The Commonwealth Department of Health plays an integral role in the development of health policies and the administration and delivery of health programs, to support improved Australian health outcomes.
Over time the department’s role has changed, with functions such as sport and ageing moving in and out of the organisation through successive Machinery-of-Government changes. Nevertheless, the department’s core purpose of responding to national health trends, risks and emergencies has remained fairly consistent since it was established in 1921.
Australia’s health delivery responsibilities are distributed between the Commonwealth, state and territory jurisdictions and the private sector. By necessity, the department regularly interacts with its state and territory counterparts, industry and the non-government sector in its pursuit of health outcomes. The significant involvement of the private sector in the health system requires a high level of commercial acumen in the department in order to understand the business drivers and market forces that influence decisions made by the private sector.
The department operates in a complex and fluid environment, both because of its role in the health system and as an agency within the broader APS. In this context, the review team found that the department needs transformational change to develop the agility and capability required to operate strategically and contemporaneously.
The department takes pride in its record of delivery, with 94 per cent of key performance indicators reported as met in its annual report. However, in the context of shifting roles and relationships in the federal health system, combined with a policy of smaller government, it is highly feasible in the future that the department will be less engaged in service delivery and more in health-system strategy. This will require a shift in the department’s capability profile and in the way people work together.
In recognising the department’s capability strengths the review team also identified the following five overarching themes for capability improvement:
- prioritise focus on organisational culture and people leadership
- develop a high-level organisational and policy strategic capability
- address inadequate governance arrangements and delivery frameworks
- foster a culture that appropriately embraces and manages risks within defined tolerances
- lead purposeful engagement and partnership with external stakeholders.
These themes are consistent with the almost 1500 free-form suggestions for change made by departmental employees in the 2014 APS Employee Census (the Census). These suggestions focused on the need for improved leadership and management, communication, training, skills, change and performance management.
The following sub-sections provide further explanation of the review’s overarching findings.
The department’s strengths
Most employees interviewed during this review expressed deep sense of pride in, and commitment to, helping improve Australian health outcomes. They also expressed strong motivation and alignment with the department’s vision of ‘creating better health and wellbeing for all Australians’. The review team heard that the department’s high level of employee commitment has served it well in its pursuit of what has often been a voluminous policy agenda.
The department has many highly capable employees, with deep subject matter expertise and a well-educated workforce (67 per cent of employees have university qualifications compared to 60 per cent across the APS). The department employs highly credentialed medical officers and other professionals with relevant health qualifications to help inform internal policy and program decisions. It has access to rich data repositories, is developing an Enterprise Data Warehouse and is working on a broad e-Health program which has the potential to strengthen the department’s platform for evidence-based approaches to policy development.
Throughout the review, employees consistently noted that a central aspect of the department’s culture is its focus on delivery, especially at the tactical policy and program level. Similarly, the review team heard that employees and business areas across the department have effectively and consistently delivered on urgent work in short timeframes.
The department is widely recognised for its ability to deliver the initiatives and reforms required of it by Government. Examples include the tobacco plain packaging strategy—an international first to reduce smoking levels—National Health and Hospital Reform, and reforms to mental health and aged care. The department has, over many years, also implemented policy ideas across a broad range of areas to improve health outcomes in Australia and internationally. These include reforms to ensure the sustainability of the Pharmaceutical Benefits Scheme, increasing private health insurance coverage rates, e-Health initiatives such as the Personally-Controlled Electronic Health Record (PCEHR), and enabling more sophisticated debate around health productivity. The department has demonstrated its ability to implement organisational change in response to external pressures such as the 2010 Strategic Review and its more recent internal changes aimed at realising improved financial efficiencies. Employee confidence in the department’s ability to manage change has also improved, up by seven percentage points from 2013, with 2014 Census data reporting that 50 per cent of employees believe senior leaders effectively lead and manage organisational change, compared to 52 per cent in like policy agencies.
External stakeholders recognised the department’s track record of mobilising and working with public service agencies across jurisdictions and other external stakeholders to help lead the national response to domestic and international health risks and emergencies. Similar to its national efforts, the department is recognised for its positive contributions and leadership role in the international health arena.
Until recently, the department has been led by Ms Jane Halton PSM, a respected and long-term Secretary who left to take up her appointment as Secretary of the Department of Finance before the start of this Capability Review. The review team heard that the former secretary provided clear task and policy direction for the organisation and was recognised by employees and external stakeholders for her in-depth knowledge of the health sector. Ms Halton also played an important role in her interactions with the World Health Organization, including as the chair of the World Health Assembly in her final year with the department. Ms Halton was instrumental in leading national and international health reforms and provided a strong profile and an identity for the department.
