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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

 Strong

  • Outstanding capability 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 Regional Australia, Local Government, Arts and Sport's capability is outlined in the tables below.

Leadership
Capability Rating
Set direction

Well placed

Motivate people

 Development area

Develop people

 Development area

Strategy
Capability Rating
Outcome-focused strategy

 Development area

Evidence-based choices

 Well placed

Collaborate and build common purpose

 Well placed

Delivery
Capability Rating
Innovative delivery

 Strong

Plan, resource and prioritise

 Well placed

Shared commitment and sound delivery models

 Well placed

Manage performance

 Well placed

4.1 Leadership summary

Set direction

  • The SES works well as a united group, with a real sense of collaboration and common purpose.
  • The Secretary's leadership is highly regarded, both internally and externally.
  • The Secretary and the Executive Board have succeeded in integrating a disparate range of functions into a single department with a coherent strategic narrative.
  • The Executive Board has demonstrated an ability and willingness to make tough decisions.
  • The department may benefit from further articulation of its strategic intent to stakeholders.
  • The Executive Board has acknowledged and responded to challenges related to internal communications. There is still room for significant improvement.

Motivate people

  • Staff exhibit commendable levels of confidence, conviction and commitment to their work.
  • Some staff appreciate the opportunities afforded by this department to perform a diverse range of challenging work and are encouraged by seeing how they influence the delivery of government outcomes.
  • There is some evidence that non-SES staff are under considerable pressure and, while committed to the purpose of DRALGAS, are showing signs of low morale.
  • A key challenge will be to maintain current levels of commitment and enthusiasm through uncertainty of the department's future and any resource tightening.

Develop people

  • DRALGAS faces a range of workforce challenges related to its broad remit and the relevant skills and expertise it requires, exhibiting a heavy reliance on some staff, a lack of succession planning options and a need for greater staff development.
  • The department has a lack of processes to ensure corporate knowledge is adequately transferred, which may affect relationships and business continuity.
  • Policy development expertise is variable and resides within a few key senior staff.
  • DRALGAS is cognisant of most of its workforce challenges and has taken steps to plan for, and develop, its capability in this area.
  • The department's performance management framework is comprehensive, although it would benefit from better consistency of application across divisions, including a commitment to specific and tailored key performance indicators, to ensure accountability.

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

Set direction

Guidance Questions
  1. 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?
  2. Does the leadership work effectively in a culture of teamwork, including working across internal boundaries, seeking out internal expertise, skills and experience?
  3. Does the leadership take tough decisions, see these through and show commitment to continuous improvement of delivery outcomes?
  4. Does the leadership lead and manage change effectively, addressing and overcoming resistance when it occurs?
Rating

 Well placed

The Secretary's leadership is highly regarded internally and externally. The Secretary has created a highly collaborative SES culture, through regular all-SES meetings, and other avenues, on which the department prides itself. The SES works well as a united group, with a real sense of shared commitment.

The leadership team has taken great efforts to welcome and integrate all areas of DRALGAS, which includes the creation of a single, high-level, mission statement 'Building a stronger, creative and liveable Australia' that encompasses what were previously disparate areas of government. The department's regional Australia, local government and arts and sports functions have come together under the banner of empowering communities to achieve social, cultural, sporting and economic dividends.

There are some disadvantages to relying on the mission statement alone and DRALGAS may need to define more clearly the purpose of each of its key areas, with additional subsidiary strategic purpose statements to embrace the regional, arts, sports, local government and territories functions. This additional detail would help to align the department's internal focus, be more inclusive of partner interests, and inform partner perceptions of the department's intent. While some staff can articulate and clearly identify with the department's mission, others feel it lacks meaning, is too broad and that there is a notable absence of a reference to regions.

Many external sources were positive about the department's regional aims or priorities, however some perceive DRALGAS to only be reactive to emerging issues. Further articulation of the departmental mission and strategic intent may reinforce the department's purpose in government and the outcomes it strives to achieve. The release of the foreshadowed regional policy statement may be particularly helpful in this regard.

There may be some benefit in DRALGAS considering the addition of subsidiary strategic purpose statements to provide a clearer and more practical sense of purpose and to improve the current line-of-sight for staff to see how their work is contributing to departmental goals.

Since the department's inception, the Executive Board has demonstrated its ability and willingness to make tough decisions. Examples range from the department's restructures to its rounds of downsizing. Some evidence suggests that it has been difficult for a number of these decisions to be followed through in the context of reducing activities, and there may come a point where DRALGAS is asked to deliver beyond its capacity.

