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Human Capital planning framework

Acknowledgements: The initial analysis of recurring risks in APS human capital was done by Mr Craig Brown, while key input on the Strategic Workforce Planning element of the Human Capital Planning Framework was provided by Ms Janet Scott, Director Workforce Information and Planning.

About this Insight

This Insight identifies the key human capital elements for the APS that emerged from an analysis of a range of recurrent human factors risks in the APS. These were then integrated into a Human Capital Planning Framework (the Framework) that includes environmental scanning, strategic workforce planning, and the range of people-related strategies that agencies might adopt. The Framework offers an holistic approach to understanding and analysing the impact of these elements on APS workforce capability and capacity, and subsequently, on organisational performance.

The Framework operationalises the concept of human capital. When fully mature, it will give APS leaders, managers and HR practitioners a clear, logical way to integrate workforce planning with broader human capital planning, into agency strategic business planning. The Framework is evidence-based, having been derived from a close examination of APS audits and reports with a particular focus on human capital and as the model develops and matures, additional material will be added to this evidence-base. This ensures that the Framework will remain relevant to their environment and can, therefore, always be used with a high degree of confidence.

Headlines

  • The APS, either collectively or at the agency or program level, has undergone multiple workforce related reviews or audits over the past decade.
  • These reviews routinely identify human factors that contribute to organisational risks for the APS.
  • Analysis of these recurring risks has identified the following elements of human capital:
    • Workplace Culture;
    • Workplace Leadership;
    • Workplace Conditions; and
    • Workplace Design.
  • These human capital elements interact with other key elements including external environmental pressures, the APS business context, and a variety of common strategic business tools to influence or affect the APS’ workforce capability and capacity which, in turn, have a direct impact on the APS’ organisational performance.
  • All of these elements are presented as an integrated Human Capital Planning Framework.
  • There are four elements of the Framework: environmental scanning, strategic workforce planning, human capital response, and organisational performance. The Framework links these in a way that allows APS leaders, managers, and HR practitioners a clear line of sight from their consideration of the external operating environment, through the type of people strategies they can employ to improve organisational performance.
  • The Framework is robust and has been desktop tested for multiple purposes (e.g., forensic and scenario planning). It is also adaptable and able to be viewed from a variety of management perspectives (e.g., as a demand-supply model or in a benefits-management framework). In addition, a comprehensive process of internal and external consultation was undertaken to test the validity and utility of the Framework.
  • A program of continued development of the Framework will provide the APS with a comprehensive tool for making human capital planning decisions.

Background

A major emphasis of the Government’s APS reform process[1] is the need for a greater focus on the role of “human capital” in public sector regeneration. The focus on human capital was deliberate and reflects a change towards a more systematic approach to building and sustaining APS organisational capability; where organisational capability is a combination of people, processes, systems, and structures.

The Blueprint noted that APS leaders will have to move ‘beyond people management to human capital management’ which is a significant change in the way the APS has approached the management of its people. The concept of human capital management provides a direct link between the capability of employees, the human capital of the organisation, and organisational capability. The performance of people matters because of its impact on organisational capability and, subsequently, organisational performance. It brings with it a different language and way of thinking about employees and, to be a systematic approach, needs to be delivered across the entire APS. As a result, the APSC has been asked to lead the development of a common Human Capital Framework to guide and inform human capital development across the APS.

The objectives of the APS Human Capital Framework are to enable effective management of agency workforces and to better align APS human capital planning with the priorities and expectations of the Government. Agencies will be able to use the Framework to assist them in their human capital decision making, confident in the knowledge that they will be aligned with and supporting the Government’s strategic priorities and expectations.

For the APSC, developing the Framework means developing a comprehensive Human Capital planning process that includes the supporting tools and methodologies needed to implement this, both across the APS as well as within agencies. The Framework needs to be applicable across the range of APS agencies, allowing large and small agencies to benefit from the information, data and analysis provided by the APS Human Capital Framework.

Fundamental to the APSC’s approach in developing the Framework is the adoption of an evidence-based approach. The following distinct, but inter-related, streams of human capital research and analysis have been identified:

  • compiling a Human Capital Environmental Scan;
  • identifying the recurring risks in human capital;
  • modeling APS workforce trends;
  • establishing a model for Human Capital benchmarking and measurement; and
  • establishing a Scenario Development and Analytic Method.

These are designed to follow a logical process of identifying the impact the external environment might have on APS human capital, identifying consistent themes in the internal human capital of the APS, collecting evidence on the nature of APS human capital, determining ways of monitoring APS human capital, and developing a methodology for planning for future human capital needs.

The first two streams of research have occurred concurrently: an APS Human Capital Environmental Scan has been developed[2] and the results of the second activity—identifying recurring risks in human capital—are reported here.

