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Part 4: More detailed assessment of departmental capability

This section provides an assessment framed by the leadership-strategy-delivery structure of the capability review model.

Assessments were made according to the assessment criteria set out in Figure 2.

Figure 2 - Rating descriptions
Assessment rating Rating image Rating description
Strong
  • Outstanding approach for future delivery in line with the model of capability
  • Clear approach to monitoring and sustaining future capability with supporting evidence and metrics
  • Evidence of learning and benchmarking against peers and other comparators
Well placed
  • Capability gaps are identified and defined
  • Is already making improvements in capability for current and future delivery, and is well placed to do so
  • Is expected to improve further in the short term through practical actions that are planned or already underway
Development area
  • Has weaknesses in capability for current and future delivery and/or has not identified all weaknesses and has no clear mechanism for doing so
  • More action is required to close current capability gaps and deliver improvement over the medium term
Serious concerns
  • Significant weaknesses in capability for current and future delivery that require urgent action
  • Not well placed to address weaknesses in the short or medium term and needs additional action and support to secure effective delivery

The review team's assessment of the Department of Foreign Affair's and Trade (DFAT's) capability is outlined in the tables below.


DFAT Capability Review - Leadership

Capability
Assessment rating Rating image
Set direction Well placed
Motivate people Well placed
Develop people Well placed
DFAT Capability Review - Strategy
Capability Assessment rating Rating image
Outcome-focused strategy Development area
Evidence-based choices Well placed
Collaborate and build common purpose Development area

DFAT

 Capability Review - Delivery
Capability Assessment rating Rating image
Innovative delivery Well placed
Plan, resource and prioritise Development area
Shared commitment and sound delivery models Well placed
Manage performance Development area

4.1 Leadership summary

Set direction

  • DFAT has many strong and experienced leaders, but there could be a greater sense among the SES of a shared responsibility for departmental leadership.
  • Staff understand, and have a high level of commitment to, the department's broad role. They can see how their work contributes to it. But clearer strategies would help them translate that commitment into better prioritised day-to-day decision making across the department's operations.
  • DFAT is better at responding to events externally than it is in dealing with their consequences for its internal operations. It needs better change management processes.
  • The department's role and contribution is less well understood by external stakeholders in Canberra and the wider community.

Motivate people

  • Staff are highly motivated, resilient and proud to work in DFAT, where they can build a long career of interesting and challenging work.
  • Locally-engaged staff are a critical asset, a source of in-country expertise, relationships and stability.
  • The department is highly responsive and adaptable as issues emerge, but internal churn in Canberra-based roles can limit the development of expertise.
  • A DFAT officer's career is often defined by overseas service. The department's leadership has a challenge in reinforcing the value and relevance of working in Canberra.
  • It would be worth DFAT taking a closer look at work flow processes and levels of delegation in Canberra.

Develop people

  • DFAT has a mix of policy and corporate, generalist and specialist staff, reflecting the diversity of its responsibilities. It has maintained a consistent investment in their development in the face of budgetary constraints.
  • The department's learning and development programs, especially its graduate recruitment and language training, are highly regarded.
  • Staff are generally managed as pools of talent, with special weight placed on training and placements directed to developing a cadre of skilled officers for overseas service. This model places increased responsibility on departmental leaders to manage and mentor staff careers carefully.
  • The recognition and development of locally-engaged staff at overseas posts will be increasingly important.
  • A more strategic, professionally-assisted approach to workforce planning, recruitment

    and development would help identify areas of future need and strengthen the department's capabilities.
  • More active efforts to draw upon and value the experiences of others—inside the APS and outside—would assist DFAT in the complex management and policy challenges it faces.

Comments and ratings against the components of the 'leadership' dimension follow.

Set direction

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

Well placed

A solid base to build on

DFAT is a strong department with a record of substantial achievement and a committed workforce. These strengths provide a solid base upon which to deal with future challenges.

Across the department, high-calibre leaders have played an impressive leadership role, representing Australia most effectively in difficult and at times dangerous circumstances. The leadership role of Heads of Mission in coordinating the whole-of-government activities across agencies at overseas posts
is generally highly regarded.

Staff understand and share DFAT's broad mission. According to the 2012 staff survey, 87 per cent of staff see the link between their work and the department's outcomes, and 70 per cent report that the department has a clear understanding of its strategic directions. DFAT performs above the APS average
on both of these.

The difficulty DFAT has in describing and measuring the nature of its work—common to most foreign ministries—hinders its ability to persuade the Government and the public of the value of investing in its activities. The department needs to find better ways of explaining what it does and
how Australia benefits.