In response to staff survey feedback, there have been improvements to internal communication mechanisms, such as the Secretary's regular all-SES meetings. DRALGAS is also formalising an internal communication strategy, which aims to strengthen communication between the SES and other levels. Currently, communication from the SES to the rest of the organisation relies upon regular written communications (for example the Secretary's weekly emails) and a cascading model from SES to their staff. Feedback suggests that this model is more successful in some divisions than in others. These observations are supported by the responses to the question in the 2012 State of the Service employee census—'Internal communication within my agency is effective'—where 63% of the SES answered in the affirmative, only 28% of EL respondents and 34% of APS respondents (DRALGAS average 32%; APS-wide average 39%).

Motivate people

Guidance Questions
  1. 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?
  2. Are the leadership visible, outward-looking role models communicating effectively and inspiring the respect, trust, loyalty and confidence of staff and stakeholders?
  3. Does the leadership display integrity, confidence and self-awareness in its engagement with staff and stakeholders, actively encouraging, listening to and acting on feedback?
  4. 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

Development area

The confidence, conviction and commitment of the staff within DRALGAS are evident. Despite experiencing many changes and increasing work pressures, staff dedication remains high, a result of the workforce's passion to achieve positive outcomes for communities. The Secretary is an exemplar of a way of relating to others, which is received very positively by those who come in contact with the department. Staff in DRALGAS seek to emulate the Secretary's approach, which encompasses the elements of respectfulness, integrity, openness, fairness, equal relationships, collaboration and meeting the department's mission.

All areas of DRALGAS are unified in their desire to deliver the results intended by their Ministers and the Government's agenda. Separately and, as a result of their history, both the Office for the Arts and the Office for Sport have strong individual identities embodied by staff. This does not seem to be at the expense of, or preclude, the development of a shared departmental identity. While it is possible to craft persuasive rationales to locate these offices in other departments, staff in these areas can see how their work has the ability to strengthen regional Australia. Staff appreciate being involved in a department where they have the opportunity to help shape departmental narrative while delivering positive outcomes together on behalf of the Government.

Some staff appreciate the opportunity to perform a diverse range of challenging work and are encouraged by seeing how they influence the delivery of government outcomes. A challenge will be to maintain the current level of enthusiasm with tightening resources and staff uncertainty about the department's future. As departmental systems and processes mature, human resources metrics may be able to assist in identifying particular areas or patterns of concern.

While there is a strong sense of commitment across all levels within DRALGAS, some employees below the SES level have suggested that morale is diminishing, a result of the expectation to work longer, harder and under significant pressure to maintain the current level of output, with little opportunity for respite. This presents a significant risk for sustained productivity in the longer term. While some SES are concerned about morale, others consider that staff motivation and morale is generally high in most divisions and that the workforce, having previously and consistently demonstrated resilience, has a continued capacity to deliver priority outputs. Both internal comments and responses to the 2012 State of the Service census show that there is a significant gap between perceptions of SES and other staff. Some examples include:

  APS-wide average % DRALGAS average % DRALGAS APS 1-6 % DRALGAS EL % DRALGAS SES%
My agency motivates me to help it achieve its objectives 47 35 36 30 63
In general, employees feel they are valued for their contribution 45 35 35 31 75
In my agency, senior leaders engage with staff on how to respond to future challenges 40 37 38 31 75
In my agency, communication between senior leaders and other employees is effective 38 37 37 33 88

Given this disparity, urgent remedial action is required, including to identify areas where these problems are most acute.

The Executive Board and enabling areas of DRALGAS actively seek feedback from staff through staff surveys and informal channels, and respond to this feedback. This has been demonstrated by their willingness to address the issues raised by SES Band 1s regarding information flow from the Executive, and was rectified by introducing regular stand-up sessions with the Secretary. More work, however, is needed to improve communication to non-SES employees. The corporate area has also demonstrated its commitment to improving services by changing the performance management process to make managers more accountable for outcomes and increase transparency for staff.

Successes and achievements are celebrated in various ways. Some examples include the Secretary's regular praise for positive outcomes in formal and informal communications with all staff, managers acknowledging good practice in their staff in a timely manner, the recent annual report highlighting many personal and team achievements, and the Australia Day awards. There is potential for more to be done in this regard.

