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4. More detailed assessment of agency capability

This section provides an assessment framed by the leadership–strategy–delivery structure of the capability review model. Assessments were made according to the rating assessment set out in Figure 2.

Figure 8—Rating descriptions
Rating Description

Strong

  • Outstanding capability for future delivery in line with the model of capability.
  • Clear approach to monitoring and sustaining future capability with supporting evidence and metrics.
  • Evidence of learning and benchmarking against peers and other comparators.

Well placed

  • Capability gaps are identified and defined.
  • Is already making improvements in capability for current and future delivery, and is well placed to do so.
  • Is expected to improve further in the short term through practical actions that are planned or already underway.

Development area

  • Has weaknesses in capability for current and future delivery and/or has not identified all weaknesses and has no clear mechanism for doing so.
  • More action is required to close current capability gaps and deliver improvement over the medium term.

Serious concerns

  • Significant weaknesses in capability for current and future delivery that require urgent action.
  • Not well placed to address weaknesses in the short or medium term and needs additional action and support to secure effective delivery.

The review team’s assessment of the department’s capability is outlined in the tables below.

Leadership
Capability Rating
Set direction

Development area

Motivate people

Serious concern

Develop people

Development area

Strategy
Capability Rating
Outcome-focused strategy

Serious concern

Evidence-based choices

Well placed

Collaborate and build common purpose

Development area

Delivery
Capability Rating
Innovative delivery

Development area

Plan, resource and prioritise

Development area

Shared commitment and

sound delivery models

Development area

Manage performance

Development area

 

4.1 Leadership summary

Set direction

  • The department has an ambitious vision which resonates with employee values and deep subject-matter expertise.
  • There is evidence of a risk-averse organisational culture, cultivated by a leadership focus on delivery of outputs and transactional policy and programs.
  • Notwithstanding a ‘cluster’ structuring of responsibilities and accountabilities at executive-leadership level, employees and stakeholders describe siloed decision making with little sense or organisational experience of a united leadership team.
  • The department has demonstrated a capability to make tough decisions and respond to change, particularly when externally imposed.

Motivate people

  • The department benefits from the contribution of many intrinsically motivated and skilled employees who are highly committed to their subject expertise and to improving health outcomes for Australians.
  • There is evidence of a prevailing culture of risk aversion and fear of failure often linked to the way leadership is perceived to be exercised in the department.
  • Excessive workloads and a relentless focus on delivery limit the scope for employees to negotiate work programs and resource priorities.
  • Leadership behaviours cultivate self-censorship and passive compliance, rather than energising employees and ideas.

Develop people

  • The department has demonstrated recent signs of investment in a range of people-development initiatives, led by capable and committed corporate teams and individuals.
  • There is no evidence of a strategic people capability development framework linked to organisational strategy.
  • The department has a history of centralised control, lack of consultation and transparency in decisions about SES placements, movements and performance development. This reinforces a short-term focus on immediate outputs over the long-term development of capability.
  • There is compelling evidence that performance management and people development needs greater collective ownership and attention from all leaders.

Comments and ratings against the components of the ‘leadership’ dimension follow.

Set direction

Guidance questions

  1. Is there a clear, compelling and coherent vision for the future of the organisation? Is this communicated to the whole organisation on a regular basis?
  2. Does the leadership work effectively in a culture of teamwork, including working across internal boundaries, seeking out internal expertise, skills and experience?
  3. Does the leadership take tough decisions, see these through and show commitment to continuous improvement of delivery outcomes?
  4. Does the leadership lead and manage change effectively, addressing and overcoming resistance when it occurs?

Rating

Development area

The department has a compelling vision for the health and wellbeing of all Australians which is well recognised throughout the organisation. The former secretary was recognised for setting clear expectations for the department’s performance and she was respected for her intellectual and results-focused leadership. However employees reported the need for an overarching narrative that communicates a clear and coherent direction for the future. The lack of such a narrative limits the whole-of-enterprise view of the department, and importantly, the ability to understand and influence future direction for the broader health system.

Internal communication

The Executive Leadership Team (Secretary and deputy secretaries) has focused on improving internal communication in recent years. The Secretary communicated to the department through video messages and face-to-face addresses at regular intervals throughout the year. Regular ‘Exec Connect’ email updates are distributed to inform employees of departmental priorities, SES movements and corporate-service messages.

The 2014 Census data reported that 51 per cent of employees believed that most senior leaders are sufficiently visible compared to 57 per cent in like policy agencies. Employee feedback during the review stressed the importance of greater visibility from senior leaders. While employees have reported improved visibility of senior leaders in the SES over the past 12 months, they raised the need to better understand the role of the six deputies within the department and have the opportunity for greater and more meaningful interactions with this leadership cohort.

Informally, the department relies on the SES to cascade communication through business lines. The effectiveness of this approach is variable with employees reporting inconsistent access to information in some business lines, with confused or frequently changing direction for day-to-day priorities. In addition, employees regularly commented that information was tightly controlled and shared on a perceived need-to-know basis. This has resulted in a number of employees, including some at SES level, expressing concern that they lacked sufficient understanding of the context in which they are operating, which has affected their ability to complete tasks efficiently and effectively.

By way of example, employees reported to the review team that documents were frequently revised, some more than 20 times due to a lack of clear direction on work tasks or lack of understanding by employees of work requests. The Departmental Activity Survey reports that EL2s spend around 50 per cent of their time re-drafting and gaining clearance of correspondence, ministerial briefs, briefing of senior employees and coordination requests. This creates inherent departmental inefficiencies and costs.

Issues management focus

Internal and external interviewees commented on the department’s centralised and elevated approach to decision making, which they identified was the product of a command-and-control leadership style and a risk-averse culture. While this approach may be useful for emergency or crisis management, employees and a number of external stakeholders observed it has disempowered the SES, created vertical work silos, limited ownership of direction setting and decision making, and stifled innovation.

Regular weekly meetings convened with the Secretary, deputy secretaries and first assistant secretaries (SES Band 2) largely focus on managing issues, reputational risk and matters related to corporate services and systems. There was little evidence in Executive Leadership Team meeting agendas provided to the review of high-level discussions on organisational strategy or policy.

Lack of a unified team

The department’s Executive Leadership Team and SES broadly have been focused on timely delivery of expectations and risk management, both being strong features of the department’s culture. Employees across all levels focus on measuring delivery against their individual policy or program key performance indicators (KPIs). The tight control of information limits the ability of the SES to understand the work of the broader department. This, in turn, limits their ability to make connections between information and expertise that could enhance the work produced in their areas. The restricted access of the broader SES cohort to whole-of-enterprise decision making also limits their ability to contribute to departmental stewardship.

Internal and external stakeholders report the need for SES officers to collectively step out of ‘doing’ and into ‘leading’. This includes developing and mentoring people, proactively engaging ideas, and developing efficient and effective processes and systems for shared decision making. The SES cohort recently gathered on a couple of occasions, however there are no formal networking opportunities for the SES Band 1 cohort. As such, there is no formal mechanism to unify the SES leadership team. The SES report limited opportunities for interaction with peers, many only interacting with members of the Executive within their direct reporting lines.

Reactive change management

The department has demonstrated a capacity to undertake organisational change. The review team found evidence of successful leadership of large-scale internal change in response to external pressures, such as the 2010 Strategic Review. Recent examples of successful change programs include the Department of Health and Ageing National Alignment program which arose from the 2010 Strategic Review, and recent internal restructures to meet the requirements of a tightened fiscal outlook. More recently, the Business Services Centre was established to redeploy employees who were surplus to needs as a consequence of the department’s restructure. Despite some early cynicism about its role, the centre has been successful in supporting workforce restructuring.