Part of that explanation would certainly involve DFAT's global horizon scanning capacity: in an increasingly inter-connected world it can see problems coming before other parts of the APS. It also offers useful comparative insights into all parts of the government's agenda.

But any solution also requires the department to think more comprehensively about its contribution to the broader aims of Australian policy. DFAT currently defines its role as being '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 DFAT 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 and shaping the international environment.

Other agencies told the review team that they would welcome greater DFAT engagement in Canberra with the development of ideas about, and the effective implementation of, the increasing number of Australian Government policies with an international dimension.

Internal alignment

Although the department's broad vision is clear internally, its specific objectives, both immediate and longer term, are less so. During the review a number of senior managers spoke of the need for clearer articulation of departmental strategy. Staff receive little formal guidance on day-to-day decision
making. The series of reports from executive meetings and management circulars that form the department's primary means of internal communications are of variable value in clarifying strategic intent for staff.

The department's 2012 staff survey indicates that 51 per cent were satisfied with the Executive's communication to staff (a substantial improvement from 40 per cent in 2010). The Secretary has continued regular forums in which a range of key policy and administrative issues are discussed with staff.
These forums are strongly welcomed.

A more formal strategic planning framework defining DFAT's strategic intent and clarifying its immediate and longer-term objectives would help staff understand better what is expected of them as priorities change. Staff suggested, and the review team agrees, that more formal planning would provide
an opportunity and an incentive for work groups to discuss competing priorities and share and leverage resources. Such a process would have the additional advantage of helping develop the strategic thinking skills the Secretary is determined to encourage.

The review team recognises that DFAT's priorities are often not of its own making. The uncertainties of global events and the interests and initiatives of ministers are outside the department's control. But such a variable and contingent environment reinforces the importance to the department of environmental
scanning and planning. Any planning framework must, of course, be flexible and open to change, but DFAT's strong reputation for effective response needs to be matched by a greater openness to planning and prioritisation.

Leadership and change

Examples of good leadership are found throughout the department. But too pervasive a sense remains that leadership is the responsibility of the Secretary and Deputy Secretaries rather than a more broadly shared responsibility across the department, including senior Heads of Mission overseas. Stronger
and more collegial leadership, focused on the need for and direction of change, would give greater clarity to organisational direction and help effective change management.

Although DFAT has one of the highest proportions of SES staff across the APS, staff engagement in the leadership of the department was reported in the State of the Service Report 2011-12 at 10 points below the APS average.

With no major machinery of government changes for more than 25 years, DFAT has experienced less formal change than many other APS agencies. This makes it more important that its leadership understands how internally driven change management processes can improve departmental capability and might apply
in the new circumstances DFAT will encounter over the coming years.

Motivate people

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

Well placed

Motivated workforce

DFAT's staff is motivated, career-oriented and responsive. They see the department's work as varied, interesting and important. Pride in working in DFAT is well above APS agency average at 81 per cent in the State of the Service Report and 85 per cent in the DFAT staff survey. Many staff consider their
involvement with the department to be a career-long endeavour. Almost everywhere, staff seek ambitious results for customers, but as noted elsewhere in this review the definition of who customers are might need to be broadened.

The strong culture readily adapts to crises and supports a high level of internal mobility, as staff actively look for postings and new challenges in different work areas, task forces and project teams. Personal integrity is held as an important value and staff surveys are very positive on these issues.
Although the response sample was small, direct comparison with other APS agencies in the State of the Service Report shows positive outcomes except on issues related to work-life balance, wellbeing issues such as safety, and on being part of the APS.

The incentive system is weighted towards overseas postings, which are financially rewarding and offer staff greater autonomy and responsibility than do roles in Canberra.

Risk aversion

Staff and external stakeholders frequently described DFAT's culture as risk averse. Evidence pointed to the escalation of decision making, formulation of overly cautious policy advice and a regime of administrative compliance greater than in other agencies. Some staff found the level of risk aversion
demotivating.

DFAT's external risk maturity was rated by Comcover at the target level in its 2012 assessment. The department might benefit from applying rigorously those same concepts to some of its internal decision-making processes so that risk decisions are based on analysis of likelihood and consequence rather
than by history and culture.

Empowerment

There was a general consensus in the department that while staff were empowered in particular roles, such as duties at posts or in trade negotiations, in general their autonomy was much more circumscribed in Canberra. This no doubt partly reflects the different nature of work overseas, but the review
team suggests it would be worth DFAT looking more closely at work flow processes and levels of delegation in Canberra.

Develop people

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

Well placed



DFAT employs a complex mixture of staff for general policy and administrative positions in Canberra and overseas and more specialist jobs in both categories. In addition, a separate group of locally-engaged staff—foreign nationals and, in an increasing number of cases, Australian expatriates—are
employed under different national systems at its posts.

