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Human Capital Matters 10

Editor's Note to Readers

Welcome to the tenth edition of Human Capital Matters for 2013—the digest for leaders and practitioners with an interest in human capital and organisational capability. This edition—the last for 2013—provides an overview of the 2013 issues and highlights one article from each.

Human Capital, as conceptualised in the APS is a very broad topic that covers every aspect of the workforce which contributes to organisational capability; this breadth of topic is strongly reflected in the range of topics addressed in previous issues of Human Capital Matters. The nine 2013 issues dealt with Talent Management in the Public Sector (Issue 1, February), Decentralisation (Issue 2, March), Recruitment and Retention (Issue 3, April), The Asian Century (Issue 4, May), Health and Wellbeing (Issue 5, June), Shared Services (Issue 6, July), Flexible Work (Issue 7, August), Change Management (Issue 8, September), and Millennials (Issue 9, October). All previous issues of Human Capital Matters can be found on the GovDex website, APS Human Capital Strategy and Research Community. If you are not subscribed to this website please email humancapitalmatters [at] apsc.gov.au.

Issue No. 1

Issue No. 1 examined a plethora of definitions and a range of international and local articles about talent management. One conclusion to draw is that talent management is a complex issue that requires a collaborative relationship between the employee and the organisation. The article that is highlighted from Issue 1 focuses on the growing need to globalise talent management practices.

Into China: Talent Management Essentials in a Land of Paradox

PageUp People, Melbourne, 2012, 32 pp. (download the report)

The report outlines a number of characteristics of Chinese culture which should be taken into account by foreign businesses and civil services planning to increase their involvement with China. More specifically, it identifies six major factors influencing talent management in China.

  • Confucianism (a focus on order, obedience and compassion): Leadership approaches tend to be ‘low key’ and inconspicuous compared to the more aggressive leadership assumptions and preferences of Western management, a difference which can lead to misunderstanding and confusion.
  • The ‘Iron Rice Bowl’ Legacy (a ‘cradle to grave’ and ‘job for life’ mentality among many government employees in China): This security of job tenure has produced little incentive for employees to improve their performance, innovate or take risks, which may be an obstacle to Western attempts to partner with Chinese institutions.
  • Mian Zi—Saving Face (A high priority among Chinese people is to keep face in interpersonal conduct—losing face can represent a severe reversal in social relations): Western managers must therefore be sensitive in dealing with their Chinese teams or negotiating partners.
  • The Doctrine of the Mean (A doctrine emanating from Confucian philosophy which emphasises the need to avoid extremes, to exercise moderation and to value the group over the individual): Chinese leaders can appear (by Western standards) to delay decisions unnecessarily in the interests of maintaining team harmony.
  • Guan Xi—Relationships (A concept of long-standing, deep relationships between individuals): It often involves reciprocating favours, which can lead to nepotism and even corruption and bribery and is therefore an element of Chinese life to be taken into account by Western managers.
  • Holistic Mindset (Chinese and Western approaches to framing solutions can differ considerably): Westerners are taught to think in linear sequences—cause and effect, action and reaction—and to focus on reason, logic, planning, methods and deadlines. Chinese approaches consider the whole rather than the parts in addressing issues and challenges. This ‘holistic’ mindset manifests itself in different approaches to communication, leadership and problem solving which need to be understood by Western talent managers.

PageUp People's advice for dealing with these challenges is to ‘glocalise’ talent management practices; not doing so, they argue, will mean failure in securing a foothold in China or retaining one.


Issue No. 2

Issue No. 2 looked at the challenges involved in public sector relocation and decentralisation. There is a broad range of benefits that accrue as a result of decentralisation, particularly to the communities into which government employees are relocated; this is a theme of a number of the papers in this issue of Human Capital Matters. The article highlighted from this issue focusses on a report completed by Sir Michael Lyons in 2004 on the relocation of government employees in the UK articulated the range of benefits that accrue from the relocation of Government services. The Experian report commissioned as part of the larger Lyons report specifically identified some of the benefits that can accrue to the regions into which public sector employees are relocated. While a little dated the findings still resonate today.

