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Part 3: Summary Assessment

Context

FaHCSIA is a large department with broad and complex portfolio responsibilities. It is a source of strategic advice to the Australian Government on social policy and works in partnership with government and non-government organisations to manage a diverse range of programs and services to improve the lives of Australians.
 
The department has successfully delivered on an ambitious government agenda, as demonstrated by its 2013–14 priorities that include: rolling out DisabilityCare Australia; implementing initiatives to close the gap between Indigenous and non-Indigenous Australians; continuing to rollout welfare reform initiatives; providing additional support for senior Australians; supporting the Royal Commission into Institutional Responses to Child Sexual Abuse; dealing with housing affordability and homelessness challenges; and supporting people affected by past forced adoptions. At the same time as the department was pursuing these key priorities it also had begun a large internal reform program.
 
FaHCSIA’s functional complexity is compounded by its geographically dispersed workforce and delivery recipients. Approximately one-quarter of its workforce is located outside of Canberra in a network of state and territory offices and Indigenous Coordination Centres, which include integrated Regional Operations Centres. It has also been subject to frequent machinery-of-government changes over a number of years. This level of change and complexity is unlikely to lessen and were foreshadowed at the time of the review.

Delivery Reform and the Horizon Project

At the time of the review FaHCSIA was implementing two major internal reform programs—Delivery Reform and the Horizon Project. The department believes these reform programs will deliver the improved capability it needs in key areas to meet current and emerging challenges.

Delivery Reform aims to improve some of FaHCSIA’s key functions for best serving the Australian community in a way that is sustainable. The reforms do this by ‘integrating, simplifying and streamlining’ internal processes that had previously been designed with a single program in mind. This approach allows for the development of more ‘rigorous, systematic and consistent’ ways of managing and improving business.
 
The Horizon Project is intended to build FaHCSIA’s whole-of-department strategic policy capability, so the department can better drive social policy design and delivery. FaHCSIA’s horizon focus is two to five years out and will be implemented after Delivery Reform. The project aims to develop better systems for setting whole-of-department, forward-looking policy positions and objectives, and develop better links to external bodies that influence policy outcomes.
 
The review recognises there will be challenges in implementing Delivery Reform and the Horizon Project, noting that both initiatives are countercultural as they strengthen systems and procedures and require the department to take a whole-of-system approach. However, the strong personal commitment of the Secretary and Executive team to the rollout and ensuring benefit realisation is acknowledged. The two projects are important as they specifically seek to address a number of capability challenges identified by the review.

A solid base to build on

The department has achieved a reputation for being responsive and delivering for government. It is important that FaHCSIA retain existing strengths and at the same time be able to respond effectively to pressures associated with changing demographics and fiscal circumstances.
 
The department’s strengths lie in its people, its flexibility and its capacity to deliver an ambitious government agenda. SoSR results confirm that FaHCSIA’s staff are aligned with and motivated by the department’s subject matter and keen to make a difference to Australia’s most vulnerable citizens. The review team’s observations supported the view of stakeholders that the department’s state and territory-based network is a great strength. The network is to some degree, however, an untapped resource for supporting elements of policy development and integrating whole-of-government functions at community level. The Indigenous affairs work of the network appears to be more integrated into the policy areas in Canberra and is being used to inform the development of policies and programs. In some other areas this feedback loop seems to be undeveloped or under-used. The state and territory-based network’s understanding of the operating environment can make a difference to FaHCSIA’s operations and should be encouraged, but its effectiveness depends on improving the flow of information between Canberra and the network.
 
Almost without exception, stakeholders interviewed during the review, including government departments and non-government organisations, said FaHCSIA was a department that was ‘good to deal with’. However, FaHCSIA has a co-dependent relationship with many stakeholders, many of whom rely on the department for funding. Most intersect with the department on a programmatic basis, rather than on a whole-of-life or whole-of-system basis. During the review many stakeholders reflected that FaHCSIA was less effective in establishing effective partnerships with non-government organisations, noting shared commitments to outcomes, and did not take full advantage of their available policy and financial levers, despite a demonstrated ability to do so. To build future capability and sustain its efforts, FaHCSIA needs to move from stakeholder management to stakeholder engagement.
 
Many stakeholders questioned FaHCSIA’s ability to adapt quickly to different sets of circumstances, and whether the department had focused too much on today and not enough on the future. There was a view among stakeholders that Australia’s social policy challenges were increasing due to economic, demographic and social forces. This will challenge the sustainability of current arrangements and policy frameworks. There was also a view that FaHCSIA needs stronger policy leadership, particularly in developing new ideas and frameworks. Many stakeholders considered that FaHCSIA was well positioned for such a role—more so than other human service agencies—because of its centrality in the social policy system, its wide mandate and its depth of expertise. The challenges outlined here and discussed in this report will test FaHCSIA’s leadership. The department will need to respond to changes in the social policy environment. Success will require its ability to challenge its culture, structural and functional arrangements and service delivery models. The specific challenge for leadership will be to preserve what is strong in the current culture while reinventing where necessary.