Develop people

Guidance Questions
  1. 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?
  2. 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?
  3. 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?
  4. How do you plan to fill key capability gaps in the organisation and in the delivery system?
Rating

Development area

The strategic plan notes the department's continuing focus on staff development to meet its current and future business needs. DRALGAS has acted in response to the learning and development skills gaps identified through its staff survey and is rolling out its Learning and Development Framework, targeted at developing course offerings across leadership, core public service and technical skills.

DRALGAS currently faces a range of workforce challenges. Its broad remit requires both strong generalist staff skills and deep expertise; these skills are variable across the department with key expertise often residing with key senior staff. Accordingly, DRALGAS has both to increase its generalist policy skills to a high level and to increase the number of staff with high level of knowledge of specific areas.

Staff received through machinery of government changes, or moved internally between restructured areas, do not always have the appropriate skill sets for their current roles. The presence of staff in regional areas is a positive, but with the higher expectations of the department's regional engagement these positions are critical to future capability. In addition, the department is partially managing a reduction in its budget through careful monitoring, at the highest level, of recruitment activities, and an overall reduction in staff numbers, which has required existing staff to be across a broader range of work.

The result has been a heavy reliance on staff with key expertise, a lack of succession planning options, and the need for greater staff development. DRALGAS aspires to manage these challenges through greater emphasis on on-the-job training, centralisation of learning and development functions, significant restructures and strategic staff movements.

Internal comments noted that staff reductions, restructures and lack of developed knowledge management systems have hampered the department's ability to seamlessly transfer corporate knowledge and have created significant key staff risks. The development of appropriate knowledge and client management processes, including warm handover to successors, may assist DRALGAS to mitigate these risks and support business continuity, stakeholder management and continuous improvement initiatives.

The department's performance management framework is comprehensive, with performance ratings based upon behaviour and outcomes. It is intended that individual performance agreements maintain a clear line-of-sight to the relevant divisional plan and strategic plan, but it is not evident that all staff have found this to be the case. There is evidence that the effectiveness of performance management was affected by the variable application of the framework across different work areas and by the quality of communication with staff generally. Results from the State of the Service employee census 2012 indicate more work is needed to consistently embed individual performance management processes. For example, the DRALGAS response to the question 'To what extent do you agree that your most recent performance review will help you improve your performance?' was 40% positive (APS average 48%), and there may be a need for more support for supervisors, particularly those at lower levels.

The department's corporate area has recently developed a new performance management process. The next step will be to ensure this change is appropriately managed and the new process is uniformly applied across DRALGAS.

Internal comments often mentioned the strength DRALGAS gains from having a mix of staff with diverse backgrounds (from central agencies, federal, state and private sector). This has helped to bring different perspectives to the department and helped to build and maintain relationships with various stakeholder groups.

Internal comments suggested that EL1 capability needs to be bolstered across the board, as skill gaps at this level have a significant flow-on impact on work undertaken by EL2 and SES staff. There were also frequent comments about a gap in internal staff who are ready to transition into EL2 roles.

DRALGAS is keenly aware of its need to do more to develop and plan for its future workforce. As such, the Executive Board has moved forward its schedule to consider the development of a workforce plan. The workforce plan will be a critical document to help the department consider and mitigate its workforce capability risks.

The department recognises the need for succession planning, talent management and other elements of effective workforce planning and has already initiated action to put the appropriate building blocks in place to address this challenge. These initiatives are in their infancy but, if implemented effectively, DRALGAS will be well placed to improve its capability in this area.

4.2 Strategy summary

Outcome-focused strategy

  • The department's Strategic Plan 2012–15 reflects the needs of a maturing organisation and links enterprise strategies with work areas.
  • Development of separate regional, arts, sports, local government and territories subsidiary strategic purpose statements—to sit beneath the broad, inclusive departmental mission statement—could help foster stronger internal alignment with outcomes and provide greater relevance to key customers/clients.
  • Discretionary branch and section planning across DRALGAS may inhibit line-of-sight. The department may wish to consider formalising branch planning processes.
  • Some corporate strategies are works in progress or not in place. DRALGAS should continue to develop and strengthen these strategies to assist with day-to-day operations. The workforce plan and customer service strategies should be given priority.
  • Some measures of success are not highly specific or easily measurable. The process for measuring these could be strengthened or made more transparent as it is unclear and appears subjective.