Purpose

The purpose of this paper is to describe the findings of the APSC research into identifying the recurring risks in human capital conducted in support of developing the APS Human Capital Planning Framework.

Approach

One of the features of the APS is the regularity with which it is reviewed; whether it is because of a specific organisational failure (it is rare that there is a review of an organisational success), or because of a specific feature of the workforce (or workplace). These reviews regularly identify human factors that contribute to the specific failure or the organisation as a whole. It was hypothesised that these might recur over time and that there may be consistent, interpretable patterns to these recurrent risks in human capital.

The Commission undertook an extensive desktop review of a broad range of audits, reports, and other documents that either looked at the concept of human capital in a broad context, examined specific elements of human capital, or reviewed specific organisational outcomes (typically failures) that contained a significant human capital element (see Bibliography). Each document was analysed to identify the consistent organisational risks and related human capital issues identified. These were then aggregated to identify whether there were any recurrent issues across multiple audits/reviews.

The human factors and related organisational capability risks identified in this analysis are shown in Annex A. Analysis of these showed that, while there was a wide variety of human factors contributing to the organisational risks, they could be logically aggregated into four overarching elements of human capital: workplace leadership, workplace culture, workplace conditions, and workplace design. The analysis also identified that the external environment had a clear influence on these elements that was moderated by the current business context or internal environment of the organisation.

The other factors influencing human capital were the various business tools and processes that agencies used to try to influence their workforce; strategies focussing on recruitment, diversity, and learning and development all contributed to the recurring human capital issues in an agency. Key to all this was the finding that there was a complex series of interactions among the elements of human capital, and that often, the strategies used by agencies to influence one aspect of their human capital would have associated effects on other elements. So, for example, an agency might identify that they needed to improve leadership and therefore develop a “leadership strategy”, but find that the strategy also had an impact on elements of the organisation’s culture and conditions. There was also clear evidence that the nature of the inter-relationships was context-dependent, the influences varied from agency to agency, and while the complexity of the inter-relationships was always present, their exact nature depended on the particular organisational context.

This led to the inclusion of the concept of “organisational design” into the model to reflect that there were a complex series of relationships that existed in any consideration of an organisation’s human capital, but its exact nature could not be prescribed, rather it would need to be examined in context. A follow on from this was the recognition that monitoring and reporting of all aspects of an agency’s human capital were critical in order to not only determine the impacts of any strategies the agency might use, but also to determine the state of the internal environment in order to subsequently inform future environmental scanning. Monitoring and reporting of all aspects of an agency’s human capital are critical at all points of the process. A diagrammatic representation of this first version of the Framework is shown in Figure 1 below:

Figure 1: APS Human Capital Planning Framework

The key features of the Framework:

  • There is a clear distinction between workforce factors (those that pertain to the people) and workplace factors (those that relate to the organisation itself). This reflects that the influences on human capital are much wider than just the people in an organisation.
  • It clearly acknowledges that human capital is a direct input to organisational performance, and provides a direct link from consideration of the external environment through the organisational (human capital) response, to an organisation’s performance.
  • The model shows that the interactions between the elements of human capital are complex and any analysis of them will require consideration of their business and organisational context.
  • The model clearly demonstrates that traditional workforce business tools and strategies such as talent management or performance management, while not human capital elements per se, have a direct impact on an organisation’s human capital.

Multiple views of the Framework

Having developed a prototype for human capital planning, subsequent testing demonstrated that it had a high degree of robustness in that it can be viewed as a business tool from a number of different perspectives, and it can be applied to a broad range of organisational capability issues.

Benefits Management Frame

A benefits management framework identifies three key components for any potential business intervention: the business problem, the proposed solution, and the business benefits to be achieved. It is a rigorous process that requires a degree of discipline in its application.

For the Framework, the CSIRO megatrends[3] and business context represent the “business problem”; workplace culture, leadership, conditions, and design all combine to produce capacity and capability and represents the “proposed solution”, which yields the organisational outcomes or “benefits” of the model (see Figure 2).

Figure 2: Benefits Management View

Supply-Demand Frame

One of the oldest, and most robust, ways of conceptualising workforce issues is to use a supply chain approach[4]. In this the key task is to reconcile the workforce demand with the workforce supply (whether internal or external). The supply-demand approach remains the foundation of most workforce planning activities in the APS whether at a very local level or at the most strategic. However, it is often limited to managing immediate capacity or headcount rather than as a forward-looking business tool.

Seeing the Framework through this frame of reference, the megatrends and business context articulate the “demand” side of the equation while the combination of workplace elements represents the “supply” side. Their reconciliation results in workforce capability and capacity that provide the business outcomes sought (see Figure 3). Consequently, the Framework provides an accessible way to understand workforce planning as an interdependent suite of activities that focuses on positioning the workforce to deliver organisational outcomes.