Because of its need for flexibility, the department places most weight on employing generalist staff in Australia who can move between different areas here and overseas. It has strong development and training programs, especially in core diplomatic skills and foreign languages. Learning and development
has been largely quarantined from budget cuts.

DFAT's diversity strategies are strong and appropriate, including in the modification of standardised APS-wide policies to better suit particular needs. For example, the department directly targets Indigenous student centres at universities to attract high-quality Indigenous applicants to its graduate
programs. Like all agencies, however, there will be continuing challenges to overcome in this area.

The department's staff exchanges with, and secondments to, other APS agencies, foreign ministries and external agencies have a long history and the review team encourages current efforts to develop these further, and with a wider range of partners.

Locally-engaged staff make a significant contribution to DFAT's work, providing stability and continuity at overseas posts through the cycle of postings by Australia-based officers, and offering invaluable local relationships and expertise. The department recognises the growing role of these staff.
Greater opportunities for their career development and progression will be of increasing importance in a resource-constrained world.

A self-contained universe

Senior leaders frequently referred to DFAT's low attrition as a reflection of the commitment of staff. The department's long-term attrition is below the APS average, although it has increased in recent years and is now at the APS average. But it is not at all clear that a higher attrition rate would
cause harm. In fact, more movement in and out may open DFAT to new ideas and greater opportunities for collaboration, and improve whole-of-government engagement.

A major issue for the department, in the view of the review team, is not that too few staff have external experience. More than 50 per cent of the SES arrived in DFAT from outside its graduate recruitment stream. It is the relative weight, noted by many laterally-recruited staff, that is placed on
internal experience rather than knowledge gained outside through posting and promotion processes. No matter how staff arrive, they tend to be pulled quickly into what the Secretary has described as DFAT's 'self-contained universe'.

DFAT staff also place significantly less weight than the APS average in responding to whether working in the public service 'is important to how I see myself as a person' (32 per cent compared with 41 per cent). In addition, stakeholders and available evidence point to DFAT staff at all levels being
less frequent participants in APS-wide opportunities for collaboration and engagement, such as the APS200 and other APSC forums. The department's role within the APS could be strengthened to its own benefit and that of the wider service if DFAT officers played a more active role in APS activities.

A more strategic approach to workforce planning

DFAT's current approach to staff management is highly centralised. For example, weekly staff planning meetings with the Executive is the principal means of aligning people management practices with departmental priorities.

This centralised approach allows for the easy management of a highly mobile workforce, but it reduces the scope for broader inputs and is less effective for long-term planning. The review team considers that DFAT would benefit from an approach to workforce planning and people management that ensures
long-term needs are built into recruitment plans, that learning and development efforts are directed at areas of greatest need and expectations of leadership and management roles are more clearly defined.

Staff survey results indicate variation in the quality of leadership and management across the department. The development of action plans in all work areas indicates the importance DFAT places on addressing staff concerns. The department has introduced some highly regarded leadership development opportunities
in recent years and invests in international leadership programs for selected senior leaders. Nonetheless there may be opportunities for a more planned approach to this issue. A more strategic approach to human resources management, for example, could raise the quality of performance management discussions,
focusing attention where it is most needed and improving the quality of leadership and management more generally.

DFAT has recognised a need for improved workforce planning and the review team encourages the steps being taken to add greater professional human resource management skills in staffing.

Senior managers noted that allocating staff through the centralised staffing model results in a high level of internal churn (exacerbated for DFAT compared with other APS agencies by complications of overseas posts).

Career management

DFAT's management of most staff as pools of generalist talent fits well with its goal of creating a skilled cadre of diplomats and administrators for the demands of the foreign service. But such an approach places greater weight on the role of departmental leadership in the careful management of careers
for all staff.

DFAT will always have to balance carefully its need for generalist officers who give the department agility and responsiveness with the demand for greater specialist skills in some areas. In some cases this need will best be met by dividing specialist positions from the general DFAT stream, as the
department is now doing. In other cases, this need will be met by encouraging and managing more actively the already widespread development by officers of areas of expertise—career anchors—to which they will return several times in the course of a broader career.

4.2 Strategy summary

Outcome-focused strategy

  • The department has a clear sense of the ministers' and government's foreign and trade policy priorities, and is focused on delivering outcomes.
  • The lack of an overarching strategic framework has hindered DFAT's ability to plan over the medium and longer term, and to incorporate broader government policy interests easily into its goals.
  • The line of sight from individual roles through to departmental objectives can therefore be opaque, making it more difficult for officers to know what constitutes success.