Evidence-based choices

  • DRALGAS has articulated a clear commitment to develop a solid evidence-base and a strong analytical platform to support its policy arguments.
  • Stakeholders have complimented the department's use of external research results and data sources, and indicated DRALGAS has improved in this area, but needs to continue to develop its capability.
  • The department has supported the development of policy advice through other areas, for example by funding the Regional Australia Institute.
  • DRALGAS has established the Regional Economics and Infrastructure Policy branch and internal Economic Evidence Committee to lead the department's internal approach to gathering and using data.
  • DRALGAS is aware it needs to expand its pool of policy expertise and is focused on developing capability through on-the-job training and a new internal policy training course.

Collaborate and build common purpose

  • The department has built impressive capability to engage and work with its partners across jurisdictions, particularly in relation to regional matters. Its approach has been described by some external sources as genuine, refreshing and supportive.
  • DRALGAS is vigorous in pursuing its Ministers' policy objectives, particularly with respect to regional policy issues, but needs to improve capability to be considered fully effective in all Australian Government forums.
  • Relationships with portfolio agencies are open, trusting and productive, although there is an appetite for more information about whole-of-government developments.
  • The department's service delivery model is strong, albeit informal, and modelled on the Secretary's behaviour. To retain this strength, DRALGAS needs to define its customers and formalise its service delivery model.
  • The department has not yet succeeded in gaining unqualified acceptance across government of its whole-of-government policy role or of the effectiveness of its execution of that role.

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

Outcome-focused strategy

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

 Development area

The department's Strategic Plan 2012–15 was released on 14 September 2012. This plan evolved from the agency's inaugural Strategic Plan 2011–12 to reflect the needs of a maturing organisation, encompass additional functions transferred into DRALGAS through a machinery of government change, and to more clearly link enterprise strategies with functional areas.

The current strategic plan outlines common aspects that encompass all of the department's work, with a broad purpose statement that links its work across arts, sports, territories, local government, and regional policy areas. While annual divisional plans provide a further level of aligned strategic detail, with key deliverables included in attached action plans, there remains a gap between divisional plans and the department's mission statement. The development of separate regional, arts, sports, local government and territories strategic purpose statements, to link and cascade the department's current mission statement, could help to foster stronger internal alignment with outcomes and provide key customers/clients with greater relevance. The release of the foreshadowed regional and cultural policy statements may be particularly helpful in this regard.

A clear line-of-sight is intended between individual staff roles and both the divisional and strategic plans. Managers have discretion to develop branch and/or section plans, which are only used in some areas. The addition of mandatory branch plans would further assist line-of-sight, by providing staff with greater detail of how their work contributes to divisional and ultimately departmental goals.

Corporate strategies (such as, workforce planning, customer service delivery, internal communication) are in some instances immature, a work in progress or not in place. DRALGAS is systematically working towards delivering these strategies to assist with day-to-day operations.

Measures of success in the strategic plan are high-level and linked to Portfolio Budget Statement outcomes (which are also included in the strategic plan). Similar to the department's key performance indicators, some measures of success are not highly specific or easily measurable; the process for measuring these is unclear and appears subjective. DRALGAS could enhance its ability to accurately measure and report on outcomes through making its process for tracking measures of success more specific and transparent where possible.

The department's current strategic plan notes the importance of 'exemplary service delivery for our customers'. The review team notes that while many of these are informally in place, DRALGAS has yet to define its customer service delivery strategies. These may describe the way it engages with its various classes of customers, one of which is likely to be its partners. The department's approach to partner engagement is widely regarded as a strength, and it needs to be formalised to ensure it continues.

The agency works closely with its Ministers to identify and provide them with updates on priority areas and relevant strategies, including resource allocation. DRALGAS is aware of its Ministers' focus and is responsive to their agendas.

Evidence-based choices

Guidance Questions
  1. 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?
  2. Does the organisation ensure that vision and strategy are informed by sound use of timely evidence and analysis?
  3. Does the organisation identify future trends, plan for them and choose among the range of options available?
  4. Does the organisation evaluate and measure outcomes and ensure that lessons learned are fed back through the strategy process?
Rating

Well placed

DRALGAS has articulated a clear commitment in its strategic plan to developing a solid evidence-base and strong analytical platform to support policy arguments. Stakeholders noted that the department has improved its capability to support policy proposals with evidence, though these and internal comments noted there is still some work to be done.

The department's Regional Economics and Infrastructure Policy branch aims to support evidence-based policy. The branch's main role is to assist internal clients to identify, access and use external information to support policy development and decision making. It has also developed and published some initial datasets based on Australian Bureau of Statistics data for the myregion website.