Employee change resilience appears to be improving as the department’s confidence in senior leaders’ ability to manage change effectively. Confidence increased to 50 per cent in the 2014 Census by seven percentage points, similar to like policy agencies at 52 per cent.

That said, change was often described by employees as being managed centrally, lacking systemic rationale or strategic context, and not supported by consistent communication. Employees have raised the issue of change fatigue stemming from recent major changes, particularly in areas that have experienced previous long-term stability.

Motivate people

Guidance questions

  1. Does the leadership create and sustain a unifying culture and set of values and behaviours which promote energy, enthusiasm and pride in the organisation and its vision?
  2. Are the leadership visible, outward-looking role models communicating effectively and inspiring the respect, trust, loyalty and confidence of staff and stakeholders?
  3. Does the leadership display integrity, confidence and self-awareness in its engagement with staff and stakeholders, actively encouraging, listening to and acting on feedback?
  4. Does the leadership display a desire for achieving ambitious results for customers, focusing on impact and outcomes, celebrating achievement and challenging the organisation to improve?

Rating

Serious concern

Prevailing evidence in high-performing public and private sector organisations is that highly motivated, valued and skilled people are the competitive and sustainable points of difference.

Employees in the department regularly commented to the review team that they are intrinsically motivated by their roles and the nature of their work. They universally reported strong interest and commitment to their subject matter as a key motivator and reason for working in the department. This commitment is reflected in the department’s record of employee retention, with many also reporting good working relations within their immediate teams.

However, with the exception of a bonus pay system for some leadership levels, and a program of employee awards, there was little evidence provided to the review team that the department’s leadership placed sufficient priority on motivating and recognising people, and celebrating their achievements.

Delivery focused culture

The department has a reputation for delivery. It has been recognised by government and stakeholders as a ‘safe pair of hands’ for delivering a number of highly challenging reforms—tobacco plain packaging, National Health Reform, and Mental Health and Aged Care reforms are some examples. Much of the department’s reputation for delivery was attributed by stakeholders and employees to the leadership of the former secretary.

Employees consistently described the focus on delivery as one for which there was an expectation to deliver at any cost. They reported that the emphasis on delivery led to a ‘results over people’ culture.

Going forward, many employees and stakeholders commented that the requirement to deliver at all costs on all commitments is increasingly unsustainable in an environment of declining resources. Employees report that they work long hours and under immense pressure to deliver. This is a workplace health and safety risk. The department has experienced a history of high levels of unscheduled leave, with 14.1 days taken on average per person in 2013–14, compared to 12.3 across the APS.

Leadership style

Many employees and stakeholders have expressed respect for the intellectual leadership displayed by the former secretary and, in individual cases, the deputies, particularly in a range of external national and international fora. The former secretary’s decisive leadership was respected, and the profile she provided the department over 12 years as its leader was significant.

The prevailing departmental leadership style has been variously described by employees and stakeholders as directive, command and control, risk averse, outwardly defensive and internally siloed. While the Executive Leadership Team communicate a ‘no surprises, no blame’ approach to risk management, employees at all levels have overwhelmingly reported that the Executive Leadership Team had zero tolerance for bad news or failure. Employees reported they are fearful of making a mistake or failing to deliver. They report that that this has encouraged a departmental culture of compliance and self-censorship, influencing avoidance behaviours such as the escalation of decisions and a reluctance to report ‘red lights’.

Excessive workloads

The review team found that departmental employees demonstrated a strong commitment to delivering on expectations, with many working exceedingly long hours to acquit their responsibilities. Census data reported that employee engagement statistics are similar to like agencies, with some exceptions. For example, the 2014 State of the Service data reports that 43 per cent of employees feel valued in the department, compared with 50 per cent in like policy agencies. Also, 41 per cent of employees reported that when someone praises the department’s accomplishments it feels like a personal compliment, compared to 45 per cent in like policy agencies. The 2014 Census data revealed that effective communication between senior leaders and employees is perceived to be less than in like policy agencies (45 per cent versus 49 per cent).

An internally driven work program, heightened risk aversion, lack of information sharing and inconsistent internal communication all have an impact on the way the department operates. These features and their impact on the workloads of the SES especially affect the ability of employees to deliver their work program efficiently. Many employees reported they were often asked to complete a task without full information, leading to a high level of rework, inefficiency and unnecessary cost. Many SES and some executive-level employees have reported a requirement to be available to the Executive Leadership Team at all times, with some working long hours regularly, including all weekend to deliver on expectations. Census data stated that more than 50 per cent of SES level employees work more than 100 hours a fortnight. Many EL employees state they have no desire to be promoted to SES level.

These workload levels are neither productive nor sustainable, yet there appears to be no mitigation strategy to address them, other than the Departmental Activity Survey which seeks information on the allocation of an officer’s time to duties. However, if the genesis of the survey was to ascertain employee workloads, there was no sense from employees that excessive workload issues had been addressed.

Unacceptable behaviour

For several years the department has demonstrated consistently high rates of bullying and harassment. In the 2014 Census, 19 per cent of employees identified being subjected to harassment or bullying during the last 12 months (compared to 15 per cent for like agencies) and 24 per cent identified having witnessed someone else being subjected to harassment or bullying in the past 12 months (compared to 21 per cent in like agencies).

Internal commentary from some senior leaders suggested this was more prevalent at junior officer level and related to performance expectations. These senior leaders also suggested that some employees lacked an understanding of the difference between performance management and genuine bullying and harassment. The view that the data on bullying and harassment is a product of performance management is not supported by analysis of Census results which attribute a fraction of reports to performance issues and a larger number to more serious issues.

Some senior employees are dismissive of the issue entirely, referring to the low rates of formally reported complaints and low employee turnover. The evidence collected throughout the review describes behaviours including verbal abuse, throwing of documents, withholding of information, intimidation and exclusion. There are reports of exclusion behaviours regarding information and communication. Internal and external to the review, concerns were raised about the control of information at senior levels.

The department has committed corporate resources to analyse the data on harassment and bullying and has recently launched a communications campaign to promote the reporting of inappropriate behaviour and encourage employees to use the service provided through the department’s Harassment Contact Officers.

A need to acknowledge hard and good work

The department has a formal award system for performance recognition, including on Australia Day, for length of service, and through the annual National Aborigines and Islanders Day Observance Committee (NAIDOC) awards. However, employees reported that these awards predominately focus on delivery performance.

Australia Day award categories include descriptors such as ‘resilience’, ‘tenacity’, ‘energy’ and ‘stamina’. More broadly, there appears to be little recognition of hard work and the contribution of employees outside of these awards. Many SES raised a concern that exemplary leadership behaviour or people leadership is not valued or recognised, and that recognition of employees is left to the discretion of individual leaders and managers, and is therefore inconsistent across the department.

SES employees are eligible to receive annual performance pay, whereas Executive performance pay arrangements recently ceased. SES performance pay is determined by the Executive Leadership Team. There is a strong internal view, (particularly among the SES cohort) that performance-pay arrangements have been based on ‘personality politics’, and favoured those working on high-profile tasks, which were bestowed on some and not available to others. To those eligible for the scheme, there is no evidence of moderation and decisions are seen to be opaque and feedback limited.

