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Part 3: Summary Assessment

DFAT is a strong and agile organisation. The new Secretary and his leadership team have a solid base to build on as they work to shape the department's capabilities to meet future challenges.

As observed by the review team, DFAT's four principal functions are to:

  1. provide policy advice to the Government on Australia's external relations, including trade
  2. manage Australia's external relationships with key international actors—bilateral, multilateral and non-government
  3. support Australians in their overseas engagement by assisting businesses and providing identity documents and consular support
  4. run the underpinning infrastructure to make the first three objectives possible, through:
  • overseas network, including property and security at posts
  • international communications network
  • passports.

DFAT fulfils these functions most effectively. Its strengths lie in its ability to recruit and hold able and committed people, its flexibility and its capacity to deliver. Its challenges are in many cases the obverse of its strengths. Some examples are set out in this table:

Strengths Challenges

Loyalty of staff to department

Flexibility of workforce

Talented generalists

Excellence of overseas network

Excellent delivery in a crisis; 'can-do' approach

High responsiveness to Ministers

Effective advocacy of existing policy

Institutional insularity

Churn and poor workforce planning

Strains on specialisation

Less effective in Canberra

Suspicion of prioritisation, strategic planning

Less clearly articulated departmental views

Less good at policy development

The review team concluded that DFAT has great potential to deliver more to the Government and to the Australian community. In doing so, it would also advantage itself and the broader public service. The team did not underestimate the complexity or difficulty of the task DFAT's leadership faces, but
some areas where the team thinks significant capability improvements are possible are set out in this report.

Review team assumptions

In considering DFAT's capability needs in coming years, the review team made some general assumptions about the future.

The first was that the external environment DFAT has to deal with will continue to change in unexpected ways. Events like the end of the Cold War or the Global Financial Crisis will arrive unheralded and DFAT will have to respond quickly and flexibly.

The review team also made the broadly uncontroversial assumptions that global economic and political power will continue to flow to Asia; that Australia's domestic and international objectives will be increasingly intertwined; that a growing number of APS agencies will have a stake in the work of the
overseas network; that DFAT officials will have to work with and influence a broader range of people and institutions inside and outside Australia; and that the resources available to the public service will continue to be stretched. DFAT will need continually to adapt to ensure it has the people, systems
and processes in place to respond effectively.

Mission

It is clear from the review team's discussions that DFAT still faces difficulties in clearly articulating to outsiders what it does and adequately measuring the outcomes of its activities. It needs to find better ways of doing this, and explaining how Australia benefits, to others inside and outside
government.

Part of the answer lies in the value of the assets DFAT alone can bring to the APS in an environment in which increasing amounts of the Australian Government's business have an international dimension. These assets include global horizon-scanning and warning-capacity based on its overseas network;
a comprehensive understanding of ways of understanding, advocating to and influencing other governments and international organisations; and useful comparative insights from the experience of other countries into many parts of the government's agenda.

DFAT currently defines its role as 'advancing the interests of Australia and Australians internationally'. This expresses the department's mission predominantly in terms of the world outside Australia's borders. Perhaps it should instead think of its goals in broader terms that comprehend the full
range of the government's interests—for example, to advance Australia's interests by engaging with and shaping the international environment.

The overseas network

The review team's observations underlined the view of all stakeholders that the overseas network functions most effectively. Overall, the work of posts in understanding the overseas operating environment and helping to implement policy is held in high regard. The review team saw outstanding examples
of missions coordinating whole-of-government operations in ways that would be much more difficult in Canberra.

Decisions by successive Secretaries to preserve resources overseas at the expense of Canberra have strengthened the relative position of posts. Some larger missions are beginning to play a greater role in the policy development and ministerial support work of the department. This should be encouraged
but its continuing effectiveness depends on continuing improvements to the flow of information between Canberra and posts.

Operating in Canberra

DFAT is not seen by other government agencies, or by some of its own people, as performing as well in Canberra as it does overseas. It is perceived as being distant from policy processes outside traditional national security and trade areas, even on issues like the global economy or energy where it
has something to bring to the table. Others see that DFAT is not easily able to identify and engage proactively with emerging policy issues like the The Group of Twenty(G-20).

It is easier in many ways to work closely in the smaller and more collegial environment of an overseas post, where the focus is on advocacy for and implementation of established policy, than in the more competitive atmosphere of policy development in Canberra. But it was clear to the review team that
other agencies believed DFAT could play a larger and more helpful role across the government's policy agenda in Canberra.

This was expressed by some as the view that DFAT should play more of a central agency-type role in informing discussion and shaping the development of the broad range of government policies wherever (as is increasingly the case) these have international political, economic or strategic dimensions.

If DFAT were to take on such a role, given resource constraints, it would be necessary for it to develop, across its divisions, a deeper understanding of the government's overall agenda, the capacity to assess issues on which it can add value, a broader network of contacts across the APS and, in many
cases, a better coordinated whole-of-department position on these issues.