Figure 3: Supply and demand view

This ability of the Framework to be viewed through a variety of business frames of reference reinforces the clear link between human capital and organisational capability to deliver its outcomes. It should be noted, however, that there are a number of other types of capital (e.g., financial) that impact on organisational capability, and so the link between human capital and organisational performance will be moderated by these.

Multiple uses of the framework

Another important characteristic of the Framework that makes it particularly powerful in an organisational setting is that it has been shown to be applicable to a broad range of organisational capability issues. The research supporting the development of the Framework has shown how it can be applied to support a number of analytic approaches, which include business improvement, forensic analysis and scenario modelling.

Business improvement

Agencies seeking business improvements might use the Framework to identify the human capital requirements required to support the outcomes they are seeking to achieve. For example, they might examine which of the human capital ‘levers’ they can adjust to achieve a better fit between their human capital and their organisational capability.

The example below demonstrates the application of the Framework for business improvement purposes; in this case, identifying the key human capital elements associated with improving innovation in a workplace. These are demonstrated in Figure 4 below.

Figure 4: Business Improvement – Innovation

The key findings from this analysis were:

  • It appears that Workplace Leadership is a key lever, particularly because of its strong influence on Workplace Culture and the role that culture plays in achieving innovation in the workplace. However, Workplace Conditions and Design cannot be ignored because they actively support innovation behaviours as well as providing a workplace that shapes organisational values and ideas around innovation.
  • A number of factors are influenced heavily by Leadership, particularly in creating the conditions for a culture of innovation. In fact, in an innovative organisation, one might speak of an agency embodying an ‘innovation culture’ intrinsic to the organisation, rather than thinking of culture as a separate characteristic.
  • There is a degree of tension between the need of the public service to meet current government expectations while attempting to anticipate future government and citizen needs that has the effect of inhibiting the public service’s ability to implement initiatives in support of innovation. While this is heavily influenced by the Business Context, it needs special consideration because of its centrality to public service decision-making.
  • Similarly, some issues result from structural and sector-specific drivers that cannot easily be addressed by agencies and whose effects are seen in ‘lower level’ human capital risks. Some are a function of necessary public sector requirements for accountability, probity, impartiality and transparency.
  • We have contextual drivers, but they are not enough to bring about a change to an innovation culture. Real motivators are needed. Some such as reward and recognition may be possible, but other motivational characteristics may not be actually achievable in a public sector context (including increased responsibility, accelerated advancement, personal growth, self-scheduling, control of resources, accountability undertaking specialised tasks and the nature of the work itself).
  • Any analysis of public service structures, leadership practice and cultures suggests that there are many imperatives antithetical to innovation. It is easy to conclude that ‘everything must change’ for a genuinely innovation culture to be a reality in the APS, along with all the downsides that would imply. In summary: “Bureaucracies, task forces, organisational charts, and formal [administrative] processes do not breed innovation. They kill it.” Jarvis (2009, quoted in MAC 2010)

Forensic analysis

Another key business application for the Framework is in situations where there has been a catastrophic organisational outcome that requires analysis and the identification of possible preventative measures for the future. In this case, agencies can “reverse engineer” the outcome through the Framework to identify the elements of human capital that might have contributed to the outcome and that may benefit from investment to prevent similar outcomes in future.

The example below illustrates the application of the Framework in a “forensic” way to analyse possible human capital contributors to an identified organisational failure, in this case, the outcomes from the Palmer[5] and Comrie[6] inquiries into a number of well documented organisational failures within the Immigration Department. These are detailed in Figure 5, below.

Figure 5: Forensic Examination – Immigration (Comrie, 2005)

The key findings from this analysis were:

  • This example only includes negative characteristics of the organisation. In this instance the negatives clearly outweighed the positives. For example, the Palmer inquiry found that the agency had highly committed staff but that this was negated by the heavy workloads.
  • The model demonstrates that the poor outcomes resulted from a number of different inter-related issues rather than specific failures.
  • Although there seems to be more ‘Workplace Design’ issues, these may not have had the greatest effect on performance. The degree of influence of each issue varies and are not easily quantified.

The flexibility of the Framework allows APS managers and leaders to apply it to a range of potential and actual problems to assist with finding solutions and improvements. There is no suggestion here that the Framework is a silver bullet, in fact a more reasonable assumption is that there is no single solution to these problems, however, the Framework can contribute to improving outcomes in many different contexts.

Scenario modelling

Scenario modelling refers to a process where agencies can examine the impacts of a range of changes in the external and internal environment (either the megatrends or the business context in which they are viewed) and identify what effect these might cause and how they might be mitigated by differential application of the different human capital levers.