Evidence-based choices

  • DFAT has a strong information-gathering network, but the broader dissemination and easier retrieval of that information would have wide benefits inside and outside the department.
  • As part of the department's current efforts to address this problem, a comprehensive review of the current instructions on the purpose of cables and the way they are used would be useful.

Collaborate and build common purpose

  • DFAT can play a larger, helpful role in the development of policies across the APS that have, as so many now do, a broader international dimension.
  • That will require the department to understand better than it does the value it can bring to discussion of national policy issues outside the traditional national security and trade policy space.
  • At posts, DFAT works well across other agencies and presents an effective whole-of-nation perspective. There would be benefits in its bringing more of this experience to its work in Canberra.
  • The department would benefit from a more structured stakeholder engagement policy, perhaps with the formal identification of relationship managers for the most important of these.

Comments and ratings against the components of the 'strategy' dimension follow.

Outcome focused strategy

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

Development area

DFAT staff understand, and are committed to, the department's overall mission. But the department would benefit from the development of more specific strategies in policy and corporate areas to support the mission. This was a common message to the review team from inside and outside DFAT. This has
been noted by others, including through the 2012 Inquiry into Australia's Overseas Representation by the Joint Standing Committee on Foreign Affairs, Defence and Trade.

Stronger strategic planning processes would assist DFAT to better identify, describe and plan for the challenges it will face over the next few years.

Strategic alignment

DFAT's Portfolio Budget Statement and annual report set out its broad outcomes. These have changed little over the past four years.

Divisions and posts determine their own priorities annually, with the Secretary and four Deputy Secretaries. The results are set out in the Divisional Evaluation Reports and Post Evaluation Reports, which plan for the next 12 to 18 months and evaluate the previous time period. These reports are not
formally linked with each other or wrapped into a broader departmental plan. The objectives they set vary in precision and measurability.

The establishment of DFAT priorities is essentially made at the most senior levels between the Secretary and the Deputy Secretaries. The result manifests itself most clearly in decisions on staffing and resources. Staff receive advice on priorities through the Secretary's speeches, administrative circulars
and the flow of information to lower-level staff from meetings of Division Heads. Many staff told the review team they would benefit from a clearer understanding of priority-setting processes.

The task of establishing effective planning and prioritisation processes, with sufficient senior leadership input, is a challenging one in a government department exposed to contingency in world affairs and government policy directions. The review team envisages an approach that:

  • takes government direction as a starting point
  • links performance agreements from the Secretary down
  • incorporates and strengthens the existing Divisional Evaluation Report and Post Evaluation Report processes
  • gives sufficient weight to policy, service delivery and internal capability matters
  • operates over the short and medium-term, picking up matters where work is needed now to support outcomes in 18 to 36 months, as well as matters which are immediate and pressing.

The review team is conscious that a successful approach to planning in the department would rely heavily on regular discussion and debate, say every three months, rather than lengthy documentation that is stable over a three-year planning cycle.

Planning and prioritisation are also relevant to internal capability building efforts. Indeed, more explicit prioritisation processes would convey a sense of priority on internal matters as well as contribute to the shared leadership of departmental capability that is currently lacking.

Some work units, such as the Information Management and Technology Division, the Australian Passports Office and the Overseas Property Office, have strategic plans that set out clearly defined outcomes and objectives. Despite the obvious differences between these work units and the policy development
divisions, these strategic plans could be used as a model across DFAT to develop a better, more integrated whole-of-department agenda. This is already happening in the consular and public diplomacy areas.

The department has a strong sense of the ministers' and the government's priorities, and works effectively to support ministers, to advocate and implement policy and deliver services.

The Secretary indicated in his first speech to DFAT that while staff should be mindful of the political environment, they should always give true policy options and recommendations:

Our job is not to anticipate what a minister wants and to make sure that we give it or say it. We're not here to second guess political judgements. By all means we need to be sensitive to the environment in which our ministers work and in which the government works. But we should always call it as we see it.

Evidence-based choices

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

Well placed

Knowledge management

One major objective of DFAT's overseas network is to provide an information gathering capability to enable the government to understand, respond to and shape overseas developments. This information is mostly fed back to Canberra in the form of cables over the department's communications system, Secure
Australian Telecommunications and Information Network (SATIN High). The cable system ensures information is distributed more widely and more formally than is usually possible in emails or telephone calls and is centrally searchable and retrievable.

But the volume of information generated is so great, and the distribution challenges to other APS agencies (where SATIN High terminals are usually scarce and hard to access) so significant, that valuable information does not get to all who might benefit from it. The review team sees this is a major
loss for the APS. The review team encourages the Secretary in the moves already underway to examine ways of ensuring that information from DFAT is distributed and retrieved more easily. The review team suggests that, as part of this, a comprehensive review of current instructions on the purpose of cables
and the way they should be used would be useful.