Develop people

Guidance questions

  1. Are there people with the right skills and leadership across the organisation to deliver your vision and strategy? Does the organisation demonstrate commitment to diversity and equality?
  2. Is individuals’ performance managed transparently and consistently, rewarding good performance and tackling poor performance? Are individuals’ performance objectives aligned with the strategic priorities of the organisation?
  3. Does the organisation identify and nurture leadership and management talent in individuals and teams to get the best from everyone? How do you plan effectively for succession in key positions?
  4. How do you plan to fill key capability gaps in the organisation and in the delivery system?

Rating

Development area

The review team found that the department has historically under-invested in people capability. Employees reported that people development has not been a priority in the department, with people matters managed as the remit of the human resources or people and capability areas, rather than being seen as the responsibility of the broader leadership cohort.

The department has developed a skilled corporate team focused on enabling people development, however it remains significantly behind other APS departments in terms of sustained investment in people. There are early signs of united leadership efforts to improve the level of investment, however the challenge is to sustain this focus on and accountability for people development.

Recent signs of an investment in people

The department has strengthened its corporate people area and started a workforce management plan, which provides a greater focus on fit-for-job roles, capability mapping, job families and job sizing. The Health Capability Framework, introduced in June 2014, includes job roles and descriptions for the People, Finance, Communication, IT, and Grants Services Job Families. The first module will be in production by December 2014 and a pilot with one division will start early February 2015.

The department’s Learning and Capability Development Strategy 2013–17 includes a range of activities that started in early 2014. To inform the strategy, a department-wide Capability Needs Analysis was conducted using de-identified Performance Development Scheme data.

A consultation process with divisional executive teams was undertaken to promote the findings, explore actions and create shared ownership in implementing the strategy’s local action plans.

The department is developing some modern human capital tools, including human resources metrics, a talent management program for some SES and EL employees, peer mentoring for SES, diversity networks, and a pilot program of People Business Partners to support line areas by embedding a human resources specialist in each to grow people management capability. An informal mentoring network for employees was established by a Band 2 officer. The network would benefit from being endorsed by and invested in by more SES to demonstrate that they see people development as central to their leadership accountabilities.

Workforce planning and related strategies for people development are at an embryonic stage. A number of initiatives are underway, however without aligning these with the department’s strategic intent and organisational development strategy, it is difficult to ensure the department will have the people capability it requires for the future.

Leadership capability

Many senior leaders have expressed concern that the department undervalues people leadership capability. Senior leaders are perceived to have been promoted based on the value of their technical skills or track record of delivering, to the exclusion of their ability to lead and manage people. Investment in leadership and management capability development has been historically low in the department, with the more recent delivery of middle management and talent management programs being exceptions.

Employees reported an internal view that human resource issues are relegated by leadership to the department’s corporate ‘people’ area and that there is a need to recognise that people matters are matters for attention by all leaders, enabled by the corporate area.

This has resulted in a perceived lack of united leadership commitment to engaging in genuine performance management, mentoring employees and investing in their professional development. Some SES reported a desire to spend more time on people leadership, but they noted that work pressures and the requirement to deliver their work program often consumed them.

The department has recognised this as an issue. A new Performance Development Scheme template was implemented in July 2014 for SES officers to highlight the importance of people leadership. The template consolidates the SES Band 1 and SES Band 2 templates used previously. The updated template has a new rating system which now includes equal ratings for leadership behaviours and business outcomes.

Individual performance

The review team received extensive feedback about the lack of effective performance management in the department, particularly in relation to underperformance. The 2014 Census data reported that 15 per cent of employees considered that the department managed underperformance effectively, compared with 18 per cent reported for like agencies. Reasons given for underperformance included: variable policy capability and work standards across all levels of the department; and mismatches between employees and roles (noting that some have been promoted for technical skill and lack broader management or public administration skills). Some employees have noted that managing workloads is at the expense of spending time managing underperformance or developing people.

SES management and development

Many SES have expressed concerns about having little control over their careers, with some identifying that they have never had a discussion about their future career aspirations or the opportunity to express their interest in future appointments within the department. Heightened workloads, and limited provision of formal feedback, have resulted in many SES feeling they have been commoditised. Feedback throughout the review suggested that frequent informal and formalised performance feedback opportunities would be welcomed by the broader SES cohort.

SES officers generally reported a lack of transparency around appointment processes and expressed concern with being moved from role to role with limited consultation, explanation or notice. There appears to be a ‘trouble shooting’ approach to employee appointments, driven by unforeseen changing organisational priorities. A number of SES observed the need for greater attention to longer-term planning, succession planning, talent management and career development.

4.2 Strategy summary

Outcome-focused strategy

  • The department does not have a high-level strategic policy framework to help it ascertain upcoming demand, model environmental factors and shape policy decisions and work programs into a strategic roadmap that can be articulated and understood across the department. A clear and articulated health system strategy is required.
  • Stakeholders believe the department needs to take a proactive rather than reactive leadership role in shaping the health policy agenda, to keep pace with customer demands and the changing global health landscape.
  • The department lacks a high-level organisational strategy which is vital to ensuring it has the resources and capability to deliver on a forward-looking strategic policy agenda.
  • The department needs to demonstrate a greater capacity for responsiveness and strategic flexibility to Government. It needs to be more proactive in its advice and provide a range of options, including alternate policy options in line with the Government’s agenda, rather than waiting for direction.

Evidence-based choices

  • At program and policy levels, the department has a strong focus on evidence-based choices to drive health outcomes for customers.
  • Overwhelmingly, external stakeholders have highlighted that the department is leading and influencing the international sport agenda through a period of increasing complexity.
  • The department should do more to position itself on new and emerging issues with a stronger focus on the whole of the health system and a strategic policy ‘lens’ that cuts across multiple stakeholders and time horizons.
  • There is an opportunity to underpin strategy development and policy formulation through more effective analysis and harnessing of data, within, across and beyond the APS. To this end, the current development of an Enterprise Data Warehouse requires ongoing investment to realise its potential.

Collaborate and build common purpose

  • External stakeholders have noted positive working relationships with individual officers, particularly at executive level.
  • The department does not have a strategic or coordinated approach to stakeholder engagement.
  • The department has been described by many APS agencies and other external stakeholders as having a track record of being insular, defensive and not acting in a collaborative way.
  • Stakeholders often perceive consultation as highly orchestrated and sometimes perfunctory, describing engagement as being undertaken very late in the development process.
  • Many employees and external stakeholders suggest concerns over political sensitivities and media scrutiny has resulted in a cultural reluctance to share information or seek stakeholder input.

Comments and ratings against the components of the ‘strategy’ dimension follow.

Outcome-focused strategy

Guidance questions

  1. Does the organisation have a clear, coherent and achievable strategy with a single, overarching set of challenging outcomes, aims, objectives and measures of success?
  2. Is the strategy clear about what success looks like and focused on improving the overall quality of life for customers and benefiting the nation?
  3. Is the strategy kept up to date, seizing opportunities when circumstances change?
  4. Does the organisation work with political leadership to develop strategy and ensure appropriate trade-offs between priority outcomes?

Rating

Serious concern

The department lacks a high level, long-term organisational strategy, required to deliver on the Government’s agenda, effect change and keep pace with customer demands and the changing global health landscape. Interviews with internal and external stakeholders highlighted limited evidence of holistic thinking, engagement and discussion about the department’s role in an evolving health system. The department interprets ‘strategy’ as an amalgam of tactical policies and programs, rather than holistic-thinking about the operation of a federated health system, and how to improve its efficiency and effectiveness. The White Paper on the Reform of the Federation provides a significant opportunity for the department to exercise strategic influence on future health system thinking and strategy.