A common view

In meeting government priorities, the department’s primary function and mission have become arguably more ambiguous to internal and external stakeholders. The review echoes the question of many stakeholders as to whether FaHCSIA is primarily a policy department, a delivery department, or a combination of both. This question is important in looking forward, sustaining effort, resolving priorities and supporting resource allocation across the department.
 
FaHCSIA has multiple identities and speaks with many voices. Sometimes its voices contradict one another and this weakens its focus and dilutes its energy. The department does not seem to understand when it is necessary to speak with one voice. FaHCSIA needs to strengthen its capacity to manage its diversity to optimise local outcomes while building its position as a leader in the Government’s strategic policy debate. 
 
A highly siloed business model, while promoting ‘cylinders of excellence’, weakens strategic focus and the ability to integrate policy and program delivery in ways that strengthen effectiveness. Silos are not necessarily bad, but the issue lies in a lack of integrating processes necessary to harmonise diversity into a cohesive and coherent whole. Silos present the department with challenges around the creation of bespoke delivery solutions or grant programs and duplication of effort. They impact on shared learning and innovation. In this regard, FaHCSIA has been referred to as ‘a city of separate postcodes’.
 
The review acknowledges that one desired outcome of Delivery Reform is to break down some of the silo mentality. The new structure proposed by the reform is to be supported by a systematic and consistent way of establishing and managing programs and grants. Delivery Reform will be supported by the Accountabilities and Collaborative Working Arrangements model, which aims to clearly articulate how internal ‘partners’ work together. The model describes the department’s roles and responsibilities of its business streams and how they intersect, share and transfer knowledge. It is in the early stages of being implemented.
 
Delivery Reform has high level support by the department’s executive and if implemented as planned should provide FaHCSIA with a sustainable business model. Delivery Reform is an important strategic initiative, but it needs to move faster and is not by itself sufficient to reposition the department. At the time of the review, external stakeholders were unaware of the potential scope and benefits arising from the proposed reforms.
 
The review questions the ability of Delivery Reform to generate the necessary cultural change to make it a success. FaHCSIA has a culture that has been described by its staff as non-compliant. Staff relate to the end stakeholder and, as such, want to develop unique programs and grants to support them because they are ‘different and special’. The review found that the department has yet to establish a ‘burning platform’ for change that will override the cultural norm and deliver the efficiencies it is seeking. This view was reinforced by middle-level managers.
 
The department is further challenged by its highly collaborative and consensus-driven culture, making it difficult to cut through on issues, support trade-off decisions or manage underperformance effectively. Decisiveness needs to be the new norm.

Strategic planning

FaHCSIA’s vision and mission are clear to all staff and are linked to its business planning processes through to, and including, individual staff performance agreements. However, given that the department’s vision and mission are broad ranging, the review believes that planning processes need further development and currently do not provide the necessary focus to allow for rigorous resource allocation and prioritisation of decisions. Nor is there sufficient understanding and integration of risk into decision making.
 
The review found that FaHCSIA’s planning system is in its early stages of development. It does not as yet appear to support critical thinking and decision making, nor does it have feedback loops that would facilitate organisational adaptiveness. It needs to drive its business and support strategic trade-off decisions between the present and the future.
 
The department’s focus on delivering for government is emphasised in its mission statement: ‘Supporting our Ministers by collaboratively developing and implementing excellent social policy’. But its focus on the here and now seems to have had an opportunity cost on longer-term policy thinking; with staff expressing the concern that the urgent has overridden the important. The review recognises that in some areas, such as with families, blue-sky thinking is part of business-as-usual activities.
 
FaHCSIA needs to balance short-term imperatives with long-term stewardship responsibilities. The department also needs to ensure it balances its resources in each domain. One measure of its success needs to be linked to the mobilisation of resources in rebuilding and/or reinforcing its strategic capability to deliver for government in the future. This measure would need to be attuned to the fiscal situation and enable FaHCSIA to plan for a future where tough decisions will be identified, analysed and taken.
 
The department, through the Horizon Project, is starting to proactively plan for future policy challenges and the review considers that initiatives of this type need to be advanced with greater urgency and are arguably core business. To make a sustainable transition, this project needs to be incorporated into business-as-usual and business planning processes.

Outcome focus

FaHCSIA’s ability to measure the impact of its programs is weak. It has responded well to government requirements but this has pushed the department to measure success in milestones. Organisational performance tends to be viewed in the context of the outputs of projects or programs rather than the outcomes. This is not helped by a lack of a larger narrative. This prevents a more strategic frame which, in turn, makes an outcome focus problematic. To shift this focus to enable a more sustainable planning framework, the department needs to work on defining, measuring and reporting outcomes as part of the move to a more sustainable planning framework.
 
Existing planning and evaluation processes tend to be conservative in ambition and unconnected. Clearer and accountable prioritisation will be required in a more constrained operating environment demanding zero sum trade-offs and priority setting.
 
The review did not find evidence of a set of indicators to assist the Executive team in managing the department. The executive dashboard report is pitched at a level too low to influence the strategic decisions required to shape the department’s future. An integrated but more highly focused dashboard that reports on operational performance, policy development, people matters and other enabling services would assist.