DFAT is seen as too detached from the work of the APS as a whole, not contributing sufficiently to (or learning enough from) the wider public service. Greater engagement in the work of public service reform and improvement would be one way to address this. So would more exchanges and secondments with
a wider range of departments and agencies.

DFAT recognises that it has a serious problem in disseminating the knowledge drawn from its overseas network throughout the APS. It knows that it needs not just to report information but to ensure its effective distribution in Canberra. The Secretary's efforts to find better ways of achieving this
will help greatly.

Strategic thinking

In the view of its own staff and others, DFAT is more effective at advocacy and delivery than at strategic thinking. Reasons given for this include pressures on staff in Canberra, demands (real and perceived) from ministers and the way Canberra-based officers think about their work. For example, briefing
in Canberra is not seen as synonymous with policy development, which officers seem to think of in a more formal way—that is, as something like lengthy policy planning documents. The department might usefully reinforce in its training of officers the extent to which policy development is embedded
in their daily activities.

DFAT is responding enthusiastically to the Secretary's efforts to encourage more debate about policy. As the Secretary said in his first address to staff: 'You only get good policy by testing it and the best way to test it is to constantly question it and I'd encourage you all to adopt that as your
starting point'.

There are many ways to achieve this, from formal policy planning work to more crosscutting debate between divisions and discussions with outside agencies and experts. Such activities will also help cement the development of departmental views.

This will be welcomed by others. Many Canberra stakeholders told the review team they were looking to DFAT for stronger and sharper assessments, views and options to strengthen contestability and debate around the Cabinet table and between departments.

Innovation

Many DFAT officers speak about the department's culture as risk-averse. They seem to have different definitions of this—over-regulation, heavy compliance requirements, reluctance to take decisions, cultural conservatism.

The overseas network is mostly excluded from this criticism: a willingness to take risks seems greater outside Canberra. This might not be surprising given that some risks are diminished with distance from the centre, but, with the exception of main service delivery areas such as passports and consular,
the effect has been to encourage more innovation at posts than in Canberra.

This issue will begin to matter more in coming years as DFAT has to find more efficient ways of delivering its wide range of services, from policy advice and briefing for ministers to overseas advocacy.

As resource pressures mount and new demands on DFAT's services grow, innovation will be more necessary in all areas of the department's activities. New ways of 'doing old things' need to be found, and that requires experimentation. For example, it may well be that some current manifestations of social
media being tested by DFAT (for example, blogs and tweets) will prove ephemeral or inefficient as a tool of diplomatic tradecraft. But that can only be known if experiments are conducted.

It will also be necessary to encourage greater flexibility in the heavily compliance-driven resource framework. The current reform of DFAT's ICT system will help give it greater confidence to manage this change.

A number of ways, formal and informal, can be found to foster innovation and the review team encourage the department to give more thought to ways of doing so.

People

It is widely recognised within the department and by its stakeholders that DFAT's key strength is its people. The department attracts high-quality candidates for vacancies across all parts of its operations. Staff, including those employed locally in Australian missions around the world, are self-motivated
and committed to getting the job done.

Those qualities are seen clearly in DFAT's highly-regarded responses to overseas crises such as the 2011 Japanese tsunami or the Christchurch earthquake.

DFAT's mobile workforce requires more centralised management than is usual in the APS. With the overseas network, the department demands a whole-of-life commitment from most of its staff that only the Australian Defence Force comes near.

But the current incentive structures (financial and delegation of work responsibilities) weigh heavily in the direction of overseas service. This contributes to the difficulties noted earlier in this report that DFAT has in operating as effectively in Canberra as it does overseas.

Another impact of running an overseas service is the more frequent than usual churn in Canberra-based positions (reinforced by time and emotion-intense aspects of moving between countries). This has important implications for DFAT, including the need for staff to quickly master new areas of work. While
there is no inherent problem in these levels of churn in a policy team, it presents some capability challenges given the other difficulties the department is experiencing in its Canberra work and in knowledge management.

Perceptions remain that DFAT is a closed shop, and that persistent differences remain over a career between those recruited to the department as graduate trainees and those who come in later—so-called 'lateral recruits'. In fact these differences do not seem as great as they are sometimes perceived
to be. Fewer than 50 per cent of DFAT's Senior Executive Services (SES) began in the department's graduate program, and half the department's SES Band 3 staff came into the department as lateral recruits. And the competitiveness of the graduate program ensures that many who join DFAT have extensive outside
experience.

Insularity remains a problem for DFAT. However people arrive in the department, they become acculturated quickly and staff believe that promotion processes give greater weight to experience inside the department than outside. That seems to be one factor deterring more departmental officers from taking
chances to accept positions outside unless they are allowed to retain their ties to DFAT.

Efforts are underway to broaden the range of secondments and exchanges with other agencies and departments and the review team encourages those. It would also be useful for DFAT to bring in officers at SES Band 2 and SES Band 3 level who have experience in the wider APS and intend to return to it.