Figure 6 below shows how the Framework might be used in a scenario modelling context; in this case, examining what impact the ageing of the population might have on the Department of Veterans’ Affairs (DVA):

Figure 6: Scenario Planning – Older Workforce

Key Issues from this analysis were:

  • DVA faces two issues as a result of the ageing of the population: an ageing workforce and a rapidly declining client base. DVA will lose 60% of its clients, mainly due to ageing, in the next ten years, reducing to around 100,000 in 2020. A majority of these will also disappear over the following ten years. As a result, the average age of its client base will progressively decrease over the longer term.
  • The age profile of DVA employees is substantially skewed towards older workers. The proportion of employees 55-and-over is double that of the APS as a whole. 60% of current staff will be 65+ in 20 years, and the proportion 30-and-under is more than a third lower than the APS as a whole.
  • This scenario leads to a conclusion that DVA will have to maintain a large, national service delivery network into the future for fewer and fewer clients. It suggests a need for new delivery channels, taking into account the client demographics over time, and increased use of devolved delivery methods, including state and territory partnerships. The analysis suggests that flexible working conditions will be central to future DVA performance.
  • It could be speculated from this that DVA may be absorbed into a larger agency (e.g., DHS, FaHCSIA, or DOHA) at some time in the future. Adapting to a less autonomous agency will also pose cultural challenges, as will a broadening of work roles for employees.
  • Focused leadership will be essential to manage the changing workforce and culture and to ensure the agency has the sorts of flexibility it needs to both attract younger workers and to retain more experienced ones in an environment of change and contraction.
  • The coincidence of an ageing workforce may actually be fortuitous as the declining client base means a reduction in resources and a concomitant change to a smaller organisation.

The impact of ageing on DVA is complex and will present significant challenges to the Department’s senior leadership over the next ten to twenty years; this will require forward looking decisions to be made about the Department’s workforce. There is no “silver bullet” for this, but the Framework can assist DVA senior leaders to identify those human capital investments that will mitigate the impact on the workforce.

Subsequent refinement

Having developed and desktop-tested the prototype framework it was then tested externally in the following ways:

  • An extensive consultation process was undertaken with content experts from across the APSC culminating in a workshop as part of the Commission Executive Planning day in late 2011 to test the concepts in the Framework against APSC capabilities.
  • It was used as the organising framework for a series of workshops focussed on the future of work in the APS that led to the development of the APS Human Capital Environmental Scan.
  • The Framework was used to structure a half-day workshop with a small number of agencies examining shared human capital issues.
  • The Framework was used as the basis for a successful comprehensive human capital planning process for a medium sized[7] APS agency.
  • The Framework was provided to both the APS Workforce Planning Working Group (whose membership includes representatives from 19 APS agencies) and the APS Workforce Planning Practice Group (over 40 APS agencies).

This series of testing resulted in some minor refinements of the model and one major change, specifically the clear integration of strategic workforce planning into the Framework. The revised Framework clearly identifies the four components of human capital planning: environmental scanning, strategic workforce planning, human capital response, and organisational performance; the APS Human Capital Framework shown in Figure 2 below.

Figure 7: APS Human Capital Planning Framework – Final Version

The four elements of human capital planning are shown in Table 1, a more complete description of each is included in Annex B.

Table 1: Elements of the APS Human Capital Planning Framework
Element Description

Environmental Scan

The first element of human capital planning is the conduct of an environmental scan, this involves an examination of the broader external environment in which the organisation operates through the lens of the current APS (or agency) business context.

How one considers the external environment will range in complexity and scale depending on the nature of the human capital planning requirement. In considering the future of the APS, for example, the CSIRO Megatrends might provide an appropriate level of consideration of the external environment. In examining critical job shortages, on the other hand, a more detailed analysis of the Australian domestic labour market might be more appropriate. The time horizon is a crucial parameter in this and can range from one to over twenty years.

The business context is the lens through which the external environment is analysed. It is scalable from the broader APS, to an agency, and even to an element within an agency. It has two key components: the enduring nature of the organisation that serves to set it apart from others, and the current internal business environment which might include things such as the current state of the workforce, planned new programs, new technology, restructures, organisational performance, budget forecasts or reforms.

Strategic Workforce Planning

Strategic workforce planning is a continuous business planning process of shaping and structuring the workforce to ensure there is sufficient and sustainable capability and capacity to deliver organisational objectives, now and in the future. It aims to ensure that the right people—those with the skills and capabilities necessary for the work—are available in the right numbers, in the right employment types, in the right place and at the right time to deliver business outcomes.