The Impact of Relocation

Experian, January 2004, London, 81 pp. (download the report)

This report was commissioned by Sir Michael Lyons during the course of his major inquiry into the relocation of government agencies from London and the South East (see abstract for Sir Michael Lyons). It looks at public and private sector relocations across the UK, and examines the economic impact of public sector relocation. It is based largely on a series of interviews with the senior staff of 10 public sector bodies and the leaders of seven companies as well as a number of case studies. Experian concluded that, ‘… relocation brings significant benefits to organisations, enabling them to reduce operating costs, reshape their culture, and modernise working practices in the light of new technology’ (p. 1). The study also reported that, ‘ … the economic benefit to areas receiving relocated government functions was greater than had been believed, and that there were broader, but less tangible benefits to these areas in terms of boosting skills and investment, and building confidence for future development and investment’ (p. 1). On the basis of this work and a literature search, it reached seven specific conclusions about the relocation of government agencies which still have resonance today:

  1. Relocation can deliver considerable cost benefits, principally in the areas of premises costs and labour costs.
  2. Relocations that focus on delivering operational change are likely to deliver greater benefits than those that focus exclusively on labour and rental cost savings.
  3. Organisations can benefit from improved labour force availability and better service delivery.
  4. Relocation can in some instances significantly advance wider Government imperatives, such as regional growth, regeneration and devolution.
  5. Effective planning and project management are required in order to facilitate a successful move.
  6. Relocation benefits must be sustained; long-term success requires careful risk management and, critically, strong leadership and commitment from the top.
  7. The debate as to whether or not ‘policy’ people can move from London will benefit from much tighter definition and challenge; ‘policy’ and other senior jobs have been successfully relocated in the past.

Experian (whose Business Strategies Division produced this report) is an information services company operating in 44 countries.


Issue No. 3

Issue No. 3 contained a mix of public and private sector articles with cross-sectoral implications for recruitment and retention. The article highlighted from this edition focuses on the Public Policy Forum in Canada which looks at means of making public policy issues more appealing to younger employees in order to better retain them.

The Road to Retention

Public Policy Forum, 2010, 51 pp. (download the report)

The report, by Canada's Public Policy Forum (PPF), sets out the results of a series of six cross-country discussions convened by the PPF between February and December 2009 as part of its PPX initiative. PPX was launched in January 2009 with the aim of increasing youth engagement in mainstream public policy discourse by making conversations about Canada's public policy challenges more ‘accessible, meaningful, and relevant to young people’. The discussions (with 300 young Canadians) were held in Ottawa, Toronto, Calgary, Saint John, Regina and Montreal. Participants were aged between 18 and 30 years. A range of employers also took part. Each workshop brought together approximately 40 young people, with sessions being facilitated by the PPF.

The main theme for discussion in the workshops was how to retain younger employees in the public sector—individuals who collectively have a different philosophy of work to their older colleagues. The report notes that there often seems to be a disconnect between young people and the organisational cultures they encounter at work—an argument substantiated in the workshop discussions. But the PPF asserts that, ‘The good news is that youth are not inherently nomadic—they can be retained’ (p. 5). The PPF adds that this must be a two-way process, one not only about transforming organisations so that they will attract and retain young employees. The latter have also to understand workplace expectations and adjust to the values and ethics of the organisation. An ‘intergenerational conversation’ is central to achieving this balance. How to arrive at this balance?

The report outlines 10 approaches for agency leaders and managers to bridging existing gaps in understanding between younger employees and their older colleagues, many of which can be pursued fruitfully by the young as well as their managers and senior leaders. They are:

  • Recognise and nurture new ideas and creative thinking.
  • Understand that the boundaries of the office have shifted.
  • Maintain a real open-door policy.
  • Show young employees how they can grow.
  • Shift the focus from the bottom-line to people.
  • When thinking about benefits, put yourself in the shoes of young people.
  • Stimulate intergenerational conversation.
  • Be a corporate citizen.
  • Re-evaluate and renew relationships with labour unions.
  • Eliminate gender and culture-related inequities.

The Public Policy Forum (PPF) is an independent, not-for-profit organisation established in 1987 which seeks to improve the quality of government in Canada. The report was researched and written by Vinod Rajasekaran, a Research Associate with the PPF.