The department's capacity to retrieve and access information effectively is vital in an environment of frequent staffing changes. In line with the government's policy on digital record keeping, DFAT has transferred its records to an electronic data and records management system. The importance of the
standards and business rules underpinning the system, however, are less well embedded in DFAT's culture with the result that the difficulty of locating stored information promptly was mentioned frequently to reviewers.

Increased emphasis on the importance of, and training in, practices governing digital records management, such as standard terms and naming conventions, backed by a stronger retrieval and search capacity would do much to aid user acceptance and improve system functionality overall. This should be a
high priority for DFAT in the interests of more effective knowledge management.

As the review team noted, however, knowledge management is broader than electronic systems. High levels of mobility within DFAT generate gaps in corporate knowledge within divisions, especially given the absence of staffing handovers in most cases. Better ways of identifying and drawing upon the rich
knowledge of others in the department would offer real capability advantages.

New approaches to evidence and analysis

Many stakeholders and internal interviewees told the review team they wanted more strategic thinking from DFAT. In many respects, this can be seen as a call for different analytical techniques to be employed and for different approaches to assessing evidence to be used. In particular, it would be helpful
for DFAT to explore greater use of quantitative analysis, including financial and economic analysis where relevant, more use of transparent policy options with comparative analysis between options, and greater efforts to paint a dynamic analytical picture, including trends and projections.

Together with scenario-based approaches and more focus on horizon scanning, these approaches would make more explicit to stakeholders some matters that DFAT officers take for granted, making for more inclusive foreign policy development and providing Canberra stakeholders with more obvious advantages
from their engagement with DFAT. It would also help to create more contestability, and build more ideas into the policy conversations in which the department is involved.

Given the nature of the foreign policy challenges ahead, it will be increasingly important to have a capable cadre of economists within DFAT's foreign policy team, to achieve even greater levels of cooperation and engagement with Treasury, and to reduce duplication and role ambiguity.

Such techniques and analytical approaches could usefully be employed in pursuit of internal capability issues such as workforce planning or cost reduction. It is striking that a department with such high levels of analytical capability does not seem to subject its own operations to the same level of
rigour to which it subjects policy proposals.

Learning lessons

The department provides solid examples of good practice in capturing lessons learned for future use. For example, the Crisis Management and Contingency Planning Section undertakes a lessons learned exercise following every consular crisis. This incorporates feedback from posts, members of the crisis
centre cadre, DFAT divisions, departmental executive and other government agencies. Lessons learned in the earlier unsuccessful United Nations Security Council campaign were used in the development of the strategy for the successful 2012 bid. The value of these examples and the operational changes that
resulted should encourage such work.

Collaborate and build common purpose

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

Development area

Selling DFAT's value

It is clear that at its overseas posts, DFAT plays an effective coordinating role. Drawing on the Prime Minister's directive on overseas service, the department's officers place a high value on their relationships with attached staff from other departments. But DFAT's engagement with other agencies
within Australia is seen by many APS leaders as more limited and less effective.

A number of reasons for this have been suggested, including the nature of policy development work in Canberra compared with advocacy and implementation at posts, resource pressures on the department, and a certain institutional insularity (often reinforced by long periods of time overseas) which means
the networks of contacts which other agencies around Canberra use effectively are absent.

This is a loss for DFAT and the broader public service because the strengths the department uniquely brings to the policy table—a global network with knowledge of the external environment and expertise in operating in it—will be of increasing demand across the agenda of the Australian Government.

As the Secretary has pointed out, the days when DFAT could be the sole point of contact between the Australian Government and the outside world have long passed. Most Australian Government agencies operate actively and effectively overseas, often directly with their counterparts (although it is possible
that future resource pressures will limit rather than increase external representation by other APS agencies, increasing the pressures on DFAT). But the strategic and tactical insights DFAT can bring to the agenda of others, its cross-government knowledge and its horizon-scanning capacities are not as
well used as they should be.

DFAT should approach the task of building networks of influence in Canberra with the same gusto it applies at posts and use those networks to identify carefully selected issues on which it can add value. It would also need to develop across its divisions a deeper understanding of the government's overall
agenda, an assessment of issues on which it can add value and, in many cases, a better coordinated whole-of-department position on those issues. 