The department needs an increased focus on organisational culture and people leadership
The review team found that the department will need to undergo significant cultural change to develop a greater focus on people leadership and capability development.
Throughout the review, employees described the department as strongly focused on tactical delivery and issues management with limited acknowledgement of the toll its ambitious work program had on employees. Most Senior Executive Service (SES) employees advised the review team that they work excessive hours, with many noting an average of more than 80 hours a week, substantially in excess of the reported APS Employee Census data. Executive Level (EL) 2 employees reported to the review team that they also regularly work long hours, with most volunteering that they have no desire to progress to a senior leadership position due to concerns about a further anticipated diminution of work–life balance. Evidence before the review indicated that much of this workload was attributed to inefficiency of systems and processes, duplication and rework, which all lead to significant resource and capacity waste.
Employees and external stakeholders regularly noted that the department lacks sufficient focus on the contribution of highly skilled people to its achievements. While some individual leaders were recognised for their focus on people leadership, the review team found that the broader department has not sufficiently invested in the development of its culture, in line with high-performing organisations. Contemporary research is clear: when an organisation’s culture lacks a sufficient focus on people this can lead to a decline in productivity, negative external perceptions and the eventual devaluation of the organisation.1
Despite the efforts of the former secretary to break down silos, most employees and stakeholders described the department as hierarchical and siloed. The review team heard a strong desire from some employees for consistent communication and greater leadership visibility. This is supported by Census data, which reported that 51 per cent of employees perceive that senior leaders are sufficiently visible, compared to 57 per cent in like policy agencies.
The review team found strong emphasis on contributions of ‘the individual’ over collective collaboration. Employees commented that there is a lack of a sense of a united leadership ‘team’ and a lack of whole-of-organisation ownership from employees and leaders with a strong corporate versus policy–program–regulatory divide.
The review team regularly heard evidence from employees and external stakeholders of a culture of ‘inappropriate’ behaviour in some areas, including bullying and harassment. The 2014 Census rate of 19 per cent compares with an average 15 per cent in like policy agencies. The relatively high reported rate of bullying in the Census does not correlate with the data held by the department on formal complaints about inappropriate behaviour. The department has acknowledged that this is an issue and has implemented a targeted communications campaign to encourage employees to report inappropriate behaviour and seek support.
A number of employees reported a need for greater transparency regarding SES placements and performance pay. Many senior employees commented that they received no input into or rationale regarding their placement to a position, with many in long-term acting positions. Others advised that they had received a telephone call only days before a move with no accompanying explanation.
APS Census data in 2014 reports on the climate of workplaces by considering the demands placed on employees and the control employees have in relation to these demands. Figure 7 plots the distribution of departments. Those in the lower right-hand quadrant represent employees experiencing the highest demand and lowest control in relation to workload. In relative terms, the department, represented in ‘red’, is a high-strain workplace. Evidence demonstrates that high demand–low control workplaces face an elevated risk of ill health among employees.
Figure 7—Census data indicates employees operate in a high demand–low control environment.
The department needs to develop a high-level organisational and policy strategy
The department has an ambitious, noble and compelling vision that employees aspire to achieve. But it is not clear how the department’s vision is translated through organisational strategy to inform structures, priorities, resource allocation, workforce planning and performance measurement and reporting. Organisational strategy is also needed to map how the department is going to increase its influence and where it will invest.
The review team found that the department has a view that the Government does not welcome or value strategic policy, which contradicts the evidence provided. The department does not have a high-level strategic policy framework to support the development of coherent policies and programs that are guided by and support a single strategic intent.
The department needs to better connect sources of evidence across the organisation to support the development of a high-level whole-of-health-system view to inform and guide the department’s advice in an increasingly contested policy environment. The department has established a Strategic Policy Unit to provide a system-wide and strategic policy capability, however policy discussions are largely constrained within work silos. The review also found limited evidence of horizon-scanning or internal discussion on whole-of-health-system policy.
The forthcoming White Paper on the Reform of the Federation, the consequences of the Williams II High Court decision, and broader government health and economic policy decisions have the potential to change the department’s role within the Australian health system. While the department is providing input into these processes, the views expressed by external stakeholders, and by some within the department, is that greater internal consultation and connection is needed to leverage expertise and draw on policy ideas from across the department in order to provide the best advice to the Government.
Internal and external comments to the review team also highlighted a sense of reluctance from the department to consider new or changed policy direction. While there are many examples of the department using evidence to inform policy and decisions, the review team also heard examples where new evidence did not result in a change of policy or program direction. It seems likely that the department’s lack of high-level strategic policy direction is hampering policy and program agility.