Issue No. 4

Issue No. 4 focused on the implications of the increased involvement in Asia required by the APS as a result of the Government's ‘Asian Century’ agenda. The articles in this edition highlight the need to look beyond languages to understanding of the traditions and practices that inform Asian systems of public administration. The article highlighted is by Professor Helen Sullivan and provides a view on how the Asian Century might influence the shape of the APS and what opportunities this offers for training and professional development for APS employees.

‘Looking to Asia to Reform Australia's Public Service’

Helen Sullivan, ‘The Conversation’, 23 November 2012. (download the report)

Professor Sullivan analyses what the ‘Asian Century’ will mean for Australian public administration. She begins by observing that this is not usually the first question that comes to people's minds when they ponder the implications of the shift in economic and political power from West to East. But she adds that it is a more important question than it sounds. For this reason, the authors of the ‘Australia in the Asian Century’ White Paper proposed that by 2025, a third of the senior leadership of the APS will need to have a trenchant knowledge of Asia. The author acknowledges that this will require a new approach to the continuing professional development of APS staff, including building in opportunities to study and work across Asia as a matter of course. She sees this as a significant practical and cultural challenge for a country more accustomed to receiving study delegations from Asian countries than in sending them. Professor Sullivan also notes that closer attention will have to be paid to the content of public education so that all potential APS employees have a much better grounding in Asian languages, histories and cultures than has hitherto been the case.

However, she emphasises that this does not stop at language teaching. Deepening Australian public servants' understanding of the traditions and practices that inform Asian systems of public administration could also prove to be an important mechanism for understanding how Asian cultures approach problem solving and negotiation. This in turn may lead to an exchange of ideas about the nature of public administration itself in Australia and elsewhere in Asia, how it is organised and the respective roles in it of politicians, public servants and citizens. Increasing numbers of Asian scholars (and senior public service practitioners) are becoming concerned about the repeated integration of Western ‘new public management’ conceptions of public administration into Asian societies largely on the basis that this is how such discourse and practice has been conducted for so long; and also because many senior Asian public service leaders continue to be educated in the West and on returning to run their home public services perpetuate Anglo-Saxon ideas and norms into Asian countries regardless of their unique cultural, political and societal backgrounds.

In order to address this situation, the author draws on her research across Europe, South America, Africa and Asia, which found considerable variation in public management approaches due to local contextual factors. This included long-standing public service traditions (e.g. the role of Confucianism in shaping conceptions of merit, service and hierarchy in Asian—especially Chinese—public administration). Accordingly, Professor Sullivan concludes that public administration is as likely to be greatly affected by the ‘Asian Century’ as business and civil society, and that because of this the APS and its employees must seek to understand all influences on the Asian-Australian relationship.

The author is Professor and Director of the Centre for Public Policy at the University of Melbourne.


Issue No. 5

Issue No. 5 focused on the broad issue of health and wellbeing. In Australia there has been recent effort directed towards compensation schemes with a view to promoting early intervention and rehabilitation for the benefit of injured workers and their employers. The highlight from this edition is the review and modernisation of the Federal Workers' Compensation Scheme undertaken by Mr Peter Hanks QC including Dr Allan Hawke's report of Comcare Scheme's performance, governance and financial framework.

Safety, Rehabilitation and Compensation Act Review, and ‘Safety, Rehabilitation and Compensation Act Review: Report of the Comcare Scheme's performance, governance and financial framwork’

Mr Peter Hanks QC, Australian Government 2013, pp. 255 (download the report), and Dr Allan Hawke AC, Australian Government 2013, pp. 112 (download the report)

The Safety, Rehabilitation and Compensation Act 1988 (SRC Act) provides rehabilitation and compensation support to injured Australian Government and Australian Capital Territory Government employees. It also covers employees of private corporations who self-insure under the Comcare Scheme.

The Hon Bill Shorten MP, Minister for Employment and Workplace Relations' media statement of 24 July 2012 announced that the Federal Workers' Compensation Scheme was to be reviewed and modernised. The aim of the review is to modernise the federal workers' compensation scheme to ensure injured workers are given every opportunity to return to health, independence and work as quickly as possible after a workplace injury.