Risk management

The review found that FaHCSIA was often managing issues rather than risks. There is some evidence that assessment of risk and its implications have been factored into designing and planning some specific programs. However, the review could not find evidence that the department had embedded a process or culture of risk awareness, assessment and management into its business-as-usual executive decision making. As a department, FaHCSIA has not assessed its ‘risk appetite’ and determined through leadership engagement its approach to risk consideration in priority setting, strategic planning, operations and individual responsibility. Risk management must become part of the department’s governance structure.
 
The department has taken the first steps in building capacity in risk management with the development of a new risk project (Business Integrity Project) to investigate risk and provide recommendations from a whole-of-department perspective. This project would be perceived as an ‘assurance’ rather than management process and therefore, not driving appropriate recognition of risk in the department. Implementation needs to happen quickly to effectively mitigate risk.
 
Risk needs to be seen as key element across the business, rather than something that is dealt with at program or policy level.

Information management

FaHCSIA is proud of the information it has, but there is greater potential for using this resource. The department should be acknowledged for maintaining its datasets through a tough fiscal environment. However, the review found that the department was losing some of the technical expertise it has traditionally held. This is compounded by a turnover of staff in this area and an inability to interrogate datasets effectively.

The department acknowledges the importance of this information and through Delivery Reform is working on developing better connections between staff in its state and territory-based network and its national office. It will be important for the department to implement a knowledge management system that supports operational policy and enables planning for the longer-term policy horizon.

Workforce management

With a focus on delivery has come a change to the department’s workforce profile. The review is not clear as to whether this change has been by design or accretion. The department itself recognises a decline in policy skills. Some stakeholders described FaHCSIA’s workforce as competent rather than being the experts they once were.

The department needs to resolve the issue of ongoing identity. It will then be able to establish a workforce planning capability that identifies its future skill needs with supporting training and development and recruitment strategies.
 
The review questions whether FaHCSIA’s staffing profile is fit-for-purpose. As at 30 June 2013, almost one-third (29 per cent) of staff were Executive Level 1 (EL1) officers, with a combined total of 44 per cent at executive level. Although FaHCSIA is comparative to other policy agencies, the APS average is 18 per cent. Combined with this is a key-person risk where the same staff, including data experts, are being used for special projects leaving the department potentially exposed to a lack of effective knowledge transfer and capability gaps.

The department recognises that its performance management system is not effective. FaHCSIA’s culture of conflict avoidance has made it difficult to have hard performance discussions with staff. Throughout the review, staff expressed concerns that managers did not feel supported to manage under performance. They said the performance management system was overly complex and the threat of bullying and harassment claims were real. According to the SoSR results, 16 per cent of FaCHSIA staff reported they had been subject to harassment or bullying.

A strong, capable and robust workforce will be critical for FaHCSIA to meet its future challenges. Workforce planning and performance management will be at the core of achieving this.

Key findings

The review concluded that FaHCSIA has strong foundations and a reputation for delivering. The Executive team has accurately identified the department’s strengths and weaknesses and has started some appropriate programs in key areas to address these. However, fiscal and human resource constraints are major risks for the department’s sustainability and strategic planning, and workforce-related capabilities require strong ongoing support from the leadership team.

FaHCSIA’s strengths lie in these key areas:
  • delivering an ambitious government agenda
  • a workforce that is motivated by the department’s work
  • an Executive team that is highly regarded, internally and externally
  • a state and territory-based network that is the face of FaHCSIA with service providers
  • a solid evidence base demonstrated through strong datasets.
In considering its challenges FaHCSIA could:
  • more proactively communicate its strategic focus, internally and externally, by articulating whether and how it is primarily a policy department, a delivery department, or some combination of both
  • assertively position the department as the government’s pre-eminent source of social policy advice and thinking
  • ensure greater integration across the department, including the state and territory-based network, to support policy and program development, limit duplication and enhance innovation and learning
  • enhance stakeholder engagement to help support policy and program development
  • establish a one-FaHCSIA view for key policy issues
  • develop a robust organisational change capability and position Delivery Reform as an important strategic initiative which needs to move faster
  • ensure a sustainable transition, incorporate the Horizon Project into business-as-usual and into business planning processes
  • strengthen business planning to drive accountability in decision making by integrating goals and priority settings, better allocating resources, and ensuring evaluation and performance measurement
  • develop metrics that measure the impact of programs
  • build and implement a performance management system that includes specific outcomes and output measures for individuals that link broader FaHCSIA goals and priorities
  • ensure risk is a key element to support decision making across the business, rather than something dealt with at program or policy level
  • implement a knowledge management system that supports operational policy and enables planning for the longer-term policy horizon
  • formalise workforce planning, aligning skills with the department’s current and future priorities and addressing key-person risk.
In summary, FaHCSIA’s ability to meet its challenges will depend most critically on the quality of its leadership. The leadership needs to be prepared to challenge the prevailing cultural norms where necessary.