fostering an attendance culture. It is important that managers and agencies monitor and understand absence trends, especially at a time when many agencies are experiencing excessive workloads. A high level of unscheduled absence in an area can be an early warning sign that the area does not have the resources to cope with the current workload; likewise, it might suggest that broader management issues need to be addressed in the area. Effective management is the most cost-effective way agencies can reduce unscheduled absence, especially when good managers can create and foster a culture where employees are committed to the organisation and its leadership. This in turn will enhance the productive capacity of the APS.

 

1 The measure of APS wage increases used is the average annual wage increases from 1999–2000 to 2007–08 (the latest data available) in collective agency agreements as measured from the nominal expiry date of the previous agreement to the nominal expiry date of the current agreement.

2 For more information on the application of the efficiency dividend, see Finance’s submission to the JCPAA’s inquiry into the effects of the ongoing efficiency dividend on smaller public sector agencies, and the transcript of Finance’s appearance before the JCPAA.

3 Average calculated using data from ABS, Australian System of National Accounts, 2007–08, Cat. No. 5204.0, ABS, Canberra, <http://www.abs.gov.au>

4 In their submissions to the JCPAA inquiry, Finance indicated that there are mechanisms available to agencies to seek a review of their funding arrangements. If meeting the costs of the efficiency dividend, for example, requires consideration of reducing service levels to clients, such considerations can be brought to the attention of the relevant Minister, who can agree to bring it to the Finance Minister, with the aim of seeking additional funding as a new policy proposal.

5 The Workplace Authority was not subject to the additional dividend due to a significant general budget reduction.

6 Hon. Lindsay Tanner MP, ‘Address to the CEDA 2008 State of the Nation Conference’, Canberra, 5 June 2008, p. 3, <http://www.financeminister.gov.au>

7 Hon. Lindsay Tanner MP, ‘Address to the CEDA 2008 State of the Nation Conference’, Canberra, 5 June 2008, p. 5, <http://www.financeminister.gov.au>

8 Sir Peter Gershon, Review of the Australian Government’s Use of Information and Communication Technology (October 2008), <http://www.finance.gov.au>

9 Some results may be affected by flex-time arrangements, which are used in many agencies to assist APS 1–6 employees balance work and life commitments.

10 Two per cent of full-time employees indicated that the question was not applicable (e.g. because they were on a graduated return to work programme or they were on leave for the whole fortnight).

11 This is likely, at least in part, due to flex-time arrangements, which are used in many agencies to assist APS 1–6 employees balance work and life commitments.

12 KPMG International 2007, Performance Agenda: An International Government Survey—Focusing Public Sector Performance, pp. 4–5, <http://www.kpmg.com>

13 UK House of Commons Public Administration Select Committee, Skills for Government: Volume 1, 6 August 2007, pp. 13–14; Skills for Government: Government Response, 21 November 2007, p. 3, <http://www.parliament.uk/pasc>

14 Full details of the factor analysis, including details of the methodology and questions used, are set out in Appendix 3.

15 Australian Public Service Commission 2007, Leading Productive People: A Manager’s Seven Steps to Success, Commonwealth of Australia, Canberra, <http://www.apsc.gov.au>

16 H. Risher & C. Fay 2007, Managing for Better Performance: Enhancing Federal Performance Management Practices, IBM Center for The Business of Government, Washington, D.C., p. 3, <http://www.businessofgovernment.org>

17 Australian Public Service Commission 2006, Sharpening the Focus: Managing Performance in the APS, Commonwealth of Australia, Canberra, <http://www.apsc.gov.au>

18 ANAO 2003, Absence Management in the Australian Public Service, Performance Audit Report No. 52, 2002–03, Commonwealth of Australia, Canberra, <http://www.anao.gov.au>

19 ANAO 2006, The Management and Processing of Leave, Performance Audit Report No. 16, 2005–06, Commonwealth of Australia, Canberra, <http://www.anao.gov.au>

20 Australian Public Service Commission 2006, Fostering an Attendance Culture: A Guide for APS Agencies, p .8, <http://www.apsc.gov.au>

21 Australian Public Service Commission 2006, Fostering an Attendance Culture: A Guide for APS Agencies, Commonwealth of Australia, Canberra <http://www.apsc.gov.au>

22 Australian Public Service Commission 2006, Turned Up and Tuned In—A Manager’s Guide to Maximising Staff Attendance, Commonwealth of Australia, Canberra, <http://www.apsc.gov.au>

23 Medibank Private 2007, Sick at Work—The Cost of Presenteeism to Your Business, Employees and the Economy, <http://www.medibank.com.au>

24 ANAO 2006, The Management and Processing of Leave, Performance Audit Report No. 16, 2005–06, Commonwealth of Australia, Canberra, <http://www.anao.gov.au>

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