Engaging with stakeholders

The great majority of non-government stakeholders were highly positive about DFAT's engagement with them. Posts were held in strong regard by business and other clients. Experience in dealing with the department in Canberra was more varied. Trade divisions were experienced and effective in dealing
with their stakeholders. But in some other cases, outsiders found it difficult to identify the right people to deal with in the department, although the experience was usually positive when connections were made. In other cases, the absence of an agreed departmental position in meetings caused problems.
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 for the most important of these.

Portfolio agencies

Because other agencies in the portfolio operate so closely with DFAT overseas, smooth information flows, a better understanding of priorities and respectful relationships at all levels are essential to maximising the benefits to be obtained from the government's overseas operations.

4.3 Delivery summary

Innovative delivery

  • Evidence of innovation and continuous improvement is found in a number of DFAT's service processes, particularly passports, property and consular services.
  • However innovation and experimentation more widely can be impeded by a culture of risk aversion. More should be done to encourage innovation in the department and to share results.

Plan, resource and prioritise

  • Prioritisation needs to be more transparent and coordinated across divisions, and more explicitly linked to strategy discussions, to generate shared understanding of relative trade-offs.
  • Central control of resources provides DFAT with the ability to manage a highly mobile workforce but limits the ability of divisions and posts to adjust resources to reflect their own requirements.
  • DFAT's business culture needs to move further away from compliance towards strategic financial management.

Shared commitment and sound delivery models

  • DFAT delivers many services effectively but the development of strategic policy is more ad hoc.
  • The overseas network functions effectively, particularly in managing crises and maintaining bilateral and multilateral relationships.
  • Overseas posts need to be drawn more directly into the policy process. This will require better information flow between Canberra and posts.
  • There seems to be a sharp difference in the minds of departmental officers between day-to-day briefing and strategic policy. The department might usefully reinforce in its training of officers the extent to which policy development is embedded in their daily activities.

Manage performance

  • Performance information is used to manage service delivery in some functional areas. This reporting should be available at departmental level.
  • The Post Evaluation Report and Division Evaluation Report processes would benefit from having more precise performance and success measures.
  • DFAT needs people with specialist skills in performance evaluation, who know the right questions to ask.

Comments and ratings against the components of the 'delivery' dimension follow.

Innovative delivery

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

Well placed



DFAT is responsible for the delivery of a wide range of outcomes. These include advice on foreign and trade policy to its own ministers; advocacy for, and implementation of, those policies in Australia and overseas; assistance to other ministers and APS agencies in their international activities;
and support for the activities of Australians abroad. It also delivers the infrastructure that make these things possible: the overseas network, including property and common services to Australian agencies represented overseas; the international communications system; security at overseas posts; and
the provision of consular services and passports to Australians.

Strong examples of innovation can be found around the department and at its overseas posts. Nevertheless, an innate caution in the department's culture and the risk aversion noted by many departmental officers makes innovation in other delivery areas rarer.

The many DFAT officers who described the department's culture as risk-averse to the review team seemed to apply different meanings to the term: over-regulation; reluctance to take decisions; and policy conservatism. The overseas network is mostly excluded from this criticism—a willingness to
take risks seems greater outside Canberra. It might not be surprising that risks are diminished with distance from the centre, but the effect is to encourage a wider range of innovation at posts than in Canberra.

Innovation and continuous improvement in Canberra is most evident in the delivery of passport as well as property and consular services—for example, in the Australian Passports Office's new facial recognition capability.

An appropriate approach to innovation necessarily involves mature and sophisticated engagement with risk, and therefore a well-developed risk management approach. The current risk-averse culture does not result in zero risk. It reduces the likelihood of some risks, but leaves others unmanaged and unaddressed.
For example, the lack of an articulated approach to innovation in policy development may be one reason stakeholders commented on DFAT's caution in adding new ideas to complex policy debates. A successful innovation culture in the department would also see the potential for innovation in all areas of
work, ranging from management of property to engagement with Asia. Innovation is not simply about new technologies.

Experimentation needs to be encouraged more widely in delivering the department's less tangible services, including policy advice to government and management of external relationships. Innovative ideas need to be evaluated, rewarded and systematically carried throughout DFAT. This objective is linked
as well to the need for better capability in knowledge management, addressed earlier in the report.

Opportunities to learn from each other

The department attracts and retains exceptional people, but greater connections between staff and their colleagues from other APS agencies and the broader business community would offer exposure to new ways of doing things and better understanding of how to operate more effectively across government.
As outlined in the leadership discussion, greater staff movement in and out of DFAT would bring with it new ideas and different perspectives, strengthening innovation capability.

Greater demands should be placed on staff to evaluate their activities and processes against outside benchmarks and to look for more effective ways of doing things. The department's success in responding to rapidly increasing demand for consular services demonstrates that it is capable of thinking
radically about its delivery models.