The report outlines over 100 recommendations to modernise the SRC Act and to increase the focus on early intervention and rehabilitation for the benefit of injured workers and their employers. It incorporates Dr Allan Hawke's recommendations. The review's recommendations reflect a number of principles including:

  • work is generally good for health and wellbeing and rehabilitation should be the number one priority of all claims.
  • improving the way in which permanent impairment is assessed will provide national consistency and ensure that injured employees are entitled to receive compensation in recognition of their whole person
  • modernising the provision of incapacity payments will provide for consistently fairer remuneration for injured employees and assist in reducing age barriers to work. Superannuation should only be considered in the context of savings for retirement, and the receipt of workers compensation payments should not affect an employee's savings for retirement or increase the risk of reliance on social security benefits for compensation recipients in the later stages of life.
  • disputes should be resolved as quickly, economically and fairly as possible. Dispute resolution processes should be flexible and ensure equity for all injured employees. The focus should be on the issues and the outcomes rather than the process.

Dr Allan Hawke's report contains 33 recommendations and covers issues relating to the Comcare scheme's performance and ways to improve its operation; and financial and governance framework.

The material contained in this report has been developed by the Safety, Rehabilitation and Compensation Act Review.


Issue No. 6

Issue No. 6 examined Shared Services. The highlight from this Issue is a based on research by Mark Borman to determine what attributes might be commonly associated with successful shared services.

“A multidimensional framework to assist in the design of successful Shared Services”

Borman, M., Australasian Journal of Information Systems, vol.17:2, 2012, pp. 5-33.

Organisations are increasingly looking to realise the benefits of shared services yet there is limited guidance available as to the best way to proceed. Borman undertakes research to determine what attributes might be commonly associated with successful shared services. The specific dimensions of the multidimensional framework identified are task, strategy, structure, management processes, individual skills, information technology, environmental conditions, history and organisational resources. Case studies in 11 organisations in Australia in a range of sectors including Government, Power, Transport, Building, Mining and Telecommunications were then used to determine what specific attributes from each dimension are associated with success. It is concluded that there appears to be broadly standard patterns of attributes across the dimensions that differentiate between successful, moderately successful and limited success shared services centres (SSCs).

The more successful SSCs sought to manage or own a process end-to-end. In addition they saw the benefits of undertaking all of an organisation's transaction processing activities. The most successful SSCs however also tended not to provide so-called expert services. It was recognised though that the categorisation of activities as being transaction based – or not – was not absolute but depended upon definition and perspective. For the more successful SSCs the use of shared services was mandated – optional use was seen as leading to potential problems and a dilution of the benefits achievable. Standardisation to make sure that all parts of the business were following the same process was also seen as key. External benchmarking in order to assess performance and progress was seen as critical. The most successful SSCs also had a charging mechanism in place that formed the basis for regulating user demand, behaviour and expectations.

Borman attempts to summarise the characteristics required for a successful SSC in narrative form:

The SSC should be given responsibility for demonstrably reducing costs through economies of scale and process improvement of multiple transaction oriented tasks across multiple organisational functions. An organisation wide IT platform is key to realising those savings and should be put in place before the transition to shared services. Use of the SSC should be compulsory and charged for. The organisation should have a standard modus operandi, recognise the importance of focusing on core competencies and have a strong centre that is committed to shared services and willing to invest in the SSC for the long term. SSC management should understand the requirements and volume of each task, standardise them and develop a human resource base with the variety of skills and flexibility required to meet demand.

Mark Borman is a Senior Lecturer at the University of Sydney Business School. Prior to joining the University of Sydney, Mark worked for a number of years in senior consulting and executive roles in the UK, USA and Australia; most recently as Head eBusiness Strategy at the Australian Broadcasting Corporation. His current research interest is in understanding the role of information technology in inter-firm collaborations.


Issue No. 7

Issue No. 7 explored the issue of flexible work. While flexible work is often associated with employers who are parents or who have caring responsibilities, such arrangements can be provided to any employee. The highlight for this issue is a White paper by the Australian Institute of Management (AIM): Managing in a Flexible Environment, White Paper.