Some external stakeholders complimented the department's approach to utilising external organisations to provide research to assist in internal policy development. Stakeholders also noted that the department's data analysis varies greatly depending on the staff involved and can range from a strength to an area for improvement.

A number of internal comments noted that the Regional Economics and Infrastructure Policy branch's resources are not sufficient to meet all of the department's policy needs. This matter has been explicitly recognised as the brief for the branch and includes the provision of advice and support for other parts of DRALGAS to engage specialist external organisations to meet specific evidence requirements. To further address these concerns, the department has recently formed an internal Economic Evidence Committee to help coordinate data use across the agency and to support consistent use. Additionally, DRALGAS has funded the establishment of the Regional Australia Institute to provide an independent source of regional information and policy advice.

Externally, DRALGAS has provided its perspectives into a range of notable whole-of-government policies, across arts, sports and regional areas. External stakeholders have commented that the quality of the department's input can be a product of individuals' ability to advise on policy and influence others, and the time they are able to dedicate to the particular task. Some external comments noted that DRALGAS may be able to have more influence over other agencies' Cabinet submissions if it engaged earlier in the development of the Cabinet submission.

It was generally noted that the department has a small pool of quality policy advisers. The department is aware of its need to expand this pool and is focused on developing staff policy expertise through on-the-job training and a new internal policy training course. Collaboration with other federal government agencies, to identify how they develop policy skills, may help the department to identify additional policy development approaches.

A number of government agencies suggested that DRALGAS may be better placed, with existing resources, to narrow its focus to a smaller number of key policy areas in order to achieve a greater level of impact. Although this approach may help the department to sharpen its focus, such narrowing does not appear to be consistent with Ministers' intentions, where they are both interested in a broad and inclusive policy program.

DRALGAS has strongly promoted local knowledge at the regional level to improve service delivery and set priorities for the relevant government expenditure. At the Ministers' request, the department is focused on strengthening internal policy linkages across arts, sports and regional policy areas.

Internal comment noted that the department's short and long-term policy development is balanced, though long-term strategies are still being developed. In the absence of knowledge of long-term policy directions, external stakeholders regularly questioned if DRALGAS is too focused on short-term policy. More targeted stakeholder engagement from the department regarding its policy priorities and commitment to long-term policy development may help clarify its position externally.

DRALGAS has been responsive to adapt its approach based on feedback—examples include changes that arose from audit findings and staff survey results. Some internal comments have mentioned that the SES communicates the importance of learning lessons to ensure that work approaches continuously improve.

Collaborate and build common purpose

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

Well placed

External comments have noted the department's skill in being able to engage and work with stakeholders across government jurisdictions (federal, state, local). Stakeholders are starting to engage proactively with DRALGAS, as evidenced by the requests by the governments of New South Wales and Victoria for the department's representation at their regional development forums, and other examples of collaborative work in the Pilbara, Tasmania and North Queensland.

External comments noted that the department's approach to collaboration is refreshing, genuine and supportive, which is crucial given its wide remit, similar to a central agency without the additional authority. The exception to this was the territories function, where a number of stakeholders requested greater collaboration and responsiveness.

Most of the department's stakeholder relationships are maturing and becoming more productive. A number of other departments said that while DRALGAS's role is gaining greater acceptance from other departments, some hold the view that it is stepping into the policy responsibility areas of others and that the execution of the whole-of-government role is not yet fully effective. These views will likely change over time provided DRALGAS is able to demonstrate its policy value-add and more clearly and consistently explain its purpose in these policy spaces. There were external comments that DRALGAS has improved the quality of its Cabinet submissions and, on occasion, brings a fresh perspective to discussions in inter-departmental committees.

Federal stakeholders indicated the department's presence in the whole-of-government space is noticeable. This referred to its role in the Cabinet submission process, relevant inter-departmental committees and a range of other relevant forums. DRALGAS is vigorous in pursuing its Ministers' policy objectives, particularly with respect to regional policy issues, but needs to improve capability to be considered fully effective in all Australian Government forums. Some noted that DRALGAS may benefit from taking a more proactive, though still considered and collaborative, approach to convey its policy value. This may help to gain traction, deliver results and increase perceptions of the agency as a key whole-of-government player.

The Office for the Arts and the Office for Sport have mature, collaborative and trusting relationships with stakeholders. These relationships have developed over a long period and stakeholders noted that these offices usually plan and engage early with them.