As an element of human capital planning, strategic workforce planning aims to address the drivers identified in the environmental scan and the business context that will affect the capacity and capability of the workforce required to deliver organisational outcomes, i.e., the organisation’s human capital. It will typically produce a suite of actionable strategies to mitigate the effects of these organisational drivers.

Human Capital Response

The human capital response is the interaction between the range of strategies an organisation might identify as a result of their workforce planning and the key elements of human capital: workforce capability and capacity, workplace culture, leadership, conditions, and design.

The important concept in this is that individual strategies will impact each element of human capital to varying degrees, so the effects of a strategy may be indirect and even unanticipated. As a result, human capital planning needs to consider potential strategies in a holistic sense, and be aware that the workforce effect they seek may be achieved in a variety of ways.

So, just as individual strategies applied require evaluation, there is a need for the ongoing measurement of the individual elements of human capital that make up the human capital response in order that the response can be monitored and adapted as the effects occur.

Organisational Performance

The ultimate outcome of human capital planning is better organisational performance. The monitoring of organisational performance is fundamental to ensuring the effectiveness of any human capital planning activity for two reasons.

First, it allows the planners to determine the effectiveness of their overall planning and adjust as necessary. Planning is an ongoing process, it is not a static, one-off activity, it is part of business as usual in high functioning organisations.

Second, the environment in which an organisation functions is highly dynamic and will respond to changes in an organisation’s performance; the impact of these requires constant monitoring and feedback into the human capital planning process as a routine activity.

Conclusion

One of the key challenges in moving the APS to human capital management as required by the Blueprint is operationalising the concept of human capital; the Human Capital Planning Framework is a key part of this.

The Framework is grounded in a solid evidence base. Nineteen documents from a wide range of areas were analysed to identify the key elements of human capital. These elements were incorporated into a comprehensive model that integrates these with the impacts of the external environment and strategic workforce planning. It identifies the key role that traditional HR plays in the development of the APS human capital and links it with APS organisational capability, and subsequently, organisational performance.

In practice, the Framework has proved to be robust. It has been applied to support human capital planning and been a useful tool to supporting the forward-looking environmental scanning workshops. The ability to conceptualise, scale and adapt to suit a number of different business planning and analytical applications has been valuable to both agency practitioners and in support of research.

Refinements subsequent to its initial testing have seen the integration of human capital and strategic workforce planning into a framework of clearly linked discrete elements that show the direct connection from environmental scanning to strategic workforce planning to workforce strategies to the effects on the organisation’s human capital to its ultimate impact on organisational performance. As such, it provides APS managers and HR practitioners a framework for linking workforce issues into broader organisational planning to show its effect on organisational performance.

Next steps

The Framework as presented above requires further development, there are a number of areas of work that are required to fully operationalise the Framework, and these include:

  • Measures – to be functional, all elements of the tool require appropriate measures so that the strength of the relationships between them can be understood and modelled appropriately. This will be a challenging measurement task and will most likely require a combination of quantitative and qualitative (or judgment) measures.
  • Interventions – for each of the human capital elements of the tool (workplace culture, leadership, conditions, and design) a broad suite of appropriate interventions needs to be identified that users can use to operationalise the outcomes of the Framework. For example, if the Framework is used to support a business improvement activity by an agency which identifies a need to invest in its workplace culture, the agency will need some guidance on what interventions might provide greatest return on this investment.
  • Process – once fully developed, the Framework will need a degree of sophistication in its application. To support agencies in this the Commission might develop a consultation process that will assist agencies in applying the Framework to support their human capital decision making activities.

Bibliography

The following documents were considered in the analysis presented in this paper:

  • Royal Commission on Australian Government Administration (Coombs Report), AGPS 1976
  • Building Corporate Capability – The APS in Transition, APSC 2000.
  • Planning for the Workforce of the Future, Workforce Planning in the Australian Public Service a better practice guide for managers, ANAO 2001.
  • Organisational Renewal, MAC 2003.
  • Managing and Sustaining the Australian Workforce, MAC 2005.
  • Inquiry into the circumstances of the immigration detention of Cornelia Rau (Palmer Report), Commonwealth of Australia 2005
  • ‘Inquiry into the Circumstances of the Vivian Alvarez Matter Report (Comrie Report) Commonwealth Ombudsman 2005
  • Better Practice Guide, Implementation of program and policy initiatives, ANAO/PM&C 2006
  • Review of the Australian Government's Use of Information and Communication Technology (Gershon Report), DoFD/AGIMO 2008
  • Strategic Review of Australian Government Grants Programs, DoFD 2008
  • Strategic Review of Australian Government Climate Change Programs, DoFD 2008
  • ANAO Audit Report No.15 2009–10, AusAID's Management of the Expanding Australian Aid Program, ANAO 2009
  • Ensuring Leadership Continuity in the Australian Public Service, APSC 2008.
  • APS Blueprint Reform, PM&C 2010.
  • State of the Service Report – APSC 2010, 2009, 2008, and 2007.
  • Human Capital: A Self-Assessment Checklist for Agency Leaders, GAO 200
  • Audit Report No.12 2010–11, Home Insulation Program, ANAO 2010
  • Audit Report No.9 2010–11, Green Loans Program, ANAO 2010
  • Managing skill shortages in the Australian public sector: Issues and perspectives, Freyens, Asia Pacific Journal of Human Resources 2010