The absence of a clear and articulated health strategy

The review team concludes there is no alignment between the department’s vision, organisational strategy, and policy and capability frameworks. The Executive Committee agenda does not emphasise high-level strategy leading to focused outcomes. While many employees have confirmed that a horizon-scanning capability exists within work areas, the strong focus on tactical, transactional and reactive delivery distracts from the development of a proactive, long-term and system-wide strategy.

There is broad acknowledgement that the growing prevalence of chronic disease, continued disparity in health outcomes, increasing citizen expectations and unsustainable long-term rate of growth of government health expenditure are some of the many challenges facing the health system. However, notwithstanding the existence of a Corporate Plan 2014–17, the department has not engaged with its authorising environment to help develop a high-level strategy to seek to address these and other systemic issues. The department maintains the belief that policy strategy is not sought by stakeholders or the Government. This view is not supported by evidence gathered as part of this review.

Many stakeholders talked to the need for the department to develop a whole-of-system view and the business or commercial acumen to inform a high-level health strategy. In addition, development of an organisational strategy would help unite and mobilise the workforce towards shared goals, identify measures of organisational progress and SES stewardship.

The review team found that a clear strategy with articulated objectives and measures is needed to help guide discrete sections of the department to achieve its overarching vision. A high-level strategy should be developed with government, external stakeholders and employees and be used as a central guide to achieve a unified, cohesive approach that is clearly articulated and aligned across the department.

Such a strategy would also underpin better communication on the rationale for change. Importantly, it would be a tool to understand the interplay between individual programs and policies and how changes to the department’s work program will either move it towards or away from its higher level objectives.

Stakeholders believe the department needs to take lead ownership for developing and driving the broader health policy agenda with the objective of a more sustainable, efficient and connected system. This needs to be undertaken in consultation with key external stakeholders, including central agencies, and portfolio bodies. Stakeholder engagement should be actively sought and viewed as a major opportunity for the department to improve efficiency and effectiveness in the health system, particularly given the Government’s current agenda and forthcoming White Paper on the Reform of the Federation. The White Paper has the potential for significant change and opportunity for the department, its future role and business model.

Transformative policy for the health system

The department has shown evidence of a strong ability to implement organisational change in response to external pressures, and a determination to deliver on the agenda of the Government of the day. However, a number of external stakeholders believe the department has the opportunity to more proactively lead the health policy agenda. Many stakeholders suggest that a deeper understanding of the broader health system is required to help the department influence policy direction and develop better policy options.

There is strong external perception that the department is reluctant to consider new or changed policy direction. A focus on maintaining the status quo and lack of agility in resource allocation has resulted in the department undertaking incremental change rather than looking for and evaluating fresh approaches. External stakeholders believe the department has largely retained similar policies and programs for an extended period and their view is that there may be a diminishing return on investment from some of these interventions.

The opportunity exists for the department to put forward broad-reaching, creative policy ideas with the aim of improving high-level outcomes.

Responsive and strategic flexibility to work with Government

The department is known for its commitment to build effective relationships with ministers’ offices and many employees stated good relations exist with ministerial advisers. Relationships with ministers are generally undertaken at senior levels (First Assistant Secretary level and above) within the department. Further development of systems and relations that ensure timely and frank advice and discussion will assist the department to perform its stewardship role as a trusted advisor.

Some employees reported limited opportunity for interaction with ministers and their staff. This often meant they were not able to understand the full context for requests or demonstrate sufficient flexibility and responsiveness to the Government’s agenda. The recently developed Corporate Plan 2014–17 is largely a revision of the previous plan and not seen by some stakeholders to reflect the change in Government and subsequent change in policy priorities.

Some stakeholders perceive that the department does not always seek to engage with ministers on difficult or ambitious policy matters and there is a sense that the department is assuming ministers’ appetite for strategy rather than soliciting it directly. The department has the opportunity to be more proactive in its advice and provide a range of options, including alternate policy options in line with the Government’s agenda, rather than waiting for direction.

Evidence-based choices

Guidance questions

  1. Are policies and programs customer focused and developed with customer involvement and insight from the earliest stages? Does the organisation understand and respond to customers’ needs and opinions?
  2. Does the organisation ensure that vision and strategy are informed by sound use of timely evidence and analysis?
  3. Does the organisation identify future trends, plan for them and choose among the range of options available?
  4. Does the organisation evaluate and measure outcomes and ensure that lessons learned are fed back through the strategy process?

Rating

Well placed

The department has considerable potential to leverage its own data and the evidence of other stakeholders and agencies in building and refining policy. The review team found that employees place high personal value on the use of evidence to support decision making.

Evidence-based choice at the program and policy levels

Overwhelmingly, external stakeholders have highlighted that the department is leading and influencing the international health and sport agenda through a period of increasing complexity. Employees have expressed personal pride in applied research work they see as ‘world-leading’, such as melanoma treatment, the introduction of immunisation against Human Papillomavirus for girls and boys, and integrity in sport policies. There are also positive examples of evidence-based decision making in health-related communication campaigns, developed on the basis of market research and guided by stakeholders and subject matter experts. In addition, the Medical Benefits Scheme and Pharmaceutical Benefits Scheme processes for listing medicines and medical services are recognised internally as strong evidence-based processes, though some external stakeholders have raised concerns about the sustainability of these processes. There are pockets of evaluation capability, including the work on plain packaging of tobacco products, particular Indigenous programs and post Grant Services Division establishment.

The department’s Strategic Policy Unit provides a system-wide and strategic policy capability focusing on long-term challenges facing the government and health system. Employees across the department suggest that the unit is not used to its potential, with a primary focus on budget and modelling activity rather than strategy development. The department should do more to position itself on new and emerging issues with a stronger focus on the whole-of-the health system and a strategic policy ‘lens’ that cuts across multiple stakeholders and time horizons, for example, consideration of broader impacts on health, such as education, employment and housing.

Data management and analysis

The building of an Enterprise Data Warehouse is expected to ultimately support the storage of health data in a secure environment, where it can be accessed for reporting and research purposes. The objective of the warehouse is to enable shared health information, greater accountability and unprecedented data transparency so future generations of Australians can be confident of a sustainable, nationally unified, locally-controlled health system.

A work in progress, the Enterprise Data Warehouse requires ongoing investment to realise its potential by the department and others, as well as solve data storage and privacy obligations in legislative requirements.

There is an opportunity to underpin strategy development and policy formulation through greater analysis of data, within, across and beyond the APS. Rich repositories of data exist at policy and program levels, particularly in the Pharmaceutical Benefits Scheme and Medical Benefits Scheme. These data sets have the ability to help shape the strategic agenda. It is important to ensure data is available to support policy both within and external to the department and that the department actively seeks data and expertise from outside of the department as it develops its insights.

e-Health

The Government has indicated it remains committed to an e-Health system that delivers real benefits. It has made a further $140.6 million available in 2014–15 for the operation of e-Health and the PCEHR system while it considers the recommendations of a review undertaken in May 2014. The review has the potential to influence e-Health system design, implementation schedule, and planning for communication, education and risk management. The department needs to evaluate and measure outcomes relative to original expectations and investments made to date in the PCEHR against a strategic agenda.