Plan, resource and prioritise

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

Development area



In circumstances of continuing constraint, the Secretary's injunction to do less with less is widely appreciated. But such an approach will require a much clearer and more formally developed prioritisation process than DFAT currently has. The review team encourages the Secretary's efforts in this
area.

Transparent and strategic prioritisation

Clearer, more transparent, cross-department strategies are needed to link priorities to the resources required to achieve them.

Under DFAT's established system for planning and prioritisation—the Divisional Evaluation Report and Post Evaluation Report processes—divisions and posts agree on their priorities and full-time equivalent (FTE) allocation for the forthcoming year with the Executive, as part of an annual
performance review. The agreed priorities are not weighted, nor explicitly linked with the FTE effort needed to deliver them. Instead the FTE allocation is based on a roll-over figure from previous years, adjusted to reflect changes resulting from new policy proposals or DFAT's internal budget allocation
review process.

There is room for improvement in three key areas:

  1. Divisions and posts develop their priorities in isolation and at different times. For example, divisional priorities are not formally aligned with post priorities. Better peer engagement around establishing priorities would improve the transparency of decisions on resource allocation and generate shared
    understanding of the links between each division's priorities and the department's desired outcomes. Clearer departmental priorities would allow lower-level staff to coordinate activities and make trade-offs with greater confidence.
  2. Divisional and Post Evaluation Report priorities are not formally adjusted throughout the year to reflect change. The centrally managed staffing process is used to move staff to vacancies overseas and in Canberra in response to priorities identified through weekly staff planning meetings with the Executive.
    Greater transparency would make the links between changing priorities and the opportunity costs of staffing movements more explicit.
  3. Divisional and Post Evaluation Reports focus on short-term priorities and content outcomes, and do not seem to include capability, management and leadership objectives.

Central control over resources

DFAT's principal lever to align resources with strategic priorities is the centrally-managed staffing process. With the lion's share of the budget spent on people and rent, both managed centrally, divisions and posts have limited ability to adjust resourcing to reflect their priorities. Transparent
alignment of departmental priorities with resources would make responsibilities and accountabilities clearer.

Moving from compliance to strategic financial management

The department instituted a rigorous compliance management regime a number of years ago and the strong compliance culture that resulted is still evident in many processes despite more recent recognition of the importance of greater use of risk management. The completion of monthly Certificates of Compliance,
by comparison to annually or twice annually in most other departments, and detailed acquittal processes for travel are examples where more risk management could be considered with a saving of staff resources. 

Some initial moves have been made to reconsider and lessen the control framework and the review team encourages further work in this direction. The SAP system upgrade, scheduled to be in place in the next 18 months, will bring greater automation of financial auditing, including an expense management
system and a travel management system. The benefits of the upgrade, combined with a well-planned regime of spot audits, should provide the confidence to move to a less compliance-based framework.

The centralised control and funding of Australia-based staffing means the breadth of senior officer responsibility and accountability for financial management, in Canberra and at overseas posts, is far less than in other government departments. This, perhaps understandably, has meant that senior staff
often give financial management a lower priority than their counterparts elsewhere in government, leading to concerns that they have insufficient skills in this area. Nevertheless, as is noted by DFAT in its self-assessment, work units are frustrated by a perceived lack of transparency in decision making
about the allocation of resources. Greater visibility of budgets across the department, as well as increased understanding of budget management, would be of advantage to the officers involved, as well as to the department overall, especially in an environment of scarce resources where the need for prioritisation
will be increasingly important.

Shared commitment and sound delivery models

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

Well placed

It is clear from the review team's own observations, and the comments of stakeholders, that the overseas network functions effectively, particularly in managing crises and nurturing bilateral and multilateral relationships.

The review team saw outstanding examples of missions coordinating whole-of-government operations in ways that would be 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 policy development and ministerial support work. This should be encouraged but its effectiveness depends on continuing improvements to the overseas communications network and improved flow of information between Canberra and posts.

DFAT has a problem, however, in ensuring that the knowledge it draws from the overseas network reaches others in the APS who would benefit from it. It needs to take seriously its responsibility not just to report information but to ensure its effective dissemination throughout Canberra. The Secretary
is taking important steps in that direction, which the review team commends.

Delivering strategic policy

The department advocates existing policy effectively and has had some major successes in delivering policy outcomes like the expansion of the East Asia Summit and election to the United Nations Security Council. It provides its ministers with accurate and timely support and briefing on current developments.

Nevertheless, DFAT is seen by some important stakeholders as being less focused on the development of strategic policy. Departmental officers often pointed to the pressures of day-to-day delivery as one reason for this, suggesting a distance in their minds between day-to-day briefing and strategic
policy. DFAT might usefully reinforce in its training of officers the extent to which policy development is embedded in daily activities.