DRALGAS is aware that it needs a better definition of the role of its regional employees. When this is completed there will need to be a capability assessment of staff in these areas against the new criteria. More communication may also be needed with areas that are not the focus of a current place-based transition initiative, where engagement with the department is less regular. This will help to ensure that value, relationships and perceptions are maintained.

Relationships with portfolio agencies are described as open, trusting and productive. Portfolio agencies all commented that they can contact the Secretary when they need to and meet quarterly as a group. Portfolio agencies broadly commented that they would welcome the opportunity to provide greater input into policy and program development processes, and that their involvement would lead to better outcomes. They also commented that they would like to receive a broader pipeline of information about developments in the whole-of-government space, to fill the information void between their quarterly meetings.

The review team observed that the relationship between the portfolio Secretary and the portfolio agencies is not clearly defined. Improved clarity would be beneficial, particularly on when it is appropriate for the Secretary to be clearer with portfolio agencies about pursuing government policy (for example, regionalisation and setting key performance indicators). The review team notes and supports the proposals contained in the Department of Finance and Deregulation's review, Is Less More? Towards Better Commonwealth Performance. This report recommends that 'financial framework legislation could be updated to better support the role of departmental secretaries in assisting responsible ministers with the oversight of portfolio entities'.

The Ministers are highly engaged in the department's work and drive it to achieve greater outcomes, which often touch on many areas of government. The Secretary works closely with the Ministers to identify priorities and manage expectations. DRALGAS has protocols for managing requests from the Ministers' Offices, however, internal comments noted that some areas of the department manage this better than others, and some further work may be needed.

4.3 Delivery summary

Innovative delivery

  • There is evidence of widespread innovation across the department's activities.
  • Creativity and innovation across disparate areas of DRALGAS have been stimulated through staff coming together from a range of agencies, bringing diverse perspectives.
  • The Executive Board is currently driving a concerted effort to put in place a range of formal structures and systems to support the flow of innovative ideas into the future.

Plan, resource and prioritise

  • The department has demonstrated a capacity to be agile and use its resources flexibly and has transferred some program delivery functions to portfolio agencies to support this.
  • DRALGAS is becoming more strategic in its support of its ministers and their offices, with policy areas becoming more discerning about their policy interventions to have the greatest affect with available resources.
  • The financial management and budgeting behaviours at departmental level appear strong and are well regarded externally.
  • It has been widely stated that output has not significantly diminished despite substantial resource cuts. DRALGAS needs to ensure that this represents genuine efficiency gains and not just staff working longer hours.

Shared commitment and sound delivery models

  • DRALGAS employs a range of delivery models that reflect the needs of diverse business areas. Some are well defined, while others are less structured.
  • While, appropriately, a variety of delivery models has developed over time, these are informal and supported by the culture of the department. To ensure sustainability, a formalised service delivery strategy is required.
  • The lack of an interoperable ICT platform has impacted on the efficiency of management operations, but does not appear to be impacting on the department's customer-facing activities.

Manage performance

  • DRALGAS has the basis of a performance culture and delivers results.
  • There is not yet a commitment to hard targets; instead, the department employees a range of mainly generic, qualitative and subjective statements as the basis of its key performance indicators.
  • Internal and external audits have not delivered any major concerns or surprises and the department has been responsive in addressing recommendations and sharing lessons across its divisions.
  • There is a need to better embed risk management into departmental culture to ensure risks are adequately identified, documented, reported and mitigated and managed at the appropriate level.

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

Innovative delivery

Guidance Questions
  1. Does the organisation have the structures, people capacity and enabling systems required to support appropriate innovation and manage it effectively?
  2. 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?
  3. Is innovation explicitly linked to core business, underpinned by a coherent innovation strategy and an effective approach towards risk management?
  4. Does the organisation evaluate the success and added value of innovation, using the results to make resource prioritisation decisions and inform future innovation?
Rating

Strong

There is evidence of widespread innovation across the department's activities. The culture of innovation appears to be strongest in parts of the Regional Strategy and Coordination Division, the Office for the Arts and in Regional Development Programs branch where innovative and incremental process improvements have led to productivity gains.

There is evidence that internal staff movement has helped stimulate creativity and innovation across disparate areas of DRALGAS, particularly as staff have come together from a range of agencies and bring diverse perspectives.

One significant example of the department's innovation is streamlining the delivery model for the Regional Development Australia Fund grants process. This involved a large reduction in staff, and significant program redesign to shift the cost structure to the Regional Development Australia network. The outcome was far greater community engagement in prioritisation and decision making, significant cost savings for funding applicants and positive stakeholder feedback.