Annex A: Analysis of recurring HC issues and related organisational capability risks

Human Capital Issue Organisational Capability Risk Human Capital Element

The age-profile of the APS suggests that many experienced senior employees will soon retire or be eligible for retirement.

Loss of corporate knowledge.

Workplace design.

Fewer workforce age people in the community, resulting in increased competition for talent.

The APS will be less able to attract suitable and talented employees.

Workplace design.

The APS is not attractive as a career to younger generation Australians

Exacerbates ageing effect and reduces the talent pool.

Workplace conditions.

The diversity of the APS workforce is reducing/limited.

A lack of representation from across the community may limit the ability of the APS to design and deliver programs to all sectors.

Employing people who are the same as us stifles innovation.

Workplace design.

Employees consistently report low opinions of senior leaders.

Poor leadership leading to poor outcomes and reduced engagement by employees.

Workplace Leadership, Workplace Culture.

The APS is fragmented with only a minority of SES see themselves as part of the wider public service.

The APS is less able to operate strategically and deliver system-wide results.

Workplace Leadership, Workplace Design.

Senior employees have decreasing experience in the wider APS.

Reduced appreciation of the work of other agencies. Less likelihood of collaboration.

Workplace Design.

Few agencies have active succession or talent management programs.

Applicants for senior positions vacated by retiring/departing executives will not have sufficient skills or experience to fill the roles.

Workplace Design.

APS scores poorly on factors which attract and retain employees.

Inability to get and keep good talent.

Workplace Leadership, Workplace Conditions

Significant pay differentials exist between employees at the same level in different agencies

Reduces mobility. Creates inequities in talent as it is difficult for lower paying agencies to attract and retain staff.

Workplace Design.

Generally poorer employment conditions and remuneration than the private sector.

APS less able to attract new and retain employees

Workplace Conditions.

Management of underperformance is not done well in the APS.

Reduced overall productivity and costs.

Workplace Leadership, Workplace Culture.

Poor quality learning and development programs

Limited development of employees. Wasted money.

Workplace Leadership.

Constant need to produce an efficiency dividend reduces agencies’ ability to acquire adequate human capital resources.

Insufficient resources to deliver programs and services effectively.

Workplace Conditions, Workplace Leadership

Skills shortages in particular functional areas

Inability to meet government and citizen expectations. Inefficiencies.

Workplace Design.

Changing nature of APS work; current staff are generally not equipped with skills to deliver in future environment.

Inability to meet government and citizen expectations.

Workplace Design.

Agency cultures are often risk avoidant. Low tolerance for mistakes.

Prevents adaptation to new ways of working and innovation.

Workplace Culture.

Poor communication between policy makers and deliverers

Poorer policy and programs

Workplace Leadership, Workplace Culture.

Organisational Inertia – difficult to train, or bring in skilled staff quickly. Slow procurement practices.

Failed programs

Workplace Conditions

No budget for redundancy in staffing levels

Slow or poor responsiveness to new priorities.

Workplace Conditions

ICT Dependency (e.g., no ability to manually run a program)

Serious reduction/delays in work levels and service delivery

Workplace Conditions, Workplace Design

Differential between available skills and those required for program implementation management

Failed programs

Workplace Conditions, Workplace design.

Generalist policy developers and program managers not exploiting the specialist skills in other parts of their organisation or APS/specialists not available

Inadequate policy/program design. Breach of financial regulations.

Workplace Culture.

Staff do not remain in roles long enough to be effective/high turnover rates

Wasted resources and poorer productivity

Workplace Design

Relatively low investment in training and development programs

Limits future opportunities and workforce skills

Workplace Leadership, Workplace Culture

Low levels of trust/transparency in agencies’ recruitment and appointments practices

Loss of morale

Workplace Leadership, Workplace Culture

Emphasis on meeting KPIs at expense of outcomes

Poorer outcomes for public

Workplace Leadership, Workplace Culture

Inability to specify the skills and directly manage performance of devolved government employees

Inconsistent standards of service across the APS

Workplace Design

Few opportunities to develop staff who have heavy work/caseloads

Limits future opportunities and workforce skills

Workplace Leadership, Workplace Culture, Workplace Design

Hierarchical structure limits autonomy and willingness to take responsibility

Lower productivity

Workplace Design, Workplace Leadership, Workplace Culture

Devolved APS structure

Prevents best usage of available skills across agencies.