Managing in a Flexible Environment, White Paper

AIM Insights, November 2012

The White Paper highlights that across Australia there is a growing demand for more flexible work arrangements. Working part time, staggering start and finish times, teleworking, taking extended leave, staging retirement or phasing a return from leave—all these and more are finding their way into workplaces. It argues that flexible work arrangements can bring great benefits to both employers and employees. These include:

  • businesses finding enhanced opportunities for talent management, greater productivity and cost savings from the reduced need for office space, amongst other benefits
  • employees being better able to manage childcare and other family responsibilities, pursue study and recreational interests and avoiding long and costly commutes.

The White Paper encourages managers to identify their organisation's most pressing issues and concerns, and consider how flexible work can be part of the answer.

Although there is much research on the topic, there is a gap when it comes to a focus on the cultural and management challenges associated with making flexible work practices actually work. The White Paper notes that it is clear from the consultation and the literature that the attitude and skills of managers are make-or-break factors in implementing flexible work arrangements. It notes that managers may need support in managing the implementation of flexible work through:

  • more training
  • improved skills in negotiation and communication
  • better performance management techniques
  • higher levels of organisation
  • the capacity to coordinate complexity
  • a strategic ability to see the long term benefits even if short term costs seem high.

A core management task is to identify the resources needed for any particular project, including the number of staff or the number of hours that will be needed. The paper argues that the challenge is not fundamentally different in a flexible work environment; however the arrangements may be more complex. Managers may need to:

  • ensure ‘coverage’ for client-facing tasks
  • juggle rosters
  • carry out detailed forecasting of work volumes
  • engage additional staff, possibly including casual or contract staff, to cover specific tasks or hours
  • identify or engage staff who want to job-share.

The paper suggests that in some workplaces, managers may need to do more than simply pay attention to part time and casual rosters or designing flexibility into individual workplans: they may need to re-engineer existing roles to quarantine some kinds of tasks into specific “on call” roles.

The White Paper notes that whether managing an individual staff member working flexibly, or managing in a workplace characterised by flexible work arrangements, managers need skills in negotiating and monitoring such arrangements. The negotiation may require balancing competing interests of several employees, and ensuring all employees are treated fairly. Transparency in decision making and clear communication are likely to assist all staff to feel fairly-treated.

The Australian Institute of Management (AIM) is a professional body for managers. The sole purpose of AIM is to promote the advancement of education and learning in the field of management and leadership for commerce, industry and government. It is not for profit entity with branches in every Australian state and territory.


Issue No. 8

Issue No. 8 looked at the issue of change management. This issue canvassed models and theories that are aimed to assist one to reflect on their own experiences of change and change management. The highlight for this is a Harvard Business Review article that looks at research by Associate Professors Julie Battilana and Tiziana Casciaro into the use of networks by change agents.

The Network Secrets of Great Change Agents

Battilana, Julie and Casciaro, Tiziana, Harvard Business Review Vol. 91(7/8) (2013) (download a review of the article)

The above hyperlink is linked to a Harvard Business Review of the article.

Numerous studies have shown that employees tend instinctively to oppose change initiatives because they disrupt established power structures and ways of getting things done. The authors set out to study organizations in which size, complexity, and tradition make it exceptionally difficult to achieve reform. The UK's National Health Service has attempted to improve the quality, reliability, effectiveness, and value of its services. The government-run institution employs more than a million people in hundreds of units and divisions with deeply rooted, bureaucratic, hierarchical systems.

A recent reform involved hundreds of initiatives. For each one, a clinical manager—that is, a manager with a background in healthcare, such as a doctor or a nurse—was responsible for implementation in his/her workplace.

In tracking 68 of these initiatives for one year after their inception, the authors discovered some striking predictors of change agents' success. Their personal networks and their relationships with colleagues were critical. Three network traits were observed that can be useful for any manager, in any position, trying to effect change in their organisation.

Managing change requires a network

Formal authority is, of course, an important source of influence. Previous research has shown how difficult it is for people at the bottom of a typical organisation chart to drive change. But most scholars and practitioners now also recognise the importance of the informal influence that can come from organisational networks. When it comes to change agents, the study shows that network centrality is critical to success, whether you're a middle manager or a high-ranking boss. In fact, among the middle and senior managers studied, high rank did not improve the odds that their changes would be adopted.