DRALGAS has formalised its approach to fostering innovation in its strategic plan by way of its Innovation Champion and Innovation Action Plan. These are designed to embed innovative activity within and across the organisation to address employee perceptions that innovation is something separate from their day-to-day business. To date many staff have not specifically acknowledged their own innovative efforts as such and therefore may not have prioritised sharing, and therefore leveraging ideas across the department.

It has been widely reported that resource constraints and pressures to engage in rapidly evolving policy agendas have necessitated innovative approaches. In particular, the intensifying of Commonwealth involvement in regional activity has led the department to be creative in how it designs its response. DRALGAS needs to be constantly vigilant to ensure the appropriate expertise is available to maintain the emphasis on innovation.

Plan, resource and prioritise

Guidance Questions
  1. 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?
  2. Are delivery plans robust, consistent and aligned with the strategy? Taken together will they effectively deliver all of the strategic outcomes?
  3. 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?
  4. Are delivery plans and programs effectively managed and regularly reviewed?
Rating

Well placed

DRALGAS has done a remarkably effective job of delivering the Ministers' agenda while establishing a new department, managing the subsequent machinery of government changes, and operating within a resource-constrained environment.

DRALGAS has moved on from start-up to its next phase of maturation and now faces the obligation to expand its policy capability. It has already shifted responsibility for some service delivery functions to portfolio agencies and should continue this process, where appropriate, to continue to expand its policy function. Within the department and portfolio agencies there are many examples of good practice (for example, grants, asset and partner management) that could be leveraged to increase the portfolio's capabilities.

A functional review undertaken in the fourth quarter of 2011–12 sought to match departmental objectives with allocated resources. It demonstrated capacity to closely manage resources and take tough decisions. More communication of the outcomes of this functional review is needed, particularly to APS and EL levels, because perceptions exist that changes in resourcing have not always been accompanied by commensurate changes to workloads, deliverables and priorities. It has been stated that output across DRALGAS has not been greatly diminished despite substantial cuts to resources. This reflects efficiency gains resulting from innovative activity, and staff taking on greater workloads and working longer hours. This may be appropriate for short periods, such as during the department's establishment or through periods of substantial change, but it is not sustainable and should not be maintained in a business-as-usual state.

DRALGAS has demonstrated a capacity to be agile and use its resources flexibly, allocating staff to where they are needed most. This has been most clearly demonstrated in the Regional Development Programs branch where resources have been directed from across the agency to manage peak workloads in line with the life cycle of various grants programs.

The department is closely monitoring resourcing and prioritising its push to meet budgets this financial year in a number of ways, including the use of staffing targets which are reliant on natural attrition and judicious recruitment. Associated impacts on branch and section-level planning need to be carefully managed.

There is evidence that DRALGAS is becoming more strategic in its support of its ministers and their offices, with indications that policy areas are becoming more discerning about their policy interventions, to have the greatest impact with available resources. The Secretary has been supportive where there has been a need to engage with Ministers on managing resources and departmental priorities, and conversations have been held to establish priorities, risks and milestones around existing and proposed activities.

Internal and external stakeholders have commented that finances are managed well at departmental level. However, the current dual corporate ICT systems make it difficult to manage resources efficiently.

Shared commitment and sound delivery models

Guidance Questions
  1. Does the organisation have clear and well understood delivery models which will deliver the agency's strategic outcomes across boundaries?
  2. 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?
  3. 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?
  4. Does the organisation ensure the effectiveness of delivery agents?
Rating

Well placed

DRALGAS maintains strong relationships with its closest delivery partners, its 16 portfolio agencies and 55 Regional Development Australia Committees. Stakeholders provided positive feedback regarding the department's collaboration and engagement with delivery partners and its support for regional initiatives, especially in areas of regional transition. Staff who engage with partners share a common approach, such as openness, responsiveness, brokerage and providing practical assistance.

DRALGAS has a range of mechanisms in place to support portfolio agencies as delivery agents. These include departmental representation at portfolio agency board meetings, regular meetings between the Secretary and portfolio agency heads and the provision of the Chief Financial Officer's guidance. Some portfolio agencies asked for greater communication from DRALGAS to fill the information gap between their quarterly meetings, particularly on key departmental interactions and APS-wide issues. There has also been general agreement that formal induction processes for chairs and board members across the portfolio would be constructive.