Internal and external stakeholders described the department’s desire to maintain existing work programs, with ‘trimming around the edges’ and a limited appetite for decommissioning work. This has resulted in a lack of agility in resource allocation. The department’s current budget re-basing exercise is, in part, recognition of the need for greater flexibility in resource allocation. The review team found that greater alignment of work programs through strategy, combined with more analysis of the comparative return-on-investment in the health system, could assist the department to prioritise work activities and provide policy options to the Government.
There is an urgent need to address inadequate governance arrangements and delivery frameworks
Decision making within the department has been largely centralised at senior levels, with a number of senior leaders being described by employees and stakeholders as exercising a command-and-control leadership style. While this approach may be appropriate in responding to a crisis or national emergency, the review found that its application in day-to-day management has resulted in the disempowerment and poor use of its workforce, reinforced vertical silos, limited corporate ownership and potentially hampered innovation.
The department’s governance arrangements appear disconnected, which may be a function of their design. The accountability relationship between some committees and the Executive is unclear, with some areas (such as audit and risk) assuming greater prominence on the executive-leadership agenda than others. Minutes of meetings provided to the review team indicated that the department’s People and Capability Committee has met only once in the past 12 months.
The review team identified a number of people, system and project risks that have not been sufficiently documented through risk frameworks or identified through internal or external audits or management reports. The department needs to review its internal governance and accountability arrangements to ensure decision-making frameworks are fit-for-purpose.
Throughout the review, employees often commented on significant inefficiencies in the department’s operations due to internal workflows, especially regarding clearance and coordination processes. The review team found that the department would benefit from streamlining internal workflows, further delegating responsibilities and ensuring that people at all levels are appropriately empowered. This shift would also help refocus SES time from detailed management to leadership and strategic matters.
Additional financial investment is required to modernise and ensure the department’s information and communications technology (ICT) environment is secure and fit for purpose. While the department is acutely aware of the shortcomings and associated risks of its ICT systems, resolving this to an appropriate standard will likely require accelerated, concerted and sustained focus.
The department needs to foster a culture that appropriately embraces and manages risks within agreed tolerances
The review team regularly heard examples of risk aversion, tight control of information, micro-management, elevated decision making and an excessive focus on issues management. This approach, coupled with a reluctance from a number of employees to report potential risks or mistakes due to fear of being blamed for failures, has created ‘blind spots’ to risk exposures, disempowered people, increased residual risk and stifled innovation. Employees provided the review team with examples where red traffic lights were not placed on management reports until risks were quite advanced as they felt that bad news would not be welcomed, and they would be better off trying to mitigate risks rather than report them.
Employees regularly commented to the review team about personal fears of making a mistake, with some commenting that the department ‘does not make mistakes’. The review team found a variable understanding of, and sophistication regarding approaches to, managing risk. This is compounded by risks being elevated or escalated to the Executive to manage.
The department needs to engage with a broad range of risks on a daily basis. Due to the scale and complexity of its operations, it is inevitable that some risks will eventuate, regardless of mitigation efforts. Significant work is needed to change the department’s cultural appetite towards risk and acclimatise all levels of the department to embrace and engage collectively to manage risk as appropriate.
The department should lead more purposeful engagement and partnership with external stakeholders
The department maintains good relations with a number of external stakeholders, particularly when those relations have been managed at the most senior levels. The former secretary was highly respected by the majority of external stakeholders for her knowledge of the health system and her capacity to steer solutions to difficult issues in national and international fora. Many stakeholders also commented on the good relationships maintained with individual departmental officers at lower levels.
However, a majority of external stakeholders, including agencies across the APS, reported they have experienced the department as increasingly insular and often outwardly defensive. Stakeholders often commented on the difficulty in interacting with the department compared to other APS policy departments which were seen as much more open, though still professional and able to manage competing interests.
The review team heard from external stakeholders from across the broader APS, and the health portfolio and sector, that they would like to develop stronger, more collaborative relationships with the department. External stakeholders often noted that they understand the department is not always able to be open with them in a timely manner, or to cater to their views. Still, they perceive the department’s approach to consultation as excessively risk averse, narrow and at times perfunctory.
Some senior departmental employees noted the need to ensure that junior officers are not ‘captured’ by stakeholders who can often be quite influential in their advocacy for a certain policy position. This has led to a rotation of employees or the management of relationships at senior levels in the department.
In an increasingly contested policy environment, the department needs to ensure it adequately captures the views of stakeholder groups who often hold positions of authority and influence within the community. Incorporating a broad range of external policy perspectives into the department’s advice remains crucial to its continued position as a trusted and key policy adviser to the Government.
1 James L Heskett, W Earl Sasser, J Wheeler, ‘The Service-Profit Chain Today’, http://hbr.org/web/extras/2008/12/service-profit-chain-today, 2012.