Limits information available on actual skills required/available in APS

Competition between agencies for specialist skills

Workplace Design.

Use of contractors to fill skills gaps

Limited skills transfer

High costs

Loss of permanent staff

Probity/security issues

Limits performance management

Workplace Design

Generational characteristics - More difficult to attract younger generations to public service

Limits innovation and technological knowledge?

Workplace Design.

Annex B: Elements of the APS Human Capital Planning Framework

There are four elements of the APS Human Capital Planning Framework: environmental scanning, strategic workforce planning, human capital response, and organisational performance.

Environmental scanning

The environmental scanning element of human capital planning involves a critical examination of the external environment with a particular emphasis on the impacts on the organisation’s workforce. The specific focus on workforce impacts differentiates it from “traditional” environmental scanning which will cover the same environmental aspects, but look more broadly at the business impacts. An APS example is shown in detail in Figure B1 below:

Figure B1 – APS Human Capital Environmental Scanning

Each of the main elements is described Table B1 below:

Table B1 – Elements of APS Human Capital Environmental Scanning
Human Capital Planning Element Description
External Environment

There are a variety of ways of looking at the external environment, they tend to be either broadly based (e.g., the CSIRO megatrends work) or more specifically focussed (e.g., Industry –specific).

The time horizon is a crucial parameter in this and can range from one to over twenty years. The Commission uses the following terminology:

  • Labour market analyses normally look out one to three years – this will typically focus on workforce supply and demand issues.
  • Environmental Scans look out three to five years – these will typically focus on broader environmental workforce drivers.
  • Foresighting looks out five to ten years (or even longer) - these will typically focus on very broad impacts on the overall business and broad operational, possibly national or global, factors.
Business Context

This is the lens through which we interpret the external environment; it is scalable and will be influenced by the level of external environment analysis conducted. For example, foresighting might be viewed through a lens that incorporates aspects of the enduring nature of the APS, e.g., the stewardship role that the APS plays. An environmental scan might be viewed through a lens that includes the possible impacts of a change of government; a labour market analysis, on the other hand, might be viewed through a context that includes the potential impacts of existing or planned NPPs.

An important part of the business context is understanding the existing internal business response to the external environment and the associated workforce pressures faced by an organisation. An internal environmental scan is a critical tool for this and will typically be based on a rigorous examination of the organisation’s internal workforce metrics.

Challenges

A common outcome of any environmental scan is the identification of a set of challenges or risks for the organisation for which the scan has been conducted. These will normally focus on business risks (or challenges) and reflect a refining of the view of the external environment in terms of the expected business demands for the organisation.

These will normally tell senior leaders what considerations they need to incorporate into their overall business planning to prepare them to face the possible future contexts the organisation might experience.

Workforce Drivers

This is the key difference between an environmental scan to support human capital planning and other environmental scans. With this step one goes beyond examining the broader challenges for the business as a whole, to focus on what the implications are for the organisation’s workforce in the future and hence, what needs to be done with the workforce now, to best meet these.

They will help the organisation’s senior leaders shape their thinking about current workforce priorities and issues.

Strategic workforce planning

Strategic workforce planning is an important and integral part of an organisation’s overall business planning. It is an activity that needs to be undertaken by the leadership of an organisation because it is part of the complete planning for an organisation. It is not just an HR function, as is often the practice in the past. The strategic workforce planning process is shown in Figure B2 below.

Figure B2 – Strategic Workforce Planning

The key elements of strategic workforce planning are described in table B2 below:

Table B2 – Elements of Strategic Workforce Planning
Strategic Workforce Planning element Description
Organisational goals/ Outcomes and outputs An organisation’s application of its knowledge and understanding of both the internal and external environmental drivers which is then translated into measurable outcomes and outputs that, when delivered, will align with organisational goals and government expectations.
Strategic planning cycle Through the strategic planning cycle, key decision-makers within organisations apply their insight and foresight to determine how the organisation can most effectively and efficiently deliver its outcomes and outputs to achieve its organisational goals and meet government expectations over the short to medium term.
Organisational planning and risk management The risk management and planning cycles within organisations interact and inform business priorities at a number of levels. This interaction develops a deeper understanding of risks to meeting organisational priorities, including financial, reputational and workforce risks. Understanding the breadth of organisational risks ensures greater success to the delivery of outcomes and outputs aligned to organisational goals, in the context of the external environment and pressures.If workforce planning is done in isolation of this broader framework of organisational planning it can result in a disparity between the workforce available and the workforce required to deliver business outcomes and outputs. Similarly, and given that workforce costs represent a significant portion of an organisation’s budget, wider organisational decision making and planning done in isolation of workforce planning can present risks to the delivery of business outcomes and outputs.
Strategic workforce reporting Workforce strategies and initiatives are designed to mitigate workforce risks identified by workforce planning, to the delivery of business outcomes and outputs. The extent to which this is achieved is measured through strategic workforce reporting.
Legislative framework and employment policy Organisational planning and risk management is undertaken within the context of relevant legislation and employment policies as applied within the context of the organisation, which may present both limitations and opportunities in relation to the affordability and the skills mix of the workforce.