The department employs a diverse range of delivery models to reflect its diverse business needs. Some of these models are well structured, others less so. The Office for the Arts has adopted a customer-focused model, clearly identifying the various cultural institutions comprising the broader portfolio as its customers. The Office for Sport maintains good relationships with relevant portfolio agencies, through effective engagement at all levels. Delivery across the territories function appears to be variable. It was particularly highlighted that the division is slow to respond to whole-of-government needs in the Indian Ocean Territories, and is the one area of the department where stakeholders requested greater consultation and engagement.

Some external comments noted that Regional Development Australia Committees vary in quality, which presents DRALGAS with a substantial delivery risk. Similar comments also noted the variability of Regional Development Australia Committees to represent the interests of local government and questioned if other local government engagement strategies are required to ensure its input into the department's regional policy advice. Relationships with areas where there are no current place-based initiatives may be better supported by increasing communication and expectation management to ensure positive relationships are maintained.

In supporting external service delivery, DRALGAS uses systems located on the ICT platforms of four external departments. This presents costs and information risks for the department and creates some inefficiency in corporate operations, especially in human resources, financial management, communication and ICT.

The department's initial ICT strategy—including the implementation of modular solutions to be easily transportable to other departments if necessary—was deferred owing to a lack of funding. Consequently, systems are currently operating across four external platforms. A prevalent theme throughout this capability review was the impact of multiple ICT systems on managing corporate information. Examples provided include:

  • compromises in the quality of communications, productivity, reporting, effective management and business continuity
  • creation and maintenance of local systems, outside corporate solutions, to become immune to machinery of government changes and to improve the quality and availability of their management information
  • double-handling of information and difficulty in extracting critical management data where systems are incompatible
  • constant negotiations with two departments for the majority of ICT services
  • overall departmental needs become a lower priority than the provider's own when competing for service
  • inability for departmental ICT staff to focus on value-add activities, as their time is spent on troubleshooting problems associated with systems' incompatibility.

Although the inefficiencies of the ICT systems have impacted on the efficiency of the department's management operations and needs to be addressed, there is no evidence that this has impacted on the customer-facing activities of DRALGAS.

In the current financial environment, any investment in an enterprise solution for the department is unlikely. However, the impact of the above issues, combined with ongoing resource constraints, presents a risk to future capability. The review team considers that the resolution to this problem does not rest solely with this department, but highlights a wider issue for government in ensuring interoperability of essential systems across the APS and the ability to use ICT for service improvement.

Manage performance

Guidance Questions
  1. Is the organisation delivering against performance targets to ensure achievement of outcomes set out in the strategy and business plans?
  2. Does the organisation drive performance and strive for excellence across the organisation and delivery system in pursuit of strategic outcomes?
  3. 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

Well placed

External feedback, and the department's annual report, provides evidence that DRALGAS delivers results and has the basis of a performance culture. The annual report shows that the department has met, or is on its way to meeting, all of its targets. However, many of these are qualitative, generic and subjective statements. While there are inherent difficulties in measuring the impacts of some of its business areas, such as policy efficacy, DRALGAS would benefit from strengthening its capability to gauge its own performance by developing more robust indicators to inform decision making and improve outcomes as it matures.

The strategic plan identifies high-level measures of success linked to Portfolio Budget Statement outcomes. Monitoring of progress towards achieving strategic and divisional plans is undertaken by the Executive Board with reporting that tracks key deliverables, key performance indicators and risks by division.

A number of targeted audits on program delivery, financial processes and machinery of government changes have been completed. Most have been supportive, and DRALGAS appears responsive to implementing recommendations. The Australian National Audit Office and other stakeholders have commented positively on the department's response to areas of concern and improvements in the quality of grants management practices.

The internal audit program is clear, well-defined and prioritised. Audits do not appear to have delivered major surprises or concerns. The Corporate Services division is working to ensure that findings from each audit are 'meaningful'—shared across divisions—and incorporated into future work.

DRALGAS has a standard organisational risk management framework in place, which identifies and mitigates enterprise, divisional, branch, section and project risks through formal planning and the oversight of an internal Risk and Audit Committee. Risks are reviewed quarterly and audits prioritised based on risk. Internal comments suggest that as workloads increase and resources decrease, introduction of revamped work practices may be resulting in the implicit acceptance of a greater level of operating risks. While the department's risk management guide provides a process for the consistent management of risk, more work is needed to embed risk management into departmental culture and to ensure that all risks are adequately identified, documented, reported and mitigated and therefore managed at the appropriate level.