Collaborate and build common purpose

Guidance questions

  1. Does the organisation work with others in government and beyond to develop strategy and policy collectively to address cross-cutting issues?
  2. Does the organisation involve partners and stakeholders from the earliest stages of policy development and learn from their experience?
  3. Does the organisation ensure the agency’s strategies and policies are consistent with those of other agencies?
  4. Does the organisation develop and generate common ownership of the strategy with political leadership, delivery partners and citizens?

Rating

Development area

The department operates in a highly complex stakeholder environment with numerous, varied and highly influential stakeholders. The department interacts with APS agencies, state and territory jurisdictions, private sector organisations (including industry bodies and individual companies) and non-government organisations across a range of activities. It recognises the importance of stakeholder relationships. Generally, stakeholders describe positive interactions with departmental employees in established relationships. The department has demonstrated numerous positive examples of establishing and leading stakeholder engagement forums.

The department has access to extensive experience and insights into the health sector. Many stakeholders express a desire to work more closely with the department to improve health outcomes. The department should consider how it could better leverage expertise and insights from proactive, coordinated stakeholder engagement for shared outcomes.

The department has a demonstrated capability to co-ordinate a national response as evidenced by a track record in mobilising and working with other agencies and stakeholders on national and international health emergencies and risks.

Insular, defensive and the opportunity to be more collaborative

An increasing number of policy and contextual change pressures will reshape the Australian health landscape as the Government seeks to address strategic issues. The department, which operates in an increasingly complex environment where it cannot have all of the answers, needs to initiate collaboration with various stakeholders to develop shared ownership of solutions.

Some stakeholders described positive relationships with the department noting constructive interactions over complex issues, and, at times, competing agendas. Many stakeholders however, including agencies across the APS and within the portfolio, described the department as insular and defensive.

Some stakeholders also noted that the siloed approach to interactions meant it could be difficult to get a coordinated view on issues that cross departmental divisions without escalating the conversation to senior leaders. They reported that once a matter was escalated it was often resolved quickly and effectively by the Executive.

Stakeholders also indicated it could be difficult to communicate insights back into policy development, for example many grant recipients commented that their relationship with the department was often narrowly focused on contractual arrangements, rather than on policy outcomes.

Engagement with stakeholders by employees below SES level is minimal resulting in the concentration of relationships with individual departmental representatives. Many stakeholders noted that the regular rotation of SES officers is disruptive to relationships. In many cases, changes to SES employees are made without notice to stakeholders and with limited handover to the incoming officer. Stakeholders suggest greater consideration should be given to the time and effort required to ensure continuity of relationships and the best methods for preserving corporate knowledge.

Stakeholders value engagement with the department, but regularly describe it as ‘a closed shop’. Within the department, engagement with stakeholders is seen as a risk and elevated to senior ranks. Many employees and external stakeholders suggest concerns over political sensitivities and media scrutiny has resulted in a cultural reluctance to share information or seek stakeholder input as a means to mitigate these risks.

The review team heard that stakeholders often perceive consultation as orchestrated and sometimes perfunctory, often describing engagement being undertaken very late in the process. A well-considered and evidence-based product is often provided during these late engagements, but this method limits stakeholder ability to contribute to or influence the outcome.

Throughout the review, stakeholders stated that they clearly understood that it was not always possible for the department to consult extensively due to time pressures or sensitivities. However, in these circumstances, a clear understanding of the operating environment and stakeholder perspectives meant the department could build upon their ideas even when formal consultation is not possible.

The department has the opportunity to consider its strategic and potential role given the dynamic interplay of responsibilities between the Commonwealth and state and territory jurisdictions in a changing policy and operational environment.

4.3 Delivery summary

Innovative delivery

  • The department has a latent capability for innovation, including significant employee appetite.
  • Cultural barriers to innovation include risk aversion, elevated decision making, hierarchical silos and an inward focus.
  • The department has an opportunity to leverage the knowledge and skills of external stakeholders as a catalyst for innovation.
  • The department has recently undertaken formative work to help foster innovation through the establishment of an innovation committee and the appointment of an innovation champion.

Plan, resource and prioritise

  • The department’s business plans provide an opportunity for employees to align their performance agreements to their division’s direction.
  • The department tends to focus on short-term, incremental budgeting and immediate work crowds out longer-term strategic priorities. The current re-basing budget process is an opportunity for a more strategic and flexible resource allocation model.
  • The whole leadership team needs to collectively own the process and outcomes of resource allocation decisions, both dollars and people.

Shared commitment and sound delivery models

  • All leaders need to share ownership of, and responsibility for, core management activities and enabling systems.
  • Employees and stakeholders describe the department’s operations variously as bureaucratic, siloed, inefficient, old-fashioned and complex.
  • Senior leadership needs to empower enterprise decision making through revised and integrated governance arrangements and appropriate devolution of authority and accountability.
  • There is an urgent, ongoing need to continue investment in the development of secure and contemporary ICT capability.

Manage performance

  • The department reported achievement of 94 per cent of its numerous key performance indicators in its 2012–13 annual report.
  • The department constructs its activity around outcomes but tends to measure outputs and there is no direct alignment between these measures and the vision.
  • The department has developed a risk framework which commits to the intelligent management of risk, though in practice it is highly risk averse which in itself creates risk blind spots.
  • The department needs to develop further its management of organisational performance.

Comments and ratings against the components of the ‘delivery’ dimension follow.

Innovative delivery

Guidance questions

  1. Does the organisation have the structures, people capacity and enabling systems required to support appropriate innovation and manage it effectively?
  2. Does the leadership empower and incentivise the organisation and its partners to innovate and learn from each other, and the front line, to improve delivery?
  3. Is innovation explicitly linked to core business, underpinned by a coherent innovation strategy and an effective approach towards risk management?
  4. Does the organisation evaluate the success and added value of innovation, using the results to make resource prioritisation decisions and inform future innovation?

Rating

Development area

The review team found that the department has latent capability to undertake, and empower its stakeholders to drive, innovation. But, this capability is constrained by significant cultural barriers. The department’s latent capability derives from the desire of employees to deliver world-leading health initiatives and from the breadth and depth of its stakeholder community.

Appetite for innovation

Health employees derive a strong sense of satisfaction from applying their expertise to health subject matter, and the potential to be world-leading by implementing innovative policy and programs provides significant intrinsic motivation and pride. When discussing innovation, employees often cited Government-led initiatives such as tobacco plain packaging, and other top-down innovations, such as the introduction of immunisation against Human Papillomavirus for girls and boys, as success stories.

The department has demonstrated that it can change course, when prompted. Business improvement initiatives cited by employees as innovation include the DNA program and the Business Services Centre. Modelled on initiatives undertaken in other APS agencies, these measures were designed to increase departmental efficiency and redistribute employees in response to reducing administrative budgets.

These initiatives have been evaluated. The impact of the DNA change process is being tracked by the Departmental Activity Survey, and is demonstrating positive efficiency outcomes. Similarly, the establishment, process and operations of the Business Services Centre have been internally reviewed to identify opportunities for process improvements.

The department does not have a routine system of evaluation of programs and policies to identify areas of excellence, or for improvement. The review team did not consider that these programs and activities were evidence of a systemic innovative culture and capability within the department, particularly noting their external genesis.

Employee appetite for innovation is demonstrated through responses in the Census—within which 64 per cent of respondents indicated they felt their supervisor supported them to innovate. This response replicates the APS average of 63.8 per cent. The review team also found a small number of local level innovations in place, including the development of a website to encourage knowledge sharing and best practice among clinicians. While there is significant appetite to undertake innovative approaches, there is significantly less evidence of successful bottom-up innovation.