Human Capital response

There are two elements to the human capital response element of human capital planning: the people strategies agencies put in place and the impacts these have on human capital. Strategic workforce planning will help identify the types of strategies that an agency might consider as they address human capital issues in the agency. Monitoring these is crucial because, as mentioned previously, there are often multiple effects from the application of a people strategy and it is important to know where the effects are occurring; first to evaluate the impact of the strategy, second to assist in identifying what other strategies might be appropriate for the agency.

An example of range of strategies and the possible effects of people strategies are shown in figure B3 below:

Figure B3 – Human Capital Response

The key elements are described in Table B3 below.

Table B3 – Elements of the Human Capital Response
Human Capital element Description
Workforce Capability and Capacity This reflects the two key components of the people or workforce component of human capital planning; the capability of the workforce, which refers to WHAT the workforce can do; and the capacity of the workforce, which refers to HOW MUCH of it the workforce can do. So, it will reflect the particular skill sets available in the workforce as well as the number of staff in the workforce, the gap between the actual staff numbers and the workforce required, and employee engagement. It includes the total workforce of the APS.
Workplace Culture Workplace culture refers, in colloquial terms, to “…the way we do things around here…” It is closely related to the values of the organisation and is reflected in the vernacular in use in an organisation, the forms and traditions of the organisation. It has been shown to influence levels of morale and productivity, commitment to the workplace, and innovation in the workplace. It influences both the capability and the capacity of the workforce and is an obvious element of human capital because there is also well documented evidence that investment in workplace culture can yield benefits in organisational capability.
Workplace Leadership Workplace leadership refers to the behaviour of individual leaders and managers at all levels within an organisation because, while the literature tends to focus on the leadership behaviour of the senior executive, the leadership function occurs at all levels and has a very direct impact on the workforce. Immediate supervisor behaviour is a major determinate of a number of crucial staff outcomes (such as intention to leave for example) as much as the behaviour of senior leaders.
Workplace Conditions Workplace conditions include both financial and non-financial remuneration, the industrial legislative framework under which the organisation functions, and other basic conditions of the workplace. Also included were the psychosocial conditions in the workplace (e.g., the demands the workplace puts on individuals, the control they have, work-life balance issues, etc). The items in this area are closely related to the “hygiene” factors of Herzberg’s theory.
Workplace Design Workplace design refers less to the physical layout of an employee’s workplace than to the complexity of both the workplace (its organisation for example) and the actual nature of the work done by an employee. It includes, for example, whether the workplace is hierarchical or has a flat, or networked structure; is the day-to-day work of the individual (or the agency) well defined or less clear, do individuals have a clear understanding of their role or is this ambiguous, are the workloads of employees so high that they cannot maintain necessary skills?
Organisational Design Binding all of these together is a complex set of relationships that has been labelled the “organisational design” of the HCP Framework. It recognises that some interdependencies among the human capital elements might be generic across agencies, but that others will be specific to the particular agency in which they are being considered. While it is likely that the nature of the relationships within the HCP context will be consistent (e.g., a supportive workplace culture will positively impact both capacity and capability), it is also likely that the strength of the relationships will vary in different contexts (e.g., the supportive culture will be moderated by the workplace leadership e.g., good leadership will amplify its effect, poor leadership will attenuate its effect).

[1] Ahead of the Game: Blueprint for the Reform of Australian Government Administration (“the Blueprint”)

[2] RN 2-12 The APS Human Capital Environmental Scan. Readers should note that, although dated 2012, the Environmental Scan was completed prior to this document.

[3] CSIRO megatrends reference.

[4] Cappelli, P., (2008). A supply chain approach to workforce planning. Organisational Dynamics, Vol 38, No 1, pp 8-15.

[5] Palmer, M 2005, ‘Inquiry into the Circumstances of the Immigration Detention of Cornelia Rau Report’, Commonwealth of Australia, Australia.

[6] Comrie, N 2005, ‘Inquiry into the Circumstances of the Vivian Alvarez Matter Report, Report no.03/2005’, Commonwealth Ombudsman, Australia.

[7] A medium-size agency has between 250 and 1,000 employees.