Most important, perhaps, is the need for DFAT to recognise that promotion above a certain level should be demonstrably advantaged by evident familiarity with the broader public service.

Inside the department, the need for flexible generalists who can be easily moved and bring with them insights from other experiences will always have to be balanced against the continuing need for people with deep specialisation. From one perspective, DFAT can be seen—in the useful image of one
SES officer—as being like a series of guilds, with staff focusing on certain areas of specialisation such as trade negotiations or China in the policy areas and ICT and security in corporate areas.

There will be no final answer to where the correct balance lies between specialisation and generalisation and how much interchange there should be, and it will be a constantly changing recruitment and training challenge for DFAT's management. The review team considers that efforts underway to develop
clearer arrangements for the recruitment and retention of specialists are a useful step forward. It would also be useful to develop language and processes that more explicitly manage the accumulation of expertise during the course of a generalist career, for example through the idea of 'career anchors'.

The story with training is generally positive. DFAT has some of the best learning and development programs in the public service, for graduate trainees and foreign languages for example. But possible areas for improvement include the training of new staff entering DFAT from outside the graduate trainee
program, language training for administrative and consular staff, and handovers at certain posts.

The department recognises the increasingly important role of locally-engaged staff, including Australians recruited overseas, at posts. The trend towards expanding the responsibilities of these staff is likely to continue and will have implications for training and career development.

DFAT would find it easier to develop all these new capabilities if it had a more effective and professional system of workforce planning. Although the argument in favour of placing generalist officers who understand the work of the department in line staffing positions is strong, DFAT would benefit
from greater professionalisation of the human resource function. The review team notes that steps in this direction have begun. Such professionalisation would also help develop more sophisticated approaches to recruitment, mentoring and the management of underperformance.

Knowledge management

DFAT's core model—that of an organisation of generalists reinforced by specialists—can only work effectively if existing knowledge can be drawn on quickly and effectively by officers who will often be new to their areas and need to operate immediately in complex environments.

That is a problem at present. Too much of the information DFAT creates and receives, whether it is embedded in written product or in the experiences of officers, is difficult or impossible to retrieve. Some of this is the result of inadequacies with IT systems, but additional work is required to clarify
the protocols needed for electronic filing and retrieval systems and to identify and draw on the existing deep knowledge of staff members gained through past work experience. The review also suggests that DFAT might examine readily available and relatively low-cost improvements to its knowledge management
systems.

ICT is central to the delivery of capability improvements in almost all areas noted in this review. It presents a major challenge for DFAT in an environment of rapid change. The reform of the ICT strategy and operations, begun in 2011, combined with moves to increase the professionalism of ICT, present
DFAT with the opportunity to move well beyond a traditional view of ICT as a method of sending and receiving text to more as an enabler of productivity and innovation. Additional funding for the International Communications Network agreed in the 2013–14 Budget will be an important factor in helping
to achieve this reform.

Planning and prioritisation

Like most foreign ministries, DFAT's corporate culture is uncomfortable with long-term planning. Conscious of the messy contingency of world politics, and the constantly shifting tactics of international negotiations, it prizes flexibility and responsiveness. Existing planning and evaluation processes
at divisional and post-level tend to be conservative in ambition and unconnected. But the need for serious planning and prioritisation will become increasingly important. In a world in which, as the Secretary has said, DFAT will have to do 'less with less', judgements about priorities cannot be avoided.
Much clearer prioritisation processes will be needed. And prioritisation can only be effective if it is drawn from a broad set of strategic objectives.

The review team encourages the department to develop a more clearly articulated set of strategies to help officers prioritise day-to-day decision making.

Stakeholder engagement

The great majority of non-government stakeholders were highly positive about DFAT's engagement with them. In some cases, outsiders found it difficult to identify the right contacts in the department. Given the increasing number of external stakeholders it must deal with, DFAT would benefit from a more
structured stakeholder engagement policy, perhaps with the formal identification of relationship managers the most important of these.

Governance

The Secretary is examining DFAT's governance structures. The review team endorses this. It is not clear that the performance information flowing up the department is exactly what its leaders need most, or in a form likely to be of most use to them. The Executive should expect, and receive, high-quality
data covering operational performance, policy development, people matters and other enabling services.

More broadly, it will be important—if DFAT is to meet most of the challenges outlined in this review—for ways to be found to strengthen a sense of shared corporate leadership through the ranks of its senior officers, including experienced representatives stationed overseas.

DFAT has strong foundations: a strong and dedicated workforce; in-built flexibility; an effective overseas network; and expertise unmatched in the APS in understanding the international environment. But better systems for the development of strategic goals and priorities, closer engagement with the
broad priorities of the government and the rest of the public service, and a more formal approach to workforce planning would enhance the capabilities of DFAT itself and, just as importantly, those of the wider APS.