Cultural barriers to innovation

The department’s extremely risk averse and siloed culture is a significant barrier to innovation. Notwithstanding the efforts of the former secretary and a number of local-level attempts to drive integrated business activities, the department’s hierarchical silos are seen by a number of internal and external stakeholders to inhibit sharing of lessons learned and hamper collaboration.

Additionally, highly elevated decision making has the effect of disempowering people and constrains innovation. Some senior employees noted that junior employees would simply not raise ideas in case they proved unsuccessful. This view is supported by the lack of tolerance for making mistakes. The reluctance to identify as having made a mistake also limits the capacity to undertake continuous improvement initiatives.

The review team found that innovative ideas need to appear to have originated outside the department, or be driven by external stakeholders (outside of the department’s hierarchy) to gain traction. The department operates in a stakeholder environment which has the potential to yield a wealth of ideas, networks and information that could stimulate innovation within the department and, more broadly, within the health system. Departmental stakeholders have an appetite for more collaboration to drive better health outcomes, but consider that the department is often a ‘closed shop’. A number of stakeholders also noted that employees viewed conversations with them as risky, and sought to avoid interactions. There is an opportunity for the department to develop more continuous improvement and innovative approaches by better leveraging the knowledge of its stakeholders.

Innovation structures

Within the last year the department has established a range of structures in an attempt to foster innovation, including the following:

  • departmental Change and Innovation Committee
  • Communities of Practice (for example, Finance and Shared Outcomes forums, including on mental health and dementia)
  • All Ideas Matter initiative
  • Innovation Champion at First Assistant Secretary level.
  • There has also been an attempt to recruit employees from outside of the department at senior levels to stimulate innovation.

These initiatives are yet to reach maturity and realise benefits, but they may support innovation if cultural change and a differential risk appetite is achieved.

The department will continue to operate in an environment with constrained resources. Innovation in business systems and practices within this environment has the potential to be highly beneficial—delivering financial efficiencies, better health outcomes, and productive employee engagement. The review team encourages the department to tackle cultural barriers to innovation, and harness and empower employees and stakeholders to drive innovation internally and externally.

Plan, resource and prioritise

Guidance questions

  1. Do business planning processes effectively prioritise and sequence deliverables to focus on delivery of strategic outcomes? Are tough decisions made on trade-offs between priority outcomes when appropriate?
  2. Are delivery plans robust, consistent and aligned with the strategy? Taken together will they effectively deliver all of the strategic outcomes?
  3. Is effective control of the organisation’s resources maintained? Do delivery plans include key drivers of cost, with financial implications clearly considered and suitable levels of financial flexibility within the organisation?
  4. Are delivery plans and programs effectively managed and regularly reviewed?

Rating

Development area

The review team noted that budget pressures across the Commonwealth Government and possible changes to the role of the department following the White Paper on the Reform of the Federation will continue to pressure the department’s resources.

The review team found that the department is not well equipped to adapt to significant resource reductions, and should focus immediately on developing a holistic, transparent and organisation-wide approach to managing resources to meet current and future challenges.

Results over people

The department has a strong focus on delivering results. Employees express a sense of pride in the department’s ability to achieve, but acknowledge that delivery of results comes at a cost. The review team found that the department pursues results with little consideration of the impact on its people. There is notable lack of commitment to, and focus on, long-term strategic planning and work activities. Coupled with the reactive and relentless nature of the results focus, this leads the department to pursue ‘urgent’ over ‘important’ work.

Business planning without agility

In the absence of an organisational strategy, the department can only deliver activities with reference to its 10 outcomes. This approach does not facilitate comparative weighting of priorities, or strategic deployment of investments and resources to meet current or long-term goals.

The department undertakes an annual business planning process, with individual divisional business plans developed with reference to the Corporate Plan 2014–17. Employees have a good level of awareness of these divisional business plans and the requirement for their performance agreement to be linked to them. This is a positive starting point for developing a clear line of sight from organisational strategy to individual performance.

A clear limitation of the department’s business planning process is the absence of treatment strategies for emerging ad hoc work programs which the department regularly undertakes. The department’s business planning and allocation process incorporates formal reviews of departmental budget allocations in November and March, however there appears to be limited appetite for ‘stopping work’, with employees noting that the Executive Leadership Team’s rhetoric does not match its actions in this regard.

Additionally, no mechanisms are in place to monitor the impact of compounding work programs. As such, the drive to respond to ad hoc work constitutes an added burden that employees are obliged to carry. Diminished resources, failure to de-prioritise and cease work programs, combined with the department’s delivery focus present a significant issue for managers and reduce the capacity of the department to develop or respond to new directions or requirements, including for or from the Government.

Similarly, business plans do not provide appropriate consideration of long-term priorities and require divisions to project only into the next financial year. There is a strong sense that the immediate is crowding out longer-term strategic priorities.

Prioritisation

The department views itself as mobile and responsive to deliver on the key priorities of the Government. Employees are aware that working to the Government of the day is core to their role as public servants. The review team noted that employees see the department’s ability to prioritise and resource work required by Ministers and the senior executive employees—particularly the Secretary—as a strength. While acknowledging that the department acts in response to requests, external stakeholders have a view that the department needs to do more to support and drive Government priorities. There is an opportunity to align better ministerial priorities, business-planning activities and the department’s prioritisation of tasks as desired by the Government.

Portfolio, program and project management

While there are enterprise approaches to activities such as procurement and grants funding, the department does not have consistent systems in place for managing other day-to-day work. For example, while areas of the department have solid project management approaches to implementing policy, such as the Primary Health Networks, there is no single embedded enterprise approach to this work.

The management of grants is an area where efficiencies have been achieved through revision of business process. The establishment of the Grant Services Division has delivered consistent grant management processes and practices. As this change continues to be embedded, there is an opportunity to refine the roles of grants employees, program management and policy employees. This will help build collaboration and communication to enable best-practice delivery of grants and ensure continued feedback from ‘on-the-ground’ implementation into the policy creation process. It is noteworthy that the Grant Management System, adapted from the Department of Social Services, has been rolled out across other APS agencies.

The department has mixed relationships with portfolio agencies, and there is opportunity for a greater leadership role to build cohesion across the portfolio. While these stakeholders regularly report professional and collegiate officer-to-officer level interactions, the absence of an organisational strategy within the department limits the alignment of these agencies’ work programs. The department has the opportunity to work more collaboratively and transparently with its portfolio agencies in delivering tasks so that agencies are confident the department is responding to their views and championing their interests. This may also increase uptake of the department’s shared services offerings. There is also an opportunity for greater collaboration across the portfolio through increased sharing of information and data.

Budget allocations

For a number of years the department’s budget has been managed in an incremental ‘base-plus-new-measures’ approach. This incremental approach to budgeting has not enabled regular, strategic whole-of-department reallocation of funding. Since the 2010 Strategic Review, a similar process has been put in place to drive efficiencies within divisions. This process has continually ‘shaved off the top’ of annual divisional budgets. The review team found that this approach resulted in divisions doing largely the same amount of work with fewer resources.

The recently initiated re-basing process represents the first significant reconsideration of divisional budgets for some years, complementing the November 2013 departmental restructure and consolidation of grants administration into one division. The review team noted that this process has the potential to be an important circuit breaker, allowing for more strategic deployment of departmental resources, providing the process is consistently applied across divisions.