The shape of the network matters

Network position and the type of network are important. In a cohesive network, the people in it are connected to one another. This can be advantageous because social cohesion leads to high levels of trust and support. In a bridging network, by contrast, not all people are connected to one another. A bridging network provides access to information and knowledge, and may control when and how information is shared.

The most effective type of network depends on how much the change causes the organisation to diverge from its norms, and how much resistance it generates as a result. A cohesive network works well when the change is not particularly divergent—when it builds on rather than disrupts existing norms and practices—because most people in the change agent's network will trust his/her intentions. For more dramatic transformations, a bridging network works better because unconnected resisters are less likely to form a coalition and because the change agent can vary the messages for different contacts, highlighting issues that speak to individuals' needs and goals.

Change agents must be sure that the shape of their networks suits the type of change they want to pursue. If there's a mismatch, they can enlist people with the right kind of network to act on their behalf.

Keep fence-sitters close and beware of resisters

Identifying influential people who can convert others is crucial for successful change. Organisations generally include three types of people who can enable or block an initiative: endorsers, resisters and fence-sitters. Deepening your relationships with endorsers will not make them more engaged and effective. On the other hand, relationship building with ‘fence-sitters’ can be beneficial. Resisters are unlikely to change their mind. Relationships with resisters can be a double edged sword. The authors found that such ties helped change agents push through minor initiatives but hindered major change attempts.

Julie Battilana is an associate professor of organizational behaviour at Harvard Business School. Tiziana Casciaro is an associate professor of organisational behaviour at the University of Toronto's Rotman School of Management.


Issue No. 9

Issue No. 9 explored the values and preferences of the Millennials (those born between 1982 and 2004) that has emerged through research undertaken when this generation was starting to enter the workforce. The highlight from this issue is based on the findings of a survey of Millennials Commissioned by Deloitte for the 2013 World Economic Forum at Davos.

The Millennial Survey 2013

Deloitte (download the survey)

As part of Deloitte's activities for the World Economic Forum at Davos held in January 2013, Deloitte used a survey of Millennials to get their view on the importance of innovation in business. The research findings are based on a study conducted by Millward Brown. A total of 4,982 interviews were conducted online between 19 November and 19 December 2012. Approximately 300 interviews were conducted in each of 16 markets: USA, Canada, South Africa, Brazil, the Netherlands, UK, France, Germany, Spain, Russia, South Korea, India, Australia, Japan, China, Southeast Asia (Singapore, Thailand, and Malaysia). Screening questions at the recruitment stage ensured that all respondents were Millennials—born January 1982 onwards, were degree educated, and were currently in full-time employment. Interviews lasted approximately 15 minutes.

According to the global survey, 78% of the world's future business leaders believe innovation is essential for business growth and one of the top three ‘purposes’ of business. However only 26% of Millennials in the 18 countries surveyed, feel that business leaders are doing enough to encourage practices that foster innovation, in particular encouraging idea sharing, regardless of seniority.

Despite Australia's superior economic performance, the Australian survey results were disappointing with only 58% of the Millennials interviewed in Australia, believing they work for an innovative company.

Conditions the global Millennials believe are required to foster innovation also differed markedly from the reality and include:

  • leadership encouraging idea sharing regardless of seniority (42%) with only 26% saying their current organisation operates in this way
  • a clear vision for the future (41%)
  • encouraging and rewarding idea generation and creativity (39%)with only 20% saying their current organisation operates in this way
  • commitment to successfully advancing innovative ideas (39%) with only 25% saying their current organization operates this way

Two-thirds of the Millennials surveyed say innovation is a key factor in making an organisation an employer of choice. This is particularly relevant to many companies, attracting the ever-growing number of Millennials, who are forecasted to make up 75% of the world's workforce by 2025.

The survey highlighted that Millennials felt that Technology and Media, Consumer Business and Manufacturing were the most innovative sectors, with Australia, Spain, the Netherlands and Canada also pinpointing Energy and Resources, and that Public Sector was most in need of innovation.

Millward Brown is a global research agency specialising in advertising, marketing communications, media and brand equity research.