Overseas operations

DFAT's delivery model overseas is well adapted to the challenges of operating in many countries with differing systems and circumstances. The review team did, however, identify some evidence of duplication in overseas operations that warrants further investigation given ongoing fiscal challenges. Within
DFAT, for example, multiple ICT systems are deployed to manage locally-engaged staff. Between DFAT, Austrade and the Australian Agency for International Development, there may be opportunities for better cooperation on employment conditions and systems, a matter that is receiving some attention. Finally,
as DFAT's own ICT capabilities improve, there may be opportunities to reduce duplication in ICT infrastructure, commercial providers and support arrangements.

Structure and governance

DFAT's structure has a high proportion of senior officers and a more centralised corporate culture than is normal in the APS. Sections and branches are often very small, especially as they frequently carry gaps. One effect, reinforced by the risk aversion of which many spoke, is to push decision making
up the line.

More generally, DFAT's governance structures appear to reflect history and regulatory requirements, rather than an approach which would better reflect the unique circumstances and challenges of the department. There would be value in DFAT's leadership thinking through which issues need discussion,
and in what forums, and what signals such decisions send to the department about the aspects of leadership regarded as important.

In general, governance machinery may need rethinking—corporate leadership needs to be more widely shared and ways need to be found of engaging the senior members in the overseas network more directly in the department's collective leadership.

Addressing ICT underinvestment

As has been recognised by the department, ICT capability has critical implications for the delivery of its core business. A lack of understanding in past years of the role a professional competency can play in this area, and consequent underinvestment in its network, has resulted in significant shortcomings
that DFAT is now moving to address. ICT presents the department with a major challenge, particularly in view of the varying levels of security and the remote access required to serve a geographically dispersed network, deal with current bandwidth deficiencies, and deal with the productivity costs resulting
from a slow and unreliable network.

DFAT now employs a professional Chief Information Officer and is moving to greater use of specialised ICT capability in Canberra and at overseas posts. It has a detailed ICT forward planning process and is working to introduce proper back-up to ensure business continuity. In addition, specific funding
in the recent Budget for the new International Communications Network will enable the most pressing deficiencies to be addressed and will help alleviate the major problem of bandwidth. But such significant change takes time and continuing focus, as well as ongoing maintenance. These should remain priorities.

Manage performance

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

 Development area



Delivering to targets

DFAT manages and tracks the performance of its main customer-facing delivery functions well. The divisions responsible for passport, property, ICT and, to a lesser extent, consular services, have clear performance targets linked to strategic outcomes. Other areas of the department rely on the Portfolio
Budget Statement to set performance targets and the annual report to outline achievement against them.

Measuring performance is a challenge for all policy agencies, but the review team considers that clearer and more measurable objectives can be set realistically for posts and policy divisions as well.

High-level performance information

The main service delivery divisions collect and analyse performance information, using scorecards and dashboards to track and manage performance against targets. When such performance data is brought together, for example in the ICT scorecard, staff throughout the delivery chain can monitor the impact
of their work.

It is not clear that DFAT's leaders receive the performance information they need to effectively discharge all facets of their responsibilities. In addition, the information they receive appears to be somewhat ad hoc and generated from the efforts of individual SES leaders.

In part, this is a result of underdeveloped governance structures discussed in the previous section. There would be value in a considered, top-down approach to thinking through what performance information is needed, alongside further development of governance. The Executive should expect, and receive,
high-quality data covering operational performance, policy development, people matters and other enabling services.

Driving performance

The usefulness of the Divisional Evaluation Report and Post Evaluation Report processes are constrained by a relatively short-term focus and absence of measurable objectives. This culminates in a conversation described by some staff as too polite to send the right incentives. More comprehensive analysis
of performance in these evaluation reports, shared more openly, would help spread new ideas and assist divisions to measure their own comparative performance.

Building an evaluation capability

DFAT's compliance culture and its Strategic Audit Plan have delivered strong audit results for financial management. The Australian National Audit Office has identified the Australian Passports Office as a pocket of performance excellence. The department has a more limited capability for performance
evaluation of policy areas and would benefit from more specialist expertise—whether internal or external—in this area.

Identifying critical risks

The department needs to focus on some new risks. The Australian National Audit Office has noted consistent problems relating to the employment of locally-engaged staff, reflecting the difficulties of operating under both Australian and local laws and business requirements. New Australian workplace
safety legislation also presents DFAT with significant challenges, given the difficulty and diversity of many of its workplaces. Both cases reinforce the usefulness of drawing specialist skills into key corporate functions.