Financial management

Two separate functional areas manage finances within the department. The Portfolio Strategies Division is responsible for the external Budget process, including consolidation of the portfolio entities, negotiation of new policy proposals and management of the relationship with the Department of Finance. The Office of the Chief Financial Officer is responsible for internal management of departmental resources through business planning, as well as all reporting of ‘actuals’ and ‘variances to budget’, both administered and departmental.

There is some role ambiguity between these two areas, which appears to stem from a lack of role clarity and integrated work processes. This lack of clarity may be driving some of the frustrations of portfolio agencies, which report that the operations of the two sections are opaque, and express concerns that their interests are not being appropriately represented through the Federal Budget process.

At an operational level, a new budget management tool was recently implemented by the Office of the Chief Financial Officer to provide a consistent approach to tracking expenditure of funds across the department. This important tool should boost the ability of divisions to manage their resource allocations.

There is evidence that at times funding is expended without considering all outcomes to be achieved, and/or without appropriate long-term consideration of investments. This practice has led to detrimental impacts on the ongoing management of the department’s work program. An example is the procurement of ICT assets and solutions by divisions across the department over a number of years. This ICT requires ongoing operational funding that was not considered and is now not available. The department is continuing to operate many of these systems with inadequate resourcing support. These assets and solutions present an ongoing risk to the department for which there is no mitigation strategy. In recent years the implementation of better processes has driven a more appropriate enterprise approach to the management of ICT initiatives and this type of ICT procurement is less likely to occur, but the broader practice of expending money without appropriate strategic consideration is ongoing.

Resourcing

The review team found the department’s approach to resources focuses on the short-term, providing ‘just-in-time’ solutions to business requirements. Without an organisational strategy, the department cannot make considered judgements about the relative requirements for people and financial resources across the organisation, and into the future.

Employees across the department regularly reported working at heightened capacity, taking on additional hours daily and on weekends. Responsibility for key priorities is repeatedly allocated to a discrete group of employees across the department. There is evidence that employees are ‘spread too thinly’ to enable strategic work to take place. This is in spite of recent efforts to redistribute employees to priority areas through initiatives including the Business Services Centre and an internal expression-of-interest process.

Notwithstanding these limitations, the department has demonstrated an ability to marshal stakeholders and resources to respond very efficiently to incidents of national and international health emergencies.

The review team encourages the department to develop a holistic and organisation-wide, flexible resourcing model, which consistently aligns resources with short and long-term strategic priorities. This approach must be owned by all SES, and resource allocations must be transparent to the department, to build broad understanding of the weighting of priorities across the organisation. The review team encourages senior leadership to consider the short and long-term benefits (and costs) to employees affected by these decisions. The department should also consider an ‘investment’ focus on financial management, in preference to its current short-term resource allocation approach.

Shared commitment and sound delivery models

Guidance questions

  1. Does the organisation have clear and well understood delivery models which will deliver the agency’s strategic outcomes across boundaries?
  2. Does the organisation identify and agree roles, responsibilities and accountabilities for delivery within those models including with third parties? Are they well understood and supported by appropriate rewards, incentives and governance arrangements?
  3. Does the organisation engage, align and enthuse partners in other agencies and across the delivery model to work together to deliver? Is there shared commitment among them to remove obstacles to effective joint working?
  4. Does the organisation ensure the effectiveness of delivery agents?

Rating

Development area

The review team found that the department lacks an enterprise approach to managing its work program and to interacting with stakeholders and service providers. The department’s systems and structures do not encourage or support employees to work efficiently or collaboratively. Considerable sustained investment is required to build a modern, secure and fit-for-purpose ICT environment to equip the department to deliver current and future work programs.

Policy, program and regulation versus corporate

Tension exists between the policy, program and regulatory areas and corporate services areas of the department. This has developed over time with corporate areas historically operating with limited ‘professional expertise’ and not valued by other divisions. Notwithstanding the more recent investment in the corporate team’s capability, the review team found a sense that the corporate area is not providing enough support to the broader department. As efficiency measures, such as the centralisation of grants, have generally affected divisions undertaking policy and program work more than the corporate area there is, if anything, heightened tension.

This issue is reinforced by the department’s delivery focus. Leaders are recognised for achievement of business goals, but are not generally encouraged to take responsibility for business-management activities. Financial expenditure management is viewed by some employees to be the business of the Office of the Chief Financial Officer, and elements of people management, strategic workforce planning and performance management are viewed by some employees to be the business of the people and capability branches, rather than a core part of every manager’s role.

There is an opportunity to begin to address this issue by clarifying expectations of service provided by corporate areas, as they are not clearly documented or understood. More importantly, leadership commitment to shared ownership of these matters is essential to driving better organisational outcomes. The development of a more a cohesive and collaborative culture should be led by the department’s senior leaders.

Pillars rather than tapestries of work

The review team found that employees value collaborative behaviours and have an appetite to pursue more integrated and shared work programs. However, the department largely operates in hierarchical silos. This hampers collaboration and information sharing. Employees focus on delivery of the work programs assigned to their divisions.

A new organisational structure was introduced as part of the department’s November 2013 restructure—with divisions grouped together to form clusters. This initiative aimed to break down silos by grouping divisions with complementary activities or systemic connections. The intent behind this restructure was sound. But, in practice, the divisions grouped together do not always have the requisite alignment in strategic priorities to drive better integration, and cluster groupings have not delivered the desired connectivity. There appears to be a lack of support for and facilitation of this connectivity at senior levels of the department—for example only some clusters encourage SES employees to meet regularly to discuss shared strategic concerns.

Bureaucratic, old-fashioned and complex processes

The department has inefficient internal processes, which drive the creation of unnecessary workloads. Departmental work is largely progressed through approval processes in hard copy. The review team found widespread employee frustration at the regularity with which documents repeatedly travel up and down chains of command. There is evidence of documents being rewritten numerous times in response to feedback from SES. It is unclear whether these multiple iterations are driven by frequently changing circumstances, unclear delegation or insufficient capability of the employees preparing initial drafts. Due to the scale of this issue, and the internal work program it generates, provision of clearer guidance at task commencement, appropriate feedback on drafts and up-skilling of junior employees could deliver the department significant efficiencies. In addition, a review of accountabilities and responsibilities to ensure they are at the lowest appropriate level could deliver efficiencies, empower managers and employees and lift morale.

Coordination tasks, such as whole-of-department reporting and/or briefings are regularly not filtered and directed appropriately. This creates unnecessary time pressures and workload burdens on individuals, who must carefully screen all requests to ensure they do not miss an important work task. This issue is driven by work distributed for coordination from Business Management Units (and like functions within divisions). Employees noted that allocation of work by the Parliamentary and Ministerial Services Branch is performed well. There may be efficiencies to be achieved by harnessing the knowledge and processes in this area to better manage broader departmental coordination tasks.

The review team found that stakeholders also experience the department’s processes as inflexible and state that the department does not always tailor processes to ensure high-quality outcomes. There are also variable approaches to grants management activities undertaken in different divisions, in spite of the recent centralisation of grants activities. The review team found that the department does not adequately take into account the impact that the negotiation of complex funding agreements close to the end of a previous contract or at the end of a financial year has on recipients/applicants, and at times treats the establishment of funding agreements as an outcome within its own right—as opposed to a driver of outcomes. As the Grants Services Division has been established relatively recently, there is potential for greater consistency to be achieved in these activities once the division reaches organisational maturity.

Governance structures

The department’s governance committees include:

  • Executive Committee
  • Policy Advisory Committee
  • Finance, Risk and Security Committee
  • People and Capability Committee
  • Information, Knowledge and Technology Committee
  • Change and Innovation Committee
  • Audit Committee.

The review team found that a number of committees had not met regularly, with one committee meeting only once in the past 12 months. The current governance structure is relatively new and has the potential to help support decision making if priorities and accountabilities are clarified and committees are authorised by appropriate delegations.

The Executive Committee—the head departmental decision making body—meets weekly and brings together deputy secretaries, the Chief Medical Officer, the Chief Knowledge and Information Officer and the National Manager of the Therapeutic Goods Administration. The work program for the Executive Meeting largely focuses on the progression of corporate matters, rather than on strategic policy or on broad organisational performance indicators. Although the charters for the lower-level governance committees suggest that they provide advice to the Executive Meeting to inform its decision making, there is opportunity to increase visibility of this process.

Due to the department’s risk-averse culture, clearance processes are highly escalated within the senior leadership. This has resulted in an EL cohort with limited practical delegation of responsibility and this lessens senior executive ability to focus on strategic issues. The review team encourages the department’s senior leaders to focus more on strategic matters, including managing high-level organisational performance, and to enhance and clarify mechanisms for SES and other employees involvement in enterprise decision making. A review of committee membership, purpose and accountabilities could be used to broaden SES leadership and ownership of the enterprise.

ICT support

ICT support has been a critical organisational capability gap within the department over an extended period.

Recently, there have been efforts to address this capability gap, including by recruiting skilled ICT professionals and investing in new systems, but the department continues to face challenges in developing and appropriate ICT capability.

More than 300 bespoke ICT solutions are operating within divisions across the department. These are being rationalised into and consolidated and consistent range of ICT solutions. Employees noted that the department’s SAP system has limited functionality and is not integrated with the FaHCSIA Online Funding Management System, and that the recently implemented TRIM filing system has not yet been fully adopted and so is not enabling effective information sharing across the department. In addition, the review team heard that the department’s employees and other systems need to be adapted to support critical functions that operate around the clock.

The lack of a secure ICT platform is a significant risk to the department and one that compromises the integrity of employees who are forced to undertake ‘work-around’ activities to manage sensitive information.

Without a substantial, long-term investment and commitment from senior management, the department is likely to continue to struggle to develop an appropriate ICT capability. The department might consider reviewing its ICT business model to ensure an optimal mix of outsourcing and self-provision.

The review team encourages the department to build an enterprise approach to managing its work program, by reforming its business processes and structures. More dynamic, active and transparent governance systems would drive better integration of departmental initiatives, and would empower employees through appropriate delegation of accountabilities. The review team also encourages the department to commit to sustained investment in ICT, which will be essential to support more efficient work practices, and enable contemporary policy and program options which take full advantage of technological advancements into the future.

Manage performance

Guidance questions

  1. Is the organisation delivering against performance targets to ensure achievement of outcomes set out in the strategy and business plans?
  2. Does the organisation drive performance and strive for excellence across the organisation and delivery system in pursuit of strategic outcomes?
  3. Does the organisation have high-quality, timely and well-understood performance information, supported by analytical capability, which allows you to track and manage performance and risk across the delivery system? Does the organisation take action when not meeting (or not on target to meet) all of its key delivery objectives?

Rating

Development area

The review team found that the existing operating environment does not support holistic management of performance. The department focuses on risk—particularly at a local level measuring program performance—and achievement of a large number of KPIs.

Targets measured

A large number of quantifiable KPIs are identified within the department’s Portfolio Budget Statement. Achievement of these key performance indicators, which largely focus on measuring outputs, is documented in the department’s annual reports. The department documented that 94 per cent of KPIs were achieved in 2012–13. The department’s 2012–13 annual report was recognised as high quality by both the Australasian Reporting Awards and the Institute of Public Administration Australia.

There is evidence of pockets of regular reporting of milestone achievement across the department. The department’s measurements are often benchmarked against international data through organisations such as the Organisation for Economic Co-operation and Development. Employees take great pride in delivering quantifiable results, such as the reduction in smoking rates.

Outputs versus outcomes

Due to the absence of an organisational strategy, it is difficult to link measurement of performance to the department’s vision. The review team considers the department’s vision to be ambitious, and found there is opportunity to develop clearer links between the vision and day-to-day activities.

Additionally, while the department’s culture has a strong focus on the delivery of results, an opportunity exists for it to do more to map measurement of interventions to health outcomes. When discussing this issue, employees noted difficulty in attributing health outcomes to departmental initiatives—given the long-term nature of change in health outcomes and challenges in attributing causality. Additionally, while there is some evidence of cross-portfolio reporting—for example in Indigenous health—there is also opportunity for greater emphasis on this style of reporting for its ability to encourage greater integration of departmental work programs.

The review team also questions the impact of frequent movements at SES level, before a sufficient time has elapsed for these employees to develop ownership and take responsibility for the results they have driven.

The review team encourages the department to link its KPIs to its strategic outcomes and mission, and to align and rationalise the indicators to emphasise greater focus on the achievement of strategic outcomes versus outputs.

Risk aversion

There is near universal acknowledgement within both employees and stakeholders that the department is extremely risk averse. While awareness of the potential impact of risk in the portfolio is highly appropriate, the review team found that the department’s extreme risk aversion limits the potential for innovation and delivery of optimal outcomes. It has also resulted in inefficiency—with slow clearance processes and escalation of routine low-risk work.

The department has an internal narrative of ‘no surprises’, with reporting of potential issues encouraged. Employees note that risks are escalated and managed through weekly reporting to the Executive Leadership Team and through the weekly Secretary’s Meeting. There are mixed views on the value of the Secretary’s Meeting. While some employees feel it is important for information sharing, others note that its focus on risk management limits its strategic potential.

A tiered approach to formal risk management is in place, with strategic risks identified at organisational level. These risks have an identified First Assistant Secretary-level risk manager who regularly reports on activities to manage strategic risk to the Executive Meeting.

The new Risk Management Policy and grants management and procurement processes were developed to manage risk at an operational level as part of the DNA changes. These processes aim to apply a fit-for-purpose and scaled approach to risk management. However, while the Risk Management Policy aims to encourage a ‘healthy relationship to risk’ in which approaches to risk are ‘proportional and relevant to the risk concerned, the review team found that this is not reflected in the department’s day-to-day business practices.

Risk blind spots

The continuous focus on risk at micro-level is in contrast to the department’s apparent lack of management of major and ongoing risks—such as the ICT environment and the occupational health and safety of its employees. These risk blind spots are of serious concern, and the review team encourages the department to act immediately to address them.

The close focus on risk management also contrasts with the near absence of regular formal organisational performance reporting and quality assurance measures. The department’s Executive Meeting agenda primarily focuses on corporate matters. There was no evidence of regular reporting of organisational performance, for example with a dashboard or other management reporting tool. Some employees have suggested that the department’s no-mistakes culture impacts on the validity of the reporting that is in place, with employees reticent to highlight potential failures.

The department has the opportunity to be more open to external views, including external program evaluations. The review team found that the department treats external reviews, such as audits and evaluations, as risks to be managed and controlled. A more open approach to external reviews could be embraced as an opportunity to refine systems and develop best-practice approaches.

The absence of an organisational strategy limits the department’s ability to consider its overall performance. The review team considers that the development of an organisational strategy would enable the creation of appropriate whole-of-enterprise reporting systems that, among other things, would highlight the department’s achievements and provide an appropriate tool to unearth and manage organisational risks. The review team encourages the department to reconsider its appetite for risk, and to empower its employees to engage in contemporary